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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                 OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2009

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO _________

                        Commission File Number: 000-22996

                               Gilman Ciocia, Inc.
            (Exact name of registrants as specified in its charters)

           DELAWARE                                      11-2587324
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                                11 RAYMOND AVENUE
                          POUGHKEEPSIE, NEW YORK 12603
                    (Address of principal executive offices)

                                 (845) 486-0900
              (Registrant's telephone number, including area code)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                      NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                     Common Stock, par value $.01 per share
                                (Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes |_| No |X|

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes |_| No |X|

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer |_|                        Accelerated filer |_|
Non-accelerated filer |_|                          Smaller reporting company |X|
(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|

The aggregate market value of Gilman Ciocia, Inc.'s voting and non-voting common
equity held by non-affiliates of Gilman Ciocia, Inc. at December 31, 2008 was
approximately $2,613,210, based on a sale price of $0.09.

As of September 15, 2009, 95,868,611 shares of Gilman Ciocia, Inc.'s common
stock $0.01 par value, were outstanding.

<PAGE>

                               GILMAN CIOCIA, INC.

                               REPORT ON FORM 10-K

                     FOR THE FISCAL YEAR ENDED JUNE 30, 2009

                                TABLE OF CONTENTS

                                                                            Page
                                     PART I

Item 1.         Business                                                       2
Item 1A.        Risk Factors                                                   8
Item 2.         Properties                                                    14
Item 3.         Legal Proceedings                                             14
Item 4.         Submission of Matters to a Vote of Shareholders               15

                                     PART II

Item 5.         Market for Registrant's Common Equity, Related Stockholder
                Matters, and Issuer Purchases of Equity Securities            16
Item 7.         Management's Discussion and Analysis of Financial Condition
                and Results of Operations                                     17
Item 8.         Financial Statements and Supplementary Data                   26
Item 9.         Changes in and Disagreements with Accountants on Accounting
                and Financial Disclosure                                      26
Item 9A(T).     Controls and Procedures                                       26
Item 9B.        Other Information                                             27

                                    PART III

Item 10.        Directors, Executive Officers and Corporate Governance        28
Item 11.        Executive Compensation                                        32
Item 12.        Security Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters                    35
Item 13.        Certain Relationships and Related Transactions and Director
                Independence                                                  39
Item 14.        Principal Accountant Fees and Services                        40

                                     PART IV

Item 15.        Exhibits and Financial Statement Schedules                    41

SIGNATURES                                                                    43

<PAGE>

                                     PART I

Statement Regarding Forward-Looking Disclosure

The information contained in this Form 10-K and the exhibits hereto may contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the
"Exchange Act"). Such statements, including statements regarding our
expectations about our ability to raise capital, our strategy to achieve our
corporate objectives, including our strategy to pursue growth through
acquisitions, to increase revenues through our registered representative
recruiting program and expand our brand awareness and business presence, our
ability to be profitable, the cyclical nature of our business, our liquidity,
revenues, the payment of legacy accounts payable, the outcome or effect of
litigation, arbitration and regulatory investigations, the impact of certain
accounting pronouncements, the effects of our cost-cutting measures, contingent
liability associated with acquisitions, the impact of the current economic
downturn and others, are based upon current information, expectations, estimates
and projections regarding us, the industries and markets in which we operate,
and management's assumptions and beliefs relating thereto. Words such as "will,"
"plan," "expect," "remain," "intend," "estimate," "approximate," and variations
thereof and similar expressions are intended to identify such forward-looking
statements. These statements speak only as of the date on which they are made,
are not guarantees of future performance, and involve certain risks,
uncertainties and assumptions that are difficult to predict. Therefore, actual
outcomes and results could materially differ from what is expressed, implied or
forecast in such forward-looking statements. Such differences could be caused by
a number of factors including, but not limited to, the uncertainty of laws,
legislation, regulations, supervision and licensing by federal, state and local
authorities and their impact on the lines of business in which we and our
subsidiaries are involved; unforeseen compliance costs; changes in economic,
political or regulatory environments; changes in competition and the effects of
such changes; the inability to implement our strategies; changes in management
and management strategies; our inability to successfully design, create, modify
and operate our computer systems and networks and litigation and regulatory
enforcement action involving us. Readers should take these factors into account
in evaluating any such forward-looking statements. We undertake no obligation to
update publicly or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by law.

ITEM 1. BUSINESS

BUSINESS OVERVIEW

Gilman Ciocia, Inc. (together with its wholly owned subsidiaries, "we", "us",
"our" or the "Company") was founded in 1981 and is incorporated under the laws
of the State of Delaware. We provide federal, state and local tax preparation
services to individuals, predominantly in the middle and upper income tax
brackets, accounting services to small and midsize companies and financial
planning services, including securities brokerage, investment management
services, insurance and financing services.

As of June 30, 2009, we had 26 offices operating in three states (New York, New
Jersey, and Florida). Our financial planning clients are generally introduced to
us through our tax return preparation services, accounting services and
educational workshops. We believe that our tax return preparation and accounting
services are inextricably intertwined with our financial planning activities in
our offices and that overall profitability will depend, in part, on the two
channels leveraging off each other since many of the same processes, procedures
and systems support sales from both channels. Accordingly, management views and
evaluates the Company as one segment.

We also provide financial planning services through approximately 44
independently owned and operated offices in 11 states. We benefit from economies
of scale associated with the aggregate production of both our offices and
independently owned offices.

All of our financial planners are employees or independent contractors of the
Company and registered representatives of Prime Capital Services, Inc. ("PCS"),
our wholly owned subsidiary. PCS conducts a securities brokerage business
providing regulatory over-sight and products and sales support to its registered
representatives, who sell investment products and provide services to their
clients. PCS earns a share of commissions from the services that the financial
planners provide to their clients in transactions for securities, insurance and
related products. PCS is a registered securities broker-dealer with the
Securities and Exchange Commission ("SEC") and a member of the Financial
Industry Regulatory Authority ("FINRA") formerly known as the National
Association of Securities Dealers, Inc. ("NASD"). We also have a wholly owned
subsidiary, Asset & Financial Planning, Ltd. ("AFP"), which is registered with
the SEC as an investment advisor. Almost all of our financial planners are also
authorized agents of insurance underwriters. We have the capability of
processing insurance business through PCS and Prime Financial Services, Inc.
("PFS", a wholly owned subsidiary), which are licensed insurance brokers, as
well as through other licensed insurance brokers. We are also a licensed
mortgage broker in the State of New York and through GC Capital Corp, our wholly
owned subsidiary, a licensed mortgage brokerage business in the State of
Florida.


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<PAGE>

In fiscal 2009(1), approximately 82% of our revenues were derived from
commissions and fees from financial planning services, including our financing
and insurance activities, and approximately 18% were derived from fees for tax
preparation and accounting services.

A majority of the financial planners located in our offices are also tax
preparers and/or accountants. Our tax preparation business is conducted
predominantly in February, March and April. During the 2009 tax season, we
prepared approximately 23,600 United States tax returns, down approximately 7.8%
from 25,600 prepared in 2008, a year in which the Economic Stimulus Act of 2008
resulted in an increased amount of tax returns for individuals that ordinarily
would not have a need to file.

We are quoted on the OTC Bulletin Board under the symbol GTAX.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K can be obtained, free of charge, on our website at
www.gtax.com.

OUR STRATEGY

Overall Strategy. We believe that our recurring tax return preparation and
accounting services are inextricably intertwined with our financial planning
services. Clients often consider other aspects of their financial needs, such as
investments, insurance, retirement and estate planning, when having their tax
returns and business records prepared by us. We believe that this combination of
services to our recurring tax and accounting clients has created, and will
continue to create, optimum revenue for us.

Expand our client base through acquisitions. We are actively pursuing
acquisitions of tax preparation and accounting firms to increase our client base
and accounting business. In an effort to facilitate identifying potential
acquisitions, we have launched an advertising campaign involving targeted direct
mail, a customized website and inbound and outbound telemarketing to prospect
for leads. We believe that, in addition to the tax preparation and accounting
services revenue generated from the acquired practices, there are additional
opportunities to increase financial planning revenue by providing financial
planning services to many of the acquired clients.

Recruiting financial planners. We are actively recruiting financial planners.
These efforts are supported by advertising, targeted direct mail, and inbound
and outbound telemarketing.

Increase brand awareness; expand business presence. We plan to increase our
brand recognition to attract new clients and financial planners. We are
executing a comprehensive marketing plan to attract more clients and experienced
financial planners, build market awareness, and educate consumers and maintain
customer loyalty through direct marketing, advertising through our marketing
department, use of our website, various public relations programs, live
seminars, print advertising, radio, and television.

Provide value-added services to our clients. We provide our clients with access
to a pool of well-trained financial planners and access to up-to-date market and
other financial information. We provide our representatives with information and
training regarding current financial products and services.

Create technologically innovative solutions to satisfy client needs. We continue
to pursue additional technologies to service the rapidly evolving financial
services industry.

Build recurring revenue. We have focused our financial planning efforts on
building our fee-based investment advisory business. We believe that fee-based
investment advisory services may be better for certain clients. While these fees
generate substantially lower first year revenue than most commission products
and are more susceptible to fluctuations in the financial markets, the recurring
nature of these fees provides a platform for accelerating future revenue growth.

Provide technological solutions to our employee and independent representatives.
We believe that it is imperative that we continue to possess state-of-the-art
technology so that our employees and independent registered representatives can
effectively facilitate, measure and record business activity in a timely,
accurate and efficient manner. By continuing our commitment to provide a highly
capable technology platform to process business, we believe that we can achieve
economies of scale and potentially reduce the need to hire additional personnel.

Cost cutting measures. As a result of declines in financial markets, we have
implemented a number of Company initiatives to consolidate job functions and
implement other cost-cutting measures.


----------
(1)   Fiscal years are denominated by the year in which they end. Accordingly,
      fiscal 2009 refers to the year ended June 30, 2009.


                                       3
<PAGE>

Expand our product and service offering through strategic relationships. We
continue to pursue business alliances, capitalize on cross-selling
opportunities, create operational efficiencies and further enhance our name
recognition.

TAX RETURN PREPARATION AND ACCOUNTING SERVICES

The United States Internal Revenue Service (the "IRS") reported that more than
131.0 million individual 2008 federal income tax returns and more than 139.0
million individual 2007 federal income tax returns were filed in the United
States through April 24, 2009 and April 25, 2008, respectively. According to the
IRS, a paid preparer completes approximately 61.0% of the tax returns e-filed in
the United States each year.

Among paid preparers, H&R Block, Inc. ("H&R Block") dominates the low-cost tax
preparation business with approximately 13,000 offices located throughout the
United States. According to information released by H&R Block, H&R Block
prepared an aggregate of approximately 21.1 million United States tax returns
during the 2009 tax season and 21.8 million United States tax returns during the
2008 tax season.

Regulation

Federal legislation requires income tax return preparers to, among other things,
set forth their signatures and identification numbers on all tax returns
prepared by them, and retain all tax returns prepared by them for three years.
Federal laws also subject income tax preparers to accuracy-related penalties in
connection with the preparation of income tax returns. Preparers may be
prohibited from further acting as income tax return preparers if they
continuously and repeatedly engage in specified misconduct. In addition,
authorized IRS e-filer providers are required to comply with certain rules and
regulations, as per IRS Publication 1345 and other notices of the IRS applicable
to e-filing.

The Gramm-Leach-Bliley Act and related Federal Trade Commission ("FTC")
regulations require us to adopt and disclose customer privacy policies and
provide customers the opportunity to opt-out of having their information shared
with certain third parties.

Competition

We compete with national tax return preparers such as H&R Block, Jackson Hewitt,
and Liberty Tax. The remainder of the tax preparation industry is highly
fragmented and includes regional tax preparation services, accountants,
attorneys, small independently owned companies, and financial service
institutions that prepare tax returns as ancillary parts of their business. To a
much lesser extent, we compete with the on-line and software self preparer
market. We believe that H&R Block's dominance as the industry leader and the
fragmentation of the rest of the industry represents a very attractive growth
opportunity for us.

The principle methods of competition within the tax return preparation industry
include price, service and reputation for quality. We believe that within the
middle to upper income tax brackets, (the niche-market in which we concentrate),
service and reputation for quality are the key to competing in the tax return
preparation business.

FINANCIAL PLANNING

All of our financial planners are registered representatives of PCS. PCS
conducts a securities brokerage business providing regulatory oversight and
product and sales support to its registered representatives, who provide
investment products and services to their clients. PCS is a registered
securities broker-dealer with the SEC and a member of FINRA.

To become a registered representative, a person must pass one or more of a
series of qualifying exams administered by FINRA that test the person's
knowledge of securities and related regulations. Thereafter, PCS supervises the
registered representatives with regard to all regulatory matters. In addition to
certain mandatory background checks required by FINRA, we also require that each
registered representative respond in writing to a background questionnaire. PCS
has been able to recruit and retain experienced and productive registered
representatives who seek to establish and maintain personal relationships with
their clients. We believe that continuing to add experienced, productive
registered representatives is an integral part of our growth strategy.

Regulation (Compliance and Monitoring)

PCS, AFP and the securities industry in general, are subject to extensive
regulation in the United States at both the federal and state levels, as well as
by self-regulatory organizations ("SROs") such as FINRA.

The SEC is the federal agency primarily responsible for the regulation of
broker-dealers and investment advisers doing business in the United States.
Certain aspects of broker-dealer regulation have been delegated to securities
industry SROs, principally FINRA and the New York Stock Exchange ("NYSE"). These
SROs adopt rules (subject to SEC approval) that govern the industry, and, along
with the SEC, conduct periodic examinations of the operations of PCS. PCS is a
member of FINRA and the NYSE. The Board of Governors of the Federal Reserve
System also promulgates regulations applicable to securities credit transactions
involving broker-dealers. Securities firms are also subject to regulation by
state securities administrators in those states in which they conduct business.


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<PAGE>

Broker-dealers are subject to regulations covering all aspects of the securities
industry, including sales practices, trade practices among broker-dealers,
capital requirements, the use and safekeeping of clients' funds and securities,
recordkeeping and reporting requirements, supervisory and organizational
procedures intended to ensure compliance with securities laws and to prevent
unlawful trading on material nonpublic information, employee related matters,
including qualification and licensing of supervisory and sales personnel,
limitations on extensions of credit in securities transactions, clearance and
settlement procedures, requirements for the registration, underwriting, sale and
distribution of securities and rules of the SROs designed to promote high
standards of commercial honor and just and equitable principles of trade. A
particular focus of the applicable regulations is the relationship between
broker-dealers and their clients. As a result, many aspects of the relationship
between broker-dealers and clients are subject to regulation, including, in some
instances, requirements that brokers make "suitability" determinations as to
certain customer transactions, limitations on the amounts that may be charged to
clients, timing of proprietary trading in relation to client's trades, and
disclosures to clients.

Additional legislation, changes in rules promulgated by the SEC, state
regulatory authorities or SROs, or changes in the interpretation or enforcement
of existing laws and rules may directly affect the mode of operation and
profitability of broker-dealers. The SEC, SROs and state securities commissions
may conduct administrative proceedings that can result in censure, fines, the
issuance of cease-and-desist orders or the suspension or expulsion of a
broker-dealer, its officers or employees. The principal purpose of regulating
and disciplining broker-dealers is for the protection of customers and the
securities markets, not the protection of creditors or shareholders of
broker-dealers.

As a registered broker-dealer, PCS is required to, and has established and
maintains a system to supervise the activities of its retail brokers, including
its independent contractor offices and other securities professionals. The
supervisory system must be reasonably designed to achieve compliance with
applicable securities laws and regulations, as well as SRO rules. The SROs have
established minimum requirements for such supervisory systems; however, each
broker-dealer must establish procedures that are appropriate for the nature of
its business operations. Failure to establish and maintain an adequate
supervisory system may result in sanctions imposed by the SEC or an SRO, which
could limit PCS' ability to conduct its securities business. Moreover, under
federal law and certain state securities laws, PCS may be held liable for
damages resulting from the unauthorized conduct of its account executives to the
extent that PCS has failed to establish and maintain an appropriate supervisory
system.

Competition

The financial planning and investment advisory business is highly competitive
and contains businesses with a wide range of services. We compete with both
large and small investment management companies, commercial banks, brokerage
firms (including discount brokerage firms that have electronic brokerage
services), insurance companies, independent financial planners, independent
broker-dealers and other financial institutions. Many of our larger competitors
have greater marketing, financial and technical resources than we have.

In addition, we may suffer from competition from departing employees and
financial planners, and may compete for talent with other financial service
businesses. Our ability to compete effectively in our businesses is
substantially dependent on our continuing ability to attract, retain, and
motivate qualified financial advisors.

COMPETITIVE ADVANTAGES

Tax Return Preparation and Accounting Services

We believe that we offer clients a cost effective and proactive tax preparation
and tax planning service compared to services provided by H&R Block, accountants
and many independent tax preparers. Our volume allows us to provide uniform
services at competitive prices. In addition, as compared to certain of our
competitors that are open only during tax season, all of our offices are open
year round to provide financial planning and other services to our clients.

Almost all of our professional tax preparers have tax preparation experience or
are trained by us to meet the required level of expertise to properly prepare
tax returns.

Our tax preparers are generally not certified public accountants, attorneys or
enrolled agents. Therefore, they are limited in the representation that they can
provide to clients of ours in the event of an audit by the IRS. However, through
our acquisition of accounting firms, we expect the percentage of our tax
preparers who are certified public accountants to increase. Only an attorney, a
certified public accountant or a person specifically enrolled to practice before
the IRS can represent a taxpayer in an audit.


                                       5
<PAGE>

Financial Planning

A majority of our tax preparers and accountants also perform financial planning
services. We provide financial planning services, including securities
brokerage, investment management services, insurance and financing services.
Most middle and upper income individuals require a variety of financial planning
services. Clients often consider other aspects of their financial needs, such as
insurance, investments, retirement and estate planning, while having their tax
returns prepared by us. We offer every client the opportunity to complete a
questionnaire that is designed to ascertain if the client needs services for
other aspects of the client's financial situation. These questionnaires are
reviewed to determine whether the client may benefit from our financial planning
services.

We provide a variety of services and products to our financial planners to
enhance their professionalism and productivity.

Approved Investment Products. Our financial planners offer a wide variety of
approved investment products to their clients that are sponsored by
well-respected, financially sound companies. We believe that this is critical to
the success of our financial planners and us. We follow a selective process in
determining approved products to be offered to clients by our financial
planners, and we periodically review the product list for continued maintenance
or removal of approved status.

Marketing. We provide advertising and public relations assistance to our
financial planners that enhance their profile, public awareness, and
professional stature in the public's eye, including FINRA-approved marketing
materials, corporate and product brochures and client letters.

Supervision/Compliance. Our financial planners seek and value assistance in the
area of compliance. Keeping in step with the latest industry regulations, our
compliance department provides to our representatives, among other things:

      o     Advertising and sales literature review;
      o     Field inspections, followed up with written findings and
            recommendations;
      o     Assistance with customer complaints and regulatory inquiries;
      o     Workshops, seminars and in-house publications on various compliance
            matters;
      o     Regional and national meetings; and
      o     Interpretation of rules and regulations and general compliance
            training.

Clearing. We utilize the services of National Financial Services, LLC, which is
a wholly owned subsidiary of Fidelity Investments, to clear our transactions.
Engaging the processing services of a clearing firm exempts us from the
application of certain capital reserve requirements and other complex regulatory
requirements imposed by federal and state securities laws.

MARKETING

We market our services principally through referrals from customers, media,
direct mail, promotions and workshops. The majority of clients in each office
return to us for tax preparation services during the following year.

Branding. We have invested in upgrading our offices and developing a consistent
look including a distinctive logo and the use of green and gold in our direct
mail pieces, website, promotional pieces and signage. In addition, we
consistently direct individuals to our 1-800-TAX-TEAM toll free telephone
number.

Media. We advertise on television, radio, newspapers, magazines and outdoor
media.

Sports Marketing. We have advertised and performed special promotions with the
New York Mets during the regular season and with other major league baseball
teams during spring training.

Direct Mail. We regularly send direct mail advertisements to residences in the
areas surrounding our offices. The direct mail advertising solicits business for
our tax preparation and financial planning services. Many of our new clients
each year are first introduced to us through our direct mail advertising.

Workshops. We promote local tax planning workshops. At these workshops,
prospective new clients can learn easy to follow strategies for reducing their
taxes and for accumulating, preserving and transferring their wealth.

Online. We have a website on the internet at www.gtax.com for Company
information, including financial information and our latest news releases. In
addition, we utilize search engine marketing tools and advertising to attract
interest to our site.


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<PAGE>

SEASONALITY

Our fiscal year ends on June 30. All references to quarters and years in this
document are to fiscal quarters and fiscal years unless otherwise noted. The
seasonal nature of our tax return business results in our recognition of
approximately 51% of our tax revenues in the third quarter and approximately 30%
of our tax revenues in the fourth quarter of each fiscal year, the peak tax
preparation season.

ACQUISITIONS

In fiscal 2009, we completed the purchase of two tax and accounting service
firms generating approximately $0.5 million annually in tax preparation and
accounting service fees. We made four acquisitions in fiscal 2008. See Note 3 to
Notes to Consolidated Financial Statements for more on acquisitions.

EMPLOYEES

As of June 30, 2009, we employed 205 persons on a permanent full-time basis.
During tax season, we typically employ seasonal employees who do only tax return
preparation or provide support functions. The minimum requirements for a tax
preparer at the Company are generally some tax preparation experience and the
completion of our proprietary tax preparation training course or equivalent
educational experience.

Each of the registered representatives licensed with PCS and insurance agents
licensed through us have entered into a commission sharing agreement with us.
Each such agreement generally provides that a specified percentage of the
commissions earned by us are paid to the registered representative or insurance
agent. In the commission sharing agreements, the employee registered
representatives also agree to maintain certain Company information as
confidential and not to compete with us.

TRADEMARK

We have registered our "Gilman Ciocia Tax and Financial Planning" trademark with
the U.S. Patent and Trademark Office. The trademark is registered through 2017.

EQUITY FINANCING

On August 20, 2007, we closed the sale (the "Investment Purchase Closing") of
40.0 million shares of our common stock, par value $0.01 per share, at a price
of $0.10 per share (the "Investment Purchase") for proceeds of $4.0 million
pursuant to an Investor Purchase Agreement dated April 25, 2007 (the "Purchase
Agreement") with Wynnefield Small Cap Value Offshore Fund, Ltd., Wynnefield
Partners Small Cap Value, L.P., Wynnefield Partners Small Cap Value, L.P.I and
WebFinancial Corporation (the "Investment Purchasers"). The 40.0 million shares
of common stock were issued pursuant to an exemption from the registration
requirements of the Securities Act of 1933 under Regulation D, Rule 506 ("Rule
506"). The proceeds from the Investment Purchase Closing were used as follows:
$2.4 million was paid to Met Life Insurance Company of Connecticut ("Met Life"),
formerly known as the Travelers Insurance Company, in full satisfaction of the
approximately $6.8 million, including principal and interest, owed to Met Life
by us; $50.0 thousand was paid to Wachovia Bank, National Association
("Wachovia") as a principal payment, which reduced our loan balance with
Wachovia to approximately $0.7 million; $19.2 thousand was paid to Wachovia for
a loan fee and legal fees; and the $1.6 million balance was retained by us to be
used as working capital.

The Investment Purchase Closing was contingent upon, among other things, the
purchase of an additional 40.0 million shares of common stock at a price of
$0.10 per share in cash or by the conversion of outstanding debt or other
liabilities of ours (the "Private Placement") by other purchasers (the "Private
Placement Purchasers") including officers, directors and employees of ours.
Prime Partners II, LLC ("Prime Partners II"), a holding company owned in part by
Michael Ryan (the Company's President and Chief Executive Officer and a member
of the Company's Board of Directors) purchased 15.4 million shares of common
stock in the Private Placement by the conversion of $1.5 million of Company
debt. The closing of the Private Placement (the "Private Placement Closing")
occurred on August 20, 2007 simultaneously with the Investment Purchase Closing.

