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<P style="font-size: 14pt" align="center"><B>UNITED STATES<BR>
SECURITIES AND
EXCHANGE COMMISSION</B>
<DIV style="font-size: 12pt" align="center"><B>Washington, D.C. 20549</B>
</DIV>


<P style="font-size: 18pt" align="center"><B>FORM 8-K</B>

<P style="font-size: 12pt" align="center"><B>CURRENT REPORT<BR>
Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</B>

<P style="font-size: 10pt" align="center"><B>Date of Report (Date of earliest
event reported): December&nbsp;5, 2008</B>

<P style="font-size: 24pt" align="center"><B>IFTH Acquisition Corp.<BR></B>
<FONT style="font-size: 10pt">(Exact Name of Registrant as Specified in Charter)
</FONT>

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  <TD style="border-bottom: #000000 1px solid"><B>Delaware</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>000-22693</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>11-2889809</B></TD>
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  <TD>(State or other jurisdiction of incorporation)</TD>
  <TD>&nbsp;</TD>
  <TD>(Commission File Number)</TD>
  <TD>&nbsp;</TD>
  <TD>(IRS Employer Identification No.)</TD>
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  <TD style="border-bottom: #000000 1px solid"><B>1690 SOUTH CONGRESS AVENUE, SUITE 200</B><BR>
<B>DELRAY BEACH, FLORIDA</B></TD>
  <TD>&nbsp;</TD>
  <TD style="border-bottom: #000000 1px solid"><B>33445</B></TD>
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  <TD>(Address of Principal Executive Offices)</TD>
  <TD>&nbsp;</TD>
  <TD>(Zip Code)</TD>
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<P style="font-size: 10pt" align="center">Registrant&#8217;s telephone number, including area code: <B>561-805-8000</B>


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  <TD style="border-bottom: #000000 1px solid" nowrap><B>&nbsp;</B></TD>
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  <TD nowrap>(Former Name or Former Address, if Changed Since Last Report)</TD>
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<P style="font-size: 10pt" align="left">Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction
A.2. below):

<P style="font-size: 10pt" align="left"><FONT
style="font-family: Wingdings">o</FONT> Written communications pursuant to
Rule&nbsp;425 under the Securities Act (17 CFR 230.425)

<P style="font-size: 10pt" align="left"><FONT
style="font-family: Wingdings">o</FONT> Soliciting material pursuant to
Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)

<P style="font-size: 10pt" align="left"><FONT
style="font-family: Wingdings">o</FONT> Pre-commencement communications
pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

<P style="font-size: 10pt" align="left"><FONT
style="font-family: Wingdings">o</FONT> Pre-commencement communications
pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
&nbsp; &nbsp;

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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;1.01. Entry into a Material Definitive Agreement.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The disclosures set forth in Item&nbsp;2.01 to this Current Report are incorporated into this item
by reference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;2.01. Completion of Acquisition or Disposition of Assets.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On December&nbsp;5, 2008, IFTH Acquisition Corp. (&#147;IFTH&#148; or the &#147;Company&#148;) completed an acquisition
of National Credit Report.com, LLC, a Florida limited liability company (&#147;NCRC&#148;), pursuant to a
securities purchase agreement, dated as of December&nbsp;5, 2008, by and among IFTH, NCRC, Jared Shaw,
Ivan Posniak, Andrew Larkin, John Thau, Adam Cohen, and Safeguard Acquisition, LLC (referred to as
the &#147;Purchase Agreement&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Purchase Agreement provided for IFTH&#146;s purchase of all of the issued and outstanding
membership interests in NCRC from the sellers of NCRC, in return for one million (1,000,000) shares
of IFTH&#146;s common stock, par value $0.01 per share. In conjunction with the transaction, IFTH
issued 3.0&nbsp;million stock options to the sellers of NCRC in consideration of their continued
involvement with the operations of NCRC. We incurred normal
acquisition-related costs of approximately $0.1 million in connection
with the transactions contemplated under the Purchase Agreement. Our trading symbol is &#147;IFAQ.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The foregoing description of the Purchase Agreement does not purport to be complete and is
qualified in its entirety by reference to the complete text of the Purchase Agreement, a copy of
which is filed as Exhibit&nbsp;2.1 to this Current Report on Form 8-K and is incorporated herein by
reference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On December&nbsp;5, 2008, the Company issued a press release regarding this transaction. A copy of
the press release is attached hereto as Exhibit&nbsp;99.1.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Accounting Treatment</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The accounting treatment of the acquisition of NCRC by IFTH was viewed to be a purchase
transaction. The amount of the purchase price in excess of NCRC&#146;s book value will be allocated to
acquired intangibles and goodwill.
</DIV>
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<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><U><B>FORM 10 DISCLOSURES</B></U><BR>&nbsp;
</DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As disclosed elsewhere in this report, on December&nbsp;5, 2008, we acquired NCRC pursuant to the
Purchase Agreement. Item&nbsp;2.01(f) of Form 8-K states that if the registrant was a shell company, as
we were immediately before the closing of the transactions contemplated under the Purchase
Agreement, as disclosed under Item&nbsp;2.01, then the registrant must disclose the information that
would be required if the registrant were filing a general form for registration of securities on
Form&nbsp;10 under the Securities Exchange Act of 1934, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Accordingly, we provide below the information that would be included in Form&nbsp;10. Please note
that the information provided below relates to the combined company after the acquisition of NCRC
pursuant to the Purchase Agreement, except that information relating to periods before the closing
of the transactions contemplated under the Purchase Agreement only relates to IFTH, unless
otherwise specifically indicated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Special Note Regarding Forward-Looking Statements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This Current Report on Form 8-K contains forward-looking statements that reflect our current
estimates, expectations and projections about our future results, performance, prospects and
opportunities. Forward-looking statements include, without limitation, statements about our market
opportunities, our business and growth strategies, our projected revenue and expense levels,
possible future consolidated results of operations, the adequacy of our available cash resources,
our financing plans, our competitive position and the effects of competition and the projected
growth of the industries in which we operate. <Font style="white-space: nowrap">Forward-looking</font> statements include all statements
that are not historical facts and can be identified by forward-looking statements such as &#147;may,&#148;
&#147;might,&#148; &#147;should,&#148; &#147;could,&#148; &#147;will,&#148; &#147;intends,&#148; &#147;estimates,&#148; &#147;predicts,&#148; &#147;projects,&#148; &#147;potential,&#148;
&#147;continue,&#148; &#147;believes,&#148; &#147;anticipates,&#148; &#147;plans,&#148; &#147;expects&#148; and similar expressions. Forward-looking
statements are only predictions based on our current expectations and projections, or those of
third parties, about future events and involve risks and uncertainties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Although we believe that the expectations reflected in the forward-looking statements
contained in this Current Report on Form 8-K are based upon reasonable assumptions, no assurance
can be given that such expectations will be attained or that any deviations will not be material.
In light of these risks, uncertainties and assumptions, the forward-looking statements, events and
circumstances discussed in this Current Report on Form 8-K may not occur and actual results could
differ materially and adversely from those anticipated or implied in the forward-looking
statements. Important factors that could cause our actual results, level of performance or
achievements to differ materially from those expressed or forecasted in, or implied by, the
forward-looking statements we make in this Current Report on Form 8-K are discussed under &#147;Risk
Factors&#148; and elsewhere in this Current Report on Form 8-K and include:
</DIV>

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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to successfully implement our business strategy;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our expectation that we will incur losses, on a consolidated basis, for the near future;</TD>
</TR>

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</DIV>

<DIV style="margin-top: 10pt">
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to fund our operations;</TD>
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</DIV>

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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to attract and retain key management and other personnel;</TD>
</TR>

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</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to protect the confidentiality of our proprietary information and know-how;</TD>
</TR>

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<DIV style="margin-top: 10pt">
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to replace subscribers we lose in the ordinary course of business;</TD>
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<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to maintain our indirect relationship with the three credit reporting
repositories, which we have access to through the three credit reporting and monitoring
resellers that purchase such services wholesale from the three repositories, as well as
other key providers;</TD>
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</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to compete successfully with our competitors;</TD>
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</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to protect and maintain our computer and telephone infrastructure;</TD>
</TR>

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</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to maintain the security of our data;</TD>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in federal, state and foreign laws and regulations;</TD>
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</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>because our common stock may be a &#147;penny stock,&#148; it may be more difficult for investors
to sell shares of our common stock, and the market price of our common stock may be
adversely affected;</TD>
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>directors, executive officers, principal stockholders and affiliated entities own a
significant percentage of our capital stock, and they may make decisions that you do not
consider to be in your best interests or in the best interests of our stockholders; and</TD>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>compliance with changing regulations concerning corporate governance and public
disclosure may result in additional expenses.</TD>
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</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">You should not place undue reliance on any forward-looking statements. In addition, past
financial or operating performance is not necessarily a reliable indicator of future performance,
and you should not use our historical performance to anticipate future results or future period
trends. Except as otherwise required by federal securities laws, we disclaim any obligation or
undertaking to disseminate any updates or revisions to any forward-looking statement contained in
this Current Report on Form 8-K to reflect any change in our expectations or any change in events,
conditions or circumstances on which any such statement is based. All forward-looking statements
attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by
the cautionary statements included in this Current Report on Form 8-K.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt">*****
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Except where the context otherwise requires, the terms &#147;we,&#148; &#147;us,&#148; &#147;our,&#148; &#147;the Company&#148; or
&#147;IFTH&#148; refer to the business of IFTH Acquisition Corp. and its consolidated subsidiary, National
Credit Report.Com, LLC, which subsidiary comprises all of the operations of the Company as of the
date of this Current Report on Form 8-K.
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>OUR BUSINESS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are a Delaware corporation incorporated in September&nbsp;1987. Prior to December&nbsp;31, 2007, we
were a full service provider of Information Technology (IT)&nbsp;solutions. We delivered complete
lifecycle IT solutions for our customers. After the sale of substantially all of our operating
assets on December&nbsp;31, 2007, as approved by our stockholders at a special meeting held December&nbsp;27,
2007, we did not engage in any operations and did not engage in any
business activity. Other than paying our
outstanding liabilities, liquidating our remaining inventory and collecting our outstanding
receivables, our primary purpose was to locate and acquire an attractive operating business. On
December&nbsp;5, 2008, we purchased all of the outstanding membership interests in National Credit
Report.Com, LLC, a Florida limited liability company (&#147;NCRC&#148;), and NCRC became our wholly-owned
subsidiary. As a result, we offer consumers a variety of identity security products and services
primarily on a subscription basis. These services help consumers protect themselves against
identity theft or fraud and understand and monitor their credit profiles and other personal
information, which include credit reports, credit monitoring and credit scores.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Since
February&nbsp;4, 2004, NCRC has principally marketed and sold credit reports, credit monitoring, credit
scores and other products conventionally allied to these products to the consumer market.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Consumer Products and Services</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We offer consumers their credit reports and automated monitoring of their credit files at one,
or all three, of the major credit reporting repositories, Experian Group Limited, Equifax Inc. and
TransUnion, LLC. In addition, products and services that we currently offer or plan to offer in
2009 include: credit scores and credit score analysis tools, credit education, identity theft
recovery services, and identity theft cost reimbursement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The three credit reporting repositories have agreements with three credit reporting resellers,
allowing them to in turn supply companies, like NCRC, that resell their products and services,
separately or bundled, with other services to consumers. NCRC has a
one-year agreement expiring in October 2009, with one of
the resellers, Equidata, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Going forward, our products and services will be offered to consumers principally on a
monthly subscription basis. Subscription fees are generally billed directly to the subscriber&#146;s
credit card. The prices to subscribers of various configurations of our monitoring products and
services will range generally from $14.95 to $19.95 per month. As a means of allowing customers to
become familiar with our services, we sometimes offer free trial periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A substantial number of our subscribers cancel their subscriptions each year. Because there is
a marketing and search cost to acquire a new subscriber and produce initial fulfillment materials,
subscribers typically must be retained for a number of months to cover these costs. Not all
subscribers are retained for a sufficient period of time to achieve positive cash flow returns on
these costs.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Our Marketing</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We market our products and services primarily through our own direct sales organization over
the internet, directly to consumers. We will also market our products and services through
indirect channels, including marketing alliance partners, joint ventures and other resellers. We
mainly use the internet to market and sell our products, however, we have used in the past, or will
contemplate future use of, direct mail, outbound telemarketing, inbound telemarketing, inbound
customer service and account activation calls, e-mail, mass media and the internet.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Competition</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The markets for the products we provide are highly competitive. A number of divisions or
subsidiaries of large, <Font style="white-space: nowrap">well-capitalized</font> firms with strong brand names operate in the industry. We
compete with these firms to provide our services to our consumers, and these companies are also
either directly or indirectly the suppliers of the data that is the core of our product and service
offerings. We believe that our principal competitors are the three main consumer credit reporting
companies and the three credit data resellers that they license, either directly or through
affiliated company websites. These companies include Experian Group Limited, Equifax Inc.,
TransUnion, LLC, Intersections, Inc., First Advantage Credco and Equidata, Inc., all of which offer
a range of consumer credit reporting products that are similar to products we offer. In addition,
there are a large number of other smaller competitors who offer
competing products in specialized areas such as fraud prevention, data vendors, providers of
automated data processing services, and software companies offering credit modeling or analytical
tools. Our competitive focus will be value-added differentiation of the variety of identity
security products and services that we offer.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Government Regulation</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We market our consumer products and services through a variety of marketing channels,
including direct mail, outbound telemarketing, inbound telemarketing, inbound customer service and
account activation calls, email, mass media and the internet. These channels are subject to both
federal and state laws and regulations. Federal and state laws and regulations may limit our
ability to market to new subscribers or offer additional services to existing subscribers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Telemarketing of our services is subject to federal and state telemarketing regulation.
Federal statutes and regulations adopted by the Federal Trade Commission and Federal Communications
Commission impose various restrictions on the conduct of telemarketing. The Federal Trade
Commission also has enacted the national Do Not Call Registry, which enables consumers to elect to
prohibit telemarketers from calling them. We may not be able to reach potential subscribers because
they are placed on the national Do Not Call Registry. Many states have adopted, and others are
considering adopting, statutes or regulations that specifically affect telemarketing activities.
Although we do not control the telemarketing firms that we engage to market our programs, in some
cases we are responsible for compliance with these federal and state laws and regulations. In
addition, the Federal Trade Commission and virtually all state attorneys general have authority to
prevent marketing activities that constitute unfair or deceptive acts or practices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Federal laws govern email communications. Some of these laws may affect our use of email to
market to or communicate with subscribers or potential subscribers.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Intellectual Property</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We
rely on a combination of registered domain names, trade secrets
(including know-how), and third-party vendor agreements to establish and protect
proprietary rights in our products.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Employees</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of December 8, 2008, we had 14 employees and consultants, 8 of whom are full-time
employees or consultants.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Properties</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our corporate headquarters is located in Delray Beach, Florida where we occupy approximately
7,911 feet of office space pursuant to a Sublease, dated October&nbsp;8, 2008, entered into with Digital
Angel Corporation, our former majority stockholder, under a sublease
through June&nbsp;2010. The rent for the entire twenty-one month term
of the Sublease is $157,500, which was paid in one lump sum upon
execution of the Sublease. VeriChip Corporation
(&#147;VeriChip&#148;), one of our related parties, to which we
sublease one-half of this space, reimbursed us for one-half of the
Sublease payment, representing their share of the total cost of the
Sublease. We
also lease approximately 1,000 square feet of office space in Boca Raton, Florida, which we use for
customer service and support.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>RISK FACTORS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>The following risks and the risks described elsewhere in this Current Report on </I><I>Form 8-K</I><I>,
including the section entitled &#147;Management&#146;s Discussion and Analysis of Financial Condition and
Results of Operations,&#148; could materially affect our business, prospects, financial condition,
operating results and cash flows. If any these risks materialize, the trading price of our common
stock could decline, and you may lose all or part of your investment.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>We have a history of losses, and expect to incur additional losses in the future. We are unable to
predict the extent of future losses or when we will become profitable.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">For the years ended September&nbsp;30, 1999 through September&nbsp;30, 2008, we experienced operating
losses and as of September&nbsp;30, 2008 our accumulated deficit was $5.0&nbsp;million. We expect to continue
to incur operating losses for the near future. Our ability in the future to achieve or sustain
profitability is based on a number of factors, many of which are beyond our control. Even if we
achieve profitability in the future, we may not be able to sustain profitability in subsequent
periods.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>We are unable to control many of the factors affecting consumer spending, and declines in consumer
spending our products could reduce demand for our products.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our business depends on consumer demand for our products and, consequently, is sensitive to a
number of factors that influence consumer spending, including general economic conditions,
disposable consumer income, fuel prices, recession and fears of recession, war and fears of war,
inclement weather, consumer debt, conditions in the housing market, interest rates, sales tax rates
and rate increases, inflation, consumer confidence in future economic conditions and political
conditions, and consumer perceptions of personal well-being and security. In particular, an
economic downturn leads to decreased discretionary spending, which adversely impacts our business.
Adverse changes in factors affecting discretionary consumer spending could reduce consumer demand
for our products, thus reducing our sales and harming our business and operating results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>We must replace the subscribers we lose in the ordinary course of business and, if we fail to do
so, our revenue and subscriber base will decline.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A substantial number of subscribers to our consumer products and services cancel their
subscriptions each year. Cancellations may occur due to numerous factors, including:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changing subscriber preferences;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>competitive price pressures;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>general economic conditions;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>subscriber dissatisfaction;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>cancellation of subscribers due to credit card declines; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>credit or charge card holder turnover.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If we fail to replace subscribers to our consumer products and services we lose in the
ordinary course of business, our revenue may decline, causing a material adverse impact on the
results of our operations. There can be no assurance that we can successfully replace the large
number of subscribers that cancel each year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Marketing laws and regulations may materially limit our or our clients&#146; ability to offer our
products and services to consumers.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We market our consumer products and services through a variety of marketing channels,
including direct mail, outbound telemarketing, inbound telemarketing, inbound customer service and
account activation calls, email, mass media and the internet. These channels are subject to both
federal and state laws and regulations. Federal and state laws and regulations may limit our
ability to market to new subscribers or offer additional services to existing subscribers, which
may have a material impact on our ability to sell our services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>If we lose our ability to purchase data from any of the three major credit reporting repositories,
which we are able to do through the three credit data resellers to whom they sell, each of which is
a competitor of ours, demand for our services would decrease.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We rely on the three major credit reporting repositories, Equifax, Experian and TransUnion, to
provide us with essential data for our consumer identity theft protection and credit management
services, through our contract with Equidata, Inc. Our agreement with Equidata, Inc. expires in
October&nbsp;2009. That agreement may be terminated by them on 30&nbsp;days&#146; notice in certain circumstances.
Each of the three major credit reporting repositories owns its consumer credit data and is a
competitor of ours in providing credit information directly to consumers, and may decide that it is
in their competitive interests to stop indirectly supplying data to us. Any interruption,
deterioration or termination of our relationship with Equidata, Inc., one of its two competitors,
or one or more of the three credit reporting repositories would be disruptive to our business and
could cause us to lose subscribers.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our competitors, including those who have greater resources and experience than we do, may
commercialize technologies that make ours obsolete or noncompetitive.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">There are many public and private companies, actively engaged in our line of business and that
target the same markets that we target. Some of our current competitors have significantly greater
financial, marketing and product development resources than we do. Low barriers to entry into our
line of business may result in new competitors entering the markets we serve. If our competitors
market products that are more effective and less expensive than our products, we may not be able to
achieve commercial success.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our long-term capital needs may require additional sources of capital, and there can be no
assurances that we will be successful in negotiating additional sources of long-term capital.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our long-term capital needs may require additional sources of equity or credit. There can be
no assurances that we will be successful in negotiating additional sources of equity or credit for
our long-term capital needs. Our inability to have continuous access to such financing at
reasonable costs could materially and adversely impact our financial condition, results of
operations and cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Additionally, we are a publicly-traded company and our stock is traded on National Association
of Securities Dealers, Inc.&#146;s OTC Bulletin Board, or &#147;OTCBB,&#148; where there is limited visibility in
the investment community. Moreover, our share volume averaged less than 5,000 shares per day during
our fiscal year ended September&nbsp;30, 2008. Raising equity capital could therefore be challenging for
us. Any limitations on our ability to raise equity capital could significantly impact our ability
to fund our operations or undertake future growth through expansion or acquisition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>We depend on key personnel to manage our business effectively, and, if we are unable to hire,
retain or motivate qualified personnel, our ability to design, develop, market and sell our systems
could be harmed.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our future success depends, in part, on certain key employees, including William J. Caragol,
our chief executive officer, president and acting chief financial officer, as well as the chairman
of our board of directors, and key technical and operations personnel, and on our ability to
attract and retain highly skilled personnel. The loss of the services of any of our key personnel
may seriously harm our business, financial condition and results of operations. In addition, the
inability to attract or retain qualified personnel, or delays in hiring required personnel,
particularly operations, finance, accounting, sales and marketing personnel, may also seriously
harm our business, financial condition and results of operations. Our ability to attract and retain
highly skilled personnel will be a critical factor in determining whether we will be successful in
the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Directors, executive officers, principal stockholders and affiliated entities own a significant
percentage of our capital stock, and they may make decisions that you do not consider to be in the
best interests of our stockholders.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of December&nbsp;8, 2008, our
current directors and executive officer
beneficially owned, in the aggregate, approximately 61.6% of our outstanding voting securities. As
a result, if some or all of them acted together, they would have the ability to exert substantial
influence over the election of our board of directors and the outcome of issues requiring approval
by our stockholders. This concentration of ownership may also have the effect of delaying or
preventing a change in control of our company that may be favored by other stockholders. This could
prevent transactions in which stockholders might otherwise recover a premium for their shares over
current market prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Conflicts of interest may arise between Blue Moon Energy Partners, LLC and us that could be
resolved in a manner unfavorable to us.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Questions relating to conflicts of interest may arise between Blue Moon Energy Partners, LLC
(&#147;Blue Moon&#148;) and us, in a number of areas relating to our ongoing relationships. As of December&nbsp;8,
2008, Blue Moon owned 31.5% of our outstanding common stock. Currently, Scott R. Silverman, our
chairman of the board is a manager of and controls Blue Moon and controls a member of Blue Moon and William J.
Caragol, our chief executive officer and acting chief financial officer, is a manager and member of
Blue Moon.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The equity interests of our directors and executive officers in Blue Moon could create, or
appear to create, conflicts of interest when directors are faced with decisions that could have
different implications for the two companies. For example, these decisions could relate to, among
other matters, the desirability of a potential acquisition or joint venture opportunity or employee
retention or recruiting.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>It may be more difficult for investors to sell shares of our common stock, and the market price of
our common stock may be adversely affected.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our common stock may be a &#147;penny stock&#148; if, among other things, the stock price is below $5.00
per share, it is not listed on a national securities exchange or approved for quotation on the
Nasdaq Stock Market or any other national stock exchange or it has not met certain net tangible
asset or average revenue requirements. Broker-dealers who sell penny stocks must provide purchasers
of these stocks with a standardized risk-disclosure document prepared by the Securities and
Exchange Commission (&#147;SEC&#148;). This document provides information about penny stocks and the nature
and level of risks involved in investing in the penny-stock market. A broker must also give a
purchaser, orally or in writing, bid and offer quotations and information regarding broker and
salesperson compensation, make a written determination that the penny stock is a suitable
investment for the purchaser, and obtain the purchaser&#146;s written agreement to the purchase.
Broker-dealers must also provide customers that hold penny stock in their accounts with such
broker-dealer a monthly statement containing price and market information relating to the penny
stock. If a penny stock is sold to an investor in violation of the penny stock rules, the investor
may be able to cancel its purchase and get its money back.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If applicable, the penny stock rules may make it difficult for investors to sell their shares
of our common stock. Because of the rules and restrictions applicable to a penny stock, there is
less trading in penny stocks and the market price of our common stock may be adversely affected.
Also, many brokers choose not to participate in penny stock transactions. Accordingly, investors
may not always be able to resell their shares of our common stock publicly at times and prices that
they feel are appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Compliance with changing regulations concerning corporate governance and public disclosure may
result in additional expenses.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">There have been changing laws, regulations and standards relating to corporate governance and
public disclosure, including the Sarbanes-Oxley Act, new regulations promulgated by the SEC and
rules promulgated by the national securities exchanges and the NASDAQ. These new or changed laws,
regulations and standards are subject to varying interpretations in many cases due to their lack of
specificity, and, as a result, their application in practice may evolve over time as new guidance
is provided by regulatory and governing bodies, which could result in continuing uncertainty
regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and
governance practices. As a result, our efforts to comply with evolving laws, regulations and
standards are likely to continue to result in increased general and administrative expenses and a
diversion of management time and attention from revenue-generating activities to compliance
activities. Our board members and executive officers could face an increased risk of personal
liability in connection with the performance of their duties. As a result, we may have difficulty
attracting and retaining qualified board members and executive officers, which could harm our
business. If our efforts to comply with new or changed laws, regulations and standards differ from
the activities intended by regulatory or governing bodies, we could be subject to liability under
applicable laws or our reputation may be harmed.
</DIV>
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<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION<BR>
AND RESULTS OF OPERATION OF IFTH</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are incorporating by reference herein the Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations from the Annual Report on Form 10-K for the year ended
September&nbsp;30, 2007, as filed with the SEC on December&nbsp;27, 2007, and from the Quarterly Report on
Form 10-Q for the quarter ended June&nbsp;30, 2008, as filed with the SEC on August&nbsp;14, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are a Delaware corporation incorporated in September&nbsp;1987. Prior to December&nbsp;31, 2007, we
were a full service provider of Information Technology (IT)&nbsp;solutions. We delivered complete
lifecycle IT solutions for our customers. After the sale of substantially all of our operating
assets on December&nbsp;31, 2007, as approved by our stockholders at a special meeting held December&nbsp;27,
2007, we did not engage in any operations and did not engage in any
business activity. Other than paying our
outstanding liabilities, liquidating our remaining inventory and collecting our outstanding
receivables, our primary purpose was to locate and acquire an attractive operating business.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION<BR>
AND RESULTS OF OPERATION OF NCRC</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">You should read the following discussion and analysis of the financial condition and results
of operations of NCRC, IFTH&#146;s wholly-owned subsidiary, which now represents our ongoing business
operations, together with the financial statements and the related notes appearing at the end of
this report. Some of the information contained in this discussion and analysis or set forth
elsewhere in this report, including information with respect to our plans and related financing,
includes forward-looking statements that involve risks and uncertainties. You should read the &#147;Risk
Factors&#148; section of this report for a discussion of important factors that could cause actual
results to differ materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The discussion and analysis of NCRC&#146;s financial condition and results of operations are based
on our financial statements, which we have prepared in accordance with U.S. generally accepted
accounting principles. The preparation of these financial statements requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements, as well as the reported
revenues and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates
and judgments, including those described in greater detail below. We base our estimates on
historical experience and on various other factors that we believe are reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On December&nbsp;5, 2008, IFTH purchased all of the outstanding membership interests in NCRC, and
NCRC became IFTH&#146;s wholly-owned subsidiary. As a result, IFTH now offers consumers a variety of
identity security products and services primarily on a subscription basis. These services help
consumers protect themselves against identity theft or fraud and understand and monitor their
credit profiles and other personal information, which include credit reports, credit monitoring and
credit scores. Historically, NCRC has principally marketed and sold credit reports, credit
monitoring, credit scores and other products conventionally allied to these products to the
consumer market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Critical Accounting Estimates and Policies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">While NCRC&#146;s significant accounting policies are more fully described in Note B to our
financial statements appearing at the end of this Current Report on Form 8-K, we believe that the
following accounting policies are the most critical for one to fully understand and evaluate NCRC&#146;s
financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Revenue from the sale of a single credit report is recognized when the credit report is
delivered to the customer. Revenue from the sale of annual subscriptions for credit monitoring and
credit protection is recognized ratably over each subscriber&#146;s annual subscription period. In the
event that a customer cancels their annual service at any time, regardless of the month in which
the customer cancels, the entire annual subscription is non-refundable.</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Commission revenue from the sale of credit reports, credit monitoring, and credit protection
to a marketing partner, as per the terms of a written agreement, gives that partner
the rights to NCRC&#146;s credit reporting vendor resources. Commission revenue is comprised of
commissions earned by NCRC for the credit reports, credit monitoring, and credit protection
services provided to this customer. Commission revenue is recognized when the credit reports,
credit monitoring, and credit protection services have been provided to the customer. Generally,
NCRC invoiced its customers on a monthly basis for the direct costs of sales from the provision of
credit reporting and monitoring services plus a 12% commission. NCRC does not plan to use
marketing partners under these types of commission agreements in 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Subscriber acquisition costs represent marketing expenses used to acquire subscribers.
Subscriber acquisition costs are expensed in the period incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Effective January&nbsp;1, 2006, NCRC adopted Financial Accounting Standards Board (&#147;FASB&#148;) SFAS No.
123 (revised 2004), Share Based Payment, or FAS 123R, using the modified prospective transition
method. Under this method, stock-based compensation expense is recognized using the fair-value
based method for all awards granted on or after the date of adoption. Compensation expense for new
awards granted after January&nbsp;1, 2006 is recognized over the requisite service period based on the
grant-date fair value of those options. Prior to adoption, NCRC did not issue stock-based
compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">FAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary,
in subsequent periods if actual forfeitures differ from those estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During the unaudited nine-month period ended September&nbsp;30, 2008, web design and hosting expense of
$12,500 was recorded as 69,445 membership interest units were issued for services rendered to NCRC
in lieu of cash. As of September&nbsp;30, 2008, all services have been provided to NCRC. The stock-based
compensation expense is reflected in the statement of operations in general and administrative
expense for the unaudited nine-months ended September&nbsp;30, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Results of Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Nine Months Ended September&nbsp;30, 2008 Compared to Nine Months Ended September&nbsp;30, 2007</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Revenue</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Revenue for the nine months ended September&nbsp;30, 2008 was $327 thousand, a decrease of $152
thousand, or 32%, compared to the comparable period of the prior year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The decrease in revenue is attributable to two primary factors: (1)&nbsp;during the nine month
period ended September&nbsp;30, 2008, NCRC did not invest in search engine marketing as it did in the
first nine months of 2007, which decreased the number of new subscribers for credit monitoring
services, and (2)&nbsp;during August and September of 2008, NCRC began redesigning its website, in
preparation for a December&nbsp;2008 launch. Marketing efforts were curtailed during this redesign
project.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Gross Profit and Gross Profit Margin</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">NCRC&#146;s cost of sales consists primarily of the costs related to purchasing the data,
reporting and monitoring services it provides to its customers from its supplier.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Gross profit for the nine months ended September&nbsp;30, 2008 was $220 thousand compared to
$247 thousand for the nine months ended September&nbsp;30, 2007. As a percentage of revenue, its
gross profit margin was 67.2% and 51.6% for the nine months ended September&nbsp;30, 2008 and 2007,
respectively. This increase was the result of a change in its revenue mix, with more
subscription revenue in 2008 as a percentage of total revenue. Subscription revenue margins
are typically larger than the margins on the sale of a single credit report.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Operating Costs and Expenses</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Subscriber acquisition costs include the commissions that NCRC pays to its marketing
affiliates or the fees it pays for search engine marketing. NCRC&#146;s subscriber acquisition
costs increased to $185 thousand, or 79.6%, for the nine months ending September&nbsp;30, 2008, as
compared to $103 thousand for the nine months ended September&nbsp;30, 2007, due to the increased
spending on direct sales channels versus commission revenue, for which the majority of the
subscriber acquisition cost are incurred by its partner. Under this agreement, NCRC earns
commission revenue from its partner as described above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">General and administrative expense consists primarily of compensation for employees in
executive, sales, marketing and operational functions, including finance and accounting, and
corporate development. Other significant costs include professional fees
for accounting and legal services, consulting fees and facilities costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">General and administrative expense increased $61 thousand to $126 thousand for the nine
months ended September&nbsp;30, 2008 as compared to $65 thousand for the nine months ended September
30, 2007. $42 thousand of the increase represents an increase in salary expenses for the nine month period ended
September&nbsp;30, 2008 compared to 2007 which was the result of NCRC hiring a new president.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Year ended December&nbsp;31, 2007 Compared to Year ended December&nbsp;31, 2006</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Revenue</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Revenue for the year ended December&nbsp;31, 2007 was $596 thousand, a decrease of $394
thousand, or 40%, compared to the comparable period of the prior year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The decrease in revenue is the result of NCRC not investing as significantly in search
engine marketing in 2007 as it did during 2006, which decreased the number of new subscribers
for credit monitoring services.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Gross Profit and Gross Profit Margin</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">NCRC&#146;s cost of sales consists primarily of the costs related to purchasing the data,
reporting and monitoring services it provides to its customers from its supplier.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Gross profit for the year ended December&nbsp;31, 2007 was $298 thousand compared to $531
thousand for the year ended December&nbsp;31, 2006. As a percentage of revenue, its gross profit
margin was 50% and 46% for the years ended December&nbsp;31, 2007 and 2006, respectively. This
increase was the result of a change in its revenue mix, with more subscription revenue in 2008
as a percentage of total revenue. Subscription revenue margins are typically larger than the
margins on the sale of a single credit report.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Operating Costs and Expenses</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Subscriber acquisition costs include the commissions that NCRC pays to its marketing
affiliates or the fees it pays for search engine marketing. NCRC&#146;s subscriber acquisition
costs decreased to $171 thousand, or 47%, for the year ended December&nbsp;31, 2007, as compared to
$321 thousand for the year ended December&nbsp;31, 2006, due to NCRC&#146;s decreased spending on sales
engine marketing, which accounted for much of the decrease in its revenue, discussed above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">General and administrative expense consists primarily of compensation for employees in
executive, sales, marketing and operational functions, including finance and accounting, and
corporate development. Other significant costs include professional fees for accounting and
legal services, consulting fees and facilities costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">General and administrative expense increased $26 thousand and salary expenses decreased $3
thousand for the year ended December&nbsp;31, 2007 as compared to the year ended December&nbsp;31, 2006.
This increase was primarily driven by the hiring a new president during the second half of
2007.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Liquidity and Capital Resources</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of September&nbsp;30, 2008, cash totaled $24 thousand compared to cash of $171 thousand and $19
thousand at December&nbsp;31, 2007 and 2006, respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Cash Flows Used in Operating Activities</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Net cash used in operating activities totaled $187 thousand and $3 thousand during the
nine months ended September&nbsp;30, 2008 and 2007, respectively, and $76 thousand and $220 thousand
during the years ended December&nbsp;31, 2007 and 2006, respectively. For each of the periods
presented, cash was used primarily to fund operating losses including subscriber acquisition
costs, general and administrative expenses.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Cash Flows from Investing Activities</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Investing activities used cash of $22 thousand and $6 thousand during the nine months
ended September&nbsp;30, 2008 and 2007, respectively, and $8 thousand and nil during the years ended
December&nbsp;31, 2007 and 2006, respectively, which was used to purchase office property and
equipment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Cash Flows from Financing Activities</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Financing activities provided cash of $62 thousand and $238 thousand during the nine
months ended September&nbsp;30, 2008 and 2007, respectively, and $237 thousand and $185 thousand in
the years ended December&nbsp;31, 2007 and 2006, respectively. The cash from financing activities
was provided by contributions from the members of NCRC.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Financial Condition</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of September&nbsp;30, 2008, NCRC had a working capital deficit of $16 thousand and had
members&#146; capital of $44 thousand compared to working capital of $125 thousand and members&#146;
capital of $158 thousand as of December&nbsp;31, 2007. The decrease in working capital and members&#146;
capital was primarily due to its operating losses during 2008. NCRC has incurred recurring losses and net cash outflows from its operating activities for the unaudited nine-month
period ended September&nbsp;30, 2008 and the years ended
December&nbsp;31, 2007 and 2006. Additionally, at September&nbsp;30,
2008, NCRC had a working capital deficit. NCRC&#146;s
management plans with respect to continued funding of such shortfalls included raising additional capital from its members or looking into the potential sale of NCRC. On December&nbsp;5,
2008, the members approved the sale of NCRC to IFTH. It is NCRC&#146;s understanding that IFTH will support its operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On December&nbsp;5, 2008, NCRC&#146;s members sold 100% of its membership interests to the Company
for 1.0&nbsp;million shares of Company common stock. The selling members were also granted stock
options which vested immediately to purchase up to 3.0&nbsp;million shares of Company common stock for their continued
involvement in the operations of the business. Those options, which vested immediately, are exercisable
at $0.18 per share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Off-Balance Sheet Arrangements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">NCRC had no off-balance sheet arrangements as of December&nbsp;31, 2007 and 2006 and as of the
consummation of the transaction.
</DIV>
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</DIV>

