<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
  (Continued)</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><font size="2">(i) <u>Stock Options
  (continued)</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">The weighted-average
  grant-date fair value of options granted during the years ended March 2008
  and 2007 was $1.32 and $.71, respectively.
  No options were exercised during Fiscal 2008. In Fiscal 2007, 371,380
  options were exercised with an intrinsic value of approximately $209,500
  generating approximately $453,700 of cash proceeds. </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">Total unrecognized
  compensation cost related to unvested stock option awards at March 31, 2008
  amounted to $2,195 and is expected to be recognized over a weighted average
  period of one year. Total compensation cost for the option awards amounted to
  $104,240 and $121,112 for the years ended March 31, 2008 and 2007,
  respectively.</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><font size="2">(ii) <u>Warrants</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">At the end of March 31,
  2008 there were outstanding warrants to purchase an aggregate of 40,766
  shares of common stock at an exercise price of $3.68 per share held by one
  individual.  These warrants were to
  expire on April 30, 2007.  In April
  2007, in consideration of services provided, the expiration date of these
  warrants was extended to April 30, 2010.</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><font size="2">(iii) <u>Restricted Stock</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">As of March 31, 2008,
  pursuant to the authorization of the Company’s Board of Directors and certain
  Restricted Stock Agreements, the Company had awarded 464,352 shares (net of
  forfeited shares) of common stock under the Company’s 2002 Plan to certain
  employees.  Grant date fair value is
  determined by the market price of the Company’s common stock on the date of
  grant.  The aggregate value of these
  shares at their respective grant dates amount to approximately $1,123,901 and
  are recognized ratably as compensation expense over the vesting periods.  The shares of common stock granted
  pursuant to such agreements vest in various tranches over one to five years
  from the date of grant.</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 shares awarded to
  employees under the restricted stock agreements vest on the applicable
  vesting dates only to the extent the recipient of the shares is then an
  employee of the Company or one of its subsidiaries, and each recipient will
  forfeit all of the shares that have not vested on the date his or her
  employment is terminated.  </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">As of March 31, 2008,
  pursuant to the authorization of the Company’s Board of Directors and certain
  Restricted Stock Agreements, the Company had awarded 300,000 shares of common
  stock that were not issued under the Company’s 2002 Plan.  These shares include the award of 200,000
  shares to the Company’s Chief Executive Officer as described below.</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
  (Continued)</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
  (continued)</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>The weighted-average
  grant-date fair value of options granted during the years ended March 2008
  and 2007 was $1.32 and $.71, respectively.
  No options were exercised during Fiscal 2008. In Fiscal 2007, 371,380
  options were exercised with an intrinsic value of approximately $209,500
  generating approximately $453,700 of cash proceeds. </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>Total unrecognized
  compensation cost related to unvested stock option awards at March 31, 2008
  amounted to $2,195 and is expected to be recognized over a weighted average
  period of one year. Total compensation cost for the option awards amounted to
  $104,240 and $121,112 for the years ended March 31, 2008 and 2007,
  respectively.</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>(ii) <u>Warrants</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>At the end of March 31,
  2008 there were outstanding warrants to purchase an aggregate of 40,766
  shares of common stock at an exercise price of $3.68 per share held by one
  individual.  These warrants were to
  expire on April 30, 2007.  In April
  2007, in consideration of services provided, the expiration date of these
  warrants was extended to April 30, 2010.</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>(iii) <u>Restricted Stock</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>As of March 31, 2008,
  pursuant to the authorization of the Company’s Board of Directors and certain
  Restricted Stock Agreements, the Company had awarded 464,352 shares (net of
  forfeited shares) of common stock under the Company’s 2002 Plan to certain
  employees.  Grant date fair value is
  determined by the market price of the Company’s common stock on the date of
  grant.  The aggregate value of these
  shares at their respective grant dates amount to approximately $1,123,901 and
  are recognized ratably as compensation expense over the vesting periods.  The shares of common stock granted
  pursuant to such agreements vest in various tranches over one to five years
  from the date of grant.</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 shares awarded to
  employees under the restricted stock agreements vest on the applicable
  vesting dates only to the extent the recipient of the shares is then an
  employee of the Company or one of its subsidiaries, and each recipient will
  forfeit all of the shares that have not vested on the date his or her
  employment is terminated.  </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>As of March 31, 2008,
  pursuant to the authorization of the Company’s Board of Directors and certain
  Restricted Stock Agreements, the Company had awarded 300,000 shares of common
  stock that were not issued under the Company’s 2002 Plan.  These shares include the award of 200,000
  shares to the Company’s Chief Executive Officer as described below.</font></p>
</td>
</tr>
</tbody></table>