At the Private Placement Closing, we issued 16.9 million shares of common stock
for cash proceeds of $1.7 million and 23.1 million shares of common stock for
the conversion of $2.3 million of our debt, including 15.4 million shares issued
to Prime Partners II, for the conversion of $1.5 million of our debt. Such
shares were issued pursuant to an exemption from the registration requirements
under Rule 506. The $1.7 million of cash proceeds from the Private Placement
Closing were disbursed as follows: $3.8 thousand for escrow agent fees; and the
$1.7 million balance was retained by us to be used to retire the debt owed to
certain affiliates.


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<PAGE>

On April 14, 2008, the SEC declared effective our registration statement, which
included a prospectus filed with the SEC on April 14, 2008 for a public stock
offering (the "Public Stock Offering"). Pursuant to this offering, we
distributed, for no consideration to our holders of common stock,
non-transferable subscription rights to purchase shares of our common stock.
Each eligible shareholder received one subscription right for each share of
common stock owned at the close of business on April 14, 2008, the record date.
We distributed subscription rights exercisable for up to an aggregate of 20.0
million shares of our common stock.

Each subscription right entitled an eligible shareholder to purchase up to four
shares of common stock, subject to adjustment, at a subscription price of $0.10
per share. This is the same price at which we sold 80.0 million shares of common
stock in the two private placements described above. Shareholders who exercised
their basic subscription rights in full could over-subscribe for additional
shares to the extent additional shares were available. The Public Stock Offering
expired on June 20, 2008. A total of 3.9 million shares of the common stock were
issued pursuant to the Public Stock Offering.

The Investment Purchasers and the Private Placement Purchasers (collectively,
the "2007 Investors") did not receive subscription rights, but had the right
until September 15, 2008 to purchase at $0.10 per share the shares that remained
unsold on June 20, 2008. On September 12, 2008, we filed a supplement to our
prospectus extending until December 31, 2008 the period during which the 2007
Investors had a right to purchase up to the 16.1 million shares of common stock
offered under the Prospectus that remained unsold at the expiration of the
Public Stock Offering. A total of 0.7 million shares were purchased by the 2007
Investors during the extension period which expired on December 31, 2008.

On October 31, 2008 we commenced the Gilman Ciocia Common Stock and Promissory
Note Offering, a private offering of our securities pursuant to SEC Regulation D
(the "Offering"). The Offering was amended on December 8, 2008 and on September
3, 2009. The securities offered for sale in the Offering, as amended are: $2.3
million of notes with interest at 10% due on July 1, 2010 (the "Notes") and $0.4
million, or 3.5 million shares of our $0.01 par value common stock with a price
of $0.10 per share (the "Shares"). Through September 15, 2009, $1.7 million of
Notes and $0.1 million, or 1.0 million shares, of our common stock were issued
pursuant to the Offering.

ITEM 1A. RISK FACTORS

The outcome of an SEC Order Instituting Administrative and Cease-And-Desist
Proceedings Pursuant to Section 8A of the Securities Act of 1933, Sections 15(b)
and 21(c) of the Exchange Act, and Section 203(f) of the Investment Advisors Act
of 1940 could have a material adverse effect on our operating results.

On June 30, 2009, the SEC executed an Order Instituting Administrative and
Cease-And-Desist Proceedings (the "Order") Pursuant to Section 8A of the
Securities Act of 1933 (the "Securities Act"), Sections 15(b) and 21(c) of the
Securities Exchange Act of 1934 (the "Exchange Act"), and Section 203(f) of the
Investment Advisors Act of 1940 (the "Advisors Act") against the Company, Prime
Capital Services, Inc. a wholly owned subsidiary of the Company ("PCS"), Michael
P. Ryan, the Company's President and CEO ("Ryan"), Rose M. Rudden, the Chief
Compliance Officer of PCS ("Rudden") and certain other current and former
Company employee representatives registered with PCS (the "Representatives").
The Order alleged that the Company, PCS and the Representatives engaged in
fraudulent sales of variable annuities to senior citizens and that Ryan, Rudden
and two of the Representatives failed to supervise the variable annuity
transactions.

The Order alleged that PCS willfully: engaged in fraudulent conduct in the
offer, purchase and sale of securities; failed to make and keep current certain
books and records relating to its business for prescribed periods of time; and
failed reasonably to supervise with a view to prevent and detect violations of
the federal securities statutes, rules and regulations by the Representatives.

The Order alleged that the Company aided, abetted and caused PCS to engage in
fraudulent conduct in the offer, purchase and sale of securities.

The Order alleged that Ryan, Rudden and two of the Representatives failed
reasonably to supervise with a view to preventing and detecting violations of
the federal securities statutes, rules and regulations by the Representatives.

The Order alleged that four of the Representatives willfully: engaged in
fraudulent conduct in the offer, purchase and sale of securities; and aided,
abetted and caused PCS to fail to keep current certain books and records
relating to its business for prescribed periods of time.

It is possible that the Company and PCS may be required to pay judgments, suffer
penalties, incur settlements, or be obligated for non-financial undertakings in
amounts that could have a material adverse effect on our business, results of
operations, financial position or cash flows. As of June 30, 2009 we have
accrued $344.0 thousand as a reserve for potential fines and disgorgement of
profits related to the Order.


                                       8
<PAGE>

All claims involving the variable annuity sales practices of certain registered
representatives of PCS that involve the SEC Order have been interrelated by the
insurance carrier. The total remaining insurance coverage for all of these
claims has been reduced from $1.0 million to $0.4 million after settling claims.

As a result of this decreased insurance coverage, we could be required to pay
significant additional costs out of pocket, which would have a material adverse
effect on our working capital and our results of operations.

We will need additional capital to execute our strategic plan including
expanding our business plans and pursuing acquisitions. Failure to obtain
capital could have an adverse effect upon our strategic plan including expanding
our business plans and pursuing acquisitions.

We recently raised capital through the Offering. Our inability to find other
sources of financing or our inability to raise additional capital through the
Offering could have an adverse effect upon our strategic plan including
expanding our business plans and pursuing acquisitions. Although we have been
successful raising capital through the Offering there can be no assurances that
further capital can be raised.

Our business has and may continue to be harmed by market volatility and declines
in general economic conditions.

As the financial markets have deteriorated, our financial planning channel has
suffered decreased revenues. Our revenue and profitability may continue to be
adversely affected by declines in the volume of securities transactions and in
market liquidity, which generally result in lower revenues from trading
activities and commissions. Lower securities price levels may also result in a
reduced volume of transactions as well as losses from declines in the market
value of securities held in trading, investment and underwriting positions. In
periods of low volume, the fixed nature of certain expenses, including salaries
and benefits, computer hardware and software costs, communications expenses and
office leases, will adversely affect profitability. Sudden sharp declines in
market values of securities, like that experienced during the past year, and the
failure of issuers and counterparts to perform their obligations have resulted
in illiquid markets in which we have and may continue to incur losses in
principal trading and market making activities.

We have a history of losses and may incur losses in the future.

While, we reported a profit for the fiscal years ended June 30, 2008 and 2007,
we incurred losses in fiscal years 2009, 2006, 2005, and 2004 and may incur
losses again in the future. As of June 30, 2009, our accumulated deficit was
$31.6 million. If we fail to earn profits, the value of a shareholders
investment may decline.

The expense and diversion of management attention which result from litigation
could have an adverse effect on our operating results and could harm our ability
to effectively manage our business.

If we were to be found liable to clients for misconduct alleged in civil
proceedings, our operations may be adversely affected. Many aspects of our
business involve substantial risks of liability. There has been an increase in
litigation and arbitration within the securities industry in recent years,
including class action suits seeking substantial damages. Broker-dealers such as
PCS are subject to claims by dissatisfied clients, including claims alleging
they were damaged by improper sales practices such as unauthorized trading,
churning, sales of unsuitable securities, use of false or misleading statements
in the sale of securities, mismanagement and breach of fiduciary duty.
Broker-dealers may be liable for the unauthorized acts of their retail brokers
and independent contractors if they fail to adequately supervise their conduct.
PCS is a defendant and respondent in lawsuits and FINRA arbitrations in the
ordinary course of business. PCS maintains securities broker-dealer's
professional liability insurance to insure against this risk, but the insurance
policy contains a deductible, a cap on each claim and a cumulative cap on
coverage. In addition, certain activities engaged in by brokers may not be
covered by such insurance. The adverse resolution of any legal proceedings
involving us could have a material adverse effect on our business, financial
condition, and results of operations or cash flows.

Certain private shareholders, including some of our directors and officers,
control a substantial interest in us and thus may influence certain actions
requiring a vote of our shareholders.

On August 20, 2007, Michael Ryan (our Chief Executive Officer), Carole Enisman
(our Executive Vice President of Operations), Ted Finkelstein (our Vice
President, General Counsel and Secretary), Dennis Conroy (our former Chief
Accounting Officer), Prime Partners, Inc. and Prime Partners II, LLC (holding
companies owned in part by Michael Ryan), Wynnefield Small Cap Value Offshore
Fund, Ltd., Wynnefield Partners Small Cap Value, L.P., Wynnefield Partners Small
Cap Value, L.P.I and WebFinancial Corporation entered into a Shareholders
Agreement concerning the voting of their shares of our common stock. These
shareholders collectively own approximately 65.5% of our issued and outstanding
shares of common stock. Pursuant to the shareholders agreement, these
shareholders have the ability to influence certain actions requiring a
shareholder vote, including, the election of directors. This concentration of
ownership and control by these shareholders could delay or prevent a change in
our control or other action, even when a change in control or other action might
be in the best interests of our other shareholders.


                                       9
<PAGE>

Our staggered board may entrench management, could prevent or delay a change of
control of our Company and discourage unsolicited shareholder proposals or bids
for our common stock that may be in the best interests of our shareholders.

Our restated certificate of incorporation provides that our board of directors
is divided into three classes, serving staggered three-year terms. As a result,
at any annual meeting only a minority of our board of directors will be
considered for election. Since our "staggered board" would prevent our
shareholders from replacing a majority of our board of directors at any annual
meeting, it may entrench management, delay or prevent a change in our control
and discourage unsolicited shareholder proposals or unsolicited bids for our
common stock that may be in the best interests of our shareholders.

Making and integrating acquisitions could impair our operating results.

Our current strategy is to actively pursue acquisitions of tax preparation and
accounting firms. Acquisitions involve a number of risks, including: diversion
of management's attention from current operations; disruption of our ongoing
business; difficulties in integrating and retaining all or part of the acquired
business, its customers and its personnel; and the effectiveness of the acquired
company's internal controls and procedures. The individual or combined effect of
these risks could have an adverse effect on our business. In paying for an
acquisition, we may deplete our cash resources. Furthermore, there is the risk
that our valuation assumptions, customer retention expectations and our models
for an acquired product or business may be erroneous or inappropriate due to
foreseen or unforeseen circumstances and thereby cause us to overvalue an
acquisition target. There is also the risk that the contemplated benefits of an
acquisition may not materialize as planned or may not materialize within the
time period or to the extent anticipated.

Our operations may be adversely affected if we are not able to expand our
financial planning business by hiring additional financial planners and opening
new offices.

If the financial planners that we presently employ or recruit do not perform
successfully, our operations may be adversely affected. We plan to continue to
expand in the area of financial planning, by expanding the business of presently
employed financial planners and by recruiting additional financial planners. Our
revenue growth will in large part depend upon the expansion of existing business
and the successful integration and profitability of the recruited financial
planners. Our growth will also depend on the success of independent financial
planners who are recruited to join us.

Our cost cutting strategy could adversely affect our operations.

As a result of declines in the financial markets we have consolidated certain
job functions and implemented other cost cutting measures. There is no assurance
that our cost cutting strategy will be efficient or that such strategy will not
have an adverse impact on operations.

Our Consolidated Financial Statements do not include any adjustments that might
result due to the opening of new offices or from the uncertainties of a shift in
our business.

We may choose to open new offices. When we open a new office, we incur
significant expenses to build out the office and to purchase furniture,
equipment and supplies. We have found that a new office usually suffers a loss
in its first year of operation, shows no material profit or loss in its second
year of operation and does not attain profitability, if ever, until its third
year of operation. Therefore, our operating results could be materially
adversely affected in any year that we open a significant number of new offices.
If the financial markets deteriorate, our financial planning channel will suffer
decreased revenues. Our revenue and profitability may be adversely affected by
declines in the volume of securities transactions and in market liquidity, which
generally result in lower revenues from trading activities and commissions.
Lower securities price levels may also result in a reduced volume of
transactions as well as losses from declines in the market value of securities
held in trading, investment and underwriting positions. In periods of low
volume, the fixed nature of certain expenses, including salaries and benefits,
computer hardware and software costs, communications expenses and office leases,
will adversely affect profitability. Sudden sharp declines in market values of
securities and the failure of issuers and counterparts to perform their
obligations can result in illiquid markets in which we may incur losses in our
principal trading.

Our sale of 80.0 million shares of common stock in August 2007, the sale of 3.9
million shares in the Public Stock Offering, and the sale of 1.0 million shares
in the Private Offering significantly diluted the common stock ownership of our
shareholders which could adversely affect future prices of our stock.

The significant dilution of the common stock ownership of then-existing
shareholders resulting from our August 2007 private placements, the dilution of
common stock ownership resulting from our sale of 3.9 million shares of common
stock in the Public Stock Offering, and the sale of 1.0 million shares in the
Private Offering could have an adverse effect on the future price of the shares
of our common stock and on the future volume of the shares traded.


                                       10
<PAGE>

We are not quoted on a national securities exchange, which would limit our
ability to raise capital and your ability to trade in our securities, and which
results in additional regulatory requirements.

The Company is quoted on the OTC Bulletin Board under the symbol GTAX. If the
Company fails to meet criteria set forth in Rule 15c2-11 under the Exchange Act
(for example, by failing to file periodic reports as required by the Exchange
Act), various practice requirements are imposed on broker-dealers who sell
securities governed by the Rule to persons other than established customers and
accredited investors. For these types of transactions, the broker-dealer must
make a special suitability determination for the purchaser and have received the
purchaser's written consent to the transactions prior to sale. Consequently, the
Rule may have a material adverse effect on the ability of broker-dealers to sell
the Company's securities, which may materially affect the ability of
shareholders to sell the securities in the secondary market. Not being listed on
a national securities exchange may make trading our shares difficult for
investors, potentially leading to declines in the share price. It may also make
it more difficult for us to raise additional capital.

The low trading volume of our common stock increases volatility, which could
impair our ability to obtain equity financing.

Low trading volume in our common stock increases volatility, which could result
in the impairment of our ability to obtain equity financing. As a result,
historical market prices may not be indicative of market prices in the future.
In addition, the stock market has recently experienced extreme stock price and
volume fluctuation. Our market price may be impacted by changes in earnings
estimates by analysts, economic and other external factors and the seasonality
of our business. Fluctuations or decreases in the trading price of the common
stock may adversely affect the shareholders' ability to buy and sell the common
stock and our ability to raise money in a future offering of common stock.

Changing laws and regulations have resulted in increased compliance costs for
us, which could affect our operating results.

Changing laws, regulations and standards relating to corporate governance and
public disclosure, including the Sarbanes-Oxley Act of 2002, and newly enacted
SEC regulations have created additional compliance requirements for companies
such as ours. We are committed to maintaining high standards of internal
controls over financial reporting, corporate governance and public disclosure.
As a result, we intend to continue to invest appropriate resources to comply
with evolving standards, and this investment has resulted and will likely
continue to result in increased general and administrative expenses and a
diversion of management time and attention from revenue-generating activities to
compliance activities. See Item 9A(T) "Controls and Procedures."

Dependence on technology software and systems and our inability to provide
assurance that our systems will be effective could adversely affect our
operations.

As an information-financial services company with a subsidiary broker-dealer, we
are greatly dependent on technology software and systems and on the internet to
maintain customer records, effect securities transactions and prepare and file
tax returns. In the event that there is an interruption to our systems due to
internal systems failure or from an external threat, including terrorist
attacks, fire and extreme weather conditions, our ability to prepare and file
tax returns and to process financial transactions could be affected. We have
offsite backup, redundant and remote failsafe systems in place to safeguard
against these threats but there can be no assurance that such systems will be
effective to prevent malfunction and adverse effects on operations.

We face substantial competition. If we fail to remain competitive, we may lose
customers and our results of operations would be adversely affected.

The financial planning and tax planning industries are highly competitive. If
our competitors create new products or technologies, or are able to take away
our customers, our results of operations may be adversely affected. Our
competitors include companies specializing in income tax preparation as well as
companies that provide general financial services. Our principal competitors are
H&R Block and Jackson Hewitt in the tax preparation field and many well-known
national brokerage and insurance firms in the financial services field,
including Merrill Lynch and Citigroup. Many of these competitors have larger
market shares and significantly greater financial and other resources than us.
We may not be able to compete successfully with such competitors. Competition
could cause us to lose existing clients, impact our ability to acquire new
clients and increase advertising expenditures, all of which could have a
material adverse effect on our business or operating results.

Additionally, federal and state governments may in the future become direct
competitors to our tax offerings. If federal and state governments provide their
own software and electronic filing services to taxpayers at no charge it could
have a material adverse effect on our business, financial condition and results
of operations. The federal government has proposed legislation that could
further this initiative.


                                       11
<PAGE>

Government initiatives that simplify tax return preparation could reduce the
need for our services as a third party tax return preparer.

Many taxpayers seek assistance from paid tax return preparers such as us because
of the level of complexity involved in the tax return preparation and filing
process. From time to time, government officials propose measures seeking to
simplify the preparation and filing of tax returns or to provide additional
assistance with respect to preparing and filing such tax returns. The passage of
any measures that significantly simplify tax return preparation or otherwise
reduce the need for a third party tax return preparer could reduce demand for
our services, causing our revenues or profitability to decline.

Changes in the tax law that result in a decreased number of tax returns filed or
a reduced size of tax refunds could harm our business.

From time to time, the United States Treasury Department and the Internal
Revenue Service adopt policy and rule changes and other initiatives that result
in a decrease in the number of tax returns filed or reduce the size of tax
refunds. Similar changes in the tax law could reduce demand for our services,
causing our revenues or profitability to decline.

The highly seasonal nature of our business presents a number of financial risks
and operational challenges which, if we fail to meet, could materially affect
our business.

Our business is highly seasonal. We generate substantially all of our tax
preparation revenues during tax season, which is the period from January 1
through April 30. The concentration of this revenue-generating activity during
this relatively short period presents a number of operational challenges for us
including: (i) cash and resource management during the first eight months of our
fiscal year, when we generally operate at a loss and incur fixed costs and costs
of preparing for the upcoming tax season; (ii) flexible staffing, because the
number of employees at our offices during the peak of tax season is much higher
than at any other time; (iii) accurate forecasting of revenues and expenses; and
(iv) ensuring optimal uninterrupted operations during peak season, which is the
period from January 1 through April 30.

If we were unable to meet these challenges or were to experience significant
business interruptions during tax season, which may be caused by labor
shortages, systems failures, work stoppages, adverse weather or other events,
many of which are beyond our control, we could experience a loss of business,
which could have a material adverse effect on our business, financial condition
and results of operations.

Competition from departing employees and our ability to enforce contractual
non-competition and non-solicitation provisions could adversely affect our
operating results.

If a large number of our employees and financial planners depart and begin to
compete with us, our operations may be adversely affected. Although we attempt
to restrict such competition contractually, as a practical matter, enforcement
of contractual provisions prohibiting small-scale competition by individuals is
difficult. In the past, departing employees and financial planners have competed
with us. They have the advantage of knowing our methods and, in some cases,
having access to our clients. No assurance can be given that we will be able to
retain our most important employees and financial planners or that we will be
able to prevent competition from them or successfully compete against them. If a
substantial amount of such competition occurs, the corresponding reduction of
revenue may materially adversely affect our operating results.

Departure of key personnel could adversely affect our operations.

If any of our key personnel were to leave the Company, our operations may be
adversely affected. We believe that our ability to successfully implement our
business strategy and operate profitably depends on the continued employment of
James Ciocia, our Chairman of the Board of Directors, Michael Ryan, our
President and Chief Executive Officer, Ted Finkelstein, our Vice President,
General Counsel and Secretary, Carole Enisman, our Executive Vice President of
Operations, and Karen Fisher, our Chief Accounting Officer. Michael Ryan and
Carole Enisman are married. If any of these individuals become unable or
unwilling to continue in his or her present position, our business and financial
results could be materially adversely affected.

The decision not to pay dividends could impact the marketability of our common
stock.

Our decision not to pay dividends could negatively impact the marketability of
our common stock. Since our initial public offering of securities in 1994, we
have not paid dividends and do not plan to pay dividends in the foreseeable
future. We currently intend to retain future earnings, if any, to finance our
growth.


                                       12
<PAGE>

The release of restricted common stock may have an adverse affect on the market
price of the common stock.

The release of various restrictions on the possible future sale of our common
stock may have an adverse affect on the market price of our common stock. Based
on information received from our transfer agent, approximately 86.0 million
shares of the common stock outstanding are "restricted securities" under Rule
144 of the Securities Act of 1933.

In general, under Rule 144, a person who has satisfied a six-month holding
period may, under certain circumstances, sell, within any three month period, a
number of shares of "restricted securities" that do not exceed the greater of
one percent of the then outstanding shares of common stock or the average weekly
trading volume of such shares during the four calendar weeks prior to such sale.
Rule 144 also permits, under certain circumstances, the sale of shares of common
stock by a person who is not an "affiliate" of the Company (as defined in Rule
144) and who has satisfied a six-month holding period, without any volume or
other limitation.

The general nature of the securities industry as well as its regulatory
requirements could materially affect our business.

If a material risk inherent to the securities industry was to be realized, the
value of our common stock may decline. The securities industry, by its very
nature, is subject to numerous and substantial risks, including the risk of
declines in price level and volume of transactions, losses resulting from the
ownership, trading or underwriting of securities, risks associated with
principal activities, the failure of counterparties to meet commitments,
customer, employee or issuer fraud risk, litigation, customer claims alleging
improper sales practices, errors and misconduct by brokers, traders and other
employees and agents (including unauthorized transactions by brokers), and
errors and failure in connection with the processing of securities transactions.
Many of these risks may increase in periods of market volatility or reduced
liquidity. In addition, the amount and profitability of activities in the
securities industry are affected by many national and international factors,
including economic and political conditions, broad trends in industry and
finance, level and volatility of interest rates, legislative and regulatory
changes, currency values, inflation, and the availability of short-term and
long-term funding and capital, all of which are beyond our control.

Several current trends are also affecting the securities industry, including
increasing consolidation, increasing use of technology, increasing use of
discount and online brokerage services, greater self-reliance of individual
investors and greater investment in mutual funds. These trends could result in
our facing increased competition from larger broker-dealers, a need for
increased investment in technology, or potential loss of clients or reduction in
commission income. These trends or future changes could have a material adverse
effect on our business, financial condition, and results of operations or cash
flows.

If new regulations are imposed on the securities industry, our operating results
may be adversely affected. The SEC, FINRA, the NYSE and various other regulatory
agencies have stringent rules with respect to the protection of customers and
maintenance of specified levels of net capital by broker-dealers. The regulatory
environment in which we operate is subject to change. We may be adversely
affected as a result of new or revised legislation or regulations imposed by the
SEC, FINRA, other U.S. governmental regulators or SROs. We also may be adversely
affected by changes in the interpretation or enforcement of existing laws and
rules by the SEC, other federal and state governmental authorities and SROs.

PCS is subject to periodic examination by the SEC, FINRA, SROs and various state
authorities. PCS sales practice, operations, recordkeeping, supervisory
procedures and financial position may be reviewed during such examinations to
determine if they comply with the rules and regulations designed to protect
customers and protect the solvency of broker-dealers. Examinations may result in
the issuance of letters to PCS, noting perceived deficiencies and requesting PCS
to take corrective action. Deficiencies could lead to further investigation and
the possible institution of administrative proceedings, which may result in the
issuance of an order imposing sanctions upon PCS and/or their personnel.

Our business may be materially affected not only by regulations applicable to it
as a financial market intermediary, but also by regulations of general
application. For example, the volume and profitability of our, or our clients'
trading activities in a specific period could be affected by, among other
things, existing and proposed tax legislation, antitrust policy and other
governmental regulations and policies (including the interest rate policies of
the Federal Reserve Board) and changes in interpretation or enforcement of
existing laws and rules that affect the business and financial communities.