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<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>DIRECTORS AND EXECUTIVE OFFICERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">None of the executive officers of NCRC became executive officers of the Company after we
purchased all of the outstanding membership interests in NCRC on December&nbsp;5, 2008. Our directors
and executive officers, and their ages and positions, as of December&nbsp;5, 2008, are set forth below:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="73%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">William J. Caragol
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">41</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer, President, Acting Chief Financial Officer and Director</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Scott R. Silverman
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the Board of Directors</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Michael E. Krawitz
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">39</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The following is a summary of the background and business experience of our executive officer:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">William J. Caragol has served as our chief executive officer, president and a member of our
board of directors since December&nbsp;3, 2008 and as acting chief financial officer since October&nbsp;24,
2008. Mr.&nbsp;Caragol served as acting chief executive officer from October&nbsp;24, 2008 until December&nbsp;3,
2008 when he was appointed chief executive officer. Mr.&nbsp;Caragol has served as president of
VeriChip since May&nbsp;2007, chief financial officer since August&nbsp;2006,
treasurer since December&nbsp;2006, and secretary since March&nbsp;2007. From July&nbsp;2005 to August&nbsp;2006, he
served as the chief financial officer of Government Telecommunications, Inc. From December&nbsp;2003 to
June&nbsp;2005, Mr.&nbsp;Caragol was the vice president of business development and chief financial officer
of Millivision Technologies, a technology company focused on security applications. From August
2001 to December&nbsp;2003, Mr.&nbsp;Caragol was a consulting partner with East Wind Partners LLP, a
technology and telecommunications consulting company, in Washington, D.C. He is a member of the
American Institute of Certified Public Accountants and graduated from the Washington &#038; Lee
University with a bachelor of science in Administration and Accounting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following is a summary of the background and business experience of the members of our
board of directors:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Scott R. Silverman was appointed our chairman of our board of directors in January of 2006. Mr.
Silverman is a manager of and controls Blue Moon, and also controls a member of Blue Moon.
Mr.&nbsp;Silverman served as the acting president of VeriChip from March&nbsp;2007 through May&nbsp;4, 2007, as
its chief executive officer from December&nbsp;5, 2006 through July&nbsp;18, 2008, as chairman of its board
of directors from March&nbsp;2003 through July&nbsp;18, 2008 and as a member of its board of directors from
February&nbsp;2002 through July&nbsp;18, 2008. On November&nbsp;12, 2008, he was again appointed to VeriChip&#146;s
board of directors, to serve as chairman. He also served as VeriChip&#146;s chief executive officer from
April&nbsp;2003 to June&nbsp;2004. He served as the chairman of the board of directors of Digital Angel
Corporation (formerly known as Applied Digital Solutions, Inc.), or Digital Angel, from March&nbsp;2003
through July&nbsp;3, 2007, and served as chief executive officer of Digital Angel from March&nbsp;2003 to
December&nbsp;5, 2006, and as acting president of Digital Angel from April&nbsp;2005 to December&nbsp;5, 2006.
From March&nbsp;2002 to March&nbsp;2003, he served as Digital Angel&#146;s president and as a member of its board
of directors. From August&nbsp;2001 to March&nbsp;2002, he served as a special advisor to Digital Angel&#146;s
board of directors. From September&nbsp;1999 to March&nbsp;2002, Mr.&nbsp;Silverman operated his own private
investment banking firm. From October&nbsp;1996 to September&nbsp;1999, he served in various capacities with
Digital Angel, including positions related to business development, corporate development and legal
affairs. Mr.&nbsp;Silverman is an attorney licensed to practice in New Jersey and Pennsylvania. Mr.
Silverman graduated from the University of Pennsylvania with a bachelor of arts degree and received
his law degree from Villanova University School of Law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Michael E. Krawitz, has served as a member of our board of directors since July&nbsp;23, 2008. Mr.
Krawitz served as the chief executive officer and president of Digital Angel from December&nbsp;2006 to
December&nbsp;2007. Prior to that, during his time at Digital Angel, he served as assistant vice
president and general counsel beginning in April&nbsp;1999, and was appointed vice president and
assistant secretary in December&nbsp;1999, senior vice president in December&nbsp;2000, secretary in March
2003, executive vice president in April&nbsp;2003 and chief privacy officer in November&nbsp;2004. From 1994
to April&nbsp;1999, Mr.&nbsp;Krawitz was an attorney with Fried, Frank, Harris, Shriver &#038; Jacobson in New
York. Mr.&nbsp;Krawitz earned a bachelor of arts degree from Cornell University in 1991 and a juris
doctorate from Harvard Law School in 1994.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>DIRECTOR INDEPENDENCE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are currently traded on the OTCBB. Accordingly, we are not required to and do not have a majority of
independent directors or an audit, compensation or nominating committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our board of directors currently consists of three members: Messrs.&nbsp;Caragol, Krawitz and
Silverman. Our board of directors determined that none of our directors is independent under the
standards of the Nasdaq Global Market. In addition, Messrs.&nbsp;Cobb and Doberty, who served on our
board of directors until July&nbsp;22, 2008, were determined independent and Messrs.&nbsp;McKeage and
Patterson, who served on our board of directors until July&nbsp;2, 2008 and July&nbsp;22, 2008, respectively,
were found to not be independent under the standards of the Nasdaq Global Market during their
respective terms of service.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Since the beginning of our fiscal year ended September&nbsp;30, 2007, we have had the following
related party transactions:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Transactions with Digital Angel and Affiliates</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On June&nbsp;27, 2003, we loaned $1,000,000 to Digital Angel, our former majority shareholder.
Under the terms of the loan, interest, which accrued at an annual rate of 16%, was due and payable
on a monthly basis beginning July&nbsp;31, 2003. On May&nbsp;15, 2007, we entered into a Satisfaction of
Loan Agreement (&#147;SLA&#148;) with Digital Angel with respect to the loan. Under the SLA, Digital Angel
issued 833,333 shares (the &#147;Shares&#148;) of its common stock, par value $0.01 per share, to us having
an aggregate fair value of approximately $1,000,000 as explained below. On June&nbsp;11, 2007, the
registration statement covering the Shares was declared effective by the SEC (the &#147;Effective Date&#148;)
and on June&nbsp;22, 2007 the shares became freely tradeable pursuant to the terms of the SLA. In
accordance with the SLA, once the registration statement covering the Shares was declared effective
by the SEC and the Shares became freely tradeable by us, Digital Angel was in full satisfaction of
all principal, interest and other amounts owed to us under the loan. Additionally, in accordance
with the SLA, on the Effective Date, the exact number of shares to be delivered to us was
determined to be 703,730, which was calculated by dividing the outstanding principal amount of the
note of $1,000,000 by the average daily closing prices for a share of Digital Angel&#146;s common stock
on each trading day occurring during the ten trading day period ending on and in including the
trading day immediately preceding the Effective Date of the Registration Statement of $1.421.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On January&nbsp;20, 2006, Mr.&nbsp;McKeage was appointed our chief executive officer, president and
director. From 2004 until that time, Mr.&nbsp;McKeage was vice president of business development of
Digital Angel, as well as of Destron Fearing Corp., Digital Angel&#146;s now-wholly-owned subsidiary.
Following the sale of our operating assets, which became effective on December&nbsp;31, 2007, Mr.
McKeage remained our president and director and became vice president of corporate development for
Digital Angel, as well as of VeriChip, Digital Angel&#146;s then-majority-owned subsidiary. Effective
January&nbsp;1, 2008, we began to reimburse VeriChip in the amount of $7,000 per month for Mr.&nbsp;McKeage&#146;s
services related to finding a suitable acquisition target for the Company, which agreement ended in
May&nbsp;2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We reimbursed Digital Angel on a monthly basis for certain business expenses incurred on our
behalf. For the fiscal year ended September&nbsp;30, 2007 and 2008, these costs included accounting
fees, various business insurance coverages and miscellaneous business expenses. Additionally for
the fiscal year ended September&nbsp;30, 2007 and 2008, these costs included the salary, payroll taxes
and benefits of personnel assigned to us in those years. We reimbursed $213,000 and $85,000 of
these costs to Digital Angel in our fiscal year ended September&nbsp;30, 2007 and 2008, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">For the fiscal years ended September&nbsp;30, 2008 and 2007, we charged Digital Angel $nil and
$24,000, respectively, for services rendered by our chief financial officer at Digital Angel&#146;s
then-wholly-owned subsidiary, Computer Equity Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On October&nbsp;8, 2008, we entered into a Sublease with Digital Angel for our corporate
headquarters located in Delray Beach, Florida consisting of approximately 7,911 feet of office
space, which space is shared with VeriChip. The rent for the entire twenty-one month term of the
Sublease is $157,500, which was paid in one lump sum upon execution of the Sublease. VeriChip
reimbursed us for one-half of the Sublease payment, representing their share of the total cost of
the Sublease.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Information Regarding Control Persons</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On August&nbsp;1, 2008, Digital Angel entered into a Purchase Agreement for the sale of 2,570,000
shares of our common stock, which constituted 49.9% of our issued and outstanding common stock as
of August&nbsp;1, 2008, to Blue Moon. Blue Moon paid, in consideration for the shares, an aggregate of
$400,000, which amount was provided as capital contributions by the members of Blue Moon. As of
December&nbsp;8, 2008, Blue Moon owns 31.5% of our issued and outstanding common stock. Mr.&nbsp;Silverman
is a manager of Blue Moon and controls a member of Blue Moon and Mr.&nbsp;Caragol is a manager and
member of Blue Moon. For more information
on the beneficial holdings of our common stock by Blue Moon and Messrs.&nbsp;Silverman and Caragol, see
below, &#147;Security Ownership of Certain Beneficial Owners and Management.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Review, Approval or Ratification of Transactions with Related Parties</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">It is our unwritten policy, which policy is not otherwise evidenced, for any related party
transaction that involves more than a de minimis obligation, expense or payment, to obtain approval
by our board of directors prior to our entering into any such transaction. In conformity with our
various policies on related party transactions, each of the transactions discussed in &#147;Certain
Relationships and Related Party Transactions &#151; Transactions with Digital Angel and Affiliates&#148;
above has been reviewed and approved by our board of directors.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table sets forth certain information known to us regarding beneficial ownership
of shares of our common stock as of December&nbsp;8, 2008 by:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>each of our directors;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>each of our named executive officers;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>all of our executive officers and directors as a group; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>each person, each person, or group of affiliated persons, known to us to be the
beneficial owner of more than 5% of our outstanding shares of common stock.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Beneficial ownership is determined in accordance with the rules and regulations of the SEC and
includes voting and investment power with respect to the securities. In computing the number of
shares beneficially owned by a person and the percentage ownership of that person, shares of common
stock subject to options or warrants held by that person that are currently exercisable or
exercisable within 60&nbsp;days of December&nbsp;8, 2008 are deemed outstanding. Such shares, however, are
not deemed outstanding for purposes of computing the percentage ownership of any other person. The
percentage of beneficial ownership is based on 8,146,398 shares of our common stock outstanding as
of December&nbsp;8, 2008. Unless otherwise noted below, the address of the persons and entities listed
in the table is c/o IFTH Acquisition Corp., 1690 South Congress Avenue, Suite&nbsp;200, Delray Beach,
Florida 33445.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Percent of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Beneficially</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Outstanding</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Owned</B><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name and Address of Beneficial Owner</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(%)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px"><B>Five percent stockholders:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:0px; text-indent:-0px">R &#038; R Consulting Partners, LLC and Scott R. Silverman<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,120,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">47.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">William J. Caragol<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,570,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">43.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Blue Moon Energy Partners, LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,570,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">31.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Jerome C. Artigliere<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP><br>
48 Stumpfield Road<br>
Kensington, New Hampshire 03833</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Kevin H. McLaughlin<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">425,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px"><B>Named Executive Officers and Directors:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:0px; text-indent:-0px">William J. Caragol<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,570,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">43.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Michael J. Feder<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Michael E. Krawitz<SUP style="font-size: 85%; vertical-align: text-top">(7)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">450,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Jonathan F. McKeage<SUP style="font-size: 85%; vertical-align: text-top">(8)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:0px; text-indent:-0px">J. Robert Patterson<SUP style="font-size: 85%; vertical-align: text-top">(9)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Scott R. Silverman<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,120,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">47.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Executive
Officer and Directors as a group (3 persons)<SUP style="font-size: 85%; vertical-align: text-top">(10)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,570,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">61.6</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>





