<table>
<tbody><tr style="font-size:1px">
<td width="5%" valign="TOP">
<p>&nbsp;</p>
</td>
<td width="95%" valign="TOP">
<p>&nbsp;</p>
</td>
</tr>



<tr>
<td valign="TOP">
<p><font size="2">(5)</font></p>
</td>
<td valign="TOP">
<p><font size="2"><u>Stockholders’
  Equity</u></font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="2">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="2">(i) <u>Stock
  Options</u></font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p align="JUSTIFY"><font size="2">Under the
  Company’s 1992 Stock Option Plan (the “1992 Plan”), employees of the Company
  and its subsidiaries and members of the Board of Directors were granted
  options to purchase shares of common stock of the Company. The 1992 Plan was
  amended on May 11, 1999 to increase the maximum number of shares of common
  stock for which options may be granted to 1,500,000 shares. The 1992 Plan
  terminated in 2002, although options issued thereunder remain exercisable until
  the termination dates provided in such options. Options granted under the
  1992 Plan were either intended to qualify as incentive stock options under
  the Internal Revenue Code of 1986, or non-qualified options. Grants under the
  1992 Plan were awarded by a committee of the Board of Directors, and are
  exercisable over periods not exceeding ten years from date of grant. The
  option price for incentive stock options granted under the 1992 Plan must be
  at least 100% of the fair market value of the shares on the date of grant,
  while the price for non-qualified options granted to employees and employee
  directors is determined by the committee of the Board of Directors. At March
  31, 2008, there were 27,500 options issued and outstanding, expiring from
  April 2008 through April 2011, under the 1992 Plan. </font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p align="JUSTIFY"><font size="2">On July 1,
  2002, the Company established the 2002 Long-Term Incentive Plan (the “2002
  Plan”) providing for the grant of options or other awards, including stock
  grants, to employees, officers or directors of, consultants to, the Company
  or its subsidiaries to acquire up to an aggregate of 750,000 shares of Common
  Stock. In September 2005, the 2002 Plan was amended so as to increase the
  number of shares of common stock available under the plan to 1,250,000. Options
  granted under the 2002 Plan may either be intended to qualify as incentive
  stock options under the Internal Revenue Code of 1986, or may be
  non-qualified options. Grants under the 2002 Plan are awarded by a committee
  of the Board of Directors, and are exercisable over periods not exceeding ten
  years from date of grant. The option price for incentive stock options
  granted under the 2002 Plan must be at least 100% of the fair market value of
  the shares on the date of grant, while the price for non-qualified options
  granted is determined by the Committee of the Board of Directors. At March
  31, 2008, there were 438,750 options, expiring from June 2008 through
  September 2017, issued under the 2002 Plan that remained outstanding. Any
  option under the 2002 Plan that is not exercised by an option holder prior to
  its expiration may be available for re-issuance by the Company. As of March
  31, 2008, the Company had 326,898 options or other awards available for grant
  under the 2002 Plan.</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p align="JUSTIFY"><font size="2">The maximum
  contractual option period for any of the Company’s options is ten years. The
  Company uses the Black-Scholes model to estimate the value of stock options
  granted under SFAS No. 123R. Because option-pricing models require the use of
  subjective assumptions, changes in these assumptions can materially affect
  the fair value of options. The assumptions presented in the table below
  represent the weighted-average of the applicable assumptions used to value
  stock options at their grant date. The risk-free rate assumed in valuing the
  options is based on the U.S. Treasury yield curve in effect at the time of
  grant for the expected term of the option. The expected term, which
  represents the period of time that options granted are expected to be
  outstanding, is estimated based on the historical exercise experience of the
  Company’s employees. In determining the volatility assumption, the Company
  considers the historical volatility of its common stock. </font></p>
</td>
</tr>
</tbody></table>
<table>
<tbody><tr>
<td>
<p> </p>
</td>
<td>
<p> </p>
</td>
</tr>
<tr>
<td>
<p><font>(5)</font></p>
</td>
<td>
<p><font><u>Stockholders’
  Equity</u></font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>(i) <u>Stock
  Options</u></font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>Under the
  Company’s 1992 Stock Option Plan (the “1992 Plan”), employees of the Company
  and its subsidiaries and members of the Board of Directors were granted
  options to purchase shares of common stock of the Company. The 1992 Plan was
  amended on May 11, 1999 to increase the maximum number of shares of common
  stock for which options may be granted to 1,500,000 shares. The 1992 Plan
  terminated in 2002, although options issued thereunder remain exercisable until
  the termination dates provided in such options. Options granted under the
  1992 Plan were either intended to qualify as incentive stock options under
  the Internal Revenue Code of 1986, or non-qualified options. Grants under the
  1992 Plan were awarded by a committee of the Board of Directors, and are
  exercisable over periods not exceeding ten years from date of grant. The
  option price for incentive stock options granted under the 1992 Plan must be
  at least 100% of the fair market value of the shares on the date of grant,
  while the price for non-qualified options granted to employees and employee
  directors is determined by the committee of the Board of Directors. At March
  31, 2008, there were 27,500 options issued and outstanding, expiring from
  April 2008 through April 2011, under the 1992 Plan. </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>On July 1,
  2002, the Company established the 2002 Long-Term Incentive Plan (the “2002
  Plan”) providing for the grant of options or other awards, including stock
  grants, to employees, officers or directors of, consultants to, the Company
  or its subsidiaries to acquire up to an aggregate of 750,000 shares of Common
  Stock. In September 2005, the 2002 Plan was amended so as to increase the
  number of shares of common stock available under the plan to 1,250,000. Options
  granted under the 2002 Plan may either be intended to qualify as incentive
  stock options under the Internal Revenue Code of 1986, or may be
  non-qualified options. Grants under the 2002 Plan are awarded by a committee
  of the Board of Directors, and are exercisable over periods not exceeding ten
  years from date of grant. The option price for incentive stock options
  granted under the 2002 Plan must be at least 100% of the fair market value of
  the shares on the date of grant, while the price for non-qualified options
  granted is determined by the Committee of the Board of Directors. At March
  31, 2008, there were 438,750 options, expiring from June 2008 through
  September 2017, issued under the 2002 Plan that remained outstanding. Any
  option under the 2002 Plan that is not exercised by an option holder prior to
  its expiration may be available for re-issuance by the Company. As of March
  31, 2008, the Company had 326,898 options or other awards available for grant
  under the 2002 Plan.</font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>The maximum
  contractual option period for any of the Company’s options is ten years. The
  Company uses the Black-Scholes model to estimate the value of stock options
  granted under SFAS No. 123R. Because option-pricing models require the use of
  subjective assumptions, changes in these assumptions can materially affect
  the fair value of options. The assumptions presented in the table below
  represent the weighted-average of the applicable assumptions used to value
  stock options at their grant date. The risk-free rate assumed in valuing the
  options is based on the U.S. Treasury yield curve in effect at the time of
  grant for the expected term of the option. The expected term, which
  represents the period of time that options granted are expected to be
  outstanding, is estimated based on the historical exercise experience of the
  Company’s employees. In determining the volatility assumption, the Company
  considers the historical volatility of its common stock. </font></p>
</td>
</tr>
</tbody></table>