System or network failures or breaches in connection with our services and
products could reduce our sales, impair our reputation, increase costs or result
in liability claims, and seriously harm our business.

Any disruption to our services and products, our own information systems or
communications networks or those of third-party providers upon whom we rely as
part of its own product offerings, including the internet, could result in the
inability of our customers to receive our products for an indeterminate period
of time. Our services may not function properly for any of the following
reasons:

      o     System or network failure;
      o     Interruption in the supply of power;


                                       13
<PAGE>

      o     Virus proliferation;
      o     Security breaches;
      o     Earthquake, fire, flood or other natural disaster; or
      o     An act of war or terrorism.

Although we have made significant investments, both internally and with
third-party providers, in redundant and back-up systems for some of our services
and products, these systems may be insufficient or may fail and result in a
disruption of availability of our products or services to our customers. Any
disruption to our services could impair our reputation and cause us to lose
customers or revenue, or face litigation, customer service or repair work that
would involve substantial costs and distract management from operating our
business.

Failure to comply with laws and regulations that protect customers' personal
information could result in significant fines and harm our brand and reputation.

We manage highly sensitive client information, which is regulated by law.
Problems with the safeguarding and proper use of this information could result
in regulatory actions and negative publicity, which could adversely affect our
reputation and results of operations.

ITEM 2. PROPERTIES

Our corporate headquarters is located at 11 Raymond Avenue, Poughkeepsie, NY
10603, where we lease approximately 13,700 square feet of space. All our
company-owned offices are leased. We believe that any of our rental spaces could
be replaced with comparable office space, however, location and convenience is
an important factor in marketing our services to our clients.

ITEM 3. LEGAL PROCEEDINGS

On June 30, 2009, the SEC executed an Order Instituting Administrative and
Cease-And-Desist Proceedings (the "Order") Pursuant to Section 8A of the
Securities Act of 1933 (the "Securities Act"), Sections 15(b) and 21(c) of the
Securities Exchange Act of 1934 (the "Exchange Act"), and Section 203(f) of the
Investment Advisors Act of 1940 (the "Advisors Act") against the Company, Prime
Capital Services, Inc. a wholly owned subsidiary of the Company ("PCS"), Michael
P. Ryan, the Company's President and CEO ("Ryan"), Rose M. Rudden, the Chief
Compliance Officer of PCS ("Rudden") and certain other current and former
Company employee representatives registered with PCS (the "Representatives").
The Order alleged that the Company, PCS and the Representatives engaged in
fraudulent sales of variable annuities to senior citizens and that Ryan, Rudden
and two of the Representatives failed to supervise the variable annuity
transactions.

The Order alleged that PCS willfully: engaged in fraudulent conduct in the
offer, purchase and sale of securities; failed to make and keep current certain
books and records relating to its business for prescribed periods of time; and
failed reasonably to supervise with a view to prevent and detect violations of
the federal securities statutes, rules and regulations by the Representatives.

The Order alleged that the Company aided, abetted and caused PCS to engage in
fraudulent conduct in the offer, purchase and sale of securities.

The Order alleged that Ryan, Rudden and two of the Representatives failed
reasonably to supervise with a view to preventing and detecting violations of
the federal securities statutes, rules and regulations by the Representatives.

The Order alleged that four of the Representatives willfully: engaged in
fraudulent conduct in the offer, purchase and sale of securities; and aided,
abetted and caused PCS to fail to keep current certain books and records
relating to its business for prescribed periods of time.

It is possible that the Company and PCS may be required to pay judgments, suffer
penalties, incur settlements, or be obligated for non-financial undertakings in
amounts that could have a material adverse effect on our business, results of
operations, financial position or cash flows. As of June 30, 2009 we have
accrued $344.0 thousand as a reserve for potential fines and disgorgement of
profits related to the Order.


                                       14
<PAGE>

The Company and PCS are defendants and respondents in lawsuits and FINRA
arbitrations in the ordinary course of business. In accordance with Statement of
Financial Accounting Standards ("SFAS") No. 5 "Accounting for Contingencies," we
have established liabilities for potential losses from such complaints, legal
actions, government investigations and proceedings. In establishing these
liabilities, our management uses its judgment to determine the probability that
losses have been incurred and a reasonable estimate of the amount of the losses.
In making these decisions, we base our judgments on our knowledge of the
situations, consultations with legal counsel and our historical experience in
resolving similar matters. In many lawsuits, arbitrations and regulatory
proceedings, it is not possible to determine whether a liability has been
incurred or to estimate the amount of that liability until the matter is close
to resolution. However, accruals are reviewed regularly and are adjusted to
reflect our estimate of the impact of developments, rulings, advice of counsel
and any other information pertinent to a particular matter. Because of the
inherent difficulty in predicting the ultimate outcome of legal and regulatory
actions, we cannot predict with certainty the eventual loss or range of loss
related to such matters. If our judgments prove to be incorrect, our liability
for losses and contingencies may not accurately reflect actual losses that
result from these actions, which could materially affect results in the period
other expenses are ultimately determined. We accrued $0.2 million as a reserve
for potential settlements, judgments and awards at June 30, 2009. PCS has errors
and omissions coverage that will cover a portion of such matters. In addition,
under the PCS registered representatives contract, each registered
representative is responsible for covering awards, settlements and costs in
connection with these claims. While we will vigorously defend our self in these
matters and will assert insurance coverage and indemnification to the maximum
extent possible, there can be no assurance that these lawsuits and arbitrations
will not have a material adverse impact on our financial position.

On February 4, 2004, we were served with a Summons and a Shareholder's Class
Action and Derivative Complaint with the following caption: "Gary Kosseff,
Plaintiff, against James Ciocia, Thomas Povinelli, Michael Ryan, Kathryn Travis,
Seth A. Akabas, Louis P. Karol, Edward Cohen, Steven Gilbert and Doreen
Biebusch, Defendants and Gilman & Ciocia, Inc., Nominal Defendant". The nature
of the action is that the Company, our board of directors and our management,
breached their fiduciary duty of loyalty in connection with the sale of certain
of the Company's offices. The action was filed in the Court of Chancery of the
State of Delaware in and for New Castle County under Civil Action No. 188-N. The
case was scheduled for trial on June 4, 2007. The trial was postponed without a
new date pending settlement negotiations. On February 15, 2008, a written
Settlement Agreement was executed settling the lawsuit, subject to approval by
the Court of Chancery. At a hearing on September 22, 2008, the Court of Chancery
of the State of Delaware approved the Settlement Agreement and reserved decision
on setting an award of attorney's fees and expenses for plaintiff's counsel. On
October 31, 2008 Master in Chancery Sam Glasscock III issued a Master's Final
Report awarding the plaintiff's attorney's fees in the amount of $1.2 million
together with out-of-pocket costs in the amount of $0.1 million. We filed an
exception contesting the Master's Final Report with the Court of Chancery, which
was denied. The award of attorneys' fees and out-of-pocket costs was then paid
by our Executive Liability and Organization Reimbursement Policy with National
Union Fire Insurance Company of Pittsburgh, PA, ending the lawsuit.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

None.


                                       15
<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND
        ISSUER PURCHASES OF EQUITY SECURITIES

Prior to April 23, 2008, the shares of our common stock were traded on what is
commonly called the grey sheets under the symbol "GTAX.PK". As of April 23,
2008, we began to be quoted on the OTC Bulletin Board under the symbol GTAX.

The following table sets forth the high and low closing prices for the common
stock for the fiscal 2009 and 2008 quarters indicated:

                               ---------------------------------------
                                      High                 Low
                                 Fiscal    Fiscal    Fiscal    Fiscal
                                  Year      Year      Year      Year
                Quarter Ended     2009      2008      2009      2008
        ---------------------  ---------------------------------------

                 September 30    $ 0.20    $ 0.25    $ 0.10    $  0.05
                  December 31    $ 0.15    $ 0.33    $ 0.06    $  0.05
                     March 31    $ 0.12    $ 0.50    $ 0.08    $  0.05
                      June 30    $ 0.12    $ 0.40    $ 0.06    $  0.10

DIVIDENDS AND DIVIDEND POLICY

Since our initial public offering of securities in 1994, we have not paid
dividends, and we do not plan to pay dividends in the foreseeable future. We
currently intend to retain any future earnings, if any, to finance our growth.

HOLDERS OF COMMON STOCK

On June 30, 2009, there were approximately 437 shareholders of common stock of
record. This does not reflect persons or entities that hold common stock in
nominee or "street" name through various brokerage firms. On the close of
trading on June 30, 2009, the price of the common stock was $0.06 per share.

RECENT SALES OF UNREGISTERED SECURITIES

During the fiscal year ended June 30, 2009, we issued the following shares of
common stock in privately negotiated transactions that were not registered under
the Securities Act pursuant to the exemption provided by Section 4(2) of the
Securities Act:

      o     On October 10, 2008, we issued 300,000 shares to certain of our
            Board Directors in consideration for services as director
            compensation pursuant to our 2007 Stock Incentive Plan.

      o     On October 31, 2008, we commenced the Gilman Ciocia Common Stock and
            Promissory Note Offering, a private placement offering of our
            securities pursuant to SEC Regulation D (the "Offering"). The
            Offering was amended on December 8, 2008 and on September 3, 2009.
            The securities offered for sale in the Offering, as amended are:
            $2.3 million of notes with interest at 10% due on July 1, 2010 (the
            "Notes") and $0.4 million, or 3.5 million shares of our $0.01 par
            value common stock with a price of $0.10 per share (the "Shares").
            Through September 15, 2009, $1.7 million of Notes and $0.1 million,
            or 1.0 million shares, of our common stock were issued by us
            pursuant to the Offering. The proceeds of the sales were used for
            general corporate purposes. No underwriters participated in these
            transactions.

      o     On November 14, 2008 we issued 250,000 shares to VFinance for
            consulting services rendered in reliance upon the exemption afforded
            by Rule 506 of Regulation D.


                                       16
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

The following discussion should be read in conjunction with our Consolidated
Financial Statements and related Notes thereto set forth in Item 8. "Financial
Statements and Supplementary Data". In addition to historical information, this
discussion includes forward-looking information that involves risks and
assumptions which could cause actual results to differ materially from our
expectations. See "Statement Regarding Forward-Looking Disclosure" included in
Part I of this report.

OVERVIEW

Company Model

We provide federal, state and local income tax return preparation for
individuals predominantly in middle and upper income brackets and accounting
services to small and midsize companies and financial planning services,
including securities brokerage, investment management services, insurance, and
financing services. Clients often consider other aspects of their financial
needs such as investments, insurance, pension and estate planning, while having
their tax returns prepared by us. We believe that our tax return preparation and
accounting services are inextricably intertwined with our financial planning
activities. Neither channel would operate as profitably by itself and the two
channels leverage off each other, improving profitability and client retention.
The financial planners who provide such services are employees of the Company
and/or independent contractors of the Company's Prime Capital Services, Inc.
("PCS") subsidiary. The Company and PCS earn a share of commissions (depending
on what service is provided) from the services that the financial planners
provide to the clients in transactions for securities, insurance and related
products. We also earn substantial revenue from asset management services
provided through Asset & Financial Planning, Ltd. ("AFP"), our wholly owned
subsidiary. We also earn revenues from commissions for acting as an insurance
agent and as a broker for financing services. PCS also earns revenues ("PCS
Marketing") from its strategic marketing relationships with certain product
sponsors which enables PCS to efficiently utilize its training, marketing and
sales support resources.

For the fiscal year ended June 30, 2009, approximately 18% of our revenues were
earned from tax preparation and accounting services and 82% were earned from all
financial planning and related services of which approximately 71% was earned
from mutual funds, annuities and securities transactions, 22% from asset
management, 4% from insurance, 2% from PCS Marketing, and 1% from financing
services.

Regulatory Investigations

On June 30, 2009, the SEC executed an Order Instituting Administrative and
Cease-And-Desist Proceedings (the "Order") Pursuant to Section 8A of the
Securities Act of 1933 (the "Securities Act"), Sections 15(b) and 21(c) of the
Securities Exchange Act of 1934 (the "Exchange Act"), and Section 203(f) of the
Investment Advisors Act of 1940 (the "Advisors Act") against the Company, Prime
Capital Services, Inc. a wholly owned subsidiary of the Company ("PCS"), Michael
P. Ryan, the Company's President and CEO ("Ryan"), Rose M. Rudden, the Chief
Compliance Officer of PCS ("Rudden") and certain other current and former
Company employee representatives registered with PCS (the "Representatives").
The Order alleged that the Company, PCS and the Representatives engaged in
fraudulent sales of variable annuities to senior citizens and that Ryan, Rudden
and two of the Representatives failed to supervise the variable annuity
transactions.

The Order alleged that PCS willfully: engaged in fraudulent conduct in the
offer, purchase and sale of securities; failed to make and keep current certain
books and records relating to its business for prescribed periods of time; and
failed reasonably to supervise with a view to prevent and detect violations of
the federal securities statutes, rules and regulations by the Representatives.

The Order alleged that the Company aided, abetted and caused PCS to engage in
fraudulent conduct in the offer, purchase and sale of securities.

The Order alleged that Ryan, Rudden and two of the Representatives failed
reasonably to supervise with a view to preventing and detecting violations of
the federal securities statutes, rules and regulations by the Representatives.

The Order alleged that four of the Representatives willfully: engaged in
fraudulent conduct in the offer, purchase and sale of securities; and aided,
abetted and caused PCS to fail to keep current certain books and records
relating to its business for prescribed periods of time.

It is possible that the Company and PCS may be required to pay judgments, suffer
penalties, incur settlements, or be obligated for non-financial undertakings in
amounts that could have a material adverse effect on our business, results of
operations, financial position or cash flows. As of June 30, 2009 we have
accrued $344.0 thousand as a reserve for potential fines and disgorgement of
profits related to the Order.


                                       17
<PAGE>

Managed Assets

As indicated in the following table, as of June 30, 2009, assets under AFP
management decreased $72.6 million, to $523.8 million, from $596.4 million as of
June 30, 2008. This decrease is mostly attributable to market declines of $77.3
million offset by net increases in new assets under management of approximately
$4.7 million. As of June 30, 2009, total Company assets under custody were $3.3
billion, down $882.7 million from June 30, 2008.

The following table presents the market values of assets under management by
AFP:

          (in thousands)

           Market Value                                 Total Assets
              as of                                       Under AFP
             June 30,       Annuities     Brokerage      Management
        ----------------------------------------------------------------

               2009          $275,321      $248,394       $523,715
               2008          $330,503      $265,850       $596,353

The following table presents the market values of total Company assets under
custody:

          (in thousands)

           Market Value    Total Company
              as of         Assets Under
             June 30,         Custody
        -----------------------------------

               2009          $3,349,106
               2008          $4,231,803

Debt and Related Party Notes

On October 31, 2008 we commenced the Gilman Ciocia Common Stock and Promissory
Note Offering, a private offering of our securities pursuant to SEC Regulation D
(the "Offering"). The Offering was amended on December 8, 2008 and on September
3, 2009. The securities offered for sale in the Offering, as amended are: $2.3
million of notes with interest at 10% due on July 1, 2010 (the "Notes") and $0.4
million, or 3.5 million shares of our $0.01 par value common stock with a price
of $0.10 per share (the "Shares"). Through September 15, 2009, $1.7 million of
Notes and $0.1 million, or 1.0 million shares, of our common stock were issued
pursuant to the Offering. On January 27, 2009, Carole Enisman, our Executive
Vice President of Operations, purchased a $0.2 million Note of the $1.7 million
of Notes and on December 3, 2008, three trusts, of which James Ciocia, Chairman
of our Board of Directors, is a trustee, purchased an aggregate of $0.3 million
of Notes of the $1.7 million of the Notes. On August 19, 2009, these trusts
purchased an additional $0.3 million of the Notes.

On August 20, 2007, we sold 80.0 million shares of our common stock at the
Investment Purchase Closing and the Private Placement Closing. On August 20,
2007, we paid Met Life $2.4 million from the proceeds of the Investment Purchase
Closing and the Private Placement Closing in full satisfaction of the
approximately $6.8 million, including principal and interest, previously owed to
Met Life. During the period the loan was outstanding, we were in default on our
$5.0 million distribution financing with Met Life. See Note 18 to the Notes to
the Consolidated Financial Statements for a discussion of the stock sales.

A $1.0 million loan (the "Purchasing Group Loan") owed by us and 0.8 million
shares of our common stock were sold to a group of Company management and
employees (the "Purchasing Group") on April 29, 2005 for the amount of $0.8
million. The $0.3 million debt reduction agreed to by the Purchasing Group was
recorded to paid-in-capital, as the Purchasing Group is a related party. On
August 20, 2007, as part of the Private Placement Closing, $0.7 million of the
Purchasing Group Loan was converted to 7.1 million shares of Company common
stock.

On March 31, 2009, our outstanding principal balance of $0.1 million with
Wachovia was paid in full. As of June 30, 2008, we were in default of certain
covenants under our term loan/revolving letter of credit financing with
Wachovia.


                                       18
<PAGE>

As of September 1, 2008, we entered into a $0.5 million promissory note with
Prime Partners. The Prime Partners Note provided for 10% interest to be paid in
arrears through the end of the previous month on the 15th day of each month
commencing on October 15, 2008. The principal of the New Prime Partners Note was
to be paid on or before July 1, 2009. Michael Ryan is a director, an officer and
a significant shareholder of Prime Partners. The New Prime Partners Note was
amended as of June 30, 2009 to extend the due date of principal to July 1, 2010.

As of September 1, 2008, we entered into a $0.5 million promissory note with a
trust, of which Ted Finkelstein, our Vice President, General Counsel and
Secretary is the trustee. The New Trust Note was amended on January 30, 2009.
The New Trust Note provided for 10% interest to be paid in arrears through the
end of the previous month on the 15th day of each month commencing on October
15, 2008. The principal of the New Trust Note was to be paid to the Trust as
follows: $117.5 thousand on March 31, 2009, April 30, 2009, May 31, 2009 and
June 30, 2009. On May 8, 2009, the Trust Note was amended to extend the full
principal payment to June 30, 2009. The New Trust Note was again amended as of
September 25, 2009 to extend the due dates of principal to be paid as follows:
$120.0 thousand due on March 1, 2010 and $175.0 thousand due on April 1, 2010
and April 15, 2010.

On November 28, 2008 we issued a promissory note in the amount of $50.0 thousand
to Ted Finkelstein, our Vice President, General Counsel and Secretary. The note
provides for 10% interest to be paid monthly with the principal balance to be
paid before June 30, 2009. The promissory note was amended as of June 30, 2009
to extend the due date of principal to May 1, 2010.

See Note 11 to the Notes to Consolidated Financial Statements for a further
discussion of our debt and see Note 16 to the Notes to Consolidated Financial
Statements for a further discussion of the our related party transactions.

Acquisitions

We are actively pursuing acquisitions of tax preparation and accounting firms to
increase our client base and accounting business. In an effort to facilitate
identifying potential acquisitions, we have launched an advertising campaign
involving targeted direct mail, a customized website and inbound and outbound
telemarketing to prospect for leads. In fiscal 2009 we purchased two tax
preparation and accounting businesses and during 2008, we purchased four such
businesses.

RESULTS OF OPERATIONS

The following table sets forth certain items from our statements of operations
expressed as a percentage of revenue for fiscal years ended June 30, 2009 and
2008. The trends illustrated in the following table are not necessarily
indicative of future results.

                                                 For Fiscal Years Ended June 30,
                                                    2009                 2008
                                                 -------------------------------

Revenues
   Financial Planning Services                      82.2%                87.0%
   Tax Preparation and Accounting Fees              17.8%                13.0%
                                                 -------------------------------
       Total Revenue                               100.0%               100.0%
                                                 -------------------------------

Operating Expenses
   Commissions                                      53.8%                57.8%
   Salaries (1)                                     21.7%                18.9%
   General and Administrative Expense               11.5%                11.3%
   Advertising                                       3.8%                 3.9%
   Brokerage Fees & Licenses                         3.5%                 2.6%
   Rent                                              6.7%                 5.2%
   Depreciation and Amortization                     2.7%                 2.1%
                                                 -------------------------------
       Total Operating Expenses                    103.7%               101.8%
                                                 -------------------------------

   Income/(Loss) Before Other Income/(Expense)      -3.7%                -1.8%
                                                 -------------------------------

Other Income/(Expense)                              -0.6%                 9.2%
                                                 -------------------------------
   Income Before Income Taxes                       -4.3%                 7.4%
     Income Taxes                                    0.0%                 0.2%
                                                 -------------------------------
Net Income                                          -4.3%                 7.2%
                                                 -------------------------------

(1) Salaries in whole dollars decreased in fiscal 2009 versus fiscal 2008.


                                       19
<PAGE>

The following table sets forth a summary of our consolidated results of
operations for fiscal years ended June 30, 2009 and 2008:

(in thousands, except share data)             For Fiscal Years Ended June 30,
Consolidated Results of Operations         2009           2008          % Change
                                          --------------------------------------
Revenues                                  $41,585      $  50,877          -18.3%
Commissions                                22,374         29,419          -23.9%
Other Operating Expenses                   20,748         22,386           -7.3%
Net Income                                 (1,797)         3,698         -148.6%

Diluted EPS from Net Income/(Loss)        $ (0.02)     $    0.05         -140.3%

The following two tables set forth a breakdown of our consolidated revenue
detail by product line and brokerage product type for the fiscal years ended
June 30, 2009 and 2008:

(in thousands)                                For Fiscal Years Ended June 30,
Consolidated Revenue Detail                2009            2008         % Change
--------------------------------------------------------------------------------
Revenue by Product Line
Brokerage Commissions                     $24,219         $31,524         -23.2%
Advisory Fees (1)                           7,687          10,023         -23.3%
Tax Preparation and Accounting Fees         7,410           6,623          11.9%
Insurance Commissions                       1,364           1,459          -6.6%
PCS Marketing Revenue                         553             911         -39.3%
Lending Services                              352             337           4.4%
                                          -----------------------
    Total Revenue                         $41,585         $50,877         -18.3%
                                          =======================

Brokerage Commissions by Product Type
Annuities                                 $11,884         $16,589         -28.4%
Trails (1)                                  6,325           8,122         -22.1%
Mutual Funds                                3,151           4,473         -29.6%
Equities, Bonds & UIT                         926           1,106         -16.3%
All other products                          1,933           1,234          56.7%
                                          -----------------------
   Brokerage Commissions                  $24,219         $31,524         -23.2%
                                          =======================

(1) Advisory fees represent the fees charged by the Company's investment
advisors on client's assets under management and is calculated as a percentage
of the assets under management, on an annual basis. Trails are commissions
earned by PCS as the broker dealer each year a client's money remains in a
mutual fund or in a variable annuity account, as compensation for services
rendered to the client. Advisory fees and trails represent recurring revenue.
While these fees generate substantially lower first year revenue than most
commission products and are more susceptible to fluctuations in the financial
markets, the recurring nature of these fees provides a platform for accelerating
future revenue growth.

The following table sets forth a breakdown of our consolidated financial
planning revenue by company-owned offices and independent offices for the fiscal
years ended June 30, 2009 and 2008:

                                       For Fiscal Years Ended June 30,
                                               % of                    % of
(in thousands)                     2009        Total        2008       Total
--------------------------------------------------------------------------------
Company-Owned Offices            $ 16,319       48%       $ 19,868      45%
Independent Offices                17,856       52%         24,386      55%
                               -------------            -------------
            Total                $ 34,175                 $ 44,254
                               =============            =============


                                       20
<PAGE>

The following table sets forth a breakdown of our consolidated revenue detail by
company-owned offices for the fiscal years ended June 30, 2009 and 2008:

                                       For Fiscal Years Ended June 30,
                                               % of                    % of
(in thousands)                     2009        Total        2008       Total
--------------------------------------------------------------------------------
Financial Planning               $ 16,318       69%       $ 19,868      75%
Tax Preparation and
Accounting Services                 7,410       31%          6,623      25%
                               -------------            -------------
            Total                $ 23,728                 $ 26,491
                               =============            =============

FISCAL 2009 COMPARED WITH FISCAL 2008

Our revenues for the fiscal year ended June 30, 2009 were $41.6 million, down
18.3%, compared with $50.9 million for the fiscal year ended June 30, 2008. This
decrease in revenues is mostly the result of financial planner attrition mainly
through our independent channel and decreased production mainly through our
independent channel resulting from market declines during the fiscal year ended
June 30, 2009. These declines were partially offset by an 11.9% increase in our
tax preparation and accounting services business resulting from our acquisitions
and marketing efforts to increase organic growth.