<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Less than 1%</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>In determining the number and percentage of shares beneficially owned by each person, shares
that may be acquired by such person pursuant to options exercisable within 60&nbsp;days after December
8, 2008, are deemed outstanding for purposes of determining the total number of outstanding shares
for such person, but are not deemed outstanding for such purposes with respect to all other
stockholders. To our knowledge, except as otherwise indicated, beneficial ownership includes sole
voting and dispositive power with respect to all shares.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 2,570,000 shares directly owned by Blue Moon of which Mr.&nbsp;Silverman is a manager and
controls a member of Blue Moon, R &#038; R Consulting Partners, LLC, and 450,000 shares of our common
stock issuable upon the exercise of stock options that are
currently exercisable or exercisable within 60&nbsp;days of December&nbsp;8, 2008. Mr.&nbsp;Silverman has sole
voting power and sole dispositive power over all 4,120,000 shares.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 2,570,000 shares directly owned by Blue Moon, of which Mr.&nbsp;Caragol is a manager and
member. Mr.&nbsp;Caragol has sole voting power and sole dispositive power over all 3,570,000 of these
shares.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 500,000 shares of our common stock issuable upon the exercise of stock options that
are currently exercisable or exercisable within 60&nbsp;days of December&nbsp;8, 2008.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Based on Schedule&nbsp;13G/A filed with the SEC on February&nbsp;1, 2006,
includes 425,000 shares of our common stock issuable upon the exercise of stock options that are
currently exercisable or exercisable within 60&nbsp;days of December&nbsp;8, 2008, over which Mr.&nbsp;McLaughlin
has sole voting and dispositive power.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Feder, our former acting interim chief financial officer, ceased being a named executive
officer on October&nbsp;24, 2008.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 450,000 shares of our common stock issuable upon the exercise of stock options that
are currently exercisable or exercisable within 60&nbsp;days of December&nbsp;8, 2008.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(8)</TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;McKeage, our former chief executive officer, ceased being a named executive officer on July
2, 2008. The information included in the table is based solely
on the Form&nbsp;4 filed with the SEC
on January&nbsp;24, 2008 by Mr.&nbsp;McKeage.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(9)</TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Patterson, our former vice president, chief financial officer and treasurer, ceased being a
named executive officer on March&nbsp;21, 2008, and ceased being a director on July&nbsp;22, 2008. Includes
300,000 shares of our common stock issuable upon the exercise of stock options that are currently
exercisable or exercisable within 60&nbsp;days of December&nbsp;8, 2008.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(10)</TD>
    <TD>&nbsp;</TD>
    <TD>All securities represent shares of our common stock and shares of our common stock issuable upon the exercise of stock
options that are currently exercisable or exercisable within
60&nbsp;days of December&nbsp;8, 2008 by our current directors and
executive officer.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->18<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>COMPENSATION DISCUSSION AND ANALYSIS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The primary goals of the Compensation Committee of our board of directors with respect to
executive compensation are to attract and retain the most talented and dedicated executives
possible, to tie annual and long-term cash and stock incentives to achievement of specified
performance objectives, and to align executives&#146; incentives with stockholder value creation. To
achieve these goals, the Compensation Committee intends to implement and maintain compensation
plans that tie a substantial portion of executives&#146; overall compensation to key strategic goals, as
measured by metrics such as revenue and net market change. In the past, the Compensation Committee
has evaluated individual executive performance with a goal of setting compensation at levels the
committee believes are comparable with executives in other companies of similar size and stage of
development operating in the information technology industry while taking into account our relative
performance and our own strategic goals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have not retained a compensation consultant to review our policies and procedures with
respect to executive compensation. It is our practice to conduct an annual benchmark review of the
aggregate level of our executive compensation, as well as the mix of elements used to compensate
our executive officers. In the past, we have benchmarked our executive compensation against the
median updated compensation paid by other companies in the information technology industry
generating less than $100&nbsp;million in annual revenue. In the future, we plan to benchmark our
executive compensation against the compensation paid by other companies in the financial service
and products industry of a similar size.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Executive Officers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our named executive officers for the fiscal year ended September&nbsp;30, 2008, or fiscal 2008,
were Mr.&nbsp;McKeage, who is our former chief executive officer and president, Mr.&nbsp;Feder, who is our
former acting interim chief financial officer, and Mr.&nbsp;Patterson, who is our former vice president,
chief financial officer and treasurer. On October&nbsp;24, 2008, our board of directors appointed Mr.
Caragol as acting chief executive officer and acting chief financial officer. In connection with
this appointment, Mr.&nbsp;Caragol received 1,000,000 shares of our common stock, 500,000 of which were
restricted, for services to be rendered to us, and in lieu of salary compensation, through all of
2009. The shares issued will be compensation expenses in the period
earned. In addition, on December&nbsp;3, 2008, Mr.&nbsp;Caragol, was appointed as chief executive officer,
president, acting chief financial officer and director.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Elements of Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our compensation program for executive officers has historically consisted of a fixed base
salary, performance-related incentive awards and long-term incentive compensation in the form of
stock-based compensation awards. However, in lieu of salary through 2009, on October&nbsp;24, 2008 when
Mr.&nbsp;Caragol was appointed acting chief executive officer and acting chief financial officer, he
received one million shares of our common stock, half of which was restricted until he became an
officer on December&nbsp;3, 2008. The shares issued will be compensation expenses in the period
earned. All three components of the executive officers&#146; compensation plan are
reviewed annually and incentives, based on the performance of the business, may be established at
the beginning of each fiscal year. In addition, our executives are able to participate in various
benefit plans generally available to our other full-time employees.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">Executive compensation consists of following elements:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B><I>Base Salary. </I></B>Base salaries for our executives are established based on the scope of their
responsibilities, taking into account competitive market compensation paid by other companies for
similar positions. Generally, we believe that executive base salaries should be targeted near the
median of the range of salaries for executives in similar positions with similar responsibilities
at comparable companies, in line with our compensation philosophy. Base salaries are reviewed
annually, and adjusted from time to time to realign salaries with market levels after taking into
account individual responsibilities, performance and experience. For fiscal 2008, this review
occurred in the first quarter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B><I>Annual Incentive Compensation. </I></B>The Compensation Committee has the authority to award
discretionary annual bonuses and to set annual incentive plans for our executive officers. The
annual incentive bonuses are intended to compensate officers for achieving financial and
operational goals and for achieving individual annual performance objectives. These objectives vary
depending on the individual executive, but relate generally to financial factors such as raising
capital, improving our results of operations and increasing the price per share of our capital
stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Any discretionary annual bonuses are paid in cash or equity awards in an amount reviewed and
approved by the Compensation Committee and ordinarily is paid in a single installment in the first
quarter following the completion of a given fiscal or calendar year.
For the 2008 fiscal and calendar years, we do not plan to pay any incentive compensation, as we did
not have any material operating activity during that time.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->19<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B><I>Equity Compensation. </I></B>We believe that long-term performance is achieved through an ownership
culture that encourages such performance by our executive officers through the use of stock and
stock-based awards. The Compensation Committee believes that the use of stock and stock-based
awards offers the best approach to achieving our compensation goals. We have not adopted stock
ownership guidelines, and our stock compensation plans have provided the principal method for our
executive officers to acquire equity or equity-linked interests in our company. We believe that the
annual aggregate value of these awards should be set near competitive median levels for comparable
companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our executive officers are eligible to participate in our 2001 Flexible Stock Plan. The
purpose of the 2001 Flexible Stock Plan is to attract, retain, motivate and reward employees and
other individuals and to encourage ownership by employees and other individuals of our common
stock. The board of directors may terminate the 2001 Flexible Stock Plan at any time. There were
1,595,000 stock option awards granted under this plan during fiscal 2008, and, as of September&nbsp;30,
2008, 4,745,000 awards had been granted and remained outstanding under the 2001 Flexible Stock
Plan. The 2001 Flexible Stock Plan initially had 2,500,000 shares of common stock reserved for
issuance. This number is subject to an annual increase of 25% of the number of outstanding shares
of common stock as of January 1 of each year, but may not exceed 10,000,000 in the aggregate. As of
September&nbsp;30, 2008, there were 5,205,000 shares of common stock available for future issuance under
the 2001 Flexible Stock Plan. These shares may be issued in the form of incentive stock options,
non-qualified stock options, stock appreciation rights, restricted stock, performance shares, cash
awards, or other stock based awards. On October&nbsp;24, 2008, we granted one million shares of common
stock to each of Messrs.&nbsp;Caragol and Silverman, half of which were restricted, under the 2001
Flexible Stock Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our 1998 Stock Option Plan authorized us to grant options to purchase shares of common stock
and stock appreciation rights to our employees, directors and consultants. Our Compensation
Committee was the administrator of the 1998 Stock Option Plan. The 1998 Stock Option Plan
terminated in February&nbsp;2008, and no stock awards or options were granted, or are outstanding, under
the 1998 Stock Option Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Stock option grants are made at the commencement of employment and, occasionally, following a
significant change in job responsibilities or to meet other special retention or performance
objectives. The Compensation Committee reviews and approves stock option awards to executive
officers based upon a review of competitive compensation data, its assessment of individual
performance, a review of each executive&#146;s existing long-term incentives, and retention
considerations. Periodic stock option grants are made at the discretion of the Compensation
Committee to eligible employees and, in appropriate circumstances, the Compensation Committee
considers the recommendations of members of management, such as Mr.&nbsp;Caragol. In fiscal 2008, the
only named executive officer that received options were Mr.&nbsp;Feder and Mr.&nbsp;Patterson, who were
granted 100,000 and 50,000 stock options, respectively. Stock options granted by us have an
exercise price equal to the fair market value of our common stock on the day of grant, typically
vest 100% one to three years from the date of grant, and generally expire ten years after the date
of grant. Incentive stock options also include certain other terms necessary to assure compliance
with the Internal Revenue Code of 1986, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our Compensation Committee has and may in the future elect to make grants of stock to our
executive officers. In January&nbsp;2006, we granted 100,000 shares of restricted stock to Mr.&nbsp;McKeage,
half of which vested January&nbsp;17, 2007 and the other half of which vested January&nbsp;17, 2008, and in
January of 2008, we granted 50,000 shares of stock to Mr.&nbsp;McKeage. In October&nbsp;2008, in lieu of
salary through 2009, we granted one million shares of stock to Mr.&nbsp;Caragol, half of which was
restricted and vested on December&nbsp;3, 2008 when he was appointed chief executive officer, president
and director. We have also granted stock to Mr.&nbsp;Silverman, the chairman of our board. In January
2006, we granted 100,000 shares of restricted stock to Mr.&nbsp;Silverman, half of which vested January
17, 2007 and the other half of which vested January&nbsp;17, 2008. In October&nbsp;2008, in lieu of
compensation through 2009, we granted one million shares of stock to Mr.&nbsp;Silverman, half of which
was restricted and vested upon the completion of the acquisition of NCRC in December&nbsp;2008.
Our decision to pay stock in lieu of salary compensation reflects our desire to align the interest of our executive
officer and chairman of the board with the interests of our stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B><I>Other Compensation. </I></B>Our executive officers are not parties to written employment agreements
and are not expected to be parties to such employment agreements until such time as the
Compensation Committee determines in its discretion that revisions to our practice of not extending
employment agreements to our executive officers is advisable. We intend to continue to maintain our
current benefits for our executive officers; however, the Compensation Committee in its discretion
may revise, amend or add to the officer&#146;s executive benefits if it deems it advisable. We believe
these benefits are currently lower than median competitive levels for comparable companies. In the
past, executive officers have received certain perquisites, such as car allowance. However, our
Compensation Committee has not yet set the level of perquisites for Mr.&nbsp;Caragol, our only current
executive officer.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->20<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>EXECUTIVE COMPENSATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Summary Compensation Table</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table sets forth information regarding compensation earned in or with respect to
our fiscal years ended September&nbsp;30, 2008, 2007 and 2006, which we refer to as fiscal 2008, 2007
and 2006, respectively, by:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>each person who served as our chief executive officer in fiscal 2008; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>each person who served as our chief financial officer in fiscal 2008.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We refer to these officers collectively as our named executive officers. We had no other
executive officers in fiscal 2008.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>2008 Summary Compensation Table</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>All Other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left"><B>Name and</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Salary</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Bonus</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Principal Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Jonathan F. McKeage<br>
Former President and<br>
Chief Executive Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">54,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">6,250</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">4,500</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">65,726</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">157,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">25,000</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">9,000</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">166,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">103,846</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">18,750</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">6,320</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">160,166</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Michael J. Feder<br>
Former Acting Chief<br>
Financial Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">2,738</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,738</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">J. Robert Patterson<br>
Former Vice President,<br>
Chief Financial Officer
and Treasurer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">152,404</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">7,458</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">4,500</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">164,362</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">159,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">132,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">141,500</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects the dollar amount recognized for financial statement reporting purposes with respect
to the fiscal year in accordance with FAS 123R.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Consists of an automobile allowance paid to the executive officers in equal monthly amounts.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 100,000 shares of restricted stock, which fully vested on January&nbsp;17, 2008.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 100,000 stock options which will vest on July&nbsp;25, 2009.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes $54,808 consisting of three months salary and
accrued vacation pay in
connection with Mr.&nbsp;Patterson&#146;s resignation as an executive officer of the
Company effective March&nbsp;21, 2008.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 50,000 stock options that vested immediately upon the July&nbsp;25, 2008 grant date.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->21<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>2008 Grants of Plan-Based Awards</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Set forth in the table below is information regarding stock awards and option awards granted
by the compensation committee of our board of directors to our named executive officers in fiscal
2008, reflected on an individual grant basis. These represent all of the grants of awards by us to
our named executive officers under any plan during or with respect to fiscal 2008.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>2008 Grants of Plan-Based Awards</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>All Other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Grant</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards:</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Date Fair</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Date of Board</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>or Base</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Value of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>or</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Price of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Stock and</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Grant</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Committee</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Date</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Action</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($/Sh)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jonathan F. McKeage</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Michael J. Feder</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">07/25/2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">07/25/2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">14,917</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">J. Robert Patterson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">07/25/2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">07/25/2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">7,458</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The grant date fair value of the equity award was determined under the Black Scholes pricing
model in accordance with FAS 123R.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">None of the named executive officers currently remain with the Company. See the disclosure
found above in &#147;Compensation Discussion and Analysis&#148; for information regarding compensation
policies and practices with regards to named executive officers.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->22<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Outstanding Equity Awards as of September&nbsp;30, 2008</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table provides information as of September&nbsp;30, 2008 regarding unexercised stock
options and restricted stock awards outstanding to each of our named executive officers.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Outstanding Equity Awards as of September&nbsp;30, 2008</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 9pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Option Awards</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Equity</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Incentive</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Plan</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards:</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unexercised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unexercised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unexercised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unearned</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>Option</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>(#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Options(#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><b>Price</b></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><b>Expiration</b></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Exercisable</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Unexercisable</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Date</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jonathan F. McKeage</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Michael J. Feder</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">07/25/2018</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">J. Robert Patterson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">06/28/2010</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">03/23/2012</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">09/26/2013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">07/25/2018</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The option fully vests on July&nbsp;25, 2009.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>2008 Option Exercises and Stock Vested</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table sets forth information regarding the exercise of stock options and the
vesting of restricted stock during fiscal 2008.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Option Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Stock Awards</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Acquired on</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Value Realized on</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Acquired on</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Value Realized on</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Vesting</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Vesting</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jonathan F. McKeage</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">13,000</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>None of our other named executive officers exercised stock options or had restricted stock vest during fiscal 2008.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Represents the aggregate dollar amount realized upon vesting by multiplying the number of shares of stock by the market value of the underlying shares on the vesting
date of January&nbsp;17, 2008, or $0.26.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->23<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Pension Benefits</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">None of our named executive officers are covered by a pension plan or other similar benefit
plan that provides for payments or other benefits at, following, or in connection with retirement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Nonqualified Deferred Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">None of our named executive officers are covered by a defined contribution or other plan that
provides for the deferral of compensation on a basis that is not tax-qualified.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Potential Payments Upon Termination or Change in Control</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The amount of compensation paid to each named executive officer, if any, upon his separation
from the Company is presented below.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Payments Made Upon Termination</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Regardless of the manner in which a named executive officer&#146;s employment terminates, he is
entitled to receive amounts earned during his term of employment. Such amounts include:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any non-equity incentive compensation;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All vested shares awarded under our 2001 Flexible Stock Plan and 1998 Stock Option Plan;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any vested company contributions contributed under our former 401(k) plan; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any unused vacation pay.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Payments Made Upon Retirement</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In the event of the retirement of a named executive officer, in addition to the items
identified above, he is entitled to other amounts such as:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The executive officer will continue to vest in all outstanding options or other
stock-based compensation award and retain such options for the remainder of the outstanding
term.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>While not defined, the board of directors or a committee thereof may grant the retiring
named executive officer with other compensation that may vary depending upon position held,
length of service and other factors.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Payments Made Upon Death or Disability</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In the event of the death or disability of a named executive officer, in addition to the
benefits listed under the headings &#147;Payments Made Upon Termination&#148; and &#147;Payments Made Upon
Retirement&#148; above, the named executive officer will receive benefits under the Company&#146;s disability
plan or payments under the Company&#146;s life insurance plan, as appropriate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Payments Made Upon a Change in Control</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In the event of a change in control of the Company, the board of directors or a committee
thereof may provide for accelerated vesting or termination of any outstanding stock options issued
under the 1998 Stock Option Plan in exchange for a cash payment, or the issuance of substitute
awards to substantially preserve the terms of any option awards previously granted under the 1998
Stock Option Plan. Additionally, the named executive officer would be entitled to the standard
severance amount, as outlined in the Company&#146;s employee handbook, of one week&#146;s salary per full
year of service. The board of directors or a committee thereof may grant the named executive
officer with additional compensation that may vary depending upon position held, length of service
and other factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Jonathan F. McKeage</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In connection with his resignation from the Company on July&nbsp;2, 2008, Mr.&nbsp;McKeage received nil.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Michael J. Feder</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In connection with his resignation from the Company on October&nbsp;24, 2008, Mr.&nbsp;Feder received
nil.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->24<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>J. Robert Patterson</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In connection with his resignation from the Company on March&nbsp;21, 2008, Mr.&nbsp;Patterson received
$54,808, which consists of three months salary and accrued vacation pay.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Director Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table provides compensation information for persons serving as members of our
board of directors during fiscal 2008.
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>2008 Director Compensation</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Change in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pension Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fees</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>and</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Earned</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Non-Equity</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Nonqualified</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>or Paid</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Incentive Plan</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Deferred</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>All Other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>in Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Earnings</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jeffrey S. Cobb<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">10,196</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,746</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charles L. Doherty<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">7,458</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,008</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Michael E. Krawitz<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">5,746</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,746</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kay E. Langsford<SUP style="font-size: 85%; vertical-align: text-top">(7)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">2,738</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(8)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,738</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Scott R. Silverman<SUP style="font-size: 85%; vertical-align: text-top">(9)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">6,250</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(10)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">13,691</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(11)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,691</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The dollar amount of this award reflected in the table represents the amount recognized in
fiscal 2008 for financial statement reporting purposes in accordance with FAS 123R.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Messrs.&nbsp;Cobb and Doherty resigned from our board of directors effective July&nbsp;22, 2008. As of
September&nbsp;30, 2008, Messrs.&nbsp;Cobb and Doherty held option awards to purchase 387,500 and 487,500
shares of our common stock, respectively.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>On July&nbsp;25, 2008, Mr.&nbsp;Cobb received 150,000 stock options, 50,000 of which vested immediately
upon the July&nbsp;25, 2008 grant date, and have a grant date fair value computed in accordance with
FAS123R of $7,458, and 100,000 of which will vest on July&nbsp;25, 2009 and have a grant date fair value
computed in accordance with FAS 123R of $14,916.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>On July&nbsp;25, 2008, Mr.&nbsp;Doherty received 50,000 stock options that vested immediately upon the
July&nbsp;25, 2008 grant date and have a grant date fair value computed in accordance with FAS123R of
$7,458.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Krawitz was appointed to our board of directors effective July&nbsp;23, 2008. As of September
30, 2008, Mr.&nbsp;Krawitz held option awards to purchase 650,000 shares of our common stock.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>On July&nbsp;25, 2008, Mr.&nbsp;Krawitz received 200,000 stock options that will vest on July&nbsp;25, 2009
and have a grant date fair value computed in accordance with FAS123R of $29,833.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD>Ms.&nbsp;Langsford was appointed to our board of directors effective July&nbsp;23, 2008 and resigned
effective December&nbsp;3, 2008. As of September&nbsp;30, 2008, Ms.&nbsp;Langsford held option awards to purchase
100,000 shares of our common stock.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(8)</TD>
    <TD>&nbsp;</TD>
    <TD>On July&nbsp;25, 2008, Ms.&nbsp;Langsford received 100,000 stock options that will vest on July&nbsp;25, 2009
and have a grant date fair value computed in accordance with FAS123R of $14,916.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(9)</TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Silverman was appointed chairman of our board of directors in January&nbsp;2006. As of
September&nbsp;30, 2008, Mr.&nbsp;Silverman held 100,000 shares of our common stock and option awards to
purchase 950,000 shares of our common stock.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(10)</TD>
    <TD>&nbsp;</TD>
    <TD>On January&nbsp;17, 2006, Mr.&nbsp;Silverman received 100,000 shares of restricted stock, which fully
vested on January&nbsp;17, 2008 and has a grant date fair value computed in accordance with FAS123R of
$50,000.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(11)</TD>
    <TD>&nbsp;</TD>
    <TD>On July&nbsp;25, 2008, Mr.&nbsp;Silverman received 500,000 stock options that will vest on July&nbsp;25, 2009
and have a grant date fair value computed in accordance with FAS123R of $74,584.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Board members may receive cash or equity compensation, usually in the form of stock or stock
options, in consideration for their services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Compensation Committee Interlocks and Insider Participation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our compensation committee currently consists of Messrs.&nbsp;Silverman and Krawitz. During fiscal
2008, Jeffrey S. Cobb, Charles L. Doherty and Kay E. Langsford, former members of our board of
directors, and Messrs.&nbsp;Silverman and Krawitz served on our compensation committee. No member of
the compensation committee simultaneously served both as a member of the compensation committee and
as an officer or employee of ours during fiscal 2008. None of our executive officers serves as a
member of the board of directors or the compensation committee, or committee performing an
equivalent function, of any other entity that has one or more of its executive officers serving as
a member of our board of directors or compensation committee.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->25<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>MARKET PRICE OF AND DIVIDENDS ON OUR COMMON EQUITY<BR>
AND RELATED STOCKHOLDER MATTERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our common stock trades on the OTCBB under the symbol &#147;IFAQ&#148;. The following table shows, for
the periods indicated, the high and low bid quotations per share of the common stock based on
published financial sources. Such quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>2007</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Second Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Third Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fourth Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>2008</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Second Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Third Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fourth Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.18</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Dividends</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have never paid cash dividends on our common stock and do not anticipate paying cash
dividends in the foreseeable future. The decision whether to apply legally available funds to the
payment of dividends on our common stock may be made by our board of directors from time to time in
the exercise of its business judgment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Holders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of December&nbsp;8, 2008, there were 61 holders of record of our common stock. We believe that
there are a substantially greater number of beneficial owners of shares of our common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Issuer Purchases of Equity Securities</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">We did not make any common stock repurchases during the fiscal year ended September&nbsp;30, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Securities Authorized for Issuance Under Equity Compensation Plans</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table sets forth information regarding our compensation plans (including
individual compensation arrangements) under which shares of our common stock are authorized for
issuance as of September&nbsp;30, 2008:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of Securities</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Remaining Available for</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of Securities to be</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Weighted Average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Future Issuance under</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Issued upon Exercise of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Exercise Price of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Equity Compensation Plans</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Outstanding Options,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Outstanding Options,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(Excluding Securities</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">Warrants and Rights</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">Warrants and Rights</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Reflected in Column (a))</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Plan Category</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(a)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(b)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(c)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity compensation
plans approved by
security holders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,920,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5,205,000</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity compensation
plans not approved
by securities
holders
<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">950,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,870,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,205,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The 2001 Flexible Stock Plan initially had 2,500,000 shares of common stock reserved for
issuance. This number is subject to an annual increase of 25% of the number of outstanding shares
of common stock as of January 1 of each year, but may not exceed 10,000,000 in the aggregate. As of
September&nbsp;30, 2008, there were 5,205,000 shares of common stock available for future issuance under
the 2001 Flexible Stock Plan.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Consists of grants made outside of our equity plans and have outstanding options exercisable
for 950,000 shares of our common stock.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->26<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>LEGAL PROCEEDINGS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">There are currently no material pending legal proceedings, other than routine
litigation incidental to the business, to which we are a party or of which any of our property is
the subject.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>RECENT SALES OF UNREGISTERED SECURITIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Except as set forth in section 3.02 of this Current Report on Form 8-K, during the past three
years, we did not sell securities that were not registered under the Securities Act of 1933, as
amended.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->27<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>DESCRIPTION OF REGISTRANT&#146;S SECURITIES<BR>
AND INDEMNIFICATION OF DIRECTORS AND OFFICERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A description of our capital stock and indemnification of directors and officers has been
previously reported on Form&nbsp;S-1, No.&nbsp;333-25593, under the captions &#147;Description of Capital Stock&#148;
and &#147;Indemnification of Directors and Officers,&#148; filed by us with the SEC on April&nbsp;22, 1997, as
amended, is incorporated herein by reference.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING<BR>
AND FINANCIAL DISCLOSURE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On October&nbsp;24, 2008, our board of directors and audit committee approved the dismissal of
J.H. Cohn LLP, the Company&#146;s independent registered public accounting firm, effective as of
October&nbsp;27, 2008. On October&nbsp;24, 2008, our board of directors and audit committee approved the
engagement of Eisner LLP to serve as the Company&#146;s independent registered public accounting
firm, effective as of October&nbsp;28, 2008. For more information, see Item&nbsp;4.01 of the Current
Report on Form 8-K filed by us with the SEC on October&nbsp;29, 2008, which is incorporated herein by
reference.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>FINANCIAL STATEMENTS AND EXHIBITS</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The following documents are filed as a part of this Current Report on Form 8-K:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Financial statements of business acquired and pro forma financial information.</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>See the Exhibit&nbsp;Index filed as part of this Current Report on Form 8-K.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;3.02. Unregistered Sales of Equity Securities.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The disclosure set forth in Item&nbsp;2.01 to this Current Report is incorporated into this item by
reference. In connection with the transaction, the one million shares of common stock issued and
496,573 stock options granted were not registered under the Securities Act of 1933, as amended.
The stock options have an exercise price of $0.18 per share, are exercisable immediately on the
date of grant and expire ten years from the date of grant. These securities were issued without
registration in reliance upon the exemption provided by Section&nbsp;4(2) of the Securities Act of 1933,
as amended, and Rule&nbsp;506 of Regulation&nbsp;D promulgated thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;5.06. Change in Shell Company Status.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The disclosure set forth in Item&nbsp;2.01 to this Current Report is incorporated into this item by
reference. As a result of the closing of the transactions contemplated under the Purchase
Agreement, we believe we are no longer a shell company as that term is defined in Rule&nbsp;12b-2 of the
Exchange Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;9.01. Financial Statements and Exhibits.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(a)&nbsp;Financial statements of NCRC for the years ended December&nbsp;31, 2007 and 2006 and for the
nine-months ended September&nbsp;30, 2008 and 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(b)&nbsp;Unaudited pro forma condensed consolidated balance sheet as of June&nbsp;30, 2008, and
unaudited pro forma condensed consolidated statements of operations for the year ended September
30, 2007 and the nine months ended June&nbsp;30, 2008.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->28<!-- /Folio -->
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>INDEX TO FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="85%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">National Credit Report.com, LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>Financial Statements</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#300">Report of Independent Registered Public Accounting Firm</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#301">Balance Sheets as of September&nbsp;30, 2008 (unaudited), and as of December&nbsp;31, 2007 and 2006</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#302">Statements of Operations for the nine-months ended September&nbsp;30, 2008 and 2007 (unaudited), and for the years ended December&nbsp;31, 2007 and 2006</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#303">Statements of Members&#146; Capital for the nine-months ended September&nbsp;30, 2008 (unaudited), and for the years ended December&nbsp;31, 2007 and 2006</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#304">Statements of Cash Flows for the nine-months ended September&nbsp;30, 2008 and 2007 (unaudited), and for the years ended December&nbsp;31, 2007 and 2006</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#305">Notes to the Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-1<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="300"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Member<BR>
National Credit Report.com, LLC

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We have audited the accompanying balance sheets of National Credit Report.com, LLC (the &#147;Company&#148;)
as of December&nbsp;31, 2007 and 2006, and the related statements of operations, members&#146; capital,
and cash flows for each of the years then ended. These financial statements are the
responsibility of the Company&#146;s management. Our responsibility is to express an opinion on these
financial statements based on our audits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. We were not engaged to perform an audit of the Company&#146;s internal control over
financial reporting. Our audits include consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Company&#146;s internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In our opinion, the financial statements enumerated
above present fairly, in all material
respects, the financial position of National Credit Report.com, LLC as of December&nbsp;31, 2007 and
2006, and the results of its operations and its cash flows for each of the years then ended in conformity
with accounting principles generally accepted in the United States of America.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">
As discussed in Note&nbsp;B(3), the Company utilizes a single provider to
service its ongoing operations under a one-year agreement.
</DIV>



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Eisner LLP
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
New York, New York
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">December&nbsp;10, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>National Credit Report.com, LLC</B>
</DIV>

<DIV align="left">
<A name="301"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>Balance Sheets</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><b>September 30,</b></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">170,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,113</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Trade account receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,846</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,324</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">187,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,437</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,244</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,169</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">93,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">226,437</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">57,681</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND MEMBERS&#146; CAPITAL</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable and accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,027</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">40,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,913</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,809</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Guaranteed payment payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current portion of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,217</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,722</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,553</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,722</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Members&#146; capital (deficit):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Managing members</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,807</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54,134</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Limited members</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,508</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">157,923</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,093</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,701</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158,008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,959</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total members&#146; capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">93,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">226,437</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">57,681</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">See the accompanying notes to financial statements.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>National Credit Report.com, LLC</B>
</DIV>

<DIV align="left">
<A name="302"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>Statements of Operations</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Nine-months ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Years ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">327,378</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">478,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">595,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">990,007</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">231,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">297,834</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">458,832</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220,224</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">247,162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">298,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">531,175</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Costs and expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Subscriber acquisition costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">185,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103,115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">171,093</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">321,184</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">126,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">226,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">203,693</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total costs and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">414,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">397,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">524,877</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">(Loss) income from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(194,445</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(99,542</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,298</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income (expense)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(36</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,052</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total other income (expense)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,212</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,091</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(36</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net (loss)&nbsp;income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(189,233</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17,749</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(86,451</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,262</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">See the accompanying notes to financial statements.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>National Credit Report.com, LLC</B>
</DIV>

<DIV align="left">
<A name="303"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>Statements of Members&#146; Capital (Deficit)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Managing</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Limited</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total Members&#146;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Member</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Members</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Capital</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at December&nbsp;31, 2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(242,790</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">58,527</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(184,263</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,262</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Contributions by members</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">184,460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">184,960</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at December&nbsp;31, 2006</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54,134</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,093</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,959</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(865</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(85,586</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(86,451</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Contributions by members</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">237,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Transfer (see Note&nbsp;D)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,134</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54,134</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at December&nbsp;31, 2007</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">157,923</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158,008</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income (unaudited)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,892</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(187,341</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(189,233</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Contributions by members (unaudited)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,926</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance as of September&nbsp;30, 2008 </B><I>(unaudited)</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,807</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">45,508</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">43,701</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">See the accompanying notes to financial statements.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>National Credit Report.com, LLC</B>
</DIV>

<DIV align="left">
<A name="304"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>Statements of Cash Flows</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Nine-months ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Years ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flow activities from operating activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net (loss)&nbsp;income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(189,233</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17,749</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(86,451</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,262</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adjustments to reconcile net (loss)&nbsp;income
to net cash used in operating
activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,210</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Share-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Changes in operating assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Trade account receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,579</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,559</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Prepaid expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,028</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,521</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,169</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts payable and accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15,120</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,559</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,234</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(198,757</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,756</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,014</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,848</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,898</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Guaranteed payment payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net cash used in operating activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(186,867</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,795</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(76,775</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(219,714</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows from investing activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Acquisition of property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,689</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,010</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,294</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,769</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net cash used in investing activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22,458</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,010</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,294</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows from financing activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Contributions from members</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">237,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">237,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">184,960</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payments of capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(577</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net cash provided by financing activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">237,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236,923</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">184,960</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Increase (decrease)&nbsp;in cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(146,899</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">228,698</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">151,854</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(34,754</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash, beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">170,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,867</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash, end of period</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">247,811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">170,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,113</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Supplemental non-cash activity:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquisition of property and equipment financed
through capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,898</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-6<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">National Credit Report.com, LLC</div>

<DIV align="left">
<A name="305"></A>
</DIV>
<DIV align="left" style="font-size: 10pt">Notes to the Financial Statements

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>NOTE A &#151; DESCRIPTION OF BUSINESS</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">National Credit Report.com, LLC, a limited liability company created under the Florida
Limited Liability Company Act, (the &#147;Company&#148;), offers consumers a variety of identity
security products and services primarily on a subscription basis. These services are intended to help
consumers protect themselves against identity theft or fraud and understand and
monitor their credit profiles and other personal information, which include credit
reports, credit monitoring and credit scores. The Company&#146;s customers consist of
individuals located throughout the United States.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">The Company was established on February&nbsp;4, 2004, under the name of SJS
Associates, LLC, and renamed National Credit Report.com, LLC, on April&nbsp;6, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">
The Company has incurred recurring losses and net cash outflows from its operating
activities for the unaudited nine-month period ended
September&nbsp;30, 2008 and the years
ended December&nbsp;31, 2007 and 2006. Additionally, at
September&nbsp;30, 2008, the Company
had a working capital deficit, Management&#146;s plans with respect to continued funding of
such shortfalls included raising additional capital from its members
or looking into the potential sale of the Company. On December&nbsp;5, 2008, the members approved the sale of
the Company to IFTH Acquisition Corp. d/b/a Steel Vault (&#147;IFTH&#148;) as more fully
described in Note&nbsp;G. It is the Company&#146;s understanding that IFTH will support its
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">The accompanying unaudited financial statements of National Credit Report.com, LLC as
of September&nbsp;30, 2008 and 2007 and for the nine months ended September&nbsp;30, 2008 and
2007 have been prepared in accordance with accounting principles generally accepted in
the United States of America (&#147;U.S.&#148;). Such interim results may not be indicative
of results for the full year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>NOTE B &#151;  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</B>
</DIV>


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#091;1&#093;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B> Revenue Recognition</B></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company earns revenue from the following sources:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#091;a&#093; </B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD>Revenue from the sale of a single credit report is recognized when
the credit report is delivered to the customer. Revenue from the sale of annual
subscriptions for credit monitoring and credit protection is recognized ratably
over each subscriber&#146;s annual subscription period.
The Company also offers credit monitoring and credit protection on a month-to month
basis. In certain circumstances, the Company sells a bundled offer whereby a customer
receives a single credit report and monitoring. In such circumstances, the Company
allocates a portion of the associated revenue to the credit report with the balance
recognized ratably over the subscription period.
</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#091;b&#093; </B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD>Commission revenue from the sale of credit reports, credit
monitoring, and credit protection to a customer, as per the terms of
a written agreement, gives another company the rights to the Company&#146;s credit
reporting vendor. Commission revenue is comprised of commissions earned by the
Company for the credit reports, credit monitoring, and credit protection services
provided to this customer. Commission revenue is recognized when the credit
reports, credit monitoring, and credit protection services have been provided to
the customer. Generally, the Company invoiced its customers on a monthly basis
for costs incurred from their credit reporting vendor plus a 12% commission. For
the year ended December&nbsp;31, 2007 and 2006, gross commission revenue was approximately
$274,600 and $150,300, respectively. For the unaudited nine-months ended
September&nbsp;30, 2008 and 2007, gross commission revenue was approximately $88,286 and
$203,654, respectively.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#091;2&#093;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B> Use of Estimates</B></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. Such estimates include the
allowance for doubtful accounts and the useful lives of assets.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-7<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">National Credit Report.com, LLC<BR>
Notes to the Financial Statements

</DIV>

<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#091;3&#093;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Concentration of Credit Risk</B></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company maintains its cash in one financial institution during the years ended
December&nbsp;31, 2007 and 2006. Balances were insured up to Federal Deposit Insurance
Corporation (&#147;FDIC&#148;) limits of $100,000 per institution. At December&nbsp;31, 2007 and
2006, the Company had bank balances of approximately $71,000 and nil in excess of such
insurance limits, respectively. At September&nbsp;30, 2007 and 2008, the Company had bank
balances of approximately nil and $148,000 in excess of such insurance limits,
respectively.</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company&#146;s trade receivables are potentially subject to credit risk. The Company
extends credit to its customers based upon an evaluation of the customers&#146; financial
condition and credit history. The Company generally does not require collateral.</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company utilizes a single provider which services its ongoing operations under a
one-year agreement. In addition, the provider has cancellation rights upon providing the
Company 60 days notice. A loss or non-renewal of this agreement could significantly
impact the Company&#146;s ability to continue its business operations.</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#091;4&#093;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Trade Account Receivable</B></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Trade account receivable consist primarily of receivables from commission sales earned from
its marketing partner. The Company records a provision for doubtful receivables to
allow for any amounts which may be unrecoverable and is based upon an analysis of the
Company&#146;s prior collection experience, customer creditworthiness, and current economic
trends.</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#091;5&#093;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Property and Equipment</B></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Property and equipment are stated at cost. Depreciation and amortization
(including equipment held under capital leases) are computed
using the straight-line method over the estimated useful lives of 4 to 7&nbsp;years.</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#091;6&#093;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B> Subscriber Acquisition Costs</B></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Subscriber acquisition costs represent marketing expenses used to acquire subscribers.
Subscriber acquisition costs are expensed in the period incurred.</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#091;7&#093;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B> Share-Based Compensation</B></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Effective January&nbsp;1, 2006, the Company adopted Financial Accounting Standards Board
(&#147;FASB&#148;) SFAS No.&nbsp;123 (revised 2004), Share Based Payment, or FAS 123R, using the
modified prospective transition method. Under this method, stock-based compensation
expense is recognized using the fair-value based method for all awards granted on or
after the date of adoption. Compensation expense for new awards granted after
January&nbsp;1, 2006 is recognized over the requisite service period based on the
grant-date fair value of those options. Prior to adoption, the Company did not issue
stock-based compensation.</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>FAS 123R requires forfeitures to be estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from those estimates.</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the unaudited nine-month period ended September&nbsp;30, 2008, web design and hosting expense
of $12,500 was recorded as 69,445 membership interest units were issued for services
rendered to the Company in lieu of cash. As of September&nbsp;30, 2008, all services have
been provided to the Company. The stock-based compensation expense is reflected in the
statement of operations in general and administrative expense for the unaudited
nine-months ended September&nbsp;30, 2008.</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#091;8&#093;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Income Taxes</B></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company is treated as a partnership for income tax purposes. The members are
required to report their respective share of the Company&#146;s taxable income or loss in
their income tax returns and are liable for any related taxes thereon. Accordingly, no
provision for federal income taxes is made in the financial statements of the Company.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-8<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">National Credit Report.com, LLC<BR>
Notes to the Financial Statements

</DIV>

<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>NOTE C &#151;  PROPERTY AND EQUIPMENT</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">Property and equipment consists of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">September 30,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">December 31,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Estimated</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Useful Lives</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Furniture and fixture</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,191</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">7 Years</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Computer equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,152</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">5 Years</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Leased property</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,898</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,898</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4 Years</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,929</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less accumulated depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,527</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,924</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,804</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">Depreciation expense was $2,119 and $1,210 for the years ended December&nbsp;31, 2007 and
2006, respectively. For the unaudited nine-month periods ended September&nbsp;30, 2008 and
2007, depreciation expense was approximately $1,604 and $774, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>NOTE D &#151; MEMBERS&#146; CAPITAL (DEFICIT)</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">Members&#146; capital consists of contributed capital and each member&#146;s share of the
Company&#146;s accumulated profits and losses. Net income or loss is allocated to each
member in accordance with their percentage interest in the Company, as defined in the
Operating Agreement and Regulations of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">From 2004 through August&nbsp;2007, the limited members contributed approximately $124,000
of cash for which they received during 2007 1,925,000 units.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">During 2005 and 2006, the managing member contributed $239,000 and $184,460 of cash to
the Company, respectively. In August of 2007, this membership
interest was transferred to a limited membership interest as described below.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">In August of 2007, two investors contributed cash totaling $237,500 in capital in
exchange for 1,500,000 units in the Company. One of the new investors replaced the
previous managing member, resulting in a transfer of the previous managing members&#146;
interest to a limited membership interest.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">On July&nbsp;3, 2008, the Company entered into an agreement with the owner of Colony One
On-Line, Inc., a vendor to the Company, to sell 138,889 membership units. Colony
One On-Line, Inc. provides web design and hosting services for the Company. The investor
contributed cash of $12,500 for 69,445 units with the remaining 69,444 units to be
issued in lieu of services valued at $12,500. See Note B(7).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">The total authorized membership unit of the Company is 10,000,000 units. At December&nbsp;31, 2007, the number of limited units outstanding was 4,985,000, and the managing units outstanding were 15,000. At September&nbsp;30, 2008, the number of limited units outstanding were
5,401,667, and the managing units were 15,000.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">Prior to the termination of the Operating Agreement and Regulations on December&nbsp;5,
2008, the Company&#146;s managing member was responsible for the daily operations of the
Company&#146;s business and also controlled one-third of the Company&#146;s management
committee. The limited members of the Company controlled two-thirds of the
management committee. The management committee, comprising of all members, shall, by
majority vote, determine all major business decisions.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-9<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">National Credit Report.com, LLC<BR>
Notes to the Financial Statements

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>NOTE E &#151; RELATED PARTY TRANSACTIONS</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">Guaranteed payments have been made to one of the members of the Company pursuant to
the terms of the employment agreement. The Company paid a salary of $5,000 per month
to this employee to serve as the chief executive officer of the Company which totaled
$25,000 for the year ended December&nbsp;31, 2007. For the nine-month periods ended
September&nbsp;30, 2008 and 2007, the Company made salary payments of $45,000 and $10,000,
respectively, to this member. The payments are included in salary and payroll related
expense on the statement of operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">For the years end December&nbsp;31, 2007 and 2006, the Company incurred costs related to
web-site maintenance services provided by Colony One On-Line, Inc. in the amount of $7,481 and $82,441,
respectively. For the unaudited nine-month periods ended September&nbsp;30, 2008 and 2007,
the Company incurred costs related to services provided by Colony One On-Line, Inc. in
the amount of $51,775 and $2,183, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>NOTE F &#151; COMMITMENTS</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%"><B>Capital Lease</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">The Company leases certain equipment under a capital lease which expires on various
dates through October&nbsp;2010.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">Future minimum payments required under the capital leases are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Years ending December&nbsp;31:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,217</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,217</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,218</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total minimum lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,652</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less amount representing interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(331</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Present value of net minimum lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,321</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,020</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Long-term portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,301</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%"><B>Operating Lease</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">In 2007, the Company entered into a non-cancelable operating lease for its Florida
office for a term of three years, and placed a deposit with the landlord in the amount
of $9,169 included in other assets on the balance sheet. The leases are personally
guaranteed by the members of the Company while the Company remains in occupancy at the
premises. Future minimum lease payments under this operating lease are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Years ending December&nbsp;31:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,574</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,574</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,978</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">78,126</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">Rent expense is being recognized on a straight-line basis over the terms of the lease.
Rent amounted to $4,596 for the year ended December&nbsp;31, 2007. For the unaudited
nine-month periods ended September&nbsp;30, 2008 and 2007, rent expense was approximately
$20,681 and nil, respectively. Prior to entering into the aforementioned lease, the Company operated in an office
provided by its members without cost.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>NOTE G &#151; SUBSEQUENT EVENT</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">On December&nbsp;5, 2008 the Company sold 100% of its membership interests to IFTH, for 1.0&nbsp;million shares of IFTH common stock. In conjunction with the
acquisition, IFTH issued stock options to selling members of the Company to purchase up to 3.0
million shares of IFTH&#146;s common stock. All of the options were granted at a strike price of $0.18
per share and were fully vested as of the date of grant. The common shares issued
at market value and stock
options granted
at fair value as determined by Black-Scholes model
were valued at $475,000, as of the date of the
acquisition.
The purchase price has been preliminarily allocated to the tangible assets acquired and
intangible assets, primarily goodwill.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-10<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On December&nbsp;5, 2008, pursuant to the terms of the Securities Purchase Agreement, dated
December&nbsp;5, 2008 (the &#147;Securities Purchase Agreement&#148;), among IFTH Acquisition Corp., a Delaware
corporation (&#147;IFTH&#148; or the &#147;Company&#148;), and National Credit Report.com, LLC (&#147;NCRC&#148;), a Florida
limited liability company, Jared Shaw, Ivan Posniak, Andrew Larkin, John Thau, Adam Cohen, and
Safeguard Acquisition, LLC, the Company completed the purchase of all of the issued and outstanding
membership interests in NCRC for $0.5&nbsp;million in common stock and stock options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following unaudited pro forma condensed consolidated financial statements give effect to
our purchase of NCRC. The statements are derived from, and should be read in conjunction with, our
historical financial statements and notes thereto, as presented in our Annual Report on Form 10-K,
as amended, for the year ended September&nbsp;30, 2007 filed with the SEC on January&nbsp;28, 2008 and our
Quarterly Report on Form 10-Q for the nine months ended June&nbsp;30, 2008 filed with the SEC on
August&nbsp;14, 2008, both of which are incorporated by reference herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The unaudited pro forma condensed consolidated balance sheet
using the latest interim balance sheets, as of June&nbsp;30, 2008
for IFTH and September&nbsp;30, 2008 for NCRC, assumes the
transaction occurred on June&nbsp;30, 2008. The unaudited pro forma condensed consolidated statements of
operations for the year ended September&nbsp;30, 2007 for IFTH and December&nbsp;31, 2007 for NCRC and the nine months ended June&nbsp;30, 2008
for IFTH and September&nbsp;30, 2008 for NCRC give
effect to the transaction as if it had occurred as of the beginning of those periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The unaudited pro forma financial information is presented for illustrative purposes and is
not designed to represent, and does not represent, what the financial position or operating results
would have been had the transaction been completed as of the dates assumed, nor is it intended to
project our future financial position or results of operations.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-11<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET<BR>
At June&nbsp;30, 2008<BR>
(dollars in thousands)</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Pro Forma Adjustments</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>NCRC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Addition</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>With</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Historical</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(a)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Adjustment</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>NCRC</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,148</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Marketable securities, available for
sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">345</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pre-paid expenses and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,478</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,507</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill and other assets, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">432         </TD>
    <TD nowrap>(b)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">476</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>TOTAL ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,478</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>93</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>432</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2,003</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable and accrued
liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">166</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">191</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gauranteed payment payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">219</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Note payable, stockholder</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>TOTAL LIABILITIES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">224</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">432         </TD>
    <TD nowrap>(b)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,779</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>TOTAL LIABILITIES AND STOCKHOLDERS&#146;
EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,478</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>93</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>432</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right">2,003</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-12<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>UNAUDITED PRO FORMA CONDENSED CONSOLIDATED<BR>
STATEMENT OF OPERATIONS<BR>
Nine Months Ended June&nbsp;30, 2008<BR>
(dollars in thousands, except per share data)</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>NCRC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Addition</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>With</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Historical</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(c)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>NCRC</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">327</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">989</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(574</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(195</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(769</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest (income)&nbsp;and other expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(564</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(190</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(754</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(564</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(190</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(754</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss per common share from continuing
operations &#151; basic and diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.11</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.12</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average number of shares
outstanding
&#151; basic and diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,104</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-13<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>UNAUDITED PRO FORMA CONDENSED CONSOLIDATED<BR>
STATEMENT OF OPERATIONS<BR>
Twelve Months Ended September&nbsp;30, 2007<BR>
(dollars in thousands, except per share data)</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>NCRC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Addition</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>With</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Historical</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(d)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>NCRC</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">599</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">599</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">298</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">301</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,112</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(715</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(96</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(811</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest (income)&nbsp;and other expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(120</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(133</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(120</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(83</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(203</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(595</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(83</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(678</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax provision</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss from continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(595</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(83</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(678</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss per common share from
continuing operations &#151; basic and
diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.11</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average number of shares
outstanding &#151; basic and diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,014</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-14<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(a)</TD>
    <TD>&nbsp;</TD>
    <TD>Balance sheet presented as of September&nbsp;30, 2008 (unaudited).</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(b)</TD>
    <TD>&nbsp;</TD>
    <TD>Purchase of all of the issued and outstanding membership interests in NCRC from the sellers
of NCRC for 1.0&nbsp;million shares of IFTH common stock, par value $0.01 per share. In
conjunction with the transaction, IFTH issued 3.0&nbsp;million stock options to the sellers of NCRC
in consideration of their continued involvement with the operations of NCRC. The common shares
issued and stock options granted in the transaction were valued at $475,000, at fair value, as
of the date of the acquisition.
Based on the preliminary allocation, the purchase price was allocated to the tangible
assets acquired and intangible assets, primarily goodwill.
The goodwill reflected represents the excess of the fair
value over the net assets.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(c)</TD>
    <TD>&nbsp;</TD>
    <TD>Statement of operations presented for the nine months ended September&nbsp;30, 2008 (unaudited).</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(d)</TD>
    <TD>&nbsp;</TD>
    <TD>Statement of operations presented for the year ended December&nbsp;31, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(e)</TD>
    <TD>&nbsp;</TD>
    <TD>The shares issued to Mr.&nbsp;Silverman which vested upon completion of the NCRC
acquisition will result in compensation expense in the period earned. Accordingly, such amounts have been
excluded from the pro-forma financial results.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->F-15<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">(d)&nbsp;Exhibits
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="12%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="84%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Exhibit Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Securities Purchase Agreement, dated as of December&nbsp;5,
2008, by and among IFTH Acquisition Corp., National Credit
Report.com, LLC, Jared Shaw, Ivan Posniak, Andrew Larkin,
John Thau, Adam Cohen, and Safeguard Acquisition, LLC</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">99.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Press Release, dated December&nbsp;5, 2008</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="left">
<A name="306"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">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 hereunto duly authorized.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">
IFTH Acquisition Corp.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">