Our total revenues for the fiscal year ended June 30, 2009 consisted of $34.2
million for financial planning services and $7.4 million for tax preparation and
accounting services. Financial planning services represented approximately 82.0%
and tax preparation and accounting services represented approximately 18.0% of
our total revenues for the fiscal year ended June 30, 2009. Our total revenues
for the fiscal year ended June 30, 2008 consisted of $44.3 million for financial
planning services and $6.6 million for tax preparation and accounting services.
Financial planning represented approximately 87.0% and tax preparation and
accounting fees represented approximately 13.0% of our revenues for the fiscal
year ended June 30, 2008.

Our financial planning revenue was split approximately 48.0% for company-owned
offices and 52.0% for independent offices for the fiscal year ended June 30,
2009. Thus within Company offices, financial planning services represented
approximately 69.0% of revenues and tax preparation and accounting services
represented approximately 31.0%. Our financial planning revenue was split
approximately 45.0% for company-owned offices and 55.0% for independent offices
for the fiscal year ended June 30, 2008. Within company-owned offices
approximately 75.0% of revenues for this time period came from financial
planning and 25.0% came from tax preparation and accounting services for the
fiscal year ended June 30, 2008. This trend indicates a shift in our channel mix
to more production coming from our Company representatives versus independents
where last year the independent channel was a bigger contributor.

For the fiscal year ended June 30, 2009, revenues from recurring revenues
sources (advisory fees and trails) decreased to $14.0 million, down $4.1 million
from $18.1 million for the fiscal year ended June 30, 2008, representing a 22.8%
decrease in recurring revenue. For the fiscal year ended June 30, 2009,
recurring revenue was 33.7% of our total revenue compared to 35.7% for the
fiscal year ended June 30, 2008. This decline in recurring revenue is mostly
attributable to market declines, slightly offset by new assets under management.

For the fiscal year ended June 30, 2009, revenues from variable annuity sales
were $11.9 million compared with $16.6 million for the same period last year,
representing a 28.4% drop in annuity revenue. This trend is mostly indicative of
our efforts to continue to diversify our product mix.

Total operating expenses for the fiscal year ended June 30, 2009 were $43.1
million compared to $51.8 million for the fiscal year ended June 30, 2008.
Operating expenses decreased mostly due to a decline in commission expense
resulting from declines in revenue and decreased salaries and benefits,
advertising and general and administrative expenses as we continue our efforts
to reduce expenses. These declines were slightly offset by increased brokerage
fees, rent and depreciation and amortization expense.

Commission expense for the fiscal year ended June 30, 2009 was $22.4 million
(53.8% of revenue), a decrease of $7.0 million, or 23.9%, from $29.4 million
(57.8% of revenue) for the fiscal year ended June 30, 2008. The decrease in
commission expense is mostly attributable to declines in revenue, as well as due
to the mix of financial planning revenues generated on the employee channel
compared with the independent channel. Financial planning commission expense as
a percentage of financial planning revenue was approximately 61.0% and 64.0% for
the fiscal years ending June 30, 2009 and 2008, respectively. This decrease as a
percentage of revenue is attributable to financial planning revenue generated
through our employee channel representing 48.0% of the total financial planning
revenue where commission payout rates are lower than on the independent channel
compared with the same period last year when our employee channel generated
45.0% of total financial planning revenue.


                                       21
<PAGE>

Salaries which consist primarily of salaries, related payroll taxes and employee
benefit costs, decreased by $0.6 million, or 6.2%, for the fiscal year ended
June 30, 2009 compared with the same period last year. The decrease is mostly
attributable to our efforts started in March 2008 to reduce overhead costs to
help mitigate the impact of the downturn in the market which negatively affects
our revenues. Such cost reductions included the restructuring of departments,
eliminating open positions and layoffs.

General and administrative expense consists primarily of expenses for general
corporate functions including outside legal and professional fees, insurance,
utilities, bad debt expenses and general corporate overhead costs. General and
administrative expenses decreased by $1.0 million, or 16.7%, in the fiscal year
ended June 30, 2009 compared with the same period last year. This decrease is
primarily attributable to the timing of our 2007 and 2008 annual awards
conferences which were held in July 2007 and May 2008, which are in the same
fiscal year ended June 30, 2008. This past fiscal year ended June 30, 2009 the
annual awards conference was scaled back due to the declines in revenues. This
cost savings of $0.7 million has an offsetting revenue decline in PCS Marketing
revenues of $0.4 million as we recognize these revenues at the commencement of
the event. Additional cost savings of $0.5 million in legal and professional
expenses and claim settlements resulted from our effort to control expenses by
processing more customer claims in-house as well as a reduced number of claims
versus the same period last year. These savings were offset by a $344.0 thousand
reserve for potential fines and disgorgement of profits related to the SEC
Order. The remaining $0.2 million reduction in expenses resulted mostly from our
continued efforts to reduce operating expenses.

Advertising expense decreased 21.2% to $1.6 million for the fiscal year ended
June 30, 2009 compared with $2.0 million for the same period last year. This
decrease is primarily attributable to our efforts to find more cost effective
advertising channels to grow brand awareness.

Brokerage fees and license expense for the fiscal year ended June 30, 2009 was
$0.1 million higher compared with the same period last year. This increase is
due to more trades going through brokerage accounts versus direct applications,
partially offset by lower fees due to the decline in market values for accounts
under management with third party money managers in AFP.

Rent expense increased 5.4% to $2.8 million for the fiscal year ended June 30,
2009 compared with $2.6 million for the same period last year. This increase is
due to annual rent increases, new offices related to acquisitions and the
relocation of existing offices to more prominent office locations, offset in
part by the closing and consolidation of certain of our offices during fiscal
2009.

Depreciation and amortization expense was 6.4% higher for the fiscal year ended
June 30, 2009 compared with the same period last year. This is mostly
attributable to increased amortization expense related to the intangible assets
acquired through acquisitions made during both fiscal years, offset in part by
lower depreciation as fixed assets become fully depreciated.

Our loss before other income and expense for the fiscal year ended June 30, 2009
was $1.5 million compared with a loss of $0.9 million for the same period last
year. This increase in loss was primarily attributable to decreased financial
planning revenue due to declines in market conditions and attrition mostly on
the independent channel, partially offset by increased tax preparation and
accounting services revenue, decreased commission expenses due to declines in
financial planning revenues and by our efforts to control operating expenses.

Total other income/(expense) for the fiscal year ended June 30, 2009 was an
expense of $0.3 million compared to income of $4.7 million for the fiscal year
ended June 30, 2008. The decrease in other income/(expense) was primarily due to
the extinguishment of debt owed to Met Life and the conversion of a portion of
related debt to our common stock resulting from the sale of 80.0 million shares
of common stock in two private placements (the "Investment Purchase Closing" and
"Private Placement Closing") each of which closed on August 20, 2007.

Our net loss for the fiscal year ended June 30, 2009, was $1.8 million, or
$(0.02) per basic and diluted share, compared to net income of $3.7 million, or
$0.05 per basic and diluted share for the fiscal year ended June 30, 2008. This
decline was primarily attributable to decreased financial planning revenue due
to declines in market conditions and representative attrition, reduced one-time
other income realized in fiscal 2008 related to the extinguishment of our debt
owed to Met Life and related parties, partially offset by increased tax
preparation and accounting services revenue, decreased commission expense due to
declines in financial planning revenues and by controlling expenses. Weighted
average shares outstanding increased by 16.3 million shares compared to the
prior period, mainly due to the sale of 80.0 million shares of common stock in
the Investment Purchase Closing and the Private Placement Closing on August 20,
2007.


                                       22
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

During fiscal 2009, we had a net loss of $1.8 million and at June 30, 2009 had a
working capital deficit of $3.4 million. At June 30, 2009 we had $0.7 million of
cash and cash equivalents, $17.0 thousand in marketable securities and $2.3
million of trade accounts receivable, net, to fund short-term working capital
requirements. PCS is subject to the SEC's Uniform Net Capital Rule 15c3-1, which
requires that PCS maintain minimum regulatory net capital of $0.1 million and,
in addition, that the ratio of aggregate indebtedness to net capital, both as
defined, shall not exceed 15 to one. At June 30, 2009 we were in compliance with
this regulation.

On October 31, 2008 we commenced a private offering of our securities pursuant
to SEC Regulation D (the "Offering"). The Offering was amended on December 8,
2008 and on September 3, 2009. The securities offered for sale in the Offering,
as amended are: $2.3 million of notes with interest at 10% due on July 1, 2010
(the "Notes") and $0.4 million, or 3.5 million shares of our $0.01 par value
common stock with a price of $0.10 per share (the "Shares"). Through September
15, 2009, $1.7 million of Notes and $0.1 million, or 1.0 million shares, of our
common stock were issued pursuant to the Offering.

On April 14, 2008, the SEC declared effective our registration statement, which
included a prospectus filed with the SEC on April 14, 2008 for our Public Stock
Offering. Pursuant to this offering, we distributed, for no consideration to our
holders of common stock, non-transferable subscription rights to purchase shares
of our common stock. Each eligible shareholder received one subscription right
for each share of common stock owned at the close of business on April 14, 2008,
the record date. We distributed subscription rights exercisable for up to an
aggregate of 20.0 million shares of our common stock. See Note 18 to the Notes
to Consolidated Financial Statements for a discussion of the Public Stock
Offering.

Each subscription right entitled an eligible shareholder to purchase up to four
shares of our common stock, subject to adjustment, at a subscription price of
$0.10 per share. This is the same price at which we sold in two private
placements a total of 80.0 million shares of our common stock to the 2007
Investors. Shareholders who exercised their basic subscription rights in full
could over-subscribe for additional shares to the extent additional shares were
available. The subscription rights expired on June 20, 2008. A total of 3.9
million shares of our common stock were issued pursuant to the Public Stock
Offering.

The Investment Purchasers and the Private Placement Purchasers (collectively,
the "2007 Investors") did not receive subscription rights, but had the right
until September 15, 2008 to purchase at $0.10 per share the shares that remained
unsold on June 20, 2008. On September 12, 2008, we filed a supplement to our
prospectus extending until December 31, 2008 the period during which the 2007
Investors have a right to purchase up to the 16.1 million shares of common stock
offered under the Prospectus that remained unsold at the expiration of the
Public Stock Offering. A total of 0.7 million shares were purchased by the 2007
Investors during the extension period which expired on December 31, 2008.

On March 31, 2009, our outstanding principal balance of $0.1 million with
Wachovia was paid in full. As of June 30, 2008, we were in default of certain
covenants under our term loan/revolving letter of credit financing with
Wachovia.

The New Trust Note amounting to $0.5 million and the $50.0 thousand promissory
note with Ted Finkelstein, our Vice President, General Counsel and Secretary
were due in full on June 30, 2009. Additionally, the new $0.5 million New Prime
Partners Note was due in full on or before July 1, 2009. On June 30, 2009, the
promissory note with Ted Finkelstein and the New Prime Partners Note were
amended to extend the due dates of principal as follows: the promissory note
with Ted Finkelstein is due on May 1, 2010 and the New Prime Partners Note is
due on July 1, 2010. The New Trust Note was amended on September 25, 2009. The
New Trust Note due dates of principal are as follows: $120.0 thousand due on
March 1, 2010 and $175.0 thousand due on April 1, 2010 and April 15, 2010.

Our ability to satisfy our obligations depends on our future financial
performance, which will be subject to prevailing economic, financial, and
business conditions. Capital requirements, at least in the near term, are
expected to be provided by cash flows from operating activities, cash on hand at
June 30, 2009 or a combination thereof. To the extent future capital
requirements exceed cash on hand plus cash flows from operating activities, we
anticipate that working capital will be financed by the further sales of
securities through private offerings and by pursuing financing through outside
lenders. We are also continuing to control operating expenses and are
implementing our acquisition strategy to increase earnings and cash flow. While
management believes that capital may be available, there is no assurance that
such capital can be secured. Additionally, there can be no assurance that our
cost control measures will provide the capital needed which could adversely
impact our business.

While we believe that payments to tax preparation and accounting practices which
we have acquired have been and will continue to be funded through cash flow
generated from those acquisitions, we need additional capital to fund initial
payments on future acquisitions. If we do not have adequate capital to fund
those future acquisitions, we may not be able to pursue future strategic
acquisitions which could adversely impact our business and ability to grow.


                                       23
<PAGE>

DISCUSSION OF CASH FLOWS

Operating Activities

For fiscal 2009, cash provided by operating activities was $0.1 million, as
compared to cash used in operating activities of $1.4 million for fiscal 2008.
The increase in net cash provided by operating activities was primarily
attributable to paying down a large portion of accounts payable during the
fiscal year ended June 30, 2008 using the cash provided by the 2007 Investors.

Investing Activities

During fiscal 2009, we completed two acquisitions with a total aggregate
purchase price of $0.2 million, made payments of $0.4 million on 2008
acquisitions for final contingency payments and spent $0.3 million for fixed
assets. We received $27.0 thousand from the sale of certain assets.
Additionally, we provide certain loans as a way to attract new financial
planners. Consistent with industry practice, some of these loans will be
forgiven if the financial planner meets certain predetermined production targets
and/or length of service commitments. During fiscal 2009, these loans increased
by $0.2 million.

Financing Activities

For fiscal 2009, cash flows provided by financing activities were $0.4 million,
as compared to cash provided by financing activities of $2.1 million for the
fiscal year ended 2008. The decrease of $1.8 million can be attributed to the
proceeds from the Investment Purchase and Private Placement and the sale of
stock in the public offering, offset in part by the pay-down of the Met Life
Note (See Note 18 to the Notes to Consolidated Financial Statements for a
discussion of the stock sales) during the fiscal year ended June 30, 2008.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2009, the Financial Accounting Stanadards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") Statement No. 168, "The
FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles, a replacement of FASB Statement No. 162 " ("SFAS No.
168"). SFAS No. 168 does not alter current generally accepted accounting
principles ("GAAP") in the United States, but rather integrates existing
accounting standards with other authoritative guidance. Under SFAS No. 168 there
will be a single source of authoritative U.S. GAAP for nongovernmental entities
and will supersede all other previously issued non-SEC accounting and reporting
guidance. SFAS No. 168 is effective for us October 1, 2009. The adoption of SFAS
No. 168 will not have an impact on our consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation
to No. 46 (Revised December 2003), Consolidation of Variable Interest Entities"
("SFAS No. 167"). SFAS No. 167 revises factors that should be considered by a
reporting entity when determining whether an entity that is insufficiently
capitalized or is not controlled through voting (or similar rights) should be
consolidated. SFAS No. 167 is effective for us July 1, 2010. We do not expect
the adoption of SFAS No. 167 will have an impact on our consolidated financial
statements.

In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS No. 165").
SFAS No. 165 establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date, but before the financial
statements are issued or are available to be issued. SFAS No. 165 was effective
for us June 30, 2009. The adoption of SFAS No. 165 did not have a significant
impact on our consolidated financial statements.

In April 2008, the FASB issued FASB Staff Position ("FSP") FAS 142-3,
"Determination of the Useful Life of Intangible Assets" ("FSP FAS 142-3"). This
position amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized
intangible asset under SFAS No. 142, "Goodwill and Other Intangible Assets." FSP
FAS 142-3 was effective for us July 1, 2009 and will be applied prospectively to
intangible assets acquired. We do not expect the adoption of FSP FAS No. 142-3
will have an impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations" ("SFAS No. 141R"). SFAS No. 141R establishes principles and
requirements for how the acquirer of a business recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed,
and any non-controlling interest in the acquiree. This statement also provides
guidance for recognizing and measuring the goodwill acquired in the business
combination and determines what information to disclose to enable users of the
financial statements to evaluate the nature and financial effects of the
business combination. In April 2009, the FASB issued FSP FAS 141R-1, "Accounting
for Assets Acquired and Liabilities Assumed in a Business Combination That Arise
from Contingencies" ("FSP FAS 141R-1"), which amends and clarifies the
accounting for assets acquired and liabilities assumed in a business combination
that arise from contingencies. SFAS No. 141R and FSP FAS 141R-1 were effective
for us July 1, 2009 and will be applied prospectively to business combinations
that have an acquisition date on or after July 1, 2009. The adoption of SFAS
141R and FSP FAS 141R-1 did not have a significant impact on our Consolidated
Financial Statements. However, any business combinations entered into in the
future may impact our Consolidated Financial Statements as a result of the
potential earnings volatility due to the changes described above.


                                       24
<PAGE>

In September 2006, the FASB issued SFAS Statement No. 157, "Fair Value
Measurements" ("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. This statement applies
under other accounting pronouncements that require or permit fair value
measurements, the Board having previously concluded in those accounting
pronouncements that fair value is a relevant measurement attribute. Accordingly,
this statement does not require any new fair value measurements. We have adopted
SFAS No. 157 effective September 30, 2007 and have recorded a $46.0 thousand
allowance against our accounts payable balance as of June 30, 2009 representing
our fair value assessment of that account. See also Note 9 to Consolidated
Financial Statements describing fair value measurements.

All other new accounting pronouncements issued but not yet effective or adopted
have been deemed not to be relevant to us, hence are not expected to have any
impact once adopted.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with Generally Accepted
Accounting Principles requires management to establish accounting policies and
make estimates and assumptions that affect reported amounts of assets and
liabilities at the date of the Consolidated Financial Statements. We evaluate
our policies and estimates on an on-going basis. Our Consolidated Financial
Statements may differ based upon different estimates and assumptions. Our
critical accounting estimates have been reviewed with the Audit Committee of the
Board of Directors.

Our significant accounting policies are discussed in Note 2 to the Notes to
Consolidated Financial Statements. We believe the following are our critical
accounting policies and estimates:

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles 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 these estimates. Furthermore, the Company,
including our wholly owned subsidiary PCS, has been named as a defendant in
various customer arbitrations. These claims result from the actions of brokers
affiliated with PCS. In addition, under the PCS registered representatives
contract, each registered representative has indemnified us for these claims. In
accordance with SFAS No. 5 "Accounting for Contingencies," we have established
liabilities for potential losses from such complaints, legal actions, government
investigations and proceedings. In establishing these liabilities, our
management uses its judgment to determine the probability that losses have been
incurred and a reasonable estimate of the amount of losses. In making these
decisions, we base our judgments on our knowledge of the situations,
consultations with legal counsel and our historical experience in resolving
similar matters. In many lawsuits, arbitrations and regulatory proceedings, it
is not possible to determine whether a liability has been incurred or to
estimate the amount of that liability until the matter is close to resolution.
However, accruals are reviewed regularly and are adjusted to reflect
management's estimates of the impact of developments, rulings, advice of counsel
and any other information pertinent to a particular matter. Because of the
inherent difficulty in predicting the ultimate outcome of legal and regulatory
actions, we cannot predict with certainty the eventual loss or range of loss
related to such matters. If our judgments prove to be incorrect, our liability
for losses and contingencies may not accurately reflect actual losses that
result from these actions, which could materially affect results in the period
other expenses are ultimately determined. As of June 30, 2009, we accrued
approximately $0.5 million for these matters. A majority of these claims are
covered by our errors and omissions insurance policy. While we will vigorously
defend ourselves in these matters, and will assert insurance coverage and
indemnification to the maximum extent possible, there can be no assurance that
these lawsuits and arbitrations will not have a material adverse impact on our
financial position.

Impairment of Intangible Assets

Impairment of intangible assets results in a charge to operations whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of an asset to be held and used is
measured by a comparison of the carrying amount of the asset to future net cash
flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the asset exceeds the fair value of the asset. The
measurement of the future net cash flows to be generated is subject to
management's reasonable expectations with respect to our future operations and
future economic conditions which may affect those cash flows. We test goodwill
for impairment annually or more frequently whenever events occur or
circumstances change, which would more likely than not reduce the fair value of
a reporting unit below its carrying amount. The measurement of fair value, in
lieu of a public market for such assets or a willing unrelated buyer, relies on
management's reasonable estimate of what a willing buyer would pay for such
assets. Management's estimate is based on its knowledge of the industry, what
similar assets have been valued at in sales transactions and current market
conditions.


                                       25
<PAGE>

Income Tax Recognition of Deferred Tax Items

We recognize deferred tax assets and liabilities based on the differences
between the financial statement carrying amounts and the tax basis of assets and
liabilities. Significant management judgment is required in determining our
deferred tax assets and liabilities. Management makes an assessment of the
likelihood that our deferred tax assets will be recovered from future taxable
income, and to an amount that it believes is more likely than not to be
realized. As of June 30, 2009 we are fully reserved for our deferred tax assets.

Revenue Recognition

Company Owned Offices - We recognize all revenues associated with income tax
preparation, accounting services and asset management fees upon completion of
the services. Financial planning services include securities and other
transactions. The related commission revenue and expenses are recognized on a
trade-date basis. Marketing revenue associated with product sales is recognized
quarterly based on production levels. Marketing event revenues are recognized at
the commencement of the event offset by its cost.

Independent Offices - We recognize 100% of all commission revenues and expenses
associated with financial planning services including securities and other
transactions on a trade-date basis. Our independent offices are independent
contractors who may offer other products and services of other unrelated
parties. These same offices are responsible for paying their own operating
expenses, including payroll compensation for their staff.

Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157. SFAS No. 157 defines fair
value, establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements.
This Statement applies under other accounting pronouncements that require or
permit fair value measurements, the Financial Accounting Standards Board having
previously concluded in those accounting pronouncements that fair value is a
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. This Statement is effective for financial
statements for fiscal years beginning after November 15, 2007. Early adoption is
permitted provided that the reporting entity has not yet issued financial
statements for that fiscal year. We adopted SFAS No. 157 effective September 30,
2007.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Financial Statements and Financial Statement Indexing commencing on page F-1
hereof.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

None.

ITEM 9A(T). CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our senior management is responsible for establishing and maintaining a system
of disclosure controls and procedures (as defined in Rule 13a-15 and 15d-15
under the Exchange Act) designed to ensure that information required to be
disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by an issuer in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the issuer's
management, including its principal executive officer and principal financial
officer, to allow timely decisions regarding required disclosure.

We have carried out an evaluation under the supervision and with the
participation of our management, including our Chief Executive Officer and
Principal Financial and Chief Accounting Officer, of our disclosure controls and
procedures as defined in Exchange Act Rule 13a-15(e). In designing and
evaluating disclosure controls and procedures, we and our management recognize
that any disclosure controls and procedures, no matter how well designed and
operated, can only provide reasonable assurance of achieving the desired control
objective. As of June 30, 2009 management concludes that our disclosure controls
and procedures are effective.


                                       26
<PAGE>

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rules
13a-15(f). Under the supervision and with the participation of our management,
including our Chief Executive Officer and Principal Financial and Chief
Accounting Officer, we conducted an evaluation of the effectiveness of our
internal control over financial reporting based on the framework in Internal
Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our evaluation of internal
control over financial reporting, our management concluded that our internal
control over financial reporting was effective as of June 30, 2009.

Attestation Report of the Registered Public Accounting Firm

This annual report does not include an attestation report of our registered
public accounting firm, Sherb and Co., LLP, regarding internal control over
financial reporting. Management's report was not subject to attestation by our
registered public accounting firm pursuant to temporary rules of the SEC that
permit us to provide only management's report in this annual report.

Changes in Internal Controls

There were no changes in our internal controls over financial reporting during
the fourth quarter of fiscal 2009 that materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.

Inherent Limitations Over Internal Controls

We believe that a control system, no matter how well designed and operated, can
not provide absolute assurance that the objectives of the control system are
met, and no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been
determined.

ITEM 9B. OTHER INFORMATION

None.


                                       27
<PAGE>

                                    PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth our directors and executive officers as of
September 1, 2009, their ages and the positions held by them with the Company.
Our executive officers are appointed by, and serve at the discretion of the
board of directors. Each executive officer is a full-time employee of the
Company. Michael Ryan and Carole Enisman are married.