/s/ William J. Caragol
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left">William J. Caragol&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD align="left">Chief Executive Officer, President and Acting
Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Date: December&nbsp;11, 2008
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left">
<A name="307"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>EXHIBIT INDEX</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="12%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="84%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Exhibit Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Securities Purchase Agreement, dated as of December&nbsp;5,
2008, by and among IFTH Acquisition Corp., National Credit
Report.com, LLC, Jared Shaw, Ivan Posniak, Andrew Larkin,
John Thau, Adam Cohen, and Safeguard Acquisition, LLC</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">99.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Press Release, dated December&nbsp;5, 2008</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>



</BODY>
</HTML>
[{"type": "8-K", "sequence": "1", "filename": "c78109e8vk.htm", "description": "FORM 8-K", "secsgml_size_bytes": 391096}]
{"company-data": {"conformed-name": "IFTH ACQUISITION CORP", "cik": "0001037417", "assigned-sic": "7373", "irs-number": "112889809", "state-of-incorporation": "DE", "fiscal-year-end": "0930"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-22693", "film-number": "081243884"}, "business-address": {"street1": "7 KINGSBRIDGE ROAD", "city": "FAIRFIELD", "state": "NJ", "zip": "07004", "phone": "9732278722"}, "mail-address": {"street1": "7 KINGSBRIDGE ROAD", "city": "FAIRFIELD", "state": "NJ", "zip": "07004"}, "former-company": [{"former-conformed-name": "INFOTECH USA INC", "date-changed": "20030410"}, {"former-conformed-name": "SYSCOMM INTERNATIONAL CORP", "date-changed": "19970408"}]}
Filed by Bowne Pure Compliance
UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): December 5, 2008
IFTH Acquisition Corp.
(Exact Name of Registrant as Specified in Charter)
Delaware
000-22693
11-2889809
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
1690 SOUTH CONGRESS AVENUE, SUITE 200
DELRAY BEACH, FLORIDA
33445
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code:
561-805-8000
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction
A.2. below):
o
Written communications pursuant to
Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
The disclosures set forth in Item 2.01 to this Current Report are incorporated into this item
by reference.
Item 2.01. Completion of Acquisition or Disposition of Assets.
On December 5, 2008, IFTH Acquisition Corp. ("IFTH" or the "Company") completed an acquisition
of National Credit Report.com, LLC, a Florida limited liability company ("NCRC"), pursuant to a
securities purchase agreement, dated as of December 5, 2008, by and among IFTH, NCRC, Jared Shaw,
Ivan Posniak, Andrew Larkin, John Thau, Adam Cohen, and Safeguard Acquisition, LLC (referred to as
the "Purchase Agreement").
The Purchase Agreement provided for IFTH's purchase of all of the issued and outstanding
membership interests in NCRC from the sellers of NCRC, in return for one million (1,000,000) shares
of IFTH's common stock, par value $0.01 per share. In conjunction with the transaction, IFTH
issued 3.0 million stock options to the sellers of NCRC in consideration of their continued
involvement with the operations of NCRC. We incurred normal
acquisition-related costs of approximately $0.1 million in connection
with the transactions contemplated under the Purchase Agreement. Our trading symbol is "IFAQ."
The foregoing description of the Purchase Agreement does not purport to be complete and is
qualified in its entirety by reference to the complete text of the Purchase Agreement, a copy of
which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by
reference.
On December 5, 2008, the Company issued a press release regarding this transaction. A copy of
the press release is attached hereto as Exhibit 99.1.
Accounting Treatment
The accounting treatment of the acquisition of NCRC by IFTH was viewed to be a purchase
transaction. The amount of the purchase price in excess of NCRC's book value will be allocated to
acquired intangibles and goodwill.
FORM 10 DISCLOSURES
As disclosed elsewhere in this report, on December 5, 2008, we acquired NCRC pursuant to the
Purchase Agreement. Item 2.01(f) of Form 8-K states that if the registrant was a shell company, as
we were immediately before the closing of the transactions contemplated under the Purchase
Agreement, as disclosed under Item 2.01, then the registrant must disclose the information that
would be required if the registrant were filing a general form for registration of securities on
Form 10 under the Securities Exchange Act of 1934, as amended.
Accordingly, we provide below the information that would be included in Form 10. Please note
that the information provided below relates to the combined company after the acquisition of NCRC
pursuant to the Purchase Agreement, except that information relating to periods before the closing
of the transactions contemplated under the Purchase Agreement only relates to IFTH, unless
otherwise specifically indicated.
Special Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements that reflect our current
estimates, expectations and projections about our future results, performance, prospects and
opportunities. Forward-looking statements include, without limitation, statements about our market
opportunities, our business and growth strategies, our projected revenue and expense levels,
possible future consolidated results of operations, the adequacy of our available cash resources,
our financing plans, our competitive position and the effects of competition and the projected
growth of the industries in which we operate.
Forward-looking
statements include all statements
that are not historical facts and can be identified by forward-looking statements such as "may,"
"might," "should," "could," "will," "intends," "estimates," "predicts," "projects," "potential,"
"continue," "believes," "anticipates," "plans," "expects" and similar expressions. Forward-looking
statements are only predictions based on our current expectations and projections, or those of
third parties, about future events and involve risks and uncertainties.
Although we believe that the expectations reflected in the forward-looking statements
contained in this Current Report on Form 8-K are based upon reasonable assumptions, no assurance
can be given that such expectations will be attained or that any deviations will not be material.
In light of these risks, uncertainties and assumptions, the forward-looking statements, events and
circumstances discussed in this Current Report on Form 8-K may not occur and actual results could
differ materially and adversely from those anticipated or implied in the forward-looking
statements. Important factors that could cause our actual results, level of performance or
achievements to differ materially from those expressed or forecasted in, or implied by, the
forward-looking statements we make in this Current Report on Form 8-K are discussed under "Risk
Factors" and elsewhere in this Current Report on Form 8-K and include:
•
our ability to successfully implement our business strategy;
•
our expectation that we will incur losses, on a consolidated basis, for the near future;
•
our ability to fund our operations;
•
our ability to attract and retain key management and other personnel;
•
our ability to protect the confidentiality of our proprietary information and know-how;
•
our ability to replace subscribers we lose in the ordinary course of business;
•
our ability to maintain our indirect relationship with the three credit reporting
repositories, which we have access to through the three credit reporting and monitoring
resellers that purchase such services wholesale from the three repositories, as well as
other key providers;
•
our ability to compete successfully with our competitors;
•
our ability to protect and maintain our computer and telephone infrastructure;
•
our ability to maintain the security of our data;
3
•
changes in federal, state and foreign laws and regulations;
•
because our common stock may be a "penny stock," it may be more difficult for investors
to sell shares of our common stock, and the market price of our common stock may be
adversely affected;
•
directors, executive officers, principal stockholders and affiliated entities own a
significant percentage of our capital stock, and they may make decisions that you do not
consider to be in your best interests or in the best interests of our stockholders; and
•
compliance with changing regulations concerning corporate governance and public
disclosure may result in additional expenses.
You should not place undue reliance on any forward-looking statements. In addition, past
financial or operating performance is not necessarily a reliable indicator of future performance,
and you should not use our historical performance to anticipate future results or future period
trends. Except as otherwise required by federal securities laws, we disclaim any obligation or
undertaking to disseminate any updates or revisions to any forward-looking statement contained in
this Current Report on Form 8-K to reflect any change in our expectations or any change in events,
conditions or circumstances on which any such statement is based. All forward-looking statements
attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by
the cautionary statements included in this Current Report on Form 8-K.
*****
Except where the context otherwise requires, the terms "we," "us," "our," "the Company" or
"IFTH" refer to the business of IFTH Acquisition Corp. and its consolidated subsidiary, National
Credit Report.Com, LLC, which subsidiary comprises all of the operations of the Company as of the
date of this Current Report on Form 8-K.
4
OUR BUSINESS
Overview
We are a Delaware corporation incorporated in September 1987. Prior to December 31, 2007, we
were a full service provider of Information Technology (IT) solutions. We delivered complete
lifecycle IT solutions for our customers. After the sale of substantially all of our operating
assets on December 31, 2007, as approved by our stockholders at a special meeting held December 27,
2007, we did not engage in any operations and did not engage in any
business activity. Other than paying our
outstanding liabilities, liquidating our remaining inventory and collecting our outstanding
receivables, our primary purpose was to locate and acquire an attractive operating business. On
December 5, 2008, we purchased all of the outstanding membership interests in National Credit
Report.Com, LLC, a Florida limited liability company ("NCRC"), and NCRC became our wholly-owned
subsidiary. As a result, we offer consumers a variety of identity security products and services
primarily on a subscription basis. These services help consumers protect themselves against
identity theft or fraud and understand and monitor their credit profiles and other personal
information, which include credit reports, credit monitoring and credit scores.
Since
February 4, 2004, NCRC has principally marketed and sold credit reports, credit monitoring, credit
scores and other products conventionally allied to these products to the consumer market.
Consumer Products and Services
We offer consumers their credit reports and automated monitoring of their credit files at one,
or all three, of the major credit reporting repositories, Experian Group Limited, Equifax Inc. and
TransUnion, LLC. In addition, products and services that we currently offer or plan to offer in
2009 include: credit scores and credit score analysis tools, credit education, identity theft
recovery services, and identity theft cost reimbursement.
The three credit reporting repositories have agreements with three credit reporting resellers,
allowing them to in turn supply companies, like NCRC, that resell their products and services,
separately or bundled, with other services to consumers. NCRC has a
one-year agreement expiring in October 2009, with one of
the resellers, Equidata, Inc.
Going forward, our products and services will be offered to consumers principally on a
monthly subscription basis. Subscription fees are generally billed directly to the subscriber's
credit card. The prices to subscribers of various configurations of our monitoring products and
services will range generally from $14.95 to $19.95 per month. As a means of allowing customers to
become familiar with our services, we sometimes offer free trial periods.
A substantial number of our subscribers cancel their subscriptions each year. Because there is
a marketing and search cost to acquire a new subscriber and produce initial fulfillment materials,
subscribers typically must be retained for a number of months to cover these costs. Not all
subscribers are retained for a sufficient period of time to achieve positive cash flow returns on
these costs.
Our Marketing
We market our products and services primarily through our own direct sales organization over
the internet, directly to consumers. We will also market our products and services through
indirect channels, including marketing alliance partners, joint ventures and other resellers. We
mainly use the internet to market and sell our products, however, we have used in the past, or will
contemplate future use of, direct mail, outbound telemarketing, inbound telemarketing, inbound
customer service and account activation calls, e-mail, mass media and the internet.
Competition
The markets for the products we provide are highly competitive. A number of divisions or
subsidiaries of large,
well-capitalized
firms with strong brand names operate in the industry. We
compete with these firms to provide our services to our consumers, and these companies are also
either directly or indirectly the suppliers of the data that is the core of our product and service
offerings. We believe that our principal competitors are the three main consumer credit reporting
companies and the three credit data resellers that they license, either directly or through
affiliated company websites. These companies include Experian Group Limited, Equifax Inc.,
TransUnion, LLC, Intersections, Inc., First Advantage Credco and Equidata, Inc., all of which offer
a range of consumer credit reporting products that are similar to products we offer. In addition,
there are a large number of other smaller competitors who offer
competing products in specialized areas such as fraud prevention, data vendors, providers of
automated data processing services, and software companies offering credit modeling or analytical
tools. Our competitive focus will be value-added differentiation of the variety of identity
security products and services that we offer.
5
Government Regulation
We market our consumer products and services through a variety of marketing channels,
including direct mail, outbound telemarketing, inbound telemarketing, inbound customer service and
account activation calls, email, mass media and the internet. These channels are subject to both
federal and state laws and regulations. Federal and state laws and regulations may limit our
ability to market to new subscribers or offer additional services to existing subscribers.
Telemarketing of our services is subject to federal and state telemarketing regulation.
Federal statutes and regulations adopted by the Federal Trade Commission and Federal Communications
Commission impose various restrictions on the conduct of telemarketing. The Federal Trade
Commission also has enacted the national Do Not Call Registry, which enables consumers to elect to
prohibit telemarketers from calling them. We may not be able to reach potential subscribers because
they are placed on the national Do Not Call Registry. Many states have adopted, and others are
considering adopting, statutes or regulations that specifically affect telemarketing activities.
Although we do not control the telemarketing firms that we engage to market our programs, in some
cases we are responsible for compliance with these federal and state laws and regulations. In
addition, the Federal Trade Commission and virtually all state attorneys general have authority to
prevent marketing activities that constitute unfair or deceptive acts or practices.
Federal laws govern email communications. Some of these laws may affect our use of email to
market to or communicate with subscribers or potential subscribers.
Intellectual Property
We
rely on a combination of registered domain names, trade secrets
(including know-how), and third-party vendor agreements to establish and protect
proprietary rights in our products.
Employees
As of December 8, 2008, we had 14 employees and consultants, 8 of whom are full-time
employees or consultants.
Properties
Our corporate headquarters is located in Delray Beach, Florida where we occupy approximately
7,911 feet of office space pursuant to a Sublease, dated October 8, 2008, entered into with Digital
Angel Corporation, our former majority stockholder, under a sublease
through June 2010. The rent for the entire twenty-one month term
of the Sublease is $157,500, which was paid in one lump sum upon
execution of the Sublease. VeriChip Corporation
("VeriChip"), one of our related parties, to which we
sublease one-half of this space, reimbursed us for one-half of the
Sublease payment, representing their share of the total cost of the
Sublease. We
also lease approximately 1,000 square feet of office space in Boca Raton, Florida, which we use for
customer service and support.
RISK FACTORS
The following risks and the risks described elsewhere in this Current Report on
Form 8-K
,
including the section entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations," could materially affect our business, prospects, financial condition,
operating results and cash flows. If any these risks materialize, the trading price of our common
stock could decline, and you may lose all or part of your investment.
We have a history of losses, and expect to incur additional losses in the future. We are unable to
predict the extent of future losses or when we will become profitable.
For the years ended September 30, 1999 through September 30, 2008, we experienced operating
losses and as of September 30, 2008 our accumulated deficit was $5.0 million. We expect to continue
to incur operating losses for the near future. Our ability in the future to achieve or sustain
profitability is based on a number of factors, many of which are beyond our control. Even if we
achieve profitability in the future, we may not be able to sustain profitability in subsequent
periods.
6
We are unable to control many of the factors affecting consumer spending, and declines in consumer
spending our products could reduce demand for our products.
Our business depends on consumer demand for our products and, consequently, is sensitive to a
number of factors that influence consumer spending, including general economic conditions,
disposable consumer income, fuel prices, recession and fears of recession, war and fears of war,
inclement weather, consumer debt, conditions in the housing market, interest rates, sales tax rates
and rate increases, inflation, consumer confidence in future economic conditions and political
conditions, and consumer perceptions of personal well-being and security. In particular, an
economic downturn leads to decreased discretionary spending, which adversely impacts our business.
Adverse changes in factors affecting discretionary consumer spending could reduce consumer demand
for our products, thus reducing our sales and harming our business and operating results.
We must replace the subscribers we lose in the ordinary course of business and, if we fail to do
so, our revenue and subscriber base will decline.
A substantial number of subscribers to our consumer products and services cancel their
subscriptions each year. Cancellations may occur due to numerous factors, including:
•
changing subscriber preferences;
•
competitive price pressures;
•
general economic conditions;
•
subscriber dissatisfaction;
•
cancellation of subscribers due to credit card declines; and
•
credit or charge card holder turnover.
If we fail to replace subscribers to our consumer products and services we lose in the
ordinary course of business, our revenue may decline, causing a material adverse impact on the
results of our operations. There can be no assurance that we can successfully replace the large
number of subscribers that cancel each year.
Marketing laws and regulations may materially limit our or our clients' ability to offer our
products and services to consumers.
We market our consumer products and services through a variety of marketing channels,
including direct mail, outbound telemarketing, inbound telemarketing, inbound customer service and
account activation calls, email, mass media and the internet. These channels are subject to both
federal and state laws and regulations. Federal and state laws and regulations may limit our
ability to market to new subscribers or offer additional services to existing subscribers, which
may have a material impact on our ability to sell our services.
If we lose our ability to purchase data from any of the three major credit reporting repositories,
which we are able to do through the three credit data resellers to whom they sell, each of which is
a competitor of ours, demand for our services would decrease.
We rely on the three major credit reporting repositories, Equifax, Experian and TransUnion, to
provide us with essential data for our consumer identity theft protection and credit management
services, through our contract with Equidata, Inc. Our agreement with Equidata, Inc. expires in
October 2009. That agreement may be terminated by them on 30 days' notice in certain circumstances.
Each of the three major credit reporting repositories owns its consumer credit data and is a
competitor of ours in providing credit information directly to consumers, and may decide that it is
in their competitive interests to stop indirectly supplying data to us. Any interruption,
deterioration or termination of our relationship with Equidata, Inc., one of its two competitors,
or one or more of the three credit reporting repositories would be disruptive to our business and
could cause us to lose subscribers.
7
Our competitors, including those who have greater resources and experience than we do, may
commercialize technologies that make ours obsolete or noncompetitive.
There are many public and private companies, actively engaged in our line of business and that
target the same markets that we target. Some of our current competitors have significantly greater
financial, marketing and product development resources than we do. Low barriers to entry into our
line of business may result in new competitors entering the markets we serve. If our competitors
market products that are more effective and less expensive than our products, we may not be able to
achieve commercial success.
Our long-term capital needs may require additional sources of capital, and there can be no
assurances that we will be successful in negotiating additional sources of long-term capital.
Our long-term capital needs may require additional sources of equity or credit. There can be
no assurances that we will be successful in negotiating additional sources of equity or credit for
our long-term capital needs. Our inability to have continuous access to such financing at
reasonable costs could materially and adversely impact our financial condition, results of
operations and cash flows.
Additionally, we are a publicly-traded company and our stock is traded on National Association
of Securities Dealers, Inc.'s OTC Bulletin Board, or "OTCBB," where there is limited visibility in
the investment community. Moreover, our share volume averaged less than 5,000 shares per day during
our fiscal year ended September 30, 2008. Raising equity capital could therefore be challenging for
us. Any limitations on our ability to raise equity capital could significantly impact our ability
to fund our operations or undertake future growth through expansion or acquisition.
We depend on key personnel to manage our business effectively, and, if we are unable to hire,
retain or motivate qualified personnel, our ability to design, develop, market and sell our systems
could be harmed.
Our future success depends, in part, on certain key employees, including William J. Caragol,
our chief executive officer, president and acting chief financial officer, as well as the chairman
of our board of directors, and key technical and operations personnel, and on our ability to
attract and retain highly skilled personnel. The loss of the services of any of our key personnel
may seriously harm our business, financial condition and results of operations. In addition, the
inability to attract or retain qualified personnel, or delays in hiring required personnel,
particularly operations, finance, accounting, sales and marketing personnel, may also seriously
harm our business, financial condition and results of operations. Our ability to attract and retain
highly skilled personnel will be a critical factor in determining whether we will be successful in
the future.
Directors, executive officers, principal stockholders and affiliated entities own a significant
percentage of our capital stock, and they may make decisions that you do not consider to be in the
best interests of our stockholders.
As of December 8, 2008, our
current directors and executive officer
beneficially owned, in the aggregate, approximately 61.6% of our outstanding voting securities. As
a result, if some or all of them acted together, they would have the ability to exert substantial
influence over the election of our board of directors and the outcome of issues requiring approval
by our stockholders. This concentration of ownership may also have the effect of delaying or
preventing a change in control of our company that may be favored by other stockholders. This could
prevent transactions in which stockholders might otherwise recover a premium for their shares over
current market prices.
Conflicts of interest may arise between Blue Moon Energy Partners, LLC and us that could be
resolved in a manner unfavorable to us.
Questions relating to conflicts of interest may arise between Blue Moon Energy Partners, LLC
("Blue Moon") and us, in a number of areas relating to our ongoing relationships. As of December 8,
2008, Blue Moon owned 31.5% of our outstanding common stock. Currently, Scott R. Silverman, our
chairman of the board is a manager of and controls Blue Moon and controls a member of Blue Moon and William J.
Caragol, our chief executive officer and acting chief financial officer, is a manager and member of
Blue Moon.
The equity interests of our directors and executive officers in Blue Moon could create, or
appear to create, conflicts of interest when directors are faced with decisions that could have
different implications for the two companies. For example, these decisions could relate to, among
other matters, the desirability of a potential acquisition or joint venture opportunity or employee
retention or recruiting.
8
It may be more difficult for investors to sell shares of our common stock, and the market price of
our common stock may be adversely affected.
Our common stock may be a "penny stock" if, among other things, the stock price is below $5.00
per share, it is not listed on a national securities exchange or approved for quotation on the
Nasdaq Stock Market or any other national stock exchange or it has not met certain net tangible
asset or average revenue requirements. Broker-dealers who sell penny stocks must provide purchasers
of these stocks with a standardized risk-disclosure document prepared by the Securities and
Exchange Commission ("SEC"). This document provides information about penny stocks and the nature
and level of risks involved in investing in the penny-stock market. A broker must also give a
purchaser, orally or in writing, bid and offer quotations and information regarding broker and
salesperson compensation, make a written determination that the penny stock is a suitable
investment for the purchaser, and obtain the purchaser's written agreement to the purchase.
Broker-dealers must also provide customers that hold penny stock in their accounts with such
broker-dealer a monthly statement containing price and market information relating to the penny
stock. If a penny stock is sold to an investor in violation of the penny stock rules, the investor
may be able to cancel its purchase and get its money back.
If applicable, the penny stock rules may make it difficult for investors to sell their shares
of our common stock. Because of the rules and restrictions applicable to a penny stock, there is
less trading in penny stocks and the market price of our common stock may be adversely affected.
Also, many brokers choose not to participate in penny stock transactions. Accordingly, investors
may not always be able to resell their shares of our common stock publicly at times and prices that
they feel are appropriate.
Compliance with changing regulations concerning corporate governance and public disclosure may
result in additional expenses.
There have been changing laws, regulations and standards relating to corporate governance and
public disclosure, including the Sarbanes-Oxley Act, new regulations promulgated by the SEC and
rules promulgated by the national securities exchanges and the NASDAQ. These new or changed laws,
regulations and standards are subject to varying interpretations in many cases due to their lack of
specificity, and, as a result, their application in practice may evolve over time as new guidance
is provided by regulatory and governing bodies, which could result in continuing uncertainty
regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and
governance practices. As a result, our efforts to comply with evolving laws, regulations and
standards are likely to continue to result in increased general and administrative expenses and a
diversion of management time and attention from revenue-generating activities to compliance
activities. Our board members and executive officers could face an increased risk of personal
liability in connection with the performance of their duties. As a result, we may have difficulty
attracting and retaining qualified board members and executive officers, which could harm our
business. If our efforts to comply with new or changed laws, regulations and standards differ from
the activities intended by regulatory or governing bodies, we could be subject to liability under
applicable laws or our reputation may be harmed.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION OF IFTH
We are incorporating by reference herein the Management's Discussion and Analysis of Financial
Condition and Results of Operations from the Annual Report on Form 10-K for the year ended
September 30, 2007, as filed with the SEC on December 27, 2007, and from the Quarterly Report on
Form 10-Q for the quarter ended June 30, 2008, as filed with the SEC on August 14, 2008.
We are a Delaware corporation incorporated in September 1987. Prior to December 31, 2007, we
were a full service provider of Information Technology (IT) solutions. We delivered complete
lifecycle IT solutions for our customers. After the sale of substantially all of our operating
assets on December 31, 2007, as approved by our stockholders at a special meeting held December 27,
2007, we did not engage in any operations and did not engage in any
business activity. Other than paying our
outstanding liabilities, liquidating our remaining inventory and collecting our outstanding
receivables, our primary purpose was to locate and acquire an attractive operating business.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION OF NCRC
You should read the following discussion and analysis of the financial condition and results
of operations of NCRC, IFTH's wholly-owned subsidiary, which now represents our ongoing business
operations, together with the financial statements and the related notes appearing at the end of
this report. Some of the information contained in this discussion and analysis or set forth
elsewhere in this report, including information with respect to our plans and related financing,
includes forward-looking statements that involve risks and uncertainties. You should read the "Risk
Factors" section of this report for a discussion of important factors that could cause actual
results to differ materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.
The discussion and analysis of NCRC's financial condition and results of operations are based
on our financial statements, which we have prepared in accordance with U.S. generally accepted
accounting principles. The preparation of these financial statements requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements, as well as the reported
revenues and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates
and judgments, including those described in greater detail below. We base our estimates on
historical experience and on various other factors that we believe are reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions.
Overview
On December 5, 2008, IFTH purchased all of the outstanding membership interests in NCRC, and
NCRC became IFTH's wholly-owned subsidiary. As a result, IFTH now offers consumers a variety of
identity security products and services primarily on a subscription basis. These services help
consumers protect themselves against identity theft or fraud and understand and monitor their
credit profiles and other personal information, which include credit reports, credit monitoring and
credit scores. Historically, NCRC has principally marketed and sold credit reports, credit
monitoring, credit scores and other products conventionally allied to these products to the
consumer market.
Critical Accounting Estimates and Policies
While NCRC's significant accounting policies are more fully described in Note B to our
financial statements appearing at the end of this Current Report on Form 8-K, we believe that the
following accounting policies are the most critical for one to fully understand and evaluate NCRC's
financial condition and results of operations.
Revenue from the sale of a single credit report is recognized when the credit report is
delivered to the customer. Revenue from the sale of annual subscriptions for credit monitoring and
credit protection is recognized ratably over each subscriber's annual subscription period. In the
event that a customer cancels their annual service at any time, regardless of the month in which
the customer cancels, the entire annual subscription is non-refundable.
10
Commission revenue from the sale of credit reports, credit monitoring, and credit protection
to a marketing partner, as per the terms of a written agreement, gives that partner
the rights to NCRC's credit reporting vendor resources. Commission revenue is comprised of
commissions earned by NCRC for the credit reports, credit monitoring, and credit protection
services provided to this customer. Commission revenue is recognized when the credit reports,
credit monitoring, and credit protection services have been provided to the customer. Generally,
NCRC invoiced its customers on a monthly basis for the direct costs of sales from the provision of
credit reporting and monitoring services plus a 12% commission. NCRC does not plan to use
marketing partners under these types of commission agreements in 2009.
Subscriber acquisition costs represent marketing expenses used to acquire subscribers.
Subscriber acquisition costs are expensed in the period incurred.
Effective January 1, 2006, NCRC adopted Financial Accounting Standards Board ("FASB") SFAS No.
123 (revised 2004), Share Based Payment, or FAS 123R, using the modified prospective transition
method. Under this method, stock-based compensation expense is recognized using the fair-value
based method for all awards granted on or after the date of adoption. Compensation expense for new
awards granted after January 1, 2006 is recognized over the requisite service period based on the
grant-date fair value of those options. Prior to adoption, NCRC did not issue stock-based
compensation.
FAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary,
in subsequent periods if actual forfeitures differ from those estimates.
During the unaudited nine-month period ended September 30, 2008, web design and hosting expense of
$12,500 was recorded as 69,445 membership interest units were issued for services rendered to NCRC
in lieu of cash. As of September 30, 2008, all services have been provided to NCRC. The stock-based
compensation expense is reflected in the statement of operations in general and administrative
expense for the unaudited nine-months ended September 30, 2008.
Results of Operations
Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007
Revenue
Revenue for the nine months ended September 30, 2008 was $327 thousand, a decrease of $152
thousand, or 32%, compared to the comparable period of the prior year.
The decrease in revenue is attributable to two primary factors: (1) during the nine month
period ended September 30, 2008, NCRC did not invest in search engine marketing as it did in the
first nine months of 2007, which decreased the number of new subscribers for credit monitoring
services, and (2) during August and September of 2008, NCRC began redesigning its website, in
preparation for a December 2008 launch. Marketing efforts were curtailed during this redesign
project.
Gross Profit and Gross Profit Margin
NCRC's cost of sales consists primarily of the costs related to purchasing the data,
reporting and monitoring services it provides to its customers from its supplier.
Gross profit for the nine months ended September 30, 2008 was $220 thousand compared to
$247 thousand for the nine months ended September 30, 2007. As a percentage of revenue, its
gross profit margin was 67.2% and 51.6% for the nine months ended September 30, 2008 and 2007,
respectively. This increase was the result of a change in its revenue mix, with more
subscription revenue in 2008 as a percentage of total revenue. Subscription revenue margins
are typically larger than the margins on the sale of a single credit report.
11
Operating Costs and Expenses
Subscriber acquisition costs include the commissions that NCRC pays to its marketing
affiliates or the fees it pays for search engine marketing. NCRC's subscriber acquisition
costs increased to $185 thousand, or 79.6%, for the nine months ending September 30, 2008, as
compared to $103 thousand for the nine months ended September 30, 2007, due to the increased
spending on direct sales channels versus commission revenue, for which the majority of the
subscriber acquisition cost are incurred by its partner. Under this agreement, NCRC earns
commission revenue from its partner as described above.
General and administrative expense consists primarily of compensation for employees in
executive, sales, marketing and operational functions, including finance and accounting, and
corporate development. Other significant costs include professional fees
for accounting and legal services, consulting fees and facilities costs.
General and administrative expense increased $61 thousand to $126 thousand for the nine
months ended September 30, 2008 as compared to $65 thousand for the nine months ended September
30, 2007. $42 thousand of the increase represents an increase in salary expenses for the nine month period ended
September 30, 2008 compared to 2007 which was the result of NCRC hiring a new president.
Year ended December 31, 2007 Compared to Year ended December 31, 2006
Revenue
Revenue for the year ended December 31, 2007 was $596 thousand, a decrease of $394
thousand, or 40%, compared to the comparable period of the prior year.
The decrease in revenue is the result of NCRC not investing as significantly in search
engine marketing in 2007 as it did during 2006, which decreased the number of new subscribers
for credit monitoring services.
Gross Profit and Gross Profit Margin
NCRC's cost of sales consists primarily of the costs related to purchasing the data,
reporting and monitoring services it provides to its customers from its supplier.
Gross profit for the year ended December 31, 2007 was $298 thousand compared to $531
thousand for the year ended December 31, 2006. As a percentage of revenue, its gross profit
margin was 50% and 46% for the years ended December 31, 2007 and 2006, respectively. This
increase was the result of a change in its revenue mix, with more subscription revenue in 2008
as a percentage of total revenue. Subscription revenue margins are typically larger than the
margins on the sale of a single credit report.
Operating Costs and Expenses
Subscriber acquisition costs include the commissions that NCRC pays to its marketing
affiliates or the fees it pays for search engine marketing. NCRC's subscriber acquisition
costs decreased to $171 thousand, or 47%, for the year ended December 31, 2007, as compared to
$321 thousand for the year ended December 31, 2006, due to NCRC's decreased spending on sales
engine marketing, which accounted for much of the decrease in its revenue, discussed above.
General and administrative expense consists primarily of compensation for employees in
executive, sales, marketing and operational functions, including finance and accounting, and
corporate development. Other significant costs include professional fees for accounting and
legal services, consulting fees and facilities costs.
General and administrative expense increased $26 thousand and salary expenses decreased $3
thousand for the year ended December 31, 2007 as compared to the year ended December 31, 2006.
This increase was primarily driven by the hiring a new president during the second half of
2007.
12
Liquidity and Capital Resources
As of September 30, 2008, cash totaled $24 thousand compared to cash of $171 thousand and $19
thousand at December 31, 2007 and 2006, respectively.
Cash Flows Used in Operating Activities
Net cash used in operating activities totaled $187 thousand and $3 thousand during the
nine months ended September 30, 2008 and 2007, respectively, and $76 thousand and $220 thousand
during the years ended December 31, 2007 and 2006, respectively. For each of the periods
presented, cash was used primarily to fund operating losses including subscriber acquisition
costs, general and administrative expenses.
Cash Flows from Investing Activities
Investing activities used cash of $22 thousand and $6 thousand during the nine months
ended September 30, 2008 and 2007, respectively, and $8 thousand and nil during the years ended
December 31, 2007 and 2006, respectively, which was used to purchase office property and
equipment.
Cash Flows from Financing Activities
Financing activities provided cash of $62 thousand and $238 thousand during the nine
months ended September 30, 2008 and 2007, respectively, and $237 thousand and $185 thousand in
the years ended December 31, 2007 and 2006, respectively. The cash from financing activities
was provided by contributions from the members of NCRC.
Financial Condition
As of September 30, 2008, NCRC had a working capital deficit of $16 thousand and had
members' capital of $44 thousand compared to working capital of $125 thousand and members'
capital of $158 thousand as of December 31, 2007. The decrease in working capital and members'
capital was primarily due to its operating losses during 2008. NCRC has incurred recurring losses and net cash outflows from its operating activities for the unaudited nine-month
period ended September 30, 2008 and the years ended
December 31, 2007 and 2006. Additionally, at September 30,
2008, NCRC had a working capital deficit. NCRC's
management plans with respect to continued funding of such shortfalls included raising additional capital from its members or looking into the potential sale of NCRC. On December 5,
2008, the members approved the sale of NCRC to IFTH. It is NCRC's understanding that IFTH will support its operations.
On December 5, 2008, NCRC's members sold 100% of its membership interests to the Company
for 1.0 million shares of Company common stock. The selling members were also granted stock
options which vested immediately to purchase up to 3.0 million shares of Company common stock for their continued
involvement in the operations of the business. Those options, which vested immediately, are exercisable
at $0.18 per share.
Off-Balance Sheet Arrangements
NCRC had no off-balance sheet arrangements as of December 31, 2007 and 2006 and as of the
consummation of the transaction.
13
DIRECTORS AND EXECUTIVE OFFICERS
None of the executive officers of NCRC became executive officers of the Company after we
purchased all of the outstanding membership interests in NCRC on December 5, 2008. Our directors
and executive officers, and their ages and positions, as of December 5, 2008, are set forth below:
Name
Age
Position
William J. Caragol
41
Chief Executive Officer, President, Acting Chief Financial Officer and Director
Scott R. Silverman
44
Chairman of the Board of Directors
Michael E. Krawitz
39
Director
The following is a summary of the background and business experience of our executive officer:
William J. Caragol has served as our chief executive officer, president and a member of our
board of directors since December 3, 2008 and as acting chief financial officer since October 24,
2008. Mr. Caragol served as acting chief executive officer from October 24, 2008 until December 3,
2008 when he was appointed chief executive officer. Mr. Caragol has served as president of
VeriChip since May 2007, chief financial officer since August 2006,
treasurer since December 2006, and secretary since March 2007. From July 2005 to August 2006, he
served as the chief financial officer of Government Telecommunications, Inc. From December 2003 to
June 2005, Mr. Caragol was the vice president of business development and chief financial officer
of Millivision Technologies, a technology company focused on security applications. From August
2001 to December 2003, Mr. Caragol was a consulting partner with East Wind Partners LLP, a
technology and telecommunications consulting company, in Washington, D.C. He is a member of the
American Institute of Certified Public Accountants and graduated from the Washington & Lee
University with a bachelor of science in Administration and Accounting.
The following is a summary of the background and business experience of the members of our
board of directors:
Scott R. Silverman was appointed our chairman of our board of directors in January of 2006. Mr.
Silverman is a manager of and controls Blue Moon, and also controls a member of Blue Moon.
Mr. Silverman served as the acting president of VeriChip from March 2007 through May 4, 2007, as
its chief executive officer from December 5, 2006 through July 18, 2008, as chairman of its board
of directors from March 2003 through July 18, 2008 and as a member of its board of directors from
February 2002 through July 18, 2008. On November 12, 2008, he was again appointed to VeriChip's
board of directors, to serve as chairman. He also served as VeriChip's chief executive officer from
April 2003 to June 2004. He served as the chairman of the board of directors of Digital Angel
Corporation (formerly known as Applied Digital Solutions, Inc.), or Digital Angel, from March 2003
through July 3, 2007, and served as chief executive officer of Digital Angel from March 2003 to
December 5, 2006, and as acting president of Digital Angel from April 2005 to December 5, 2006.
From March 2002 to March 2003, he served as Digital Angel's president and as a member of its board
of directors. From August 2001 to March 2002, he served as a special advisor to Digital Angel's
board of directors. From September 1999 to March 2002, Mr. Silverman operated his own private
investment banking firm. From October 1996 to September 1999, he served in various capacities with
Digital Angel, including positions related to business development, corporate development and legal
affairs. Mr. Silverman is an attorney licensed to practice in New Jersey and Pennsylvania. Mr.
Silverman graduated from the University of Pennsylvania with a bachelor of arts degree and received
his law degree from Villanova University School of Law.
Michael E. Krawitz, has served as a member of our board of directors since July 23, 2008. Mr.
Krawitz served as the chief executive officer and president of Digital Angel from December 2006 to
December 2007. Prior to that, during his time at Digital Angel, he served as assistant vice
president and general counsel beginning in April 1999, and was appointed vice president and
assistant secretary in December 1999, senior vice president in December 2000, secretary in March
2003, executive vice president in April 2003 and chief privacy officer in November 2004. From 1994
to April 1999, Mr. Krawitz was an attorney with Fried, Frank, Harris, Shriver & Jacobson in New
York. Mr. Krawitz earned a bachelor of arts degree from Cornell University in 1991 and a juris
doctorate from Harvard Law School in 1994.
14
DIRECTOR INDEPENDENCE
We are currently traded on the OTCBB. Accordingly, we are not required to and do not have a majority of
independent directors or an audit, compensation or nominating committee.
Our board of directors currently consists of three members: Messrs. Caragol, Krawitz and
Silverman. Our board of directors determined that none of our directors is independent under the
standards of the Nasdaq Global Market. In addition, Messrs. Cobb and Doberty, who served on our
board of directors until July 22, 2008, were determined independent and Messrs. McKeage and
Patterson, who served on our board of directors until July 2, 2008 and July 22, 2008, respectively,
were found to not be independent under the standards of the Nasdaq Global Market during their
respective terms of service.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Since the beginning of our fiscal year ended September 30, 2007, we have had the following
related party transactions:
Transactions with Digital Angel and Affiliates
On June 27, 2003, we loaned $1,000,000 to Digital Angel, our former majority shareholder.
Under the terms of the loan, interest, which accrued at an annual rate of 16%, was due and payable
on a monthly basis beginning July 31, 2003. On May 15, 2007, we entered into a Satisfaction of
Loan Agreement ("SLA") with Digital Angel with respect to the loan. Under the SLA, Digital Angel
issued 833,333 shares (the "Shares") of its common stock, par value $0.01 per share, to us having
an aggregate fair value of approximately $1,000,000 as explained below. On June 11, 2007, the
registration statement covering the Shares was declared effective by the SEC (the "Effective Date")
and on June 22, 2007 the shares became freely tradeable pursuant to the terms of the SLA. In
accordance with the SLA, once the registration statement covering the Shares was declared effective
by the SEC and the Shares became freely tradeable by us, Digital Angel was in full satisfaction of
all principal, interest and other amounts owed to us under the loan. Additionally, in accordance
with the SLA, on the Effective Date, the exact number of shares to be delivered to us was
determined to be 703,730, which was calculated by dividing the outstanding principal amount of the
note of $1,000,000 by the average daily closing prices for a share of Digital Angel's common stock
on each trading day occurring during the ten trading day period ending on and in including the
trading day immediately preceding the Effective Date of the Registration Statement of $1.421.
On January 20, 2006, Mr. McKeage was appointed our chief executive officer, president and
director. From 2004 until that time, Mr. McKeage was vice president of business development of
Digital Angel, as well as of Destron Fearing Corp., Digital Angel's now-wholly-owned subsidiary.
Following the sale of our operating assets, which became effective on December 31, 2007, Mr.
McKeage remained our president and director and became vice president of corporate development for
Digital Angel, as well as of VeriChip, Digital Angel's then-majority-owned subsidiary. Effective
January 1, 2008, we began to reimburse VeriChip in the amount of $7,000 per month for Mr. McKeage's
services related to finding a suitable acquisition target for the Company, which agreement ended in
May 2008.
We reimbursed Digital Angel on a monthly basis for certain business expenses incurred on our
behalf. For the fiscal year ended September 30, 2007 and 2008, these costs included accounting
fees, various business insurance coverages and miscellaneous business expenses. Additionally for
the fiscal year ended September 30, 2007 and 2008, these costs included the salary, payroll taxes
and benefits of personnel assigned to us in those years. We reimbursed $213,000 and $85,000 of
these costs to Digital Angel in our fiscal year ended September 30, 2007 and 2008, respectively.
For the fiscal years ended September 30, 2008 and 2007, we charged Digital Angel $nil and
$24,000, respectively, for services rendered by our chief financial officer at Digital Angel's
then-wholly-owned subsidiary, Computer Equity Corporation.
On October 8, 2008, we entered into a Sublease with Digital Angel for our corporate
headquarters located in Delray Beach, Florida consisting of approximately 7,911 feet of office
space, which space is shared with VeriChip. The rent for the entire twenty-one month term of the
Sublease is $157,500, which was paid in one lump sum upon execution of the Sublease. VeriChip
reimbursed us for one-half of the Sublease payment, representing their share of the total cost of
the Sublease.
15
Information Regarding Control Persons
On August 1, 2008, Digital Angel entered into a Purchase Agreement for the sale of 2,570,000
shares of our common stock, which constituted 49.9% of our issued and outstanding common stock as
of August 1, 2008, to Blue Moon. Blue Moon paid, in consideration for the shares, an aggregate of
$400,000, which amount was provided as capital contributions by the members of Blue Moon. As of
December 8, 2008, Blue Moon owns 31.5% of our issued and outstanding common stock. Mr. Silverman
is a manager of Blue Moon and controls a member of Blue Moon and Mr. Caragol is a manager and
member of Blue Moon. For more information
on the beneficial holdings of our common stock by Blue Moon and Messrs. Silverman and Caragol, see
below, "Security Ownership of Certain Beneficial Owners and Management."
Review, Approval or Ratification of Transactions with Related Parties
It is our unwritten policy, which policy is not otherwise evidenced, for any related party
transaction that involves more than a de minimis obligation, expense or payment, to obtain approval
by our board of directors prior to our entering into any such transaction. In conformity with our
various policies on related party transactions, each of the transactions discussed in "Certain
Relationships and Related Party Transactions — Transactions with Digital Angel and Affiliates"
above has been reviewed and approved by our board of directors.
16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us regarding beneficial ownership
of shares of our common stock as of December 8, 2008 by:
•
each of our directors;
•
each of our named executive officers;
•
all of our executive officers and directors as a group; and
•
each person, each person, or group of affiliated persons, known to us to be the
beneficial owner of more than 5% of our outstanding shares of common stock.
Beneficial ownership is determined in accordance with the rules and regulations of the SEC and
includes voting and investment power with respect to the securities. In computing the number of
shares beneficially owned by a person and the percentage ownership of that person, shares of common
stock subject to options or warrants held by that person that are currently exercisable or
exercisable within 60 days of December 8, 2008 are deemed outstanding. Such shares, however, are
not deemed outstanding for purposes of computing the percentage ownership of any other person. The
percentage of beneficial ownership is based on 8,146,398 shares of our common stock outstanding as
of December 8, 2008. Unless otherwise noted below, the address of the persons and entities listed
in the table is c/o IFTH Acquisition Corp., 1690 South Congress Avenue, Suite 200, Delray Beach,
Florida 33445.
Number of
Shares
Percent of
Beneficially
Outstanding
Owned
(1)
Shares
Name and Address of Beneficial Owner
(#)
(%)
Five percent stockholders:
R & R Consulting Partners, LLC and Scott R. Silverman
(2)
4,120,000
47.9
%
William J. Caragol
(3)
3,570,000
43.8
%
Blue Moon Energy Partners, LLC
2,570,000
31.5
%
Jerome C. Artigliere
(4)
48 Stumpfield Road
Kensington, New Hampshire 03833
500,000
5.8
%
Kevin H. McLaughlin
(5)
425,000
5.0
%
Named Executive Officers and Directors:
William J. Caragol
(3)
3,570,000
43.8
%
Michael J. Feder
(6)
—
*
Michael E. Krawitz
(7)
450,000
5.2
%
Jonathan F. McKeage
(8)
120,000
1.5
%
J. Robert Patterson
(9)
300,000
3.6
%
Scott R. Silverman
(2)
4,120,000
47.9
%
Executive