<TABLE>
<CAPTION>
Name                           Age     Position                                           Year Board Term Will Expire
--------------------------    -----    -----------------------------------------------    ----------------------------------
<S>                            <C>     <C>                                                <C>
James Ciocia                   53      Chairman of the Board of Directors                 2011
Michael Ryan                   51      Chief Executive Officer, President and Director    2011
Edward Cohen (2)(3)            70      Director                                           2010
John Levy  (1)(2)              54      Lead Director                                      2009
Allan Page  (1)(3)             62      Director                                           2009
Frederick Wasserman (1)(2)     55      Director                                           2010
Nelson Obus (3)                62      Director                                           2009
Carole Enisman                 50      Executive Vice President of Operations             n/a
Ted Finkelstein                56      Vice President, General Counsel and Secretary      n/a
Karen Fisher                   43      Chief Accounting Officer and Treasurer             n/a
</TABLE>

(1)   Audit Committee member
(2)   Compensation Committee member
(3)   Corporate Governance and Nominating Committee member

JAMES CIOCIA, CHAIRMAN OF THE BOARD OF DIRECTORS. Mr. Ciocia is a principal
founder of the Company having opened the Company's first tax preparation office
in 1981. In addition to serving the Company as its Chief Executive Officer until
November 6, 2000, Mr. Ciocia is a registered representative of PCS. Mr. Ciocia
holds a B.S. in Accounting from St. John's University.

MICHAEL RYAN, CHIEF EXECUTIVE OFFICER, PRESIDENT AND DIRECTOR. Mr. Ryan was
appointed the Company's President and Chief Executive Officer in August 2002.
Mr. Ryan co-founded PCS and has served as its President since it's founding in
1987. Mr. Ryan is a founding member and past President of the Mid-Hudson Chapter
of the International Association for Financial Planning. Mr. Ryan is a
Registered Principal with FINRA and serves on the Independent Firms Committee of
the Securities Industry Association. Mr. Ryan holds a B.S. in Finance from
Syracuse University. Mr. Ryan was first elected as a director in 1999.

EDWARD COHEN, DIRECTOR. Mr. Cohen has been a director of the Company since 2003.
Mr. Cohen has been Counsel to the international law firm of Katten Muchin
Rosenman LLP since February 2002, and before that was a partner in the firm
(with which he has been affiliated since 1963). Mr. Cohen is a director of
Phillips-Van Heusen Corporation, a manufacturer and marketer of apparel and
footwear, Franklin Electronic Publishers, Incorporated, an electronic publishing
company, and Merrimac Industries, Inc., a manufacturer of passive RF and
microwave components for industry, government and science. Mr. Cohen is a
graduate of the University of Michigan and Harvard Law School.

JOHN LEVY, DIRECTOR. Mr. Levy has been a director of the Company since October
2006 and since September 4, 2007, has served as Lead Director. Since May 2005,
Mr. Levy has served as the Chief Executive Officer of Board Advisory Services, a
consulting firm which advises public companies in the areas of corporate
governance, corporate compliance, financial reporting and financial strategies.
From August 2008 through February 2009, Mr. Levy has served as the Interim Chief
Financial Officer of Photovoltaic Power Corporation, a development stage company
whose goal is to reduce manufacturing costs of solar modules. Mr. Levy served as
Interim Chief Financial Officer from November 2005 to March 2006 of Universal
Food & Beverage Company, which filed a voluntary petition under the provisions
of Chapter 11 of the United States Bankruptcy Act on August 31, 2007. From
November 1997 to May 2005, Mr. Levy served as Chief Financial Officer of
MediaBay, Inc., a NASDAQ company and leading provider of premium spoken word
audio content. While at MediaBay, he also served for a period as its Vice
Chairman. Mr. Levy is a Certified Public Accountant with nine years experience
with the national public accounting firms of Ernst & Young, Laventhol & Horwath
and Grant Thornton. Mr. Levy is a director and Chairman of the Audit Committee
of Take-Two Interactive Software, Inc., a publicly traded company that develops,
markets, distributes and publishes interactive entertainment software games, is
a director and non-executive Chairman of the Board of Atlas Mining Company, an
exploration stage natural resource and mining company, is a director and audit
committee member of Applied Energetics, Inc., a publicly traded company that
specializes in the development and application of high power lasers, high
voltage electronics, advanced optical systems and energy management systems
technologies, and is a director of PNG Ventures, Inc., a producer and
distributor of vehicle-quality liquid natural gas serving airports, public
transit, refuse, seaports, regional trucking, taxis and government fleets
markets. On September 10, 2009 PNG Ventures filed a voluntary petition under the
provisions of Chapter 11 of the United States Bankruptcy Act. Mr. Levy has a
B.S. degree in economics from the Wharton School of the University of
Pennsylvania and received his M.B.A. from St. Joseph's University in
Philadelphia.


                                       28
<PAGE>

ALLAN PAGE, DIRECTOR. Mr. Page has been a director of the Company since October
2006. Mr. Page is the principal of A. Page & Associates LLC, an international
consulting firm he founded in 2002 that is engaged in project development and
advisory work in the energy market sector. Mr. Page is also Chairman and
cofounder of The Hudson Renewable Energy Institute, Inc. a not for profit
corporation promoting market applications for the public use of renewable
energy. Prior to founding A. Page & Associates, Mr. Page spent more than thirty
years with the CH Energy Group Inc., holding a variety of positions including
President. Mr. Page started his employment as a distribution engineer at Central
Hudson Gas and Electric, the principal subsidiary of the CH Energy Group and was
the executive responsible for the development of a family of competitive
business units for CH Energy Group. The competitive businesses included an
electric generation company, an energy services company, and fuel oil companies
operating along the eastern sea board. Mr. Page holds B.S. degrees in physics,
civil engineering and electrical engineering and a masters degree in industrial
administration, all from Union College.

FREDERICK WASSERMAN, DIRECTOR. Mr. Wasserman has been a director of the Company
since September 2007. Mr. Wasserman currently provides financial and management
consulting services to small and micro-cap companies. From August 2005 until
December 31, 2006, Mr. Wasserman served as the Chief Operating and Chief
Financial Officer for Mitchell & Ness Nostalgia Co., a privately-held
manufacturer and distributor of licensed sportswear and authentic team apparel.
Prior to his employment at Mitchell & Ness, Mr. Wasserman served as the
President of Goebel of North America, a U.S. subsidiary of W. Goebel
Porzellanfabrik GmbH & Co., an international manufacturer of collectibles, gifts
and home decor. Mr. Wasserman held several positions, including Chief Financial
Officer and President with Goebel of North America from 2001 to 2005. Mr.
Wasserman is non-executive Chariman of the Board for TeamStaff, inc., a provider
of temporary and permanent medical staffing and administrative/logistics
services. Mr. Wasserman is also a director of The AfterSoft Group, Inc., Acme
Communications, Inc., Allied Defense Group, Inc., Breeze-Eastern Corporation,
and Crown Crafts, Inc. Mr. Wasserman received a B.S. degree in Economics from
The Wharton School of the University of Pennsylvania in 1976.

NELSON OBUS, DIRECTOR. Mr. Obus has been a director of the Company since
September 2007. Mr. Obus has served as president of Wynnefield Capital, Inc.
since November 1992 and as a managing member of Wynnefield Capital Management,
LLC since January 1997. Wynnefield Capital Management manages two private
investment funds and Wynnefield Capital, Inc. manages one private investment
fund, all three of which invest in small-cap value U.S. public equities. Mr.
Obus also serves on the board of directors of Layne Christensen Company, a
diversified natural resources company with interests in water, mineral drilling
and energy. In April 2006, the Securities and Exchange Commission filed a civil
action alleging that Nelson Obus, the Wynnefield Capital Funds, and two other
individuals, in June 2001 engaged in insider trading in the securities of
SunSource, a public company that had been in the portfolio of the Wynnefield
Capital Funds for years. Mr. Obus, the Wynnefield Capital Funds, and the other
defendants emphatically deny the allegations and are vigorously contesting the
case, which will go to trial in early 2010. Mr. Obus received a B.A. degree from
New York University and an M.A. and A.B.D from Brandeis University in Politics.

CAROLE ENISMAN, EXECUTIVE VICE PRESIDENT OF OPERATIONS. Ms. Enisman was
appointed the Executive Vice President of Operations of the Company on November
15, 2004. Ms. Enisman began her career with the Company in 1990 as a Financial
Planner. She served as Director of Operations and then Senior Vice President of
Operations of PCS from 1994-1999. Ms. Enisman has been the Chief Operating
Officer of PCS since April 5, 1999. Ms. Enisman graduated from the University of
Miami (Florida) with degrees in Economics and Political Science.

TED FINKELSTEIN, VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY. Mr. Finkelstein
has been Vice President and General Counsel of the Company since February 1,
2007 and Secretary since December, 2008. He was Associate General Counsel of the
Company from October 11, 2004 to February 1, 2007. Mr. Finkelstein was Vice
President and General Counsel of the Company from June 1, 2001 to October 11,
2004. Mr. Finkelstein has a B.S. degree in Accounting. He is Cum Laude graduate
of Union University, Albany Law School and also has a master of Laws in Taxation
from New York University Law School. Mr. Finkelstein has approximately 30 years
of varied legal experience including acting as outside counsel for PCS prior to
joining the Company.

KAREN FISHER, CHIEF ACCOUNTING OFFICER. Ms. Fisher had been the Controller of
the Company since March 2005 and was appointed Treasurer on May 25, 2007 and
Chief Accounting Officer on July 4, 2007. Ms. Fisher is a Certified Public
Accountant and holds a B.S. in Accounting from Arizona State University and an
A.A.S. in Computer Information Systems from Dutchess Community College. Prior to
joining the Company, Ms. Fisher was employed by Thomson Financial as Director of
Financial Reporting and Accounting from March 2002 until March 2005 and the New
York Times Company as Manager of Financial Reporting from July 1998 until July
2001. Ms. Fisher has significant experience in public reporting and accounting.
Prior to returning to New York, Ms. Fisher was the Assistant Controller for an
engineering firm in Phoenix, AZ, where she was employed for over nine years.


                                       29
<PAGE>

Director Designees

On August 20, 2007, the Company, Wynnefield Small Cap Value Offshore Fund, Ltd.,
Wynnefield Partners Small Cap Value, L.P., Wynnefield Partners Small Cap Value,
L.P.I and WebFinancial Corporation (as heretofore defined, the "Investment
Purchasers"), Michael Ryan, Carole Enisman, Ted Finkelstein, Dennis Conroy, and
Prime Partners, Inc. and Prime Partners II, holding companies owned in part by
Michael P. Ryan (the "Existing Shareholders") entered into a Shareholders
Agreement. Pursuant to the terms of the Shareholders Agreement: at the
Investment Purchase Closing, the Investment Purchasers were given the right to
designate two directors (the "Investor Directors") for election to our board of
directors (the "Board"); so long as the Existing Shareholders own at least 10%
of the outstanding shares of Common Stock, the Existing Shareholders have the
right to nominate two directors (the "Existing Shareholder Directors") for
election to the Board; the Investor Directors and the Existing Shareholder
Directors shall jointly nominate three independent directors; the Investor
Purchasers and the Existing Shareholders agreed to take such action as may be
reasonably required under applicable law to cause the Investor Purchasers'
designees and the Existing Shareholders' designees to be elected to the Board;
we agreed to include each of the Director designees of the Investor Purchasers
and the Existing Shareholders on each slate of nominees for election to the
Board proposed by the Company, to recommend the election of such designees to
the shareholders of the Company, and to use commercially reasonable efforts to
cause such designees to be elected to the Board; one of the Investor Directors
shall be appointed as a member of the Compensation Committee of the Board and
one of the Investor Directors shall have the right to attend all Audit Committee
meetings; the consent of one of the Investor Directors is required for certain
Company actions above designated thresholds, including the issuance, redemption
or purchase of equity or debt, the issuance of an omnibus stock plan, the
creation of any new class of securities, certain affiliate transactions, changes
to our certificate of incorporation or bylaws, entering into a merger,
reorganization or sale of the Company or acquiring any significant business
assets, or material changes to the business line of the Company; the Investor
Shareholders agreed to a one year standstill agreement concerning the
acquisition of our assets, our securities, proxy solicitations, voting trusts or
tender offers; the Investor Purchasers were granted a right of first refusal for
future securities issued by the Company; and we were granted a right of first
refusal for sales of Common Stock by the Investment Purchasers and by the
Existing Shareholders.

Nelson Obus and Frederick Wasserman are the Investor Directors designated by the
Investment Purchasers. James Ciocia and Michael Ryan are the Existing
Shareholder Directors designated by the Existing Shareholders.

BOARD COMMITTEES

Our Board met six times in fiscal 2009 and acted by written consent once. All
directors attended at least 75% of the combined Board and committee meetings on
which they served in fiscal 2009. All directors are encouraged to attend our
annual meeting of shareholders and all of our directors attended last year's
annual meeting.

Audit Committee

Our Audit Committee is comprised of John Levy, Chair, Allan Page and Frederick
Wasserman. The Audit Committee met six times during fiscal 2009. The functions
of the Audit Committee are as set forth in the Audit Committee Charter, which
can be viewed on our website at www.gtax.com. Our Board has determined that each
of Messrs. Levy, Page and Wasserman is independent as defined in Rule
5005(a)(19) of the listing standards of the Nasdaq Stock Market and Rule 10A-3
of the Exchange Act. Our board of directors also has determined that Mr. Levy is
an "audit committee financial expert" as defined in the applicable rules and
regulations of the Exchange Act. The Audit Committee is required to pre-approve
all audit and non-audit services performed by the independent auditors in order
to assure that the provision of such services does not impair the auditor's
independence. Unless a type of service to be provided has received general
pre-approval from the Audit Committee, it requires specific pre-approval in each
instance by the Audit Committee. Any proposed services exceeding pre-approved
cost levels generally require specific pre-approval by the Audit Committee.

Compensation Committee

Our Compensation Committee is comprised of Edward Cohen, John Levy and Frederick
Wasserman, Chair. The Compensation Committee met three times during fiscal 2009.
The functions of the Compensation Committee are as set forth in the Compensation
Committee Charter, which can be viewed on our website at www.gtax.com. Our Board
has determined that each of Messrs. Cohen, Levy and Wasserman is independent as
defined in Rule 5005(a)(19) of the listing standards of the Nasdaq Stock Market.
In accordance with the Compensation Committee Charter, the members are "outside
directors" as defined in Section 162(m) of the Internal Revenue Code of 1986, as
amended, and "non-employee directors" within the meaning of Section 16 of the
Exchange Act. The Compensation Committee is required, amongst other things, to
discharge the Board's responsibilities relating to the compensation and
evaluation of our Senior Executives and to produce the report that the rules and
regulations of the Securities and Exchange Commission may require to be included
in, or incorporated by, reference into our annual report and proxy statement.
The Compensation Committee has not engaged compensation consultants to provide
advice with respect to the form or amount of executive or director compensation.


                                       30
<PAGE>

Corporate Governance and Nominating Governance Committee

Our Corporate Governance and Nominating Committee comprised of Edward Cohen,
Chair, Nelson Obus and Allan Page. The Corporate Governance and Nominating
Committee met two times during fiscal 2009. The functions of the Corporate
Governance and Nominating Committee are as set forth in the Corporate Governance
and Nominating Committee Charter, which can be viewed on our website at
www.gtax.com. Our board of directors has determined that each of Messrs. Cohen,
Page and Obus is independent as defined in Rule 5005(a)(19) of the listing
standards of the Nasdaq Stock Market. The Corporate Governance and Nominating
Committee will consider nominees recommended by shareholders. Any such
recommendations should be submitted in writing to our General Counsel at our
principal executive offices. Nominees recommended by shareholders will be
evaluated in the same manner as nominees identified by management, the board of
directors or the Corporate Governance and Nominating Committee. The Corporate
Governance and Nominating Committee, in making its recommendations regarding
Board nominees, may consider some or all of the following factors, among others:
judgment, skill, diversity, experiences with businesses and other organizations
of a comparable size, the interplay of the candidate's experience with that of
the other Board members, the extent to which a candidate would be a desirable
addition to the Board and any committees of the Board and whether or not the
candidate would qualify as an "independent director" under applicable listing
standards and the Sarbanes-Oxley Act of 2002 and any related Securities and
Exchange Commission regulations.

Communications with our Board

Communications to our Board or to any director individually may be made by
writing to the following address:

Attention: [Board of Directors] [Board Member]
           c/o Ted Finkelstein, Vice President, General Counsel and Secretary
           11 Raymond Avenue
           Poughkeepsie, NY 12603

Communications sent to the physical mailing address are forwarded to the
relevant director if addressed to an individual director, or to the chairman of
our Board if addressed to the Board.

ADOPTION OF CODE OF ETHICS

We have adopted a written Code of Ethics that applies to our principal executive
officer, principal financial officer, principal accounting officer, or
controller, or persons performing similar functions and is consistent with the
rules and regulations of the Exchange Act. A copy of the Code of Ethics is
available on our website at www.gtax.com. We will disclose any amendment to or
waiver of our Code of Ethics on our website.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors, executive officers and
persons who own more than 10% of our common stock to file with the SEC initial
reports of ownership and reports of changes in ownership of common stock. The
SEC requires such officers, directors and greater than 10% shareholders to
furnish to the Company copies of all forms that they file under Section 16(a).

To our knowledge based solely on a review of Forms 3, 4 and 5 and amendments
thereto, all officers, directors and/or greater than 10% shareholders of ours
complied with all Section 16(a) filing requirements during the fiscal year ended
June 30, 2009.


                                       31
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the annual compensation of the Chief Executive
Officer (the "CEO") and the two most highly compensated executive officers other
than the CEO (the "Named Executive Officers") during the fiscal years ended June
30, 2009 and 2008:

<TABLE>
<CAPTION>
                                             Summary Compensation Table

                                                            Option                        All Other
Name and Principal Position            Year     Salary     Awards(1)      Bonus        Compensation(3)      Total
------------------------------------------------------------------------------------------------------------------
<S>                                    <C>     <C>         <C>          <C>               <C>             <C>
Michael Ryan                           2009    $350,000    $     509    $ 92,922(2)       $ 17,289        $460,720
President, Chief Executive Officer
and Director                           2008    $350,000    $      --    $166,369(2)       $ 18,416        $534,785

Carole Enisman                         2009    $235,000    $     436    $     --          $ 14,990        $250,426
Executive Vice President of
Operations                             2008    $235,000    $      --    $     --          $ 21,563        $256,563

Ted Finkelstein                        2009    $185,000    $     400    $     --          $     --        $185,400
Vice President, General Counsel and
Secretary                              2008    $185,000    $      --    $     --          $     --        $185,000
</TABLE>

(1) Reflects the dollar amounts recognized for financial statement reporting
purposes for the fiscal year ended June 30, 2009 in accordance with SFAS No. 123
for all option awards held by such person and outstanding on June 30, 2009. The
amounts reflect the accounting expense for these awards and do not correspond to
the actual value that may be recognized by such persons with respect to these
awards. For additional information with respect to option awards granted during
the fiscal year ended June 30, 2009 see Note 14 under the heading "Equity
Compensation Plans" of the Notes to Consolidated Financial Statements.

(2) Represents commissions earned as per an employment agreement with Michael
Ryan whereby commissions will be paid as draw against his bonus. As per the
agreement, no commissions will be paid back no matter what bonus is calculated
or if no bonus is paid. In fiscal 2009 and 2008, no bonus was awarded.

(3) Other Compensation includes the following:

<TABLE>
<CAPTION>
                                                                                                                Total Other
Name and Principal Position                        Year    Car Allowance    Club Membership    Commissions      Compensation
----------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>        <C>               <C>              <C>              <C>
Michael Ryan                                       2009       $17,289           $    --          $    --          $17,289
President, Chief Executive Officer and Director    2008       $17,289           $ 1,127          $    --          $18,416

Carole Enisman                                     2009       $13,630           $    --          $ 1,360          $14,990
Executive Vice President of Operations             2008       $13,630           $    --          $ 7,933          $21,563
</TABLE>


                                       32
<PAGE>

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table sets forth information concerning unexercised stock options,
shares of restricted stock and stock options that have not vested for each of
the Named Executive Officers at June 30, 2009.

<TABLE>
<CAPTION>
                                                         Option Awards

                                                                        Equity
                                                                    Incentive Plan
                           Number of            Number of           Awards: Number
                          Securities            Securities          of Securities
                          Underlying            Underlying            Underlying
                          Unexercised          Unexercised           Unexercised            Option              Option
                          Options (#)          Options (#)             Unearned         Exercise Price      Expiration Date
       Name               Exercisable       Unexercisable (1)        Options (#)              ($)
--------------------    ----------------    -------------------    -----------------    ----------------    ----------------
<S>                            <C>               <C>                      <C>               <C>                <C>
Michael Ryan                   --                130,100                  --                $ 0.18             2/19/2019
Carole Enisman                 --                111,500                  --                $ 0.18             2/19/2019
Ted Finkelstein                --                102,200                  --                $ 0.18             2/19/2019
</TABLE>

(1) Time-based stock option awards granted under the 2007 Stock Incentive Plan,
which awards vest, subject to continuing employment, 20% annually commencing on
the first anniversary of the date of grant.

EMPLOYMENT AGREEMENTS

On August 20, 2007, we entered into an employment agreement with Michael Ryan,
our President and Chief Executive Officer (the "Employment Agreement"). The
Employment Agreement contains the following salient terms: the term is from July
1, 2007 to June 30, 2011; the base salary is $350 thousand per year; a bonus
will be awarded to Mr. Ryan ranging from 40% of base salary to 100% of base
salary if actual EBITDA results for a fiscal year exceed at least 85% of the
EBITDA budgeted for such fiscal year; any commissions paid to Mr. Ryan for
personal production will reduce the bonus, but under no circumstances should the
commission earned be paid back; a severance payment equal to base salary and
bonus (computed at 100% of base salary) will be paid to Mr. Ryan for the greater
of three years or the ending date of the term if he is terminated as the result
of an involuntary change of control, or the greater of one year or the ending
date of the term if he is terminated as the result of a voluntary change of
control. In addition, Mr. Ryan agreed to a one year covenant not to compete with
the Company and a two year covenant not to solicit customers or employees of
ours or registered representatives of our broker-dealer subsidiary.

POTENTIAL PAYMENTS UPON TERMINATION INCLUDING CHANGE OF CONTROL

<TABLE>
<CAPTION>
                                                          Voluntary        Voluntary Termination   Involuntary Termination
                               Termination Without     Termination with     Following Change of      Following Change of
                                    Cause (1)          Good Reason (1)          Control (1)              Control (2)
                               -------------------------------------------------------------------------------------------
<S>                                 <C>                   <C>                    <C>                     <C>
Payment due upon termination:
Cash Severance
Michael P. Ryan
Base Salary                         $  700,000            $  700,000             $  700,000              $1,050,000
Bonus                                  700,000               700,000                700,000               1,050,000
                               -------------------------------------------------------------------------------------------
Total Cash Severance                $1,400,000            $1,400,000             $1,400,000              $2,100,000
</TABLE>

(1)   Mr. Ryan will be paid an amount equal to his base salary and a bonus
      computed at 100% of his base salary for a period measured as the greater
      of one year from the date of termination or the June 30, 2011 ending date
      of the term of his Employment Agreement.

(2)   Mr. Ryan will be paid an amount equal to his base salary and a bonus
      computed at 100% of his base salary for a period measured as the greater
      of three years from the date of termination or the June 30, 2011 ending
      date of the term of his Employment Agreement.


                                       33
<PAGE>

<TABLE>
<CAPTION>
                                                          Voluntary        Voluntary Termination   Involuntary Termination
                               Termination Without     Termination with     Following Change of      Following Change of
                                    Cause (1)          Good Reason (1)          Control (2)              Control (2)
                               -------------------------------------------------------------------------------------------
<S>                                  <C>                   <C>                    <C>                     <C>
Payment due upon termination:
Cash Severance - Base Salary
Carole Enisman                       $235,000              $235,000               $235,000                $235,000
Ted Finkelstein                      $123,333              $123,333               $185,000                $185,000
</TABLE>

(1)   Named Executive Officers will receive one month of compensation for each
      year of service with a maximum severance of one year.

(2)   Named Executive Officers will receive one year of compensation in a lump
      sum

DIRECTOR COMPENSATION

The table below summarizes the compensation earned by our directors during
fiscal 2009:

<TABLE>
<CAPTION>
                                            Fees Earned or                             Options Awards
                                             Paid In Cash      Stock Awards (a)(c)         (b)(c)              Total
                                          ---------------------------------------------------------------------------------
<S>                                             <C>                  <C>                   <C>                 <C>
James Ciocia ((1))                              $24,000              $5,000                $5,000              $34,000
Edward Cohen                                    $30,000              $5,000                $5,000              $40,000
John Levy                                       $54,000              $5,000                $5,000              $64,000
Nelson Obus                                     $27,000              $5,000                $5,000              $37,000
Allan Page                                      $30,000              $5,000                $5,000              $40,000
Frederick Wasserman                             $30,000              $5,000                $5,000              $40,000
</TABLE>

(a)   Annual grant of shares of restricted common stock with a fair market value
      at the time of grant. The number of shares of stock is computed and
      granted five days after the filing of the 10-K.

(b)   Annual grant of common stock options with a five-year term and vesting as
      to 20% of the shares annually commencing one year after the date of grant
      and having a Black-Scholes value at the time of grant determined based on
      the closing price on the date of such grant. Outstanding shares as a
      result of options awarded at fiscal year ended June 30, 2008 amount to
      50,000 shares each. The number of stock options awarded as director
      compensation for fiscal year ended June 30, 2009 will be computed and
      granted five days after the filing of the fiscal year ended June 30, 2009
      10-K.

(c)   Reflects the dollar amount recognized for financial statement reporting
      purposes for the fiscal year ended June 30, 2009 in accordance with SFAS
      No. 123R for all stock awards or option awards, as applicable, held by
      such director and outstanding on June 30, 2009. For additional
      information, see Note 14 under the heading "Equity Compensations Plans" of
      the Notes to Consolidated Financial Statements for fiscal year ended June
      30, 2009. The amounts reflect the accounting expense for these awards and
      do not correspond to actual value that may be recognized by the directors
      with respect to these awards.

(1)   Mr. Ciocia is Chairman of the Board of Directors and an employee of the
      Company. However, Mr. Ciocia's employment compensation is 100% commission
      based. The time Mr. Ciocia devotes to board activities reduces his efforts
      to generate commission income. Therefore, the board has determined that
      Mr. Ciocia will receive compensation for his activities as a director
      equivalent to that of non-employee directors.

We use a combination of cash and equity incentive compensation for our
non-employee directors. In developing the compensation levels and mix for
non-employee directors, we consider a number of factors, including the
significant time commitment required of board and committee service as well as
the need to attract highly qualified candidates for board service.

Each non-management director and James Ciocia, as a director of the board,
receives an annual retainer fee of $24,000 plus $5,000 per year in restrictive
stock, based upon its then fair market value, and $5,000 per year in stock
options using Black-Scholes valuation. The Lead Director of the Board receives
an additional annual retainer fee of $24,000. Each member of the Audit
Committee, Compensation Committee, and Nominating and Corporate Governance
Committee receives an additional $3,000 annually.


                                       34
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHILDER MATTERS

                                   5% HOLDERS

The following table sets forth as of September 1, 2009 the holdings of the only
persons known to us to beneficially own more than 5% of our outstanding common
stock, the only class of voting securities issued by us. Except as indicated in
the footnotes to this table and the table following and pursuant to applicable
community property laws, the persons named in the table and the table following
have sole voting and investment power with respect to all shares of common
stock. For each individual or group included in the table and the table
following, percentage ownership is calculated by dividing the number of shares
beneficially owned by such person or group by the sum of the 95,868,611 shares
of common stock outstanding as of September 1, 2009 and the number of shares of
common stock that such person or group had the right to acquire within 60 days
of September 1, 2009, including, but not limited to, upon the exercise of
options.

<TABLE>
<CAPTION>
        NAME AND ADDRESS OF BENFICIAL OWNER               AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP       PERCENTAGE OF CLASS
-----------------------------------------------------     -----------------------------------------       -------------------
<S>                                                                    <C>                                       <C>
Michael Ryan                                                           63,073,594(1)                             65.5%
11 Raymond Avenue
Poughkeepsie, NY 12603

Carole Enisman                                                         63,073,594(2)                             65.5%
11 Raymond Avenue
Poughkeepsie, NY 12603

Ted Finkelstein                                                        63,073,594(3)                             65.5%
11 Raymond Avenue
Poughkeepsie, NY 12603

Ralph Porpora                                                          63,073,594(4)                             65.5%
11 Raymond Avenue
Poughkeepsie, NY 12603

Prime Partners II, LLC                                                 63,073,594(5)                             65.5%
11 Raymond Avenue
Poughkeepsie, NY 12603

Nelson Obus                                                            63,073,594(6)(7)                          65.5%
450 Seventh Avenue, Suite 509
New York, NY 10123

Wynnefield Partners Small Cap Value LP                                 63,073,594(8)(9)                          65.5%
450 Seventh Avenue, Suite 509
New York, NY 10123

Wynnefield Small Cap Value Offshore Fund, Ltd 450                      63,073,594(8)(10)                         65.5%
Seventh Avenue, Suite 509
New York, NY 10123

Wynnefield Partners Small Cap Value LP I                               63,073,594(8)(11)                         65.5%
450 Seventh Avenue, Suite 509
New York, NY 10123

WebFinancial Corporation                                               63,073,594(12)                            65.5%
61 East Main Street
Los Gatos, CA 95031

Dennis Conroy                                                          63,073,594(13)                            65.5%
10514 Brookside Road
Pleasant Valley, NY 12569
</TABLE>


                                       35
<PAGE>

(1)   Includes 538,500 shares which are beneficially owned by Mr. Ryan
      personally; 263,541 shares which are beneficially owned by Mr. Ryan's
      wife, Carole Enisman (the Executive Vice President of Operations of the
      Company) of which Mr. Ryan disclaims beneficial ownership; 1,093,798
      shares which are beneficially owned by Prime Partners, Inc. of which Mr.
      Ryan is a shareholder, officer and director; 15,420,000 shares which are
      beneficially owned by Prime Partners II, LLC of which Mr. Ryan is a member
      and manager and 45,757,755 shares which are owned by certain of the other
      shareholders to the Shareholders Agreement of which both Mr. Ryan and
      Prime Partners II, disclaim beneficial ownership.

(2)   Includes 263,541 shares which are beneficially owned by Ms. Enisman
      personally and 62,810,053 shares owned by certain of the other partners to
      the Shareholders Agreement of which shares Ms. Enisman disclaims
      beneficial ownership.

(3)   Includes 4,338,788 shares which are beneficially owned by Mr. Finkelstein
      personally and 10,000 shares underlying options. Also includes 58,724,806
      shares owned by certain of the other parties to the Shareholders Agreement
      and of which shares Mr. Finkelstein disclaims beneficial ownership.

(4)   Includes 282,500 shares which are beneficially owned by Mr. Porpora
      personally; 1,093,798 shares which are beneficially owned by Prime
      Partners, Inc. of which Mr. Porpora is a shareholder, officer and
      director; and 15,420,000 shares which are beneficially owned by Prime
      Partners II, LLC of which Mr. Porpora is a member and manager. Also
      includes 46,277,296 shares owned by certain of the other parties to the
      Shareholders Agreement and of which shares Mr. Porpora disclaims
      beneficial ownership.

(5)   Includes 47,653,594 shares owned by certain of the other parties to the
      Shareholders Agreement and Prime Partners II, LLC disclaims beneficial
      ownership of these shares.

(6)   Includes 50,000 shares which are beneficially owned by Mr. Obus
      personally; 71,429 shares accrued for Board of Director compensation and
      10,000 shares underlying exercisable options awarded for Board of Director
      compensation. Also includes 62,942,165 shares owned by certain of the
      other parties to the Shareholders Agreement and Mr. Obus disclaims
      beneficial ownership of these shares. Does not include 57,143 shares
      issuable upon the exercise of unvested options awarded for Board of
      Director compensation.

(7)   Wynnefield Capital Management, LLC, a New York limited liability company
      ("WCM") is the sole general partner of each of Wynnefield Partners Small
      Cap Value LP, a Delaware limited partnership ("Wynnefield Partners") and
      Wynnefield Partners Small Cap Value LP I, a Delaware limited partnership
      ("Wynnefield Partners I"). Nelson Obus and Joshua Landes are the
      co-managing members of WCM and by virtue of such positions with WCM, have
      the shared power to vote and dispose of the shares of our common stock
      that are beneficially owned by each of Wynnefield Partners and Wynnefield
      Partners I. Wynnefield Capital, Inc., a Delaware corporation ("WCI"), is
      the sole investment manager of Wynnefield Small Cap Value Offshore Fund,
      Ltd., Cayman Islands company ("Wynnefield Offshore"). Messrs. Obus and
      Landes are the co-principal executive officers of WCI and by virtue of
      such positions with WCI, have the shared power to vote and dispose of the
      shares of our common stock that are beneficially owned by Wynnefield
      Offshore. Each of WCM, WCI and Messrs. Obus and Landes disclaims any
      beneficial ownership of the shares of our common stock that are directly
      beneficially owned by each of Wynnefield Partners, Wynnefield Partners I
      and Wynnefield Offshore, except to the extent of their respective
      pecuniary interest in such shares. Mr. Obus was appointed as a director of
      the Company effective on August 20, 2007.

(8)   Includes 8,000,000 shares beneficially owned by Wynnefield Partners Small
      Cap Value LP, a Delaware limited partnership ("Wynnefield Partners") and
      10,000,000 shares beneficially owned by Wynnefield Partners Small Cap
      Value LP I, a Delaware limited partnership ("Wynnefield Partners I").
      Wynnefield Capital Management, LLC, a New York limited liability company
      ("WCM") is the sole general partner of Wynnefield Partners and Wynnefield
      Partners I. Mr. Obus is a co-managing member of WCM and by virtue of his
      position with WCM, has the shared power to vote and dispose of the shares
      of our common stock that are beneficially owned by each of Wynnefield
      Partners and Wynnefield Partners I. Includes 12,000,000 shares
      beneficially owned by Wynnefield Small Cap Value Offshore Fund, Ltd.,
      Cayman Islands company ("Wynnefield Offshore"). Wynnefield Capital, Inc.,
      a Delaware corporation ("WCI"), is the sole investment manager of
      Wynnefield Offshore. Mr. Obus is a co-principal executive officer of WCI,
      and by virtue of his position with WCI, has the shared power to vote and
      dispose of the shares of our common stock that are beneficially owned by
      Wynnefield Offshore. Mr. Obus disclaims beneficial ownership of the shares
      of our common stock that are directly beneficially owned by each of
      Wynnefield Partners, Wynnefield Partners I and Wynnefield Offshore, except
      to the extent of his pecuniary interest in such shares.

(9)   Includes 55,073,594 shares owned by certain of the other parties to the
      Shareholders Agreement and Wynnefield Partners Small Cap Value LP
      disclaims beneficial ownership of these shares.


                                       36
<PAGE>

(10)  Includes 51,073,594 shares owned by certain of the other parties to the
      Shareholders Agreement and Wynnefield Small Cap Value Offshore Fund, Ltd.
      disclaims beneficial ownership of these shares.

(11)  Includes 53,073,594 shares owned by certain of the other parties to the
      Shareholders Agreement and Wynnefield Small Cap Value, LP I disclaims
      beneficial ownership of these shares.

(12)  Includes 52,615,654 shares owned by certain of the other parties to the
      Shareholders Agreement and WebFinancial Corporation disclaims beneficial
      ownership of these shares.

(13)  Includes 537,098 shares which are beneficially owned by Mr. Conroy
      personally and 62,536,496 shares owned by certain of the other parties to
      the Shareholders Agreement and Mr. Conroy disclaims beneficial ownership
      of these shares.

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth as of September 1, 2009 the beneficial ownership
of our common stock by (i) each Company director, (ii), each Named Executive
Officer and (iii) the directors and all executive officers as a group.

<TABLE>
<CAPTION>
        NAME AND ADDRESS OF BENFICIAL OWNER               AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP            PERCENTAGE OF CLASS
-----------------------------------------------------     -----------------------------------------            -------------------
<S>                                                                     <C>                                           <C>
James Ciocia                                                            2,986,213(1)                                   3.1%
14802 North Dale Mabry Highway, Suite 101
Tampa, FL 33618

Michael Ryan                                                           63,073,594(2)                                  65.5%
11 Raymond Avenue
Poughkeepsie, NY 12603

Edward Cohen                                                              641,429(3)                                    *
45 Club Pointe Drive
White Plains, NY 10605

Allan Page                                                                334,429(3)                                    *
9 Vassar Street
Poughkeepsie, NY 12603

John Levy                                                                 134,429(3)                                    *
110 Oak Tree Pass
Westfield, NJ 07090

Carole Enisman                                                         63,073,594(4)                                  65.5%
11 Raymond Avenue
Poughkeepsie, NY 12603

Nelson Obus                                                            63,073,594(5)(6)                               65.5%
450 Seventh Avenue, Suite 509
New York, NY 10123

Frederick Wasserman                                                       131,429(3)                                    *
4 Nobadeer Drive
Pennington, NJ 08534

Directors and executive officers as a group (ten                       67,331,520                                     69.9%
persons)
</TABLE>

*     Less than 1.0%


                                       37
<PAGE>

(1)   Includes 600,000 shares which are held jointly with Tracy Ciocia, Mr.
      Ciocia's wife; 9,100 shares are held as custodian for Mr. Ciocia's sons
      and 71,429 shares accrued for Board of Director compensation and 10,000
      shares underlying exercisable options awarded for Board of Director
      compensation.

(2)   Includes 538,500 shares which are beneficially owned by Mr. Ryan
      personally; 263,541 shares which are beneficially owned by Mr. Ryan's
      wife, Carole Enisman (the Executive Vice President of Operations of the
      Company) of which Mr. Ryan disclaims beneficial ownership; 1,093,798
      shares which are beneficially owned by Prime Partners, Inc. of which Mr.
      Ryan is a shareholder, officer and director; 15,420,000 shares which are
      beneficially owned by Prime Partners II, LLC of which Mr. Ryan is a member
      and manager and 45,757,755 shares which are owned by certain of the other
      shareholders to the Shareholders Agreement of which both Mr. Ryan and
      Prime Partners II, disclaim beneficial ownership.

(3)   Includes 71,429 shares accrued for Board of Director compensation and
      10,000 shares underlying exercisable options awarded for Board of Director
      compensation.

(4)   Includes 263,541 shares which are beneficially owned by Ms. Enisman
      personally and 62,810,053 shares owned by certain of the other partners to
      the Shareholders Agreement of which shares Ms. Enisman disclaims
      beneficial ownership.

(5)   Includes 50,000 shares which are beneficially owned by Mr. Obus
      personally; 71,429 shares accrued for Board of Director compensation and
      10,000 shares underlying exercisable options awarded for Board of Director
      compensation. Also includes 62,942,165 shares owned by certain of the
      other parties to the Shareholders Agreement and Mr. Obus disclaims
      beneficial ownership of these shares.

(6)   Wynnefield Capital Management, LLC, a New York limited liability company
      ("WCM") is the sole general partner of each of Wynnefield Partners Small
      Cap Value LP, a Delaware limited partnership ("Wynnefield Partners") and
      Wynnefield Partners Small Cap Value LP I, a Delaware limited partnership
      ("Wynnefield Partners I"). Nelson Obus and Joshua Landes are the
      co-managing members of WCM and by virtue of such positions with WCM, have
      the shared power to vote and dispose of the shares of our common stock
      that are beneficially owned by each of Wynnefield Partners and Wynnefield
      Partners I. Wynnefield Capital, Inc., a Delaware corporation ("WCI"), is
      the sole investment manager of Wynnefield Small Cap Value Offshore Fund,
      Ltd., Cayman Islands company ("Wynnefield Offshore"). Messrs. Obus and
      Landes are the co-principal executive officers of WCI and by virtue of
      such positions with WCI, have the shared power to vote and dispose of the
      shares of our common stock that are beneficially owned by Wynnefield
      Offshore. Each of WCM, WCI and Messrs. Obus and Landes disclaims any
      beneficial ownership of the shares of our common stock that are directly
      beneficially owned by each of Wynnefield Partners, Wynnefield Partners I
      and Wynnefield Offshore, except to the extent of their respective
      pecuniary interest in such shares. Mr. Obus was appointed as a director of
      the Company effective on August 20, 2007.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

Equity Compensation Plan Information

<TABLE>
<CAPTION>
                                                                                                    (c)
                                                                                            Number of Securities
                                                                                          Remaining Available for
                                                     (a)                    (b)            Future Issuance Under
                                           Number of Securities to    Weighted-Average      Equity Compensation
                                           be Issued Upon Exercise   Exercise Price of        Plans (Excluding
                                           of Outstanding Options,   Options, Warrants    Securities Reflected in
               Plan Category                 Warrants and Rights         and Rights             Column (a))
-------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                                          <C>
Equity Compensation Plans Approved by
   Shareholders                                       2,165,800                $0.17               13,962,306
Equity Compensation Plans not Approved
   by Shareholders                                       10,000                $6.00                       --
                                               ----------------      ---------------           --------------
Total                                                 2,175,800                $0.20               13,962,306
</TABLE>

We maintain records of option grants by year, exercise price, vesting schedule
and grantee. In certain cases, we have estimated, based on all available
information, the number of such options that were issued pursuant to each plan.
The material terms of each option grant varied according to the discretion of
the board of directors. In addition, from time to time, we have issued, and in
the future may issue, additional non-qualified options pursuant to individual
option agreements, the terms of which vary from case to case. See Note 14 to the
Notes to Consolidated Financial Statements.

Our 2007 Stock Incentive Plan was adopted at our shareholders meeting on July
19, 2007. Subject to anti-dilution adjustments as provided in the 2007 Plan, (i)
the 2007 Plan provides for a total of 16.1 million shares of our common stock to
be available for distribution pursuant to the 2007 Plan, and (ii) the maximum
number of shares of our common stock with respect to which stock options,
restricted stock, deferred stock, or other stock-based awards may be granted to
any participant under the 2007 Plan during any calendar year or part of a year
may not exceed 0.6 million shares.


                                       38
<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
         INDEPENDENCE

James Ciocia, our Chairman of the Board of Directors and a financial planner for
the Company, receives commissions based on a variable percentage of his own
business production and under which he received an aggregate of $0.4 million in
fiscal 2009.

During fiscal 2007, Prime Partners loaned us an aggregate of $1.7 million at an
interest rate of 10%. During fiscal 2007, we repaid $0.7 million to Prime
Partners and as of June 30, 2007, we owed Prime Partners $2.8 million. Michael
Ryan is a director, an officer and a significant shareholder of Prime Partners.
On August 16, 2007, Prime Partners sold to Prime Partners II, LLC $1.5 million
of the $2.8 million owed to it by the Company. Prime Partners II, LLC is a
limited liability company. Michael Ryan is a significant member and a manager of
Prime Partners II, LLC. On August 20, 2007, Prime Partners II, LLC converted the
$1.5 million of our debt into 15.4 million shares of our common stock. As of
June 30, 2008, we owed Prime Partners a total of $1.3 million in principal. A
$1.0 million note to Prime Partners dated as of January 31, 2008 was due on June
30, 2008 (the "$1.0 Million Note"). On December 26, 2007, we entered into a
promissory note in the amount of $0.3 million with Prime Partners for related
party debt which was previously included in accrued expenses. The note pays
interest at the rate of 10.0% per annum. The note is payable over 31 months and
the first payment of approximately $11.0 thousand was paid in January 2008 and
continues to be paid monthly.

On December 23, 2003, we entered into a promissory note in the amount of $0.2
million with Ted Finkelstein, our Vice President and General Counsel. The note
paid interest at the rate of 10% per annum payable monthly. At June 30, 2007,
the principal balance we owed Mr. Finkelstein was $25.8 thousand. On August 20,
2007, $30.0 thousand of Mr. Finkelstein's note, including accrued interest, was
converted to 0.3 million shares of our common stock. A trust, of which Mr.
Finkelstein is the trustee ("the Trust"), made a short-term loan to Prime
Partners for $0.3 million on July 18, 2006, which paid interest at 10% per
annum. On October 16, 2006, the Trust made an additional short-term loan to
Prime Partners for $0.2 million, which accrued interest at 10% per annum. As of
June 30, 2008, Prime Partners owed the Trust $0.5 million in principal pursuant
to a promissory note dated January 31, 2008 (the "Old Note"). As security for
the total loan in the amount of $0.5 million, Prime Partners gave the Trust a
security interest in the note related to the sale of two of our offices that we
assigned to Prime Partners and a security interest in the notes that we owed to
Prime Partners.

As of September 1, 2008, Prime Partners assigned $0.5 million from the $1.0
million note to the Trust in payment of the Old Note. As of September 1, 2008,
we entered into a new $0.5 million promissory note with Prime Partners at 10%
interest with interest and principal due on or before July 1, 2009 (the "New
Prime Partners Note"). The New Prime Partners Note was amended as of June 30,
2009 to extend the due date of principal to July 1, 2010.

As of September 1, 2008, we entered into a new $0.5 million promissory note with
the Trust (the "New Trust Note"). The New Trust Note was amended on January 30,
2009. The New Trust Note provided for 10% interest to be paid in arrears through
the end of the previous month on the 15th day of each month commencing on
October 15, 2008. The principal of the New Trust Note was to be paid to the
Trust as follows: $117.5 thousand on March 31, 2009, April 30, 2009, May 31,
2009 and June 30, 2009. On May 8, 2009 the New Trust Note was amended to extend
the full principal payment of $0.5 million to June 30, 2009. We gave the Trust a
collateral security interest in all of our assets, including the stock of PCS,
subordinate only to the outstanding security interest of Wachovia Bank. We
agreed that the only loan debt principal that we are permitted to pay until the
New Trust Note is paid in full is: the existing Wachovia debt which was paid in
full on March 31, 2009, the scheduled principal payments on certain notes
payable to certain of our executive officers with de minimis balances and the
scheduled principal payments to Prime Partners for the $0.3 million Promissory
Note dated December 26, 2007. No payments of loan principal can be paid to any
other existing or future lenders, including to Prime Partners on the New Prime
Partners Note. Prime Partners and Ted Finkelstein guaranteed the New Trust Note.
The guarantee of Prime Partners is secured by a collateral assignment of the
promissory note dated January 23, 2004 between Daniel R. Levy and the Company in
the original amount of $0.9 million which was assigned to Prime Partners, Inc.
on June 26, 2006. The New Trust Note was again amended as of September 25, 2009
to extend the due dates of principal to be paid as follows: $120.0 thousand due
on March 1, 2010 and $175.0 thousand due on April 1, 2010 and April 15, 2010.

On October 30, 2008 Michael Ryan and Carole Enisman each purchased 250,000
Shares of our common stock at $0.10 per Share pursuant to the Offering in
reliance upon the exemption afforded by Section 4(2) of the Securities Act and
Rule 506 of Regulation D. See Item 5 for more on the Offering.

On November 28, 2008 we issued a promissory note in the amount of $50.0 thousand
to Ted Finkelstein, our Vice President and General Counsel and Secretary. The
note provides for 10.0% interest to be paid monthly with the principal balance
to be paid before June 30, 2009. The promissory note was amended as of June 30,
2009 to extend the due date of principal to May 1, 2010.


                                       39
<PAGE>

On December 3, 2008, three trusts of which James Ciocia is a trustee, purchased
an aggregate of $0.3 million of the Notes issued pursuant to the Offering in
reliance upon the exemption from registration in Rule 506 of Regulation D. On
August 19, 2009, these trusts purchased an additional $0.3 million of the Notes.
See Item 5 for more on the Offering.

On January 27, 2009, Carole Enisman purchased a $0.2 million Note pursuant to
the Offering. See Item 5 for more on the Offering.

At June 30, 2009 and 2008, we owed to related parties as described above $1.8
million and $1.3 million, respectively.