Officer and Directors as a group (3 persons)
(10)
5,570,000
61.6
%
*
Less than 1%
(1)
In determining the number and percentage of shares beneficially owned by each person, shares
that may be acquired by such person pursuant to options exercisable within 60 days after December
8, 2008, are deemed outstanding for purposes of determining the total number of outstanding shares
for such person, but are not deemed outstanding for such purposes with respect to all other
stockholders. To our knowledge, except as otherwise indicated, beneficial ownership includes sole
voting and dispositive power with respect to all shares.
17
(2)
Includes 2,570,000 shares directly owned by Blue Moon of which Mr. Silverman is a manager and
controls a member of Blue Moon, R & R Consulting Partners, LLC, and 450,000 shares of our common
stock issuable upon the exercise of stock options that are
currently exercisable or exercisable within 60 days of December 8, 2008. Mr. Silverman has sole
voting power and sole dispositive power over all 4,120,000 shares.
(3)
Includes 2,570,000 shares directly owned by Blue Moon, of which Mr. Caragol is a manager and
member. Mr. Caragol has sole voting power and sole dispositive power over all 3,570,000 of these
shares.
(4)
Includes 500,000 shares of our common stock issuable upon the exercise of stock options that
are currently exercisable or exercisable within 60 days of December 8, 2008.
(5)
Based on Schedule 13G/A filed with the SEC on February 1, 2006,
includes 425,000 shares of our common stock issuable upon the exercise of stock options that are
currently exercisable or exercisable within 60 days of December 8, 2008, over which Mr. McLaughlin
has sole voting and dispositive power.
(6)
Mr. Feder, our former acting interim chief financial officer, ceased being a named executive
officer on October 24, 2008.
(7)
Includes 450,000 shares of our common stock issuable upon the exercise of stock options that
are currently exercisable or exercisable within 60 days of December 8, 2008.
(8)
Mr. McKeage, our former chief executive officer, ceased being a named executive officer on July
2, 2008. The information included in the table is based solely
on the Form 4 filed with the SEC
on January 24, 2008 by Mr. McKeage.
(9)
Mr. Patterson, our former vice president, chief financial officer and treasurer, ceased being a
named executive officer on March 21, 2008, and ceased being a director on July 22, 2008. Includes
300,000 shares of our common stock issuable upon the exercise of stock options that are currently
exercisable or exercisable within 60 days of December 8, 2008.
(10)
All securities represent shares of our common stock and shares of our common stock issuable upon the exercise of stock
options that are currently exercisable or exercisable within
60 days of December 8, 2008 by our current directors and
executive officer.
18
COMPENSATION DISCUSSION AND ANALYSIS
The primary goals of the Compensation Committee of our board of directors with respect to
executive compensation are to attract and retain the most talented and dedicated executives
possible, to tie annual and long-term cash and stock incentives to achievement of specified
performance objectives, and to align executives' incentives with stockholder value creation. To
achieve these goals, the Compensation Committee intends to implement and maintain compensation
plans that tie a substantial portion of executives' overall compensation to key strategic goals, as
measured by metrics such as revenue and net market change. In the past, the Compensation Committee
has evaluated individual executive performance with a goal of setting compensation at levels the
committee believes are comparable with executives in other companies of similar size and stage of
development operating in the information technology industry while taking into account our relative
performance and our own strategic goals.
We have not retained a compensation consultant to review our policies and procedures with
respect to executive compensation. It is our practice to conduct an annual benchmark review of the
aggregate level of our executive compensation, as well as the mix of elements used to compensate
our executive officers. In the past, we have benchmarked our executive compensation against the
median updated compensation paid by other companies in the information technology industry
generating less than $100 million in annual revenue. In the future, we plan to benchmark our
executive compensation against the compensation paid by other companies in the financial service
and products industry of a similar size.
Executive Officers
Our named executive officers for the fiscal year ended September 30, 2008, or fiscal 2008,
were Mr. McKeage, who is our former chief executive officer and president, Mr. Feder, who is our
former acting interim chief financial officer, and Mr. Patterson, who is our former vice president,
chief financial officer and treasurer. On October 24, 2008, our board of directors appointed Mr.
Caragol as acting chief executive officer and acting chief financial officer. In connection with
this appointment, Mr. Caragol received 1,000,000 shares of our common stock, 500,000 of which were
restricted, for services to be rendered to us, and in lieu of salary compensation, through all of
2009. The shares issued will be compensation expenses in the period
earned. In addition, on December 3, 2008, Mr. Caragol, was appointed as chief executive officer,
president, acting chief financial officer and director.
Elements of Compensation
Our compensation program for executive officers has historically consisted of a fixed base
salary, performance-related incentive awards and long-term incentive compensation in the form of
stock-based compensation awards. However, in lieu of salary through 2009, on October 24, 2008 when
Mr. Caragol was appointed acting chief executive officer and acting chief financial officer, he
received one million shares of our common stock, half of which was restricted until he became an
officer on December 3, 2008. The shares issued will be compensation expenses in the period
earned. All three components of the executive officers' compensation plan are
reviewed annually and incentives, based on the performance of the business, may be established at
the beginning of each fiscal year. In addition, our executives are able to participate in various
benefit plans generally available to our other full-time employees.
Executive compensation consists of following elements:
Base Salary.
Base salaries for our executives are established based on the scope of their
responsibilities, taking into account competitive market compensation paid by other companies for
similar positions. Generally, we believe that executive base salaries should be targeted near the
median of the range of salaries for executives in similar positions with similar responsibilities
at comparable companies, in line with our compensation philosophy. Base salaries are reviewed
annually, and adjusted from time to time to realign salaries with market levels after taking into
account individual responsibilities, performance and experience. For fiscal 2008, this review
occurred in the first quarter.
Annual Incentive Compensation.
The Compensation Committee has the authority to award
discretionary annual bonuses and to set annual incentive plans for our executive officers. The
annual incentive bonuses are intended to compensate officers for achieving financial and
operational goals and for achieving individual annual performance objectives. These objectives vary
depending on the individual executive, but relate generally to financial factors such as raising
capital, improving our results of operations and increasing the price per share of our capital
stock.
Any discretionary annual bonuses are paid in cash or equity awards in an amount reviewed and
approved by the Compensation Committee and ordinarily is paid in a single installment in the first
quarter following the completion of a given fiscal or calendar year.
For the 2008 fiscal and calendar years, we do not plan to pay any incentive compensation, as we did
not have any material operating activity during that time.
19
Equity Compensation.
We believe that long-term performance is achieved through an ownership
culture that encourages such performance by our executive officers through the use of stock and
stock-based awards. The Compensation Committee believes that the use of stock and stock-based
awards offers the best approach to achieving our compensation goals. We have not adopted stock
ownership guidelines, and our stock compensation plans have provided the principal method for our
executive officers to acquire equity or equity-linked interests in our company. We believe that the
annual aggregate value of these awards should be set near competitive median levels for comparable
companies.
Our executive officers are eligible to participate in our 2001 Flexible Stock Plan. The
purpose of the 2001 Flexible Stock Plan is to attract, retain, motivate and reward employees and
other individuals and to encourage ownership by employees and other individuals of our common
stock. The board of directors may terminate the 2001 Flexible Stock Plan at any time. There were
1,595,000 stock option awards granted under this plan during fiscal 2008, and, as of September 30,
2008, 4,745,000 awards had been granted and remained outstanding under the 2001 Flexible Stock
Plan. The 2001 Flexible Stock Plan initially had 2,500,000 shares of common stock reserved for
issuance. This number is subject to an annual increase of 25% of the number of outstanding shares
of common stock as of January 1 of each year, but may not exceed 10,000,000 in the aggregate. As of
September 30, 2008, there were 5,205,000 shares of common stock available for future issuance under
the 2001 Flexible Stock Plan. These shares may be issued in the form of incentive stock options,
non-qualified stock options, stock appreciation rights, restricted stock, performance shares, cash
awards, or other stock based awards. On October 24, 2008, we granted one million shares of common
stock to each of Messrs. Caragol and Silverman, half of which were restricted, under the 2001
Flexible Stock Plan.
Our 1998 Stock Option Plan authorized us to grant options to purchase shares of common stock
and stock appreciation rights to our employees, directors and consultants. Our Compensation
Committee was the administrator of the 1998 Stock Option Plan. The 1998 Stock Option Plan
terminated in February 2008, and no stock awards or options were granted, or are outstanding, under
the 1998 Stock Option Plan.
Stock option grants are made at the commencement of employment and, occasionally, following a
significant change in job responsibilities or to meet other special retention or performance
objectives. The Compensation Committee reviews and approves stock option awards to executive
officers based upon a review of competitive compensation data, its assessment of individual
performance, a review of each executive's existing long-term incentives, and retention
considerations. Periodic stock option grants are made at the discretion of the Compensation
Committee to eligible employees and, in appropriate circumstances, the Compensation Committee
considers the recommendations of members of management, such as Mr. Caragol. In fiscal 2008, the
only named executive officer that received options were Mr. Feder and Mr. Patterson, who were
granted 100,000 and 50,000 stock options, respectively. Stock options granted by us have an
exercise price equal to the fair market value of our common stock on the day of grant, typically
vest 100% one to three years from the date of grant, and generally expire ten years after the date
of grant. Incentive stock options also include certain other terms necessary to assure compliance
with the Internal Revenue Code of 1986, as amended.
Our Compensation Committee has and may in the future elect to make grants of stock to our
executive officers. In January 2006, we granted 100,000 shares of restricted stock to Mr. McKeage,
half of which vested January 17, 2007 and the other half of which vested January 17, 2008, and in
January of 2008, we granted 50,000 shares of stock to Mr. McKeage. In October 2008, in lieu of
salary through 2009, we granted one million shares of stock to Mr. Caragol, half of which was
restricted and vested on December 3, 2008 when he was appointed chief executive officer, president
and director. We have also granted stock to Mr. Silverman, the chairman of our board. In January
2006, we granted 100,000 shares of restricted stock to Mr. Silverman, half of which vested January
17, 2007 and the other half of which vested January 17, 2008. In October 2008, in lieu of
compensation through 2009, we granted one million shares of stock to Mr. Silverman, half of which
was restricted and vested upon the completion of the acquisition of NCRC in December 2008.
Our decision to pay stock in lieu of salary compensation reflects our desire to align the interest of our executive
officer and chairman of the board with the interests of our stockholders.
Other Compensation.
Our executive officers are not parties to written employment agreements
and are not expected to be parties to such employment agreements until such time as the
Compensation Committee determines in its discretion that revisions to our practice of not extending
employment agreements to our executive officers is advisable. We intend to continue to maintain our
current benefits for our executive officers; however, the Compensation Committee in its discretion
may revise, amend or add to the officer's executive benefits if it deems it advisable. We believe
these benefits are currently lower than median competitive levels for comparable companies. In the
past, executive officers have received certain perquisites, such as car allowance. However, our
Compensation Committee has not yet set the level of perquisites for Mr. Caragol, our only current
executive officer.
20
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding compensation earned in or with respect to
our fiscal years ended September 30, 2008, 2007 and 2006, which we refer to as fiscal 2008, 2007
and 2006, respectively, by:
•
each person who served as our chief executive officer in fiscal 2008; and
•
each person who served as our chief financial officer in fiscal 2008.
We refer to these officers collectively as our named executive officers. We had no other
executive officers in fiscal 2008.
2008 Summary Compensation Table
Stock
Option
All Other
Name and
Salary
Bonus
Awards
Awards
Compensation
Total
Principal Position
Year
($)
($)
($)
(1)
($)
(1)
($)
($)
Jonathan F. McKeage
Former President and
Chief Executive Officer
2008
$
54,976
—
$
6,250
(3)
—
$
4,500
(2)
$
65,726
2007
$
157,500
—
$
25,000
(3)
—
$
9,000
(2)
$
166,500
2006
$
103,846
—
$
18,750
(3)
—
$
6,320
(2)
$
160,166
Michael J. Feder
Former Acting Chief
Financial Officer
2008
—
—
—
$
2,738
(4)
—
$
2,738
2007
—
—
—
—
—
—
2006
—
—
—
—
—
—
J. Robert Patterson
Former Vice President,
Chief Financial Officer
and Treasurer
2008
$
152,404
(5)
—
—
$
7,458
(6)
$
4,500
(2)
$
164,362
2007
$
150,000
—
—
—
$
9,000
$
159,000
2006
$
132,500
—
—
—
$
9,000
$
141,500
(1)
Reflects the dollar amount recognized for financial statement reporting purposes with respect
to the fiscal year in accordance with FAS 123R.
(2)
Consists of an automobile allowance paid to the executive officers in equal monthly amounts.
(3)
Includes 100,000 shares of restricted stock, which fully vested on January 17, 2008.
(4)
Includes 100,000 stock options which will vest on July 25, 2009.
(5)
Includes $54,808 consisting of three months salary and
accrued vacation pay in
connection with Mr. Patterson's resignation as an executive officer of the
Company effective March 21, 2008.
(6)
Includes 50,000 stock options that vested immediately upon the July 25, 2008 grant date.
21
2008 Grants of Plan-Based Awards
Set forth in the table below is information regarding stock awards and option awards granted
by the compensation committee of our board of directors to our named executive officers in fiscal
2008, reflected on an individual grant basis. These represent all of the grants of awards by us to
our named executive officers under any plan during or with respect to fiscal 2008.
2008 Grants of Plan-Based Awards
All Other
Option
Grant
Awards:
Exercise
Date Fair
Date of Board
Number of
or Base
Value of
or
Securities
Price of
Stock and
Compensation
Underlying
Option
Option
Grant
Committee
Options
Awards
Awards
Name
Date
Action
(#)
($/Sh)
($)
Jonathan F. McKeage
—
—
—
—
—
Michael J. Feder
07/25/2008
07/25/2008
100,000
$
0.21
$
14,917
(1)
J. Robert Patterson
07/25/2008
07/25/2008
50,000
$
0.21
$
7,458
(1)
(1)
The grant date fair value of the equity award was determined under the Black Scholes pricing
model in accordance with FAS 123R.
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
None of the named executive officers currently remain with the Company. See the disclosure
found above in "Compensation Discussion and Analysis" for information regarding compensation
policies and practices with regards to named executive officers.
22
Outstanding Equity Awards as of September 30, 2008
The following table provides information as of September 30, 2008 regarding unexercised stock
options and restricted stock awards outstanding to each of our named executive officers.
Outstanding Equity Awards as of September 30, 2008
Option Awards
Equity
Incentive
Plan
Awards:
Number of
Number of
Securities
Number of
Securities
Underlying
Securities
Underlying
Unexercised
Underlying
Unexercised
Option
Options
Unexercised
Unearned
Exercise
Option
(#)
Options(#)
Options
Price
Expiration
Name
Exercisable
Unexercisable
(#)
($)
Date
Jonathan F. McKeage
—
—
—
—
—
Michael J. Feder
—
100,000
(1)
—
$
0.21
07/25/2018
J. Robert Patterson
100,000
—
—
$
0.28
06/28/2010
100,000
—
—
$
0.34
03/23/2012
50,000
—
—
$
0.41
09/26/2013
50,000
—
—
$
0.21
07/25/2018
(1)
The option fully vests on July 25, 2009.
2008 Option Exercises and Stock Vested
The following table sets forth information regarding the exercise of stock options and the
vesting of restricted stock during fiscal 2008.
Option Awards
Stock Awards
Number of Shares
Number of Shares
Acquired on
Value Realized on
Acquired on
Value Realized on
Exercise
Exercise
Vesting
Vesting
Name
(1)
(#)
($)
(#)
($)
Jonathan F. McKeage
—
—
50,000
$
13,000
(2)
(1)
None of our other named executive officers exercised stock options or had restricted stock vest during fiscal 2008.
(2)
Represents the aggregate dollar amount realized upon vesting by multiplying the number of shares of stock by the market value of the underlying shares on the vesting
date of January 17, 2008, or $0.26.
23
Pension Benefits
None of our named executive officers are covered by a pension plan or other similar benefit
plan that provides for payments or other benefits at, following, or in connection with retirement.
Nonqualified Deferred Compensation
None of our named executive officers are covered by a defined contribution or other plan that
provides for the deferral of compensation on a basis that is not tax-qualified.
Potential Payments Upon Termination or Change in Control
The amount of compensation paid to each named executive officer, if any, upon his separation
from the Company is presented below.
Payments Made Upon Termination
Regardless of the manner in which a named executive officer's employment terminates, he is
entitled to receive amounts earned during his term of employment. Such amounts include:
•
Any non-equity incentive compensation;
•
All vested shares awarded under our 2001 Flexible Stock Plan and 1998 Stock Option Plan;
•
Any vested company contributions contributed under our former 401(k) plan; and
•
Any unused vacation pay.
Payments Made Upon Retirement
In the event of the retirement of a named executive officer, in addition to the items
identified above, he is entitled to other amounts such as:
•
The executive officer will continue to vest in all outstanding options or other
stock-based compensation award and retain such options for the remainder of the outstanding
term.
•
While not defined, the board of directors or a committee thereof may grant the retiring
named executive officer with other compensation that may vary depending upon position held,
length of service and other factors.
Payments Made Upon Death or Disability
In the event of the death or disability of a named executive officer, in addition to the
benefits listed under the headings "Payments Made Upon Termination" and "Payments Made Upon
Retirement" above, the named executive officer will receive benefits under the Company's disability
plan or payments under the Company's life insurance plan, as appropriate.
Payments Made Upon a Change in Control
In the event of a change in control of the Company, the board of directors or a committee
thereof may provide for accelerated vesting or termination of any outstanding stock options issued
under the 1998 Stock Option Plan in exchange for a cash payment, or the issuance of substitute
awards to substantially preserve the terms of any option awards previously granted under the 1998
Stock Option Plan. Additionally, the named executive officer would be entitled to the standard
severance amount, as outlined in the Company's employee handbook, of one week's salary per full
year of service. The board of directors or a committee thereof may grant the named executive
officer with additional compensation that may vary depending upon position held, length of service
and other factors.
Jonathan F. McKeage
In connection with his resignation from the Company on July 2, 2008, Mr. McKeage received nil.
Michael J. Feder
In connection with his resignation from the Company on October 24, 2008, Mr. Feder received
nil.
24
J. Robert Patterson
In connection with his resignation from the Company on March 21, 2008, Mr. Patterson received
$54,808, which consists of three months salary and accrued vacation pay.
Director Compensation
The following table provides compensation information for persons serving as members of our
board of directors during fiscal 2008.
2008 Director Compensation
Change in
Pension Value
Fees
and
Earned
Non-Equity
Nonqualified
or Paid
Stock
Option
Incentive Plan
Deferred
All Other
in Cash
Awards
Awards
Compensation
Compensation
Compensation
Total
Name
($)
($)
(1)
($)
(1)
($)
Earnings
($)
($)
Jeffrey S. Cobb
(2)
$
550
—
$
10,196
(3)
—
—
—
$
10,746
Charles L. Doherty
(2)
$
550
—
$
7,458
(4)
—
—
—
$
8,008
Michael E. Krawitz
(5)
—
—
$
5,746
(6)
—
—
—
$
5,746
Kay E. Langsford
(7)
—
—
$
2,738
(8)
—
—
—
$
2,738
Scott R. Silverman
(9)
—
$
6,250
(10)
$
13,691
(11)
—
—
—
$
13,691
(1)
The dollar amount of this award reflected in the table represents the amount recognized in
fiscal 2008 for financial statement reporting purposes in accordance with FAS 123R.
(2)
Messrs. Cobb and Doherty resigned from our board of directors effective July 22, 2008. As of
September 30, 2008, Messrs. Cobb and Doherty held option awards to purchase 387,500 and 487,500
shares of our common stock, respectively.
(3)
On July 25, 2008, Mr. Cobb received 150,000 stock options, 50,000 of which vested immediately
upon the July 25, 2008 grant date, and have a grant date fair value computed in accordance with
FAS123R of $7,458, and 100,000 of which will vest on July 25, 2009 and have a grant date fair value
computed in accordance with FAS 123R of $14,916.
(4)
On July 25, 2008, Mr. Doherty received 50,000 stock options that vested immediately upon the
July 25, 2008 grant date and have a grant date fair value computed in accordance with FAS123R of
$7,458.
(5)
Mr. Krawitz was appointed to our board of directors effective July 23, 2008. As of September
30, 2008, Mr. Krawitz held option awards to purchase 650,000 shares of our common stock.
(6)
On July 25, 2008, Mr. Krawitz received 200,000 stock options that will vest on July 25, 2009
and have a grant date fair value computed in accordance with FAS123R of $29,833.
(7)
Ms. Langsford was appointed to our board of directors effective July 23, 2008 and resigned
effective December 3, 2008. As of September 30, 2008, Ms. Langsford held option awards to purchase
100,000 shares of our common stock.
(8)
On July 25, 2008, Ms. Langsford received 100,000 stock options that will vest on July 25, 2009
and have a grant date fair value computed in accordance with FAS123R of $14,916.
(9)
Mr. Silverman was appointed chairman of our board of directors in January 2006. As of
September 30, 2008, Mr. Silverman held 100,000 shares of our common stock and option awards to
purchase 950,000 shares of our common stock.
(10)
On January 17, 2006, Mr. Silverman received 100,000 shares of restricted stock, which fully
vested on January 17, 2008 and has a grant date fair value computed in accordance with FAS123R of
$50,000.
(11)
On July 25, 2008, Mr. Silverman received 500,000 stock options that will vest on July 25, 2009
and have a grant date fair value computed in accordance with FAS123R of $74,584.
Board members may receive cash or equity compensation, usually in the form of stock or stock
options, in consideration for their services.
Compensation Committee Interlocks and Insider Participation
Our compensation committee currently consists of Messrs. Silverman and Krawitz. During fiscal
2008, Jeffrey S. Cobb, Charles L. Doherty and Kay E. Langsford, former members of our board of
directors, and Messrs. Silverman and Krawitz served on our compensation committee. No member of
the compensation committee simultaneously served both as a member of the compensation committee and
as an officer or employee of ours during fiscal 2008. None of our executive officers serves as a
member of the board of directors or the compensation committee, or committee performing an
equivalent function, of any other entity that has one or more of its executive officers serving as
a member of our board of directors or compensation committee.
25
MARKET PRICE OF AND DIVIDENDS ON OUR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Our common stock trades on the OTCBB under the symbol "IFAQ". The following table shows, for
the periods indicated, the high and low bid quotations per share of the common stock based on
published financial sources. Such quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.
High
Low
2007
First Quarter
$
0.40
$
0.20
Second Quarter
0.28
0.20
Third Quarter
0.25
0.20
Fourth Quarter
0.28
0.18
2008
First Quarter
$
0.23
$
0.17
Second Quarter
0.30
0.19
Third Quarter
0.30
0.19
Fourth Quarter
0.35
0.18
Dividends
We have never paid cash dividends on our common stock and do not anticipate paying cash
dividends in the foreseeable future. The decision whether to apply legally available funds to the
payment of dividends on our common stock may be made by our board of directors from time to time in
the exercise of its business judgment.
Holders
As of December 8, 2008, there were 61 holders of record of our common stock. We believe that
there are a substantially greater number of beneficial owners of shares of our common stock.
Issuer Purchases of Equity Securities
We did not make any common stock repurchases during the fiscal year ended September 30, 2008.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth information regarding our compensation plans (including
individual compensation arrangements) under which shares of our common stock are authorized for
issuance as of September 30, 2008:
Number of Securities
Remaining Available for
Number of Securities to be
Weighted Average
Future Issuance under
Issued upon Exercise of
Exercise Price of
Equity Compensation Plans
Outstanding Options,
Outstanding Options,
(Excluding Securities
Warrants and Rights
Warrants and Rights
Reflected in Column (a))
Plan Category
(a)
(b)
(c)
Equity compensation
plans approved by
security holders
4,920,000
$
0.27
5,205,000
(1)
Equity compensation
plans not approved
by securities
holders
(2)
950,000
$
0.70
—
Total
5,870,000
$
0.35
5,205,000
(1)
The 2001 Flexible Stock Plan initially had 2,500,000 shares of common stock reserved for
issuance. This number is subject to an annual increase of 25% of the number of outstanding shares
of common stock as of January 1 of each year, but may not exceed 10,000,000 in the aggregate. As of
September 30, 2008, there were 5,205,000 shares of common stock available for future issuance under
the 2001 Flexible Stock Plan.
(2)
Consists of grants made outside of our equity plans and have outstanding options exercisable
for 950,000 shares of our common stock.
26
LEGAL PROCEEDINGS
There are currently no material pending legal proceedings, other than routine
litigation incidental to the business, to which we are a party or of which any of our property is
the subject.