Director Independence

The independent members of our board of directors are Edward Cohen, John Levy,
Allan Page, Nelson Obus, and Frederick Wasserman, all who have been deemed to be
independent as defined in Rule 5005(a)(18) of the listing standards of the
Nasdaq Stock Market.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Audit Committee selected Sherb & Co., LLP, an independent registered public
accounting firm, to audit the consolidated financial statements of Gilman
Ciocia, Inc. for the fiscal year 2009. That selection was ratified by our Board
and by our shareholders at our Annual Meeting on January 22, 2009. The following
table sets forth the aggregate fees billed by Sherb & Co., LLP, for fiscal 2009
and 2008 for professional services rendered to the Company for the audit of our
annual financial statements, for the reviews of the financial statements
included in our Quarterly Reports on Form 10-Q for those fiscal years, and for
other services rendered on behalf of us during those fiscal years. All of such
fees were pre-approved by our Board of Directors. Our policy is to pre-approve
all audit and non-audit services subject to a de minimis exception for non-audit
services of eight percent of the total pre-approved amounts to be paid to
outside auditors.

                                       Fiscal 2009         Fiscal 2008
                                     ----------------    ----------------
       Audit Fees                       $ 205,000           $ 222,500
       Tax Fees                         $      --           $      --
       Audit Related Fees (1)           $      --           $  19,550
       Other Fees                       $      --                  --

(1) "Audit-Related Fees" are fees billed by Sherb & Co., LLP for assurance and
related services that are reasonably related to the performance of the audit or
review of our financial statements, which were rendered in connection with our
2007 public offering.


                                       40
<PAGE>

                                     PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)   The following documents are filed as part of this report:

1     Financial Statements: See "Index to Consolidated Financial Statements" set
      forth on page F-1.

2     Financial Statement Schedule: See "Index to Consolidated Financial
      Statements" set forth on page F-1.

3     Exhibits: See "Index to Exhibits" set forth below.

                                INDEX TO EXHIBITS

3.1   Certificate of Amendment of the Certificate of Incorporation of the
      Registrant dated January 28, 2008 filed with the State of Delaware
      Secretary of State on January 28, 2008.

21    List of subsidiaries.

23.1  Consent of Sherb & Co., LLP.

31.1  Rule 13a-14(a) Certification of Chief Executive Officer.

31.2  Rule 13a-14(a) Certification of Principal Financial and Chief Accounting
      Officer.

32.1  Certification of Chief Executive Officer Pursuant to Section 906 of the
      Sarbanes-Oxley of Act of 2002.

32.2  Certification of Principal Financial and Chief Accounting Officer Pursuant
      to Section 906 of the Sarbanes-Oxley of Act of 2002.

(b)   The following exhibits are incorporated by reference or attached herein:

3.2   Registrant's Certificate of Incorporation, as amended, incorporated by
      reference to the like numbered exhibit in the Registrant's Registration
      Statement on Form SB-2 under the Securities Act of 1933, as amended, File
      No. 33-70640-NY.

3.3   Registrant's Certificate of Amendment of Certificate of Incorporation,
      incorporated by reference to the exhibit in the Registrant's Proxy
      Statement on Form 14-A under the Securities Exchange Act of 1934, as
      amended, filed on June 22, 1999.

3.4   Registrant's By-Laws, incorporated by reference to the like numbered
      exhibit in the Registrant's Registration Statement on Form SB-2 under the
      Securities Act of 1933, as amended, File No. 33-70640-NY.

10.1  Stock Purchase Agreement dated as of January 1, 2004 between Registrant
      and Daniel Levy and Joseph Clinard on the Registrant's Annual Report on
      Form 10-K dated June 30, 2004, incorporated by reference herein.

10.2  Agreement with Steven J. Gilbert on the Registrant's Quarterly Report on
      Form 10-Q for the quarter ended March 31, 2005, incorporated by reference
      herein.

10.3  Letter of Acceptance, Waiver and Consent dated August 12, 2005
      incorporated by reference on the Registrant's report on Form 8-K dated
      August 12, 2005.

10.4  Leases for the Company's Headquarters on the Registrant's Annual Report on
      Form 10-K dated June 30, 2006, incorporated by reference herein.

10.5  Investor Purchase Agreement (with Exhibits) dated April 25, 2007 on the
      Registrant's Form 8-K dated April 25, 2007, incorporated by reference
      herein.


                                       41
<PAGE>

10.6  Waiver of Registration Rights Agreement dated April 25, 2007 on the
      Registrant's Form 8-K dated April 25, 2007, incorporated by reference
      herein.

10.7  Letter from Prime Partners, Inc. dated April 25, 2007 on the Registrant's
      Form 8-K dated April 25, 2007, incorporated by reference herein.

10.8  Voting Agreement dated April 25, 2007 on the Registrant's Form 8-K dated
      April 25, 2007, incorporated by reference herein.

10.9  Placement Purchase Agreement dated August 13, 2007 on the Registrant's
      Form 8-K dated August 20, 2007, incorporated by reference herein.

10.10 Debt Conversion Agreement dated August 13, 2007 on the Registrant's Form
      8-K dated August 20, 2007, incorporated by reference herein.

10.11 Shareholder Agreement dated August 20, 2007 on the Registrant's Form 8-K
      dated August 20, 2007, incorporated by reference herein.

10.12 Registration Rights Agreement dated August 20, 2007 on the Registrant's
      Form 8-K dated August 20, 2007, incorporated by reference herein.

10.13 Employment Agreement between the Company and Michael P. Ryan dated August
      20, 2007 on the Registrant's Form 8-K dated August 20, 2007, incorporated
      by reference herein.

10.14 2007 Stock Incentive Plan adopted and approved at the July 19, 2007
      Shareholder Meeting on the Registrant's 8-K dated July 25, 2007
      incorporated by reference herein, which incorporated by reference Exhibit
      C of the Registrant's Definitive Proxy Statement on Schedule 14-A filed on
      June 18, 2007.

14.0  Code of Ethics for Senior Financial Officers and the Principal Executive
      Officer of Gilman & Ciocia, Inc. on the Registrant's Annual Report on Form
      10-K dated June 30, 2003, incorporated by reference herein.


                                       42
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                GILMAN CIOCIA, INC.


Dated: September 25, 2009       By /s/ Michael Ryan
                                Chief Executive Officer


Dated: September 25, 2009       By /s/ Karen Fisher
                                Principal Financial and Chief Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated this 25th day of September, 2009.

                                /s/ James Ciocia, Chairman

                                /s/ Edward Cohen, Director

                                /s/ Michael Ryan, Director

                                /s/ Nelson Obus, Director

                                /s/ Frederick Wasserman, Director

                                /s/ John Levy, Director

                                /s/ Allan Page, Director

                                /s/ Michael Ryan, Chief Executive Officer

                                /s/ Karen Fisher, Principal Financial and
                                    Chief Accounting Officer


                                       43
<PAGE>

                               GILMAN CIOCIA, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                                      Page
                                                                                                                    --------
<S>                                                                                                                   <C>
Part II Financial Information:

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm                                                               F-2

Consolidated Balance Sheets as of June 30, 2009 and June 30, 2008                                                     F-3

Consolidated Statements of Operations for the fiscal years ended June 30, 2009 and June 30, 2008                      F-4

Consolidated Statements of Shareholders' Equity/(Deficit) for the fiscal years ended June 30, 2009 and June 30, 2008  F-5

Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2009 and June 30, 2008                      F-6

Notes to Consolidated Financial Statements                                                                            F-8
</TABLE>

All schedules are omitted because they are not applicable or the required
information is shown in the Consolidated Financial Statements or Notes thereto.


                                      F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Shareholders of Gilman Ciocia, Inc.
Poughkeepsie, New York

We have audited the accompanying consolidated balance sheets of Gilman Ciocia,
Inc. and subsidiaries as of June 30, 2009 and 2008 and the related consolidated
statements of operations, shareholders' equity/(deficit) and cash flows for the
fiscal years ended June 30, 2009 and 2008. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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. 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Gilman Ciocia, Inc.
and its subsidiaries at June 30, 2009 and 2008 and the results of its operations
and its cash flows for the fiscal years ended June 30, 2009 and 2008, in
conformity with accounting principles generally accepted in the United States.


                                                    /s/ Sherb & Co., LLP
                                                    ----------------------------
                                                    Certified Public Accountants

New York, New York
September 25, 2009


                                      F-2
<PAGE>

                               GILMAN CIOCIA, INC.
                           CONSOLIDATED BALANCE SHEETS

                                 (in thousands)

<TABLE>
<CAPTION>
                                                                               June 30, 2009      June 30, 2008
                                                                               --------------------------------
<S>                                                                            <C>                <C>
Assets

Cash & Cash Equivalents                                                        $         719      $       1,373
Marketable Securities                                                                     17                 35
Trade Accounts Receivable, Net                                                         2,269              2,739
Receivables From Employees, Net                                                          881                690
Prepaid Expenses                                                                         387                766
Other Current Assets                                                                     165                278
                                                                               --------------------------------
     Total Current Assets                                                              4,438              5,881

Property and Equipment (less accumulated depreciation
   of $6,112 in 2009 and $5,638 in 2008)                                               1,698              1,555
Goodwill                                                                               4,029              3,954
Intangible Assets (less accumulated amortization of $6,892
   in 2009 and $6,229 in 2008)                                                         4,714              4,751
Other Assets                                                                             469                536
                                                                               --------------------------------
     Total Assets                                                              $      15,348      $      16,677
                                                                               ================================

Liabilities and Shareholders' Equity

Accounts Payable ($8 and $30 are valued at fair value at June 30,
2009
    and 2008, respectively)                                                    $       2,327      $       1,669
Accrued Expenses                                                                       1,472              1,757
Commissions Payable                                                                    2,261              3,061
Current Portion of Notes Payable and Capital Leases                                      427                943
Deferred Income                                                                          110                 16
Due to Related Parties                                                                 1,252              1,155
                                                                               --------------------------------
     Total Current Liabilities                                                         7,849              8,601

Long Term Portion of Notes Payable, Capital Leases and Other                           1,178                468

Long Term Portion of Related Party Notes                                                 526                186
                                                                               --------------------------------
     Total Liabilities                                                                 9,553              9,255

Shareholders' Equity

Preferred Stock, $0.001 par value; 100 shares authorized; none issued                      -                  -
Common Stock, $0.01 par value 500,000 shares authorized; 95,869
   and 93,619 shares issued at June 30, 2009 and 2008, respectively                      959                938
Additional Paid in Capital                                                            36,435             36,286
Accumulated Deficit                                                                  (31,599)           (29,802)
                                                                               --------------------------------
     Total Shareholders' Equity                                                        5,795              7,422
                                                                               --------------------------------
Total Liabilities & Shareholders' Equity                                       $      15,348      $      16,677
                                                                               --------------------------------
</TABLE>

           See accompanying Notes to Consolidated Financial Statements


                                      F-3
<PAGE>

                               GILMAN CIOCIA, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                         Fiscal Years Ended June 30,
                                                                          2009                2008
                                                                    -----------------------------------
<S>                                                                       <C>                <C>
Revenues
   Financial Planning Services                                            $  34,175          $   44,254
   Tax Preparation and Accounting Fees                                        7,410               6,623
                                                                    -----------------------------------
        Total Revenues                                                       41,585              50,877
                                                                    -----------------------------------

Operating Expenses
   Commissions                                                               22,374              29,419
   Salaries and Benefits                                                      9,037               9,638
   General & Administrative                                                   4,780               5,740
   Advertising                                                                1,570               1,993
   Brokerage Fees & Licenses                                                  1,441               1,306
   Rent                                                                       2,782               2,639
   Depreciation & Amortization                                                1,138               1,070
                                                                    -----------------------------------
        Total Operating Expenses                                             43,122              51,805
                                                                    -----------------------------------

Loss Before Other Income and Expenses                                        (1,537)               (928)
Other Income/(Expenses)
   Interest and Investment Income                                                19                  37
   Interest Expense                                                            (355)               (368)
   Other Income, Net                                                             76               5,037
                                                                    -----------------------------------
        Total Other Income/(Expense)                                           (260)              4,706
                                                                    -----------------------------------

Income/(Loss) Before Income Taxes                                            (1,797)              3,778
   Income Tax Expense                                                             -                  80
                                                                    -----------------------------------
        Net Income/(Loss)                                                 $  (1,797)         $    3,698
                                                                    -----------------------------------

Weighted Average Number of Common
   Shares Outstanding:
   Basic and Diluted Shares                                                  95,187              78,891
   Basic and Diluted Net Income/(Loss) Per Share:
   Net Income/(Loss) per Common Share                                     $   (0.02)         $     0.05
</TABLE>

           See accompanying Notes to Consolidated Financial Statements


                                      F-4
<PAGE>

                               GILMAN CIOCIA, INC.
            CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY/(DEFICIT)

                                 (in thousands)

<TABLE>
<CAPTION>
                                                Common Stock       Additional                     Total
                                           ----------------------   Paid in     Accumulated   Shareholders'
                                              Shares     Amount     Capital       Deficit    Equity/(Deficit)
                                           ------------------------------------------------------------------
<S>                                              <C>         <C>       <C>          <C>              <C>
Balance, June 30, 2007                            9,669      $ 97      $29,041      $ (33,500)       $ (4,362)
                                           ------------------------------------------------------------------
Net income                                            -         -            -          3,698           3,698
Issuance of stock in connection
   with Investment Purchase closing              40,000       400        3,600              -           4,000
Issuance of stock in connection
   with Private Placement closing                40,000       400        3,600              -           4,000
Issuance of stock in connection
   with Public stock offering                     3,900        39          351              -             390
Issuance of stock in connection
   with acquisitions and other                       24         -           31              -              31
Issuance of stock in connection
   with default of note                              26         -            3              -               3
Investment Purchase and Private
   Placement closing costs                            -         -         (150)             -            (150)
Public stock offering closing costs                   -         -         (188)             -            (188)
                                           ------------------------------------------------------------------
Balance, June 30, 2008                           93,619       936       36,288        (29,802)          7,422
                                           ------------------------------------------------------------------

Net loss                                              -         -            -         (1,797)         (1,797)
Issuance of stock in connection
   with Private Offering                          1,000        10           90              -             100
Issuance of stock in connection
   with Public stock offering                       700         7           63              -              70
Issuance of stock in connection
   with consulting services                         250         3           12              -              15
Issuance of stock in connection
   with director compensation and other             300         3            5              -               8
Public stock offering closing costs                   -         -          (23)             -             (23)
                                           ------------------------------------------------------------------
Balance, June 30, 2009                           95,869      $959      $36,435      $ (31,599)       $  5,795
                                           ------------------------------------------------------------------
</TABLE>

           See accompanying Notes to Consolidated Financial Statements


                                      F-5
<PAGE>

                               GILMAN CIOCIA, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (in thousands)

<TABLE>
<CAPTION>
                                                                             Fiscal Years Ended June 30,

                                                                                2009             2008
                                                                            -----------------------------
<S>                                                                         <C>              <C>
Cash Flows From Operating Activities:
Net Income/(Loss)                                                           $     (1,797)    $      3,698

Adjustments to reconcile net income/(loss) to net cash provided by/(used
in) operating activities:
Depreciation and amortization                                                      1,138            1,070
Issuance of common stock for debt default penalties, interest and other               23               34
Gain on debt extinguishment                                                           --           (4,315)
Gain on sale of offices                                                               --             (224)
Allowance for doubtful accounts                                                      182              236
Gain on fair value recognition on accounts payable                                   (33)            (394)

Changes in assets and  liabilities:
Accounts receivable                                                                  373              347
Prepaid and other current assets                                                     510             (148)
Change in marketable securities                                                       18              125
Other assets                                                                          38               69
Accounts payable and accrued expenses                                               (427)          (1,628)
Deferred income                                                                       93             (218)
                                                                            -----------------------------
Net cash provided by/(used in) operating activities:                                 118           (1,348)
                                                                            -----------------------------

Cash Flows From Investing Activities:
Capital expenditures                                                                (289)            (264)
Cash paid for acquisitions, net of cash acquired and debt incurred                  (669)            (597)
Receivables from employees                                                          (199)              58
Due from office sales                                                                 27               40
                                                                            -----------------------------
Net cash used in investing activities:                                            (1,130)            (763)
                                                                            -----------------------------

Cash Flows From Financing Activities:
Proceeds from loans                                                                  910              631
Proceeds from capital stock issuance                                                 170            6,058
Proceeds from related parties                                                        520               --
Payments related to stock offering costs                                             (23)            (415)
Payments of bank loans and other loans                                            (1,045)          (3,643)
Payments to related parties                                                         (174)            (516)
                                                                            -----------------------------
Net cash provided by financing activities:                                           358            2,115
                                                                            -----------------------------

Net change in cash and cash equivalents                                             (654)               4
Cash and cash equivalents at beginning of fiscal year                              1,373            1,369
                                                                            -----------------------------
Cash and cash equivalents at end of fiscal year                             $        719     $      1,373
                                                                            =============================
</TABLE>

See accompanying Notes to Consolidated Financial Statements and supplemental
disclosures to Consolidated Statements of Cash Flows.


                                      F-6
<PAGE>

                               GILMAN CIOCIA, INC.
        SUPPLEMENTAL DISCLOSURE TO CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (in thousands)

                                                    Fiscal Years Ended June 30,
                                                       2009             2008
                                                    ---------------------------
Cash Flow Information
Cash payments during the year for
   Interest                                         $       346     $       492

Supplemental Disclosure of Non-Cash Transactions
Issuance of common stock for services, interest
   and other                                        $        23     $        34
Payment of debt by issuance of shares               $        --     $     2,309
Equipment acquired under capital leases             $       231     $       409
Fair value recognition on legacy accounts payable   $       (14)    $      (394)


                                      F-7
<PAGE>

                               GILMAN CIOCIA, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                FOR THE FISCAL YEARS ENDED JUNE 30, 2009 AND 2008

1. ORGANIZATION AND NATURE OF BUSINESS

Gilman Ciocia, Inc. (together with its wholly owned subsidiaries, "we", "us",
"our" or the "Company") was founded in 1981 and is incorporated under the laws
of the State of Delaware. We provide federal, state and local tax preparation
services to individuals, predominantly in the middle and upper income tax
brackets, accounting services to small and midsize companies and financial
planning services, including securities brokerage, investment management
services, insurance and financing services. As of June 30, 2009, we had 26
company-owned offices operating in three states (New York, New Jersey, and
Florida) and 44 independently operated offices providing financial planning
services in 11 states.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The Consolidated Financial Statements include the accounts of the
Company and all majority owned subsidiaries from their respective dates of
acquisition. All significant inter-company transactions and balances have been
eliminated.

Reclassifications

Where appropriate, prior years financial statements reflect reclassifications to
conform to the current year presentation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles 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 these estimates. Furthermore, the Company,
including our wholly owned subsidiary Prime Capital Services, Inc. ("PCS"), has
been named as a defendant in various customer arbitrations. These claims result
from the actions of brokers affiliated with PCS. In addition, under the PCS
registered representatives contract, each registered representative has
indemnified us for these claims. In accordance with Statement of Financial
Accounting Standards ("SFAS") No. 5 "Accounting for Contingencies," we have
established liabilities for potential losses from such complaints, legal
actions, government investigations and proceedings. In establishing these
liabilities, our management uses its judgment to determine the probability that
losses have been incurred and a reasonable estimate of the amount of losses. In
making these decisions, we base our judgments on our knowledge of the
situations, consultations with legal counsel and our historical experience in
resolving similar matters. In many lawsuits, arbitrations and regulatory
proceedings, it is not possible to determine whether a liability has been
incurred or to estimate the amount of that liability until the matter is close
to resolution. However, accruals are reviewed regularly and are adjusted to
reflect our estimates of the impact of developments, rulings, advice of counsel
and any other information pertinent to a particular matter. Because of the
inherent difficulty in predicting the ultimate outcome of legal and regulatory
actions, we cannot predict with certainty the eventual loss or range of loss
related to such matters. If our judgments prove to be incorrect, our liability
for losses and contingencies may not accurately reflect actual losses that
result from these actions, which could materially affect results in the period
other expenses are ultimately determined. As of June 30, 2009, we accrued
approximately $0.5 million for these matters. A majority of these claims are
covered by our errors and omissions insurance policy. While we will vigorously
defend ourselves in these matters, and will assert insurance coverage and
indemnification to the maximum extent possible, there can be no assurance that
these lawsuits and arbitrations will not have a material adverse impact on our
financial position.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three
months or less to be cash equivalents. Cash equivalents include investments in
money market funds and are stated at cost, which approximates market value. Cash
at times may exceed FDIC insurable limits.


                                      F-8
<PAGE>

Marketable Securities

We account for our short-term investments in accordance with SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities". Our
short-term investments consist of trading securities and are stated at quoted
market values, with unrealized gains and losses reported as investment income in
earnings. During the fiscal years ended June 30, 2009 and 2008 we recorded
unrealized gains/(losses) from trading securities which we deemed immaterial.
All such gains and losses are calculated on the basis of the
specific-identification method. During the fiscal year ended June 30, 2009, we
recognized $1.5 million in realized gains. Interest earned is included in other
income/(expense). The original cost included in the carrying value of marketable
securities at June 30, 2009 is $17.2 thousand.

Securities sold, but not yet purchased, are stated at quoted market values with
unrealized gains and losses reflected in the statements of operations.
Subsequent market fluctuations of securities sold, but not yet purchased, may
require purchasing the securities at prices that may differ from the market
values reflected in the accompanying balance sheets. There was no liability
attributable to securities sold short, but not yet purchased, as of June 30,
2009.

Trade Accounts Receivable, Net

Our accounts receivable consist primarily of amounts due related to financial
planning commissions and tax preparation and accounting services performed. We
record an allowance for doubtful accounts based on management's estimate of
collectibility of such trade and notes receivables outstanding. The allowance
for doubtful accounts represents an amount considered by management to be
adequate to cover potential losses, if any. The recorded allowance was $0.3
million at June 30, 2009 and 2008. Bad debt expense was $0.2 million for fiscal
years ended June 30, 2009 and 2008, and is included in general and
administrative expense in the statements of operations.

Property and Equipment

Property and equipment are carried at cost. Amounts incurred for repairs and
maintenance are charged to operations in the period incurred. Depreciation is
calculated on a straight-line basis over the following useful lives:

       Equipment                            3-5 years
       Furniture and Fixtures               5-7 years
       Leasehold Improvements               Shorter of useful life or lease term
       Software                             2-5 years
       Assets under Capital Lease           2-7 years

Goodwill and Intangible Assets

Goodwill and other intangibles, net relates to our acquisitions accounted for
under the purchase method. Intangible assets include covenants not to compete,
customer lists, goodwill, independent contractor agreements and other
identifiable intangible assets. Goodwill represents acquisition costs in excess
of the fair value of net tangible and identifiable intangible assets acquired as
required by SFAS No. 141 "Business Combinations". SFAS No. 142 "Goodwill and
Other Intangible Assets" ("SFAS No. 142") requires that purchased goodwill and
certain indefinite-lived intangibles no longer be amortized, but instead be
tested for impairment at least annually. Prior to SFAS No. 142 goodwill was
amortized over an expected life of 20 years. This testing requires the
comparison of carrying values to fair value and, when appropriate, requires the
reduction of the carrying value of impaired assets to their fair value.
Separable intangible assets that are not deemed to have indefinite lives will
continue to be amortized over their useful lives. Amortization of finite lived
intangible assets is calculated on a straight-line basis over the following
lives:

       Customer Lists                       5-20  years
       Broker-Dealer Registration             20  years
       Non-Compete Contracts                 2-5  years
       House Accounts                         15  years
       Administrative Infrastructure           7  years
       Independent Contractor Agreements      15  years


                                      F-9
<PAGE>

We review long-lived assets, certain identifiable assets and any impairment
related to those assets at least annually or whenever circumstances and
situations change such that there is an indication that the carrying amounts may
not be recoverable. To the extent carrying values have exceeded fair values, an
impairment loss has been recognized in operating results.

Website Development and Internal Use Software Costs

In accordance with Statement of Position ("SOP") 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use," as well as
Emerging Issues Task Force ("EITF") 00-02, "Accounting for Website Development
Costs," we capitalized costs incurred in the application development stage
related to the development of our website and our internal use software in the
amount of $0.7 million. Amortization expense is computed on a straight-line
basis over a period of two to five years, the expected useful life, and amounted
to approximately $79.5 thousand and $39.3 thousand for the years ended June 30,
2009 and 2008.

Revenue Recognition

Company Owned Offices - We recognize all revenues associated with income tax
preparation, accounting services and asset management fees upon completion of
the services. Financial planning services include securities and other
transactions. The related commission revenue and expenses are recognized on a
trade-date basis. Marketing revenue associated with product sales is recognized
quarterly based on production levels. Marketing event revenues are recognized at
the commencement of the event offset by its cost.