RECENT SALES OF UNREGISTERED SECURITIES
Except as set forth in section 3.02 of this Current Report on Form 8-K, during the past three
years, we did not sell securities that were not registered under the Securities Act of 1933, as
amended.
27
DESCRIPTION OF REGISTRANT'S SECURITIES
AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
A description of our capital stock and indemnification of directors and officers has been
previously reported on Form S-1, No. 333-25593, under the captions "Description of Capital Stock"
and "Indemnification of Directors and Officers," filed by us with the SEC on April 22, 1997, as
amended, is incorporated herein by reference.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
On October 24, 2008, our board of directors and audit committee approved the dismissal of
J.H. Cohn LLP, the Company's independent registered public accounting firm, effective as of
October 27, 2008. On October 24, 2008, our board of directors and audit committee approved the
engagement of Eisner LLP to serve as the Company's independent registered public accounting
firm, effective as of October 28, 2008. For more information, see Item 4.01 of the Current
Report on Form 8-K filed by us with the SEC on October 29, 2008, which is incorporated herein by
reference.
FINANCIAL STATEMENTS AND EXHIBITS
The following documents are filed as a part of this Current Report on Form 8-K:
(a)
Financial statements of business acquired and pro forma financial information.
(b)
See the Exhibit Index filed as part of this Current Report on Form 8-K.
Item 3.02. Unregistered Sales of Equity Securities.
The disclosure set forth in Item 2.01 to this Current Report is incorporated into this item by
reference. In connection with the transaction, the one million shares of common stock issued and
496,573 stock options granted were not registered under the Securities Act of 1933, as amended.
The stock options have an exercise price of $0.18 per share, are exercisable immediately on the
date of grant and expire ten years from the date of grant. These securities were issued without
registration in reliance upon the exemption provided by Section 4(2) of the Securities Act of 1933,
as amended, and Rule 506 of Regulation D promulgated thereunder.
Item 5.06. Change in Shell Company Status.
The disclosure set forth in Item 2.01 to this Current Report is incorporated into this item by
reference. As a result of the closing of the transactions contemplated under the Purchase
Agreement, we believe we are no longer a shell company as that term is defined in Rule 12b-2 of the
Exchange Act.
Item 9.01. Financial Statements and Exhibits.
(a) Financial statements of NCRC for the years ended December 31, 2007 and 2006 and for the
nine-months ended September 30, 2008 and 2007.
(b) Unaudited pro forma condensed consolidated balance sheet as of June 30, 2008, and
unaudited pro forma condensed consolidated statements of operations for the year ended September
30, 2007 and the nine months ended June 30, 2008.
28
INDEX TO FINANCIAL STATEMENTS
National Credit Report.com, LLC
Financial Statements
Report of Independent Registered Public Accounting Firm
F-2
Balance Sheets as of September 30, 2008 (unaudited), and as of December 31, 2007 and 2006
F-3
Statements of Operations for the nine-months ended September 30, 2008 and 2007 (unaudited), and for the years ended December 31, 2007 and 2006
F-4
Statements of Members' Capital for the nine-months ended September 30, 2008 (unaudited), and for the years ended December 31, 2007 and 2006
F-5
Statements of Cash Flows for the nine-months ended September 30, 2008 and 2007 (unaudited), and for the years ended December 31, 2007 and 2006
F-6
Notes to the Financial Statements
F-7
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Member
National Credit Report.com, LLC
We have audited the accompanying balance sheets of National Credit Report.com, LLC (the "Company")
as of December 31, 2007 and 2006, and the related statements of operations, members' capital,
and cash flows for each of the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. We were not engaged to perform an audit of the Company's internal control over
financial reporting. Our audits include consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Company's internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements enumerated
above present fairly, in all material
respects, the financial position of National Credit Report.com, LLC as of December 31, 2007 and
2006, and the results of its operations and its cash flows for each of the years then ended in conformity
with accounting principles generally accepted in the United States of America.
As discussed in Note B(3), the Company utilizes a single provider to
service its ongoing operations under a one-year agreement.
/s/ Eisner LLP
New York, New York
December 10, 2008
F-2
National Credit Report.com, LLC
Balance Sheets
September 30,
December 31,
2008
2007
2006
(unaudited)
ASSETS
Current assets:
Cash
$
24,068
$
170,967
$
19,113
Trade account receivable
4,846
16,745
23,324
Prepaid expenses
—
239
1,000
Total current assets
28,914
187,951
43,437
Property and equipment, net
20,402
19,317
4,244
Other assets
43,938
19,169
10,000
$
93,254
$
226,437
$
57,681
LIABILITIES AND MEMBERS' CAPITAL
Current liabilities:
Accounts payable and accrued expenses
$
25,027
$
40,147
$
26,913
Deferred revenue
11,205
19,961
23,809
Guaranteed payment payable
5,000
—
—
Current portion of long-term debt
3,217
3,020
—
Total current liabilities
44,449
63,128
50,722
Long-term debt
5,104
5,301
—
Total liabilities
49,553
68,429
50,722
Commitments and contingencies
Members' capital (deficit):
Managing members
(1,807
)
85
(54,134
)
Limited members
45,508
157,923
61,093
43,701
158,008
6,959
Total members' capital
$
93,254
$
226,437
$
57,681
See the accompanying notes to financial statements.
F-3
National Credit Report.com, LLC
Statements of Operations
Nine-months ended
September 30,
Years ended December 31,
(unaudited)
2008
2007
2007
2006
Revenues
$
327,378
$
478,806
$
595,874
$
990,007
Cost of revenues
107,154
231,644
297,834
458,832
Gross profit
220,224
247,162
298,040
531,175
Costs and expenses:
Subscriber acquisition costs
185,048
103,115
171,093
321,184
General and administrative
229,621
126,360
226,489
203,693
Total costs and expenses
414,669
229,475
397,582
524,877
(Loss) income from operations
(194,445
)
17,687
(99,542
)
6,298
Other income (expense):
Interest income (expense)
(2
)
62
3,039
(36
)
Other income
5,214
—
10,052
—
Total other income (expense)
5,212
62
13,091
(36
)
Net (loss) income
$
(189,233
)
$
17,749
$
(86,451
)
$
6,262
See the accompanying notes to financial statements.
F-4
National Credit Report.com, LLC
Statements of Members' Capital (Deficit)
Managing
Limited
Total Members'
Member
Members
Capital
Balance at December 31, 2005
$
(242,790
)
$
58,527
$
(184,263
)
Net income
4,196
2,066
6,262
Contributions by members
184,460
500
184,960
Balance at December 31, 2006
(54,134
)
61,093
6,959
Net loss
(865
)
(85,586
)
(86,451
)
Contributions by members
950
236,550
237,500
Transfer (see Note D)
54,134
(54,134
)
—
Balance at December 31, 2007
85
157,923
158,008
Net income (unaudited)
(1,892
)
(187,341
)
(189,233
)
Contributions by members (unaudited)
—
74,926
74,926
Balance as of September 30, 2008
(unaudited)
$
(1,807
)
$
45,508
$
43,701
See the accompanying notes to financial statements.
F-5
National Credit Report.com, LLC
Statements of Cash Flows
Nine-months ended
Years ended
September 30,
December 31,
(unaudited)
2008
2007
2007
2006
Cash flow activities from operating activities:
Net (loss) income
$
(189,233
)
$
17,749
$
(86,451
)
$
6,262
Adjustments to reconcile net (loss) income
to net cash used in operating
activities:
Depreciation
1,604
774
2,119
1,210
Share-based compensation
12,500
—
—
—
Changes in operating assets and liabilities:
Trade account receivable
11,899
734
6,579
(13,559
)
Prepaid expenses
239
42
761
10,028
Other assets
(5,000
)
(11,521
)
(9,169
)
—
Accounts payable and accrued expenses
(15,120
)
(3,559
)
13,234
(198,757
)
Deferred revenue
(8,756
)
(7,014
)
(3,848
)
(24,898
)
Guaranteed payment payable
5,000
—
—
—
Net cash used in operating activities
(186,867
)
(2,795
)
(76,775
)
(219,714
)
Cash flows from investing activities:
Acquisition of property and equipment
(2,689
)
(6,010
)
(8,294
)
—
Other assets
(19,769
)
—
—
—
Net cash used in investing activities
(22,458
)
(6,010
)
(8,294
)
—
Cash flows from financing activities:
Contributions from members
62,426
237,503
237,500
184,960
Payments of capital lease obligations
—
—
(577
)
—
Net cash provided by financing activities
62,426
237,503
236,923
184,960
Increase (decrease) in cash
(146,899
)
228,698
151,854
(34,754
)
Cash, beginning of period
170,967
19,113
19,113
53,867
Cash, end of period
$
24,068
$
247,811
$
170,967
$
19,113
Supplemental non-cash activity:
Acquisition of property and equipment financed
through capital lease obligations
$
—
$
—
$
8,898
$
—
F-6
National Credit Report.com, LLC
Notes to the Financial Statements
NOTE A — DESCRIPTION OF BUSINESS
National Credit Report.com, LLC, a limited liability company created under the Florida
Limited Liability Company Act, (the "Company"), offers consumers a variety of identity
security products and services primarily on a subscription basis. These services are intended to help
consumers protect themselves against identity theft or fraud and understand and
monitor their credit profiles and other personal information, which include credit
reports, credit monitoring and credit scores. The Company's customers consist of
individuals located throughout the United States.
The Company was established on February 4, 2004, under the name of SJS
Associates, LLC, and renamed National Credit Report.com, LLC, on April 6, 2004.
The Company has incurred recurring losses and net cash outflows from its operating
activities for the unaudited nine-month period ended
September 30, 2008 and the years
ended December 31, 2007 and 2006. Additionally, at
September 30, 2008, the Company
had a working capital deficit, Management's plans with respect to continued funding of
such shortfalls included raising additional capital from its members
or looking into the potential sale of the Company. On December 5, 2008, the members approved the sale of
the Company to IFTH Acquisition Corp. d/b/a Steel Vault ("IFTH") as more fully
described in Note G. It is the Company's understanding that IFTH will support its
operations.
The accompanying unaudited financial statements of National Credit Report.com, LLC as
of September 30, 2008 and 2007 and for the nine months ended September 30, 2008 and
2007 have been prepared in accordance with accounting principles generally accepted in
the United States of America ("U.S."). Such interim results may not be indicative
of results for the full year.
NOTE B —  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[1]
Revenue Recognition
The Company earns revenue from the following sources:
[a]
Revenue from the sale of a single credit report is recognized when
the credit report is delivered to the customer. Revenue from the sale of annual
subscriptions for credit monitoring and credit protection is recognized ratably
over each subscriber's annual subscription period.
The Company also offers credit monitoring and credit protection on a month-to month
basis. In certain circumstances, the Company sells a bundled offer whereby a customer
receives a single credit report and monitoring. In such circumstances, the Company
allocates a portion of the associated revenue to the credit report with the balance
recognized ratably over the subscription period.
[b]
Commission revenue from the sale of credit reports, credit
monitoring, and credit protection to a customer, as per the terms of
a written agreement, gives another company the rights to the Company's credit
reporting vendor. Commission revenue is comprised of commissions earned by the
Company for the credit reports, credit monitoring, and credit protection services
provided to this customer. Commission revenue is recognized when the credit
reports, credit monitoring, and credit protection services have been provided to
the customer. Generally, the Company invoiced its customers on a monthly basis
for costs incurred from their credit reporting vendor plus a 12% commission. For
the year ended December 31, 2007 and 2006, gross commission revenue was approximately
$274,600 and $150,300, respectively. For the unaudited nine-months ended
September 30, 2008 and 2007, gross commission revenue was approximately $88,286 and
$203,654, respectively.
[2]
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. Such estimates include the
allowance for doubtful accounts and the useful lives of assets.
F-7
National Credit Report.com, LLC
Notes to the Financial Statements
[3]
Concentration of Credit Risk
The Company maintains its cash in one financial institution during the years ended
December 31, 2007 and 2006. Balances were insured up to Federal Deposit Insurance
Corporation ("FDIC") limits of $100,000 per institution. At December 31, 2007 and
2006, the Company had bank balances of approximately $71,000 and nil in excess of such
insurance limits, respectively. At September 30, 2007 and 2008, the Company had bank
balances of approximately nil and $148,000 in excess of such insurance limits,
respectively.
The Company's trade receivables are potentially subject to credit risk. The Company
extends credit to its customers based upon an evaluation of the customers' financial
condition and credit history. The Company generally does not require collateral.
The Company utilizes a single provider which services its ongoing operations under a
one-year agreement. In addition, the provider has cancellation rights upon providing the
Company 60 days notice. A loss or non-renewal of this agreement could significantly
impact the Company's ability to continue its business operations.
[4]
Trade Account Receivable
Trade account receivable consist primarily of receivables from commission sales earned from
its marketing partner. The Company records a provision for doubtful receivables to
allow for any amounts which may be unrecoverable and is based upon an analysis of the
Company's prior collection experience, customer creditworthiness, and current economic
trends.
[5]
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization
(including equipment held under capital leases) are computed
using the straight-line method over the estimated useful lives of 4 to 7 years.
[6]
Subscriber Acquisition Costs
Subscriber acquisition costs represent marketing expenses used to acquire subscribers.
Subscriber acquisition costs are expensed in the period incurred.
[7]
Share-Based Compensation
Effective January 1, 2006, the Company adopted Financial Accounting Standards Board
("FASB") SFAS No. 123 (revised 2004), Share Based Payment, or FAS 123R, using the
modified prospective transition method. Under this method, stock-based compensation
expense is recognized using the fair-value based method for all awards granted on or
after the date of adoption. Compensation expense for new awards granted after
January 1, 2006 is recognized over the requisite service period based on the
grant-date fair value of those options. Prior to adoption, the Company did not issue
stock-based compensation.
FAS 123R requires forfeitures to be estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from those estimates.
During the unaudited nine-month period ended September 30, 2008, web design and hosting expense
of $12,500 was recorded as 69,445 membership interest units were issued for services
rendered to the Company in lieu of cash. As of September 30, 2008, all services have
been provided to the Company. The stock-based compensation expense is reflected in the
statement of operations in general and administrative expense for the unaudited
nine-months ended September 30, 2008.
[8]
Income Taxes
The Company is treated as a partnership for income tax purposes. The members are
required to report their respective share of the Company's taxable income or loss in
their income tax returns and are liable for any related taxes thereon. Accordingly, no
provision for federal income taxes is made in the financial statements of the Company.
F-8
National Credit Report.com, LLC
Notes to the Financial Statements
NOTE C —  PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
September 30,
December 31,
Estimated
2008
2007
2006
Useful Lives
(unaudited)
Furniture and fixture
$
7,412
$
5,191
$
—
7 Years
Computer equipment
9,619
9,152
6,048
5 Years
Leased property
8,898
8,898
—
4 Years
25,929
23,241
6,048
Less accumulated depreciation
(5,527
)
(3,924
)
(1,804
)
$
20,402
$
19,317
$
4,244
Depreciation expense was $2,119 and $1,210 for the years ended December 31, 2007 and
2006, respectively. For the unaudited nine-month periods ended September 30, 2008 and
2007, depreciation expense was approximately $1,604 and $774, respectively.
NOTE D — MEMBERS' CAPITAL (DEFICIT)
Members' capital consists of contributed capital and each member's share of the
Company's accumulated profits and losses. Net income or loss is allocated to each
member in accordance with their percentage interest in the Company, as defined in the
Operating Agreement and Regulations of the Company.
From 2004 through August 2007, the limited members contributed approximately $124,000
of cash for which they received during 2007 1,925,000 units.
During 2005 and 2006, the managing member contributed $239,000 and $184,460 of cash to
the Company, respectively. In August of 2007, this membership
interest was transferred to a limited membership interest as described below.
In August of 2007, two investors contributed cash totaling $237,500 in capital in
exchange for 1,500,000 units in the Company. One of the new investors replaced the
previous managing member, resulting in a transfer of the previous managing members'
interest to a limited membership interest.
On July 3, 2008, the Company entered into an agreement with the owner of Colony One
On-Line, Inc., a vendor to the Company, to sell 138,889 membership units. Colony
One On-Line, Inc. provides web design and hosting services for the Company. The investor
contributed cash of $12,500 for 69,445 units with the remaining 69,444 units to be
issued in lieu of services valued at $12,500. See Note B(7).
The total authorized membership unit of the Company is 10,000,000 units. At December 31, 2007, the number of limited units outstanding was 4,985,000, and the managing units outstanding were 15,000. At September 30, 2008, the number of limited units outstanding were
5,401,667, and the managing units were 15,000.
Prior to the termination of the Operating Agreement and Regulations on December 5,
2008, the Company's managing member was responsible for the daily operations of the
Company's business and also controlled one-third of the Company's management
committee. The limited members of the Company controlled two-thirds of the
management committee. The management committee, comprising of all members, shall, by
majority vote, determine all major business decisions.
F-9
National Credit Report.com, LLC
Notes to the Financial Statements
NOTE E — RELATED PARTY TRANSACTIONS
Guaranteed payments have been made to one of the members of the Company pursuant to
the terms of the employment agreement. The Company paid a salary of $5,000 per month
to this employee to serve as the chief executive officer of the Company which totaled
$25,000 for the year ended December 31, 2007. For the nine-month periods ended
September 30, 2008 and 2007, the Company made salary payments of $45,000 and $10,000,
respectively, to this member. The payments are included in salary and payroll related
expense on the statement of operations.
For the years end December 31, 2007 and 2006, the Company incurred costs related to
web-site maintenance services provided by Colony One On-Line, Inc. in the amount of $7,481 and $82,441,
respectively. For the unaudited nine-month periods ended September 30, 2008 and 2007,
the Company incurred costs related to services provided by Colony One On-Line, Inc. in
the amount of $51,775 and $2,183, respectively.
NOTE F — COMMITMENTS
Capital Lease
The Company leases certain equipment under a capital lease which expires on various
dates through October 2010.
Future minimum payments required under the capital leases are as follows:
Years ending December 31:
2008
$
3,217
2009
3,217
2010
2,218
Total minimum lease payments
8,652
Less amount representing interest
(331
)
Present value of net minimum lease payments
8,321
Less current portion
(3,020
)
Long-term portion
$
5,301
Operating Lease
In 2007, the Company entered into a non-cancelable operating lease for its Florida
office for a term of three years, and placed a deposit with the landlord in the amount
of $9,169 included in other assets on the balance sheet. The leases are personally
guaranteed by the members of the Company while the Company remains in occupancy at the
premises. Future minimum lease payments under this operating lease are as follows:
Years ending December 31:
2008
$
27,574
2009
27,574
2010
22,978
$
78,126
Rent expense is being recognized on a straight-line basis over the terms of the lease.
Rent amounted to $4,596 for the year ended December 31, 2007. For the unaudited
nine-month periods ended September 30, 2008 and 2007, rent expense was approximately
$20,681 and nil, respectively. Prior to entering into the aforementioned lease, the Company operated in an office
provided by its members without cost.
NOTE G — SUBSEQUENT EVENT
On December 5, 2008 the Company sold 100% of its membership interests to IFTH, for 1.0 million shares of IFTH common stock. In conjunction with the
acquisition, IFTH issued stock options to selling members of the Company to purchase up to 3.0
million shares of IFTH's common stock. All of the options were granted at a strike price of $0.18
per share and were fully vested as of the date of grant. The common shares issued
at market value and stock
options granted
at fair value as determined by Black-Scholes model
were valued at $475,000, as of the date of the
acquisition.
The purchase price has been preliminarily allocated to the tangible assets acquired and
intangible assets, primarily goodwill.
F-10
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On December 5, 2008, pursuant to the terms of the Securities Purchase Agreement, dated
December 5, 2008 (the "Securities Purchase Agreement"), among IFTH Acquisition Corp., a Delaware
corporation ("IFTH" or the "Company"), and National Credit Report.com, LLC ("NCRC"), a Florida
limited liability company, Jared Shaw, Ivan Posniak, Andrew Larkin, John Thau, Adam Cohen, and
Safeguard Acquisition, LLC, the Company completed the purchase of all of the issued and outstanding
membership interests in NCRC for $0.5 million in common stock and stock options.
The following unaudited pro forma condensed consolidated financial statements give effect to
our purchase of NCRC. The statements are derived from, and should be read in conjunction with, our
historical financial statements and notes thereto, as presented in our Annual Report on Form 10-K,
as amended, for the year ended September 30, 2007 filed with the SEC on January 28, 2008 and our
Quarterly Report on Form 10-Q for the nine months ended June 30, 2008 filed with the SEC on
August 14, 2008, both of which are incorporated by reference herein.
The unaudited pro forma condensed consolidated balance sheet
using the latest interim balance sheets, as of June 30, 2008
for IFTH and September 30, 2008 for NCRC, assumes the
transaction occurred on June 30, 2008. The unaudited pro forma condensed consolidated statements of
operations for the year ended September 30, 2007 for IFTH and December 31, 2007 for NCRC and the nine months ended June 30, 2008
for IFTH and September 30, 2008 for NCRC give
effect to the transaction as if it had occurred as of the beginning of those periods.
The unaudited pro forma financial information is presented for illustrative purposes and is
not designed to represent, and does not represent, what the financial position or operating results
would have been had the transaction been completed as of the dates assumed, nor is it intended to
project our future financial position or results of operations.
F-11
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
At June 30, 2008
(dollars in thousands)
Pro Forma Adjustments
NCRC
Pro Forma
Addition
Pro Forma
With
Historical
(a)
Adjustment
NCRC
ASSETS
Current assets:
Cash and cash equivalents
$
1,124
$
24
$
—
$
1,148
Accounts receivable, net
3
5
—
8
Marketable securities, available for
sale
345
—
—
345
Pre-paid expenses and other
6
—
—
6
Total current assets
1,478
29
—
1,507
Property and equipment, net
0
20
—
20
Goodwill and other assets, net
0
44
432
(b)
476
TOTAL ASSETS
$
1,478
$
93
432
$
2,003
LIABILITIES
Current liabilities:
Accounts payable and accrued
liabilities
$
166
$
25
$
—
$
191
Gauranteed payment payable
8
—
—
8
Other liabilities
0
20
—
20
Total current liabilities
174
45
—
219
Note payable, stockholder
0
5
—
5
TOTAL LIABILITIES
174
50
—
224
Stockholders' equity
1,304
43
432
(b)
1,779
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
1,478
$
93
$
432
$
2,003
F-12
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
Nine Months Ended June 30, 2008
(dollars in thousands, except per share data)
NCRC
Pro Forma
Addition
With
Historical
(c)
NCRC
Revenue
$
—
$
327
$
327
Cost of revenue
—
107
107
Gross profit
—
220
220
Operating expenses
574
415
989
Loss from operations
(574
)
(195
)
(769
)
Interest (income) and other expense
(10
)
(5
)
(15
)
Other expenses
(10
)
(5
)
(15
)
Loss before income taxes
(564
)
(190
)
(754
)
Net loss from continuing operations
$
(564
)
$
(190
)
$
(754
)
Net loss per common share from continuing
operations — basic and diluted
$
(0.11
)
$
—
$
(0.12
)
Weighted average number of shares
outstanding
— basic and diluted
5,104
—
6,104
F-13
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
Twelve Months Ended September 30, 2007
(dollars in thousands, except per share data)
NCRC
Pro Forma
Addition
With
Historical
(d)
NCRC
Revenue
$
—
$
599
$
599
Cost of revenue
—
298
298
Gross profit
—
301
301
Operating expenses
715
397
1,112
Loss from operations
(715
)
(96
)
(811
)
Interest (income) and other expense
(120
)
(13
)
(133
)
Other expenses
(120
)
(83
)
(203
)
Loss before income taxes
(595
)
(83
)
(678
)
Income tax provision
—
—
—
Net loss from continuing operations
$
(595
)
$
(83
)
$
(678
)
Net loss per common share from
continuing operations — basic and
diluted
$
(0.12
)
$
—
$
(0.11
)
Weighted average number of shares
outstanding — basic and diluted
5,014
—
6,014
F-14
(a)
Balance sheet presented as of September 30, 2008 (unaudited).
(b)
Purchase of all of the issued and outstanding membership interests in NCRC from the sellers
of NCRC for 1.0 million shares of IFTH common stock, par value $0.01 per share. In
conjunction with the transaction, IFTH issued 3.0 million stock options to the sellers of NCRC
in consideration of their continued involvement with the operations of NCRC. The common shares
issued and stock options granted in the transaction were valued at $475,000, at fair value, as
of the date of the acquisition.
Based on the preliminary allocation, the purchase price was allocated to the tangible
assets acquired and intangible assets, primarily goodwill.
The goodwill reflected represents the excess of the fair
value over the net assets.
(c)
Statement of operations presented for the nine months ended September 30, 2008 (unaudited).
(d)
Statement of operations presented for the year ended December 31, 2007.
(e)
The shares issued to Mr. Silverman which vested upon completion of the NCRC
acquisition will result in compensation expense in the period earned. Accordingly, such amounts have been
excluded from the pro-forma financial results.
F-15
(d) Exhibits
Exhibit Number
Description
2.1
Securities Purchase Agreement, dated as of December 5,
2008, by and among IFTH Acquisition Corp., National Credit
Report.com, LLC, Jared Shaw, Ivan Posniak, Andrew Larkin,
John Thau, Adam Cohen, and Safeguard Acquisition, LLC
99.1
Press Release, dated December 5, 2008
SIGNATURES
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 hereunto duly authorized.
IFTH Acquisition Corp.
By:
/s/ William J. Caragol
Name:
William J. Caragol
Title:
Chief Executive Officer, President and Acting
Chief Financial Officer
Date: December 11, 2008
EXHIBIT INDEX
Exhibit Number
Description
2.1
Securities Purchase Agreement, dated as of December 5,
2008, by and among IFTH Acquisition Corp., National Credit
Report.com, LLC, Jared Shaw, Ivan Posniak, Andrew Larkin,
John Thau, Adam Cohen, and Safeguard Acquisition, LLC
99.1
Press Release, dated December 5, 2008