Independent Offices - We recognize 100% of all commission revenues and expenses
associated with financial planning services including securities and other
transactions on a trade-date basis. Our independent offices are independent
contractors who may offer other products and services of other unrelated
parties. These same offices are responsible for paying their own operating
expenses, including payroll compensation for their staff.

Advertising Expense

The costs to develop direct-mail advertising are accumulated and expensed upon
the first mailing of such advertising in accordance with SOP 93-7, "Reporting on
Advertising Costs". The costs to develop tax season programs and associated
printing and paper costs are deferred in the first and second fiscal quarters
and expensed in the third fiscal quarter upon the first use of such
advertisements in the advertising programs. Other advertising fees associated
with tax season are expensed as incurred. Advertising expense was $1.6 million
and $2.0 million for the years ended June 30, 2009 and 2008, respectively.

Interest Income/(Expense)

Interest expense relates to interest owed on our debt. Interest expense is
recognized over the period the debt is outstanding at the stated interest rates
(see Note 11). Interest income relates primarily to interest earned on bonds
held by the broker-dealer. Interest is recognized from the last interest payment
date up to but not including the settlement date of the sale.

Income Taxes

Income taxes have been provided using the liability method. Deferred tax assets
and liabilities are determined based on differences between the financial
reporting and tax basis of assets and liabilities and are measured by applying
estimated tax rates and laws to taxable years in which such differences are
expected to reverse. The deferred tax asset attributed to the net operating
losses have been fully reserved, since we have yet to achieve recurring income
from operations.

Stock-based Compensation

We adopted SFAS No. 123R, "Share Based Payments" ("SFAS No. 123R"). SFAS No.
123R requires companies to expense the value of employee stock options and
similar awards and applies to all outstanding and vested stock-based awards.

In computing the impact, the fair value of each option is estimated on the date
of grant based on the Black-Scholes options-pricing model utilizing certain
assumptions for a risk free interest rate; volatility; and expected remaining
lives of the awards. The assumptions used in calculating the fair value of
share-based payment awards represent management's best estimates, but these
estimates involve inherent uncertainties and the application of management
judgment. As a result, if factors change and we use different assumptions, our
stock-based compensation expense could be materially different in the future. In
addition, we are required to estimate the expected forfeiture rate and only
recognize expense for those shares expected to vest. In estimating our
forfeiture rate, we analyzed our historical forfeiture rate, the remaining lives
of unvested options, and the amount of vested options as a percentage of total
options outstanding. If our actual forfeiture rate is materially different from
our estimate, or if we reevaluate the forfeiture rate in the future, the
stock-based compensation expense could be significantly different from what we
have recorded in the current period. For the fiscal year ended June 30, 2009
there was an $8.0 thousand charge to earnings related to stock-option awards.
There was no financial impact of applying SFAS No. 123R for the fiscal year
ended June 30, 2008.


                                      F-10
<PAGE>

Net Income/(Loss) Per Share

In accordance with SFAS No. 128, "Earnings Per Share", basic net income/(loss)
per share is computed using the weighted average number of common shares
outstanding during each period. Options to purchase 2,245,000 common shares at
an average price of $0.11 per share were outstanding during fiscal 2009, but
were not included in the computation of diluted earnings per share because to do
so would be anti-dilutive. Options to purchase 788,500 common shares at an
average price of $7.11 per share were outstanding during fiscal 2008, but were
not included in the computation of diluted earnings per share because the
option's exercise price was greater than the average market price of the common
shares.

Fair Value of Financial Instruments

The carrying amounts of financial instruments, including cash and cash
equivalents, marketable securities, accounts receivable, notes receivable,
accounts payable and debt, approximated fair value as of June 30, 2009, because
of the relatively short-term maturity of these instruments and their market
interest rates.

Contingent Consideration

We entered into several asset purchase agreements, which include contingent
consideration based upon gross revenue generated in future periods. In
accordance with SFAS No. 141 "Business Combinations" no liability will be
recorded until the contingency is determinable beyond a reasonable doubt. In
December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations" ("SFAS No. 141R") and in April 2009, the FASB issued FASB Staff
Position ("FSP") FAS 141R-1, "Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies" ("FSP FAS
141R-1"). SFAS No. 141R and FSP FAS 141R-1 were effective for us July 1, 2009
and will be applied prospectively to business combinations that have an
acquisition date on or after July 1, 2009.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit
risk consist of trade receivables. The majority of our trade receivables are
commissions earned from providing financial planning services that include
securities/brokerage services and insurance and financing services. As a result
of the diversity of services, markets and the wide variety of customers, we do
not consider ourselves to have any significant concentration of credit risk.

Segment Disclosure

Management believes the Company operates as one segment.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Stanadards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") Statement No. 168, "The
FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles, a replacement of FASB Statement No. 162 " ("SFAS No.
168"). SFAS No. 168 does not alter current generally accepted accounting
principles ("GAAP") in the United States, but rather integrates existing
accounting standards with other authoritative guidance. Under SFAS No. 168 there
will be a single source of authoritative U.S. GAAP for nongovernmental entities
and will supersede all other previously issued non-SEC accounting and reporting
guidance. SFAS No. 168 is effective for us October 1, 2009. The adoption of SFAS
No. 168 will not have an impact on our consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation
to No. 46 (Revised December 2003), Consolidation of Variable Interest Entities"
("SFAS No. 167"). SFAS No. 167 revises factors that should be considered by a
reporting entity when determining whether an entity that is insufficiently
capitalized or is not controlled through voting (or similar rights) should be
consolidated. SFAS No. 167 is effective for us July 1, 2010. We do not expect
the adoption of SFAS No. 167 will have an impact on our consolidated financial
statements.

In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS No. 165").
SFAS No. 165 establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date, but before the financial
statements are issued or are available to be issued. SFAS No. 165 was effective
for us June 30, 2009. The adoption of SFAS No. 165 did not have a significant
impact on our consolidated financial statements.


                                      F-11
<PAGE>

In April 2008, the FASB issued FASB Staff Position ("FSP") FAS 142-3,
"Determination of the Useful Life of Intangible Assets" ("FSP FAS 142-3"). This
position amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized
intangible asset under SFAS No. 142, "Goodwill and Other Intangible Assets." FSP
FAS 142-3 was effective for us July 1, 2009 and will be applied prospectively to
intangible assets acquired. We do not expect the adoption of FSP FAS No. 142-3
will have an impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations" ("SFAS No. 141R"). SFAS No. 141R establishes principles and
requirements for how the acquirer of a business recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed,
and any non-controlling interest in the acquiree. This statement also provides
guidance for recognizing and measuring the goodwill acquired in the business
combination and determines what information to disclose to enable users of the
financial statements to evaluate the nature and financial effects of the
business combination. In April 2009, the FASB issued FSP FAS 141R-1, "Accounting
for Assets Acquired and Liabilities Assumed in a Business Combination That Arise
from Contingencies" ("FSP FAS 141R-1"), which amends and clarifies the
accounting for assets acquired and liabilities assumed in a business combination
that arise from contingencies. SFAS No. 141R and FSP FAS 141R-1 were effective
for us July 1, 2009 and will be applied prospectively to business combinations
that have an acquisition date on or after July 1, 2009. The adoption of SFAS
141R and FSP FAS 141R-1 did not have a significant impact on our Consolidated
Financial Statements. However, any business combinations entered into in the
future may impact our Consolidated Financial Statements as a result of the
potential earnings volatility due to the changes described above.

In September 2006, the FASB issued SFAS Statement No. 157, "Fair Value
Measurements" ("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. This statement applies
under other accounting pronouncements that require or permit fair value
measurements, the Board having previously concluded in those accounting
pronouncements that fair value is a relevant measurement attribute. Accordingly,
this statement does not require any new fair value measurements. We have adopted
SFAS No. 157 effective September 30, 2007 and have recorded a $46.0 thousand
allowance against our accounts payable balance as of June 30, 2009 representing
our fair value assessment of that account. See also Note 9 to Consolidated
Financial Statements describing fair value measurements.

All other new accounting pronouncements issued but not yet effective or adopted
have been deemed not to be relevant to us, hence are not expected to have any
impact once adopted.

3. ACQUISITIONS

Tax Practices

During fiscal 2009, we acquired two tax preparation and accounting businesses.
In each case, the purchase price is equal to a percentage of gross revenue
generated from the preparation of tax returns of the clients and from accounting
services rendered to clients during a one to four year period. Commencing on
March 31, 2009 and each 90-day period thereafter, we will pay the sellers an
installment payment based on a percentage of gross revenues generated during a
one to four year period after the closing dates less all prior payments
received. Such payments are made on a quarterly basis and as of June 30, 2009
totaled $0.1 million in the aggregate. Payments made subsequent to June 30, 2009
totaled $0.1 million in the aggregate.

During fiscal 2008, we acquired four tax preparation and accounting businesses.
In each case, the purchase price is equal to a percentage of gross revenue
generated from the preparation of tax returns of the clients and from accounting
services rendered to clients during a one to five year period. As such, we paid
the sellers at closing down payments of $0.3 million in the aggregate. In
addition we will pay the sellers additional installment payments based on a
percentage of gross revenue generated during periods from one to five years
after the closing dates less all previous payments received. Such payments are
made on a quarterly basis and as of June 30, 2009 totaled $0.3 million in the
aggregate. Payments made subsequent to June 30, 2009 totaled $0.1 million in the
aggregate.

In accordance with SFAS No. 141 "Business Combinations" no liability will be
recorded until the contingency is determinable beyond a reasonable doubt. Based
on an estimate of these future revenues, we will have a contingent liability of
$0.9 million, subject to change based on actual future revenues earned.

Acquisitions are accounted for under the purchase method of accounting. Purchase
prices have been allocated to the acquired assets and liabilities based on their
respective fair values on the dates of the acquisition. The purchase prices in
excess of the fair values of net assets acquired are classified as goodwill in
the Consolidated Balance Sheets. Sales and net income have been included in the
Consolidated Statements of Operations from the respective dates of acquisition.
Customer lists are amortized on a straight-line basis generally over a nine year
period.


                                      F-12
<PAGE>

Financial Planners

During fiscal 2009 and 2008, we entered into several financial planner
employment agreements. As part of the agreements we provided total loans to
these financial planners during fiscal 2009 and 2008 in the amount of $0.2
million and $0.1 million, respectively. Consistent with industry practice, some
of these loans will be forgiven if the financial planner meets certain
predetermined production targets and/or length of service commitments.

4. BUSINESS COMBINATIONS AND SOLD OFFICES

On February 1, 2008 we sold one of our tax preparation and financial planning
offices for $0.2 million. We received a promissory note for the entire amount to
be financed over 60 months. This note is non-interesting bearing and has been
recorded with a 7.0% discount rate.

The scheduled payments for the balance of the term of these notes are as
follows:

                      (in thousands)
                       For the Years    Minimum Note
                      Ended June 30:      Payments
                    ---------------------------------
                                   2010        $  17
                                   2011           22
                                   2012           27
                                   2013           92
                                       --------------
                                  Total          158
                         Less Allowance            -
                                       --------------
                                  Total        $ 158
                                       ==============

5. RECEIVABLES FROM EMPLOYEES, NET

We provide loans to our employees as a way to attract new financial planners.
Most financial planners do not earn salaries or receive a minimal base salary,
consistent with industry practice. We provide these loans as a means by which
the financial planners can receive cash prior to building their book of
business. Consistent with industry practice, some of these loans will be
forgiven if the financial planner meets certain predetermined production targets
and/or length of service commitments.

Receivables from employees and independent registered representatives consist of
the following:

                                                  As of June 30,
(in thousands)                                   2009        2008
------------------------------------------------------------------
Demand loans from employees and independent    $ 1,853     $ 1,564
registered representatives
Less: Allowance                                   (972)       (874)
                                               -------------------
Total                                          $   881     $   690
                                               ===================

6. PROPERTY AND EQUIPMENT, NET

Major classes of property and equipment consist of the following:

                                                      As of June 30,
(in thousands)                                       2009        2008
----------------------------------------------------------------------
Equipment                                          $ 3,791     $ 3,637
Furniture and Fixtures                               1,590       1,369
Leasehold Improvements                               1,777       1,555
Software                                               652         632
                                                   --------------------
Property and Equipment at Cost                       7,810       7,193
Less: Accumulated Depreciation and Amortization     (6,112)     (5,638)
                                                   --------------------
Property and Equipment, Net                        $ 1,698     $ 1,555
                                                   ===================


                                      F-13
<PAGE>

Property and equipment under capitalized leases was $2.9 million at June 30,
2009 and $2.7 million at June 30, 2008. Accumulated amortization related to
capitalized leases was $2.4 million at June 30, 2009 and $2.2 million at June
30, 2008. Depreciation expense for property and equipment was $0.5 million for
both fiscal years ended June 30, 2009 and 2008.

7. GOODWILL

Goodwill included on the balance sheets was $4.0 million at June 30, 2009 and
2008. Our goodwill at June 30, 2009 consists mostly of goodwill related to the
acquisitions of PCS, Prime Financial Services, Inc. ("PFS") and Asset and
Financial Planning, Ltd. ("AFP") completed during or prior to the fiscal year
ended June 30, 1999, which was accounted for under the purchase method.

The impairment testing for goodwill was performed during the fourth quarter of
fiscal 2009 and 2008 using future discounted cash flows and a market value
approach and it was determined that no adjustment to goodwill was required in
fiscal 2009 and 2008.

8. INTANGIBLE ASSETS

During the fiscal years ended June 30, 2009 and 2008, we acquired aggregate
intangible assets valued at $0.6 million and $0.7 million, respectively, in
connection with acquisitions which are accounted for under the purchase method.

Intangible assets consist of the following:

                                         As of June 30,
(in thousands)                         2009         2008
----------------------------------------------------------
Customer Lists                       $  6,543     $  6,002
Broker-Dealer Registration                100          100
Non-Compete Contracts                     763          678
House Accounts                            600          600
Administrative Infrastructure             500          500
Independent Contractor Agreements       3,100        3,100
                                     ---------------------
Intangible Assets at Cost              11,606       10,980
Less: Accumulated Amortization         (6,892)      (6,229)
                                     ---------------------
Intangible Assets, Net               $  4,714     $  4,751
                                     =====================

Amortization expense for the fiscal years ended June 30, 2009 and 2008 was
computed on a straight-line basis over periods of two to 20 years, and amounted
to $0.7 million and $0.6 million, respectively. Annual amortization expense will
be approximately $0.7 million for each of the next five years.

As required, we performed the fair value impairment tests prescribed by SFAS No.
142 during the fiscal years ended June 30, 2009 and 2008. Fair value was
determined based on recent comparable sales transactions and future cash flow
projections. As a result, we recognized no impairment loss in fiscal 2009 and
2008.

9. FAIR VALUE MEASUREMENTS

We elected early adoption of SFAS No. 157, beginning July 1, 2007, the first day
of our fiscal year 2008. SFAS No. 157 defines fair value, establishes a
framework for measuring fair value under generally accepted accounting
principles, and expands disclosures about fair value measurements. This
statement applies under other accounting pronouncements that require or permit
fair value measurements, the FASB having previously concluded in those
accounting pronouncements that fair value is a relevant measurement attribute.

Valuation techniques for fair value are based upon observable and unobservable
inputs. Observable inputs reflect market data obtained from independent sources,
while unobservable inputs reflect our best estimate, considering all relevant
information. These valuation techniques involve some level of management
estimation and judgment. The valuation process to determine fair value also
includes making appropriate adjustments to the valuation model outputs to
consider risk factors.


                                      F-14
<PAGE>

The fair value hierarchy of our inputs used in the determination of fair value
for assets and liabilities during the current period consists of three levels.
Level 1 inputs are comprised of unadjusted, quoted prices in active markets for
identical assets or liabilities at the measurement date. Level 2 inputs include
quoted prices for similar instruments in active markets; quoted prices for
identical or similar instruments in markets that are not active; inputs other
than quoted prices that are observable for the asset or liability; and inputs
that are derived principally from or corroborated by observable market data by
correlation or other means. Level 3 inputs incorporate our own best estimate of
what market participants would use in pricing the asset or liability at the
measurement date where consideration is given to the risk inherent in the
valuation technique and the risk inherent in the inputs to the model. If inputs
used to measure an asset or liability fall within different levels of the
hierarchy, the categorization is based on the lowest level input that is
significant to the fair value measurement of the asset or liability. Our
assessment of the significance of a particular input to the fair value
measurement in its entirety requires judgment, and considers factors specific to
the asset or liability.

We have significant legacy accounts payable balances that are at least four
years old and that we believe will never require a financial payment for a
variety of reasons. Accordingly, under SFAS No. 157, we opted to use the cost
approach as our valuation technique to measure the fair value of our legacy
accounts payable. Based on historical payouts we have established an estimate of
fifteen cents on the dollar on these legacy balances that we would potentially
pay out. The income recorded during fiscal 2009 was $14.0 thousand and is
recorded in other income, net on our Consolidated Statement of Operations.

The following table sets forth the liabilities as of June 30, 2009 which are
recorded on the balance sheet at fair value on a recurring basis by level within
the fair value hierarchy. As required by SFAS No. 157, these are classified
based on the lowest level of input that is significant to the fair value
measurement:

<TABLE>
<CAPTION>
(in thousands)                                                                      Significant Unobservable
Description                                     Total Fair Value of Liability           Inputs (Level 3)
----------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                               <C>
Accounts payable greater than 4 years old                   $ 8                               $ 8
</TABLE>

The carrying value of our cash and cash equivalents, accounts payable and other
current liabilities approximate fair value because of their short-term maturity.
All of our other significant financial assets, financial liabilities and equity
instruments are either recognized or disclosed in the consolidated financial
statements together with other information relevant for making a reasonable
assessment of future cash flows, interest rate risk and credit risk. Where
practicable the fair values of financial assets and financial liabilities have
been determined and disclosed; otherwise only available information pertinent to
fair value has been disclosed.

10. ACCRUED EXPENSES

Accrued expenses consist of the following:

                                                         As of June 30,
(in thousands)                                          2009        2008
-------------------------------------------------------------------------
Accrued compensation                                  $  251      $   237
Accrued bonus                                             58           96
Accrued related party compensation and bonus             146          196
Accrued vacation                                         127          128
Accrued settlement fees                                  380          122
Accrued audit fees & tax fees                            163          160
Accrued interest                                          23           18
Accrued other                                            278          558
Accrued acquisition                                       46          242
                                                      -------------------
Total Accrued Expenses                                $1,472      $ 1,757
                                                      ===================


                                      F-15
<PAGE>

11. DEBT

                                                               As of June 30,
(in thousands)                                                2009       2008
-------------------------------------------------------------------------------
Private Offering Notes                                       $   745    $    --
Wachovia Bank (floating rate of Libor plus 4.0%)                  --        339
Note Payable for Insurance                                        88        356
Notes Payable for Client Settlements, payable over periods
    of up to 7 years at varying interest rate to 10%
                                                                  --         10
Capitalized Lease Obligations                                    692        626
                                                             ------------------
               Total                                           1,525      1,331
Less: Current Portion                                           (427)      (943)
                                                             ------------------
               Total                                         $ 1,098    $   388
                                                             ==================

On October 31, 2008 we commenced the Gilman Ciocia Common Stock and Promissory
Note Offering, a private offering of our securities pursuant to SEC Regulation D
(the "Offering"). The Offering was amended on December 8, 2008 and on September
3, 2009. The securities offered for sale in the Offering, as amended are: $2.3
million of notes with interest at 10% due on July 1, 2010 (the "Notes") and $0.4
million, or 3.5 million shares of our $0.01 par value common stock with a price
of $0.10 per share (the "Shares"). Through September 15, 2009, $1.7 million of
Notes and $0.1 million, or 1.0 million shares, of our common stock were issued
pursuant to the Offering. On January 27, 2009, Carole Enisman purchased a $0.2
million Note of the $1.7 million of Notes and on December 3, 2008, three trusts,
of which James Ciocia is a trustee, purchased an aggregate of $0.3 million of
Notes of the $1.7 million of the Notes. The Carole Enisman and James Ciocia as
trustee purchases are included in related party debt.

As of June 30, 2008, we were in default of certain covenants under our term
loan/revolving letter of credit financing with Wachovia. Our debt forbearance
agreement with Wachovia was last amended on April 1, 2006. As a result of these
defaults, our debt with Wachovia has been classified as a current liability on
our financial statements. On August 20, 2007, as a result of the Investment
Purchase Closing and the Private Placement Closing, a $50.0 thousand principal
payment was made to Wachovia. On April 7, 2008, Wachovia agreed to waive our
principal payments for the months of April, May and June of 2008 and to extend
the due date of the loan with us from October 2008 to January 2009. We resumed
our monthly payments in July 2008. On March 31, 2009, our outstanding principal
balance of $0.1 million with Wachovia was paid in full.

Debt Maturities

The stated maturities of all long-term debt due after June 30, 2009 are as
follows:

                (in thousands)
                For Fiscal Years Ended          Matures
                ---------------------------------------
                                     2010        $  427
                                     2011           990
                                     2012            73
                                     2013            27
                                     2014             8
                                         --------------
                                                 $1,525
                                         ==============

Note: This Debt Maturities schedule reflects the contractual payment terms of
the debt maturities.

12. CAPITAL LEASE OBLIGATIONS

We are the lessee of certain equipment and leasehold improvements under capital
leases expiring through 2014. The assets and liabilities under capital leases
are carried at the lower of the present value of minimum lease payments or the
fair market value of the asset. The assets are depreciated over the shorter of
their estimated useful lives or their respective lease terms. Depreciation of
assets under capital leases is included in depreciation expense.


                                      F-16
<PAGE>

Minimum future lease payments under capital leases as of June 30, 2009 are as
follows:

                                              Minimum
                (in thousands)              Future Lease
                For Fiscal Years Ended        Payments
                ------------------------------------------
                                    2010            $ 440
                                    2011              287
                                    2012               80
                                    2013               36
                                    2014               11
                                           ---------------
                                   Total              854
                Less amount representing
                 finance charge                      (162)
                                           ---------------
                Present value of net
                 minimum lease payments             $ 692
                                           ===============

Capital equipment leases have the lease rate factor (finance charge) built into
the monthly installment and range from 6.3% to 36.8%.

13. COMMITMENTS AND CONTINGENCIES

Leases

We are obligated under various non-cancelable lease agreements for the rental of
office space through 2015. The lease agreements for office space contain
escalation clauses based principally upon real estate taxes, building
maintenance and utility costs.

The following is a schedule by fiscal year of future minimum rental payments
required under operating leases as of June 30, 2009:

                                            Minimum
                (in thousands)               Rental
                For Fiscal Years Ended      Payments
                ----------------------------------------
                                     2010        $2,371
                                     2011         1,917
                                     2012         1,494
                                     2013         1,120
                                     2014           667
                               Thereafter           532
                                         ---------------
                                    Total        $8,101
                                         ===============

Rent expense from operations for the fiscal years ended June 30, 2009 and 2008
was $2.8 million and $2.6 million, respectively.

Professional Liability or Malpractice Insurance

We maintain an "Errors and Omissions" insurance policy for our securities
business. Although we believe we comply with all applicable laws and regulations
in all material respects, no assurance can be given that we will not be subject
to professional liability or malpractice suits.

Contingent Consideration

We entered into several asset purchase agreements, which include contingent
consideration based upon gross revenue generated in future periods. In
accordance with SFAS No. 141 "Business Combinations" no liability will be
recorded until the contingency is determinable beyond a reasonable doubt. See
Note 3 for a discussion of acquisitions.

Clearing Agreements

We are party to clearing agreements with unaffiliated correspondent brokers,
which in relevant part state that we will assume customer obligations in the
event of a default. At June 30, 2009, the clearinghouse brokers held
approximately $0.2 million of cash as a deposit requirement, which is included
in current assets on the balance sheet at June 30, 2009 as a reduction to
amounts due to such brokers.


                                      F-17
<PAGE>

Net Capital Requirements

PCS is subject to the SEC's Uniform Net Capital Rule 15c 3-1, which requires
that PCS maintain minimum regulatory net capital of $0.1 million and, in
addition, that the ratio of aggregate indebtedness to net capital, both as
defined, shall not exceed the greater of 15 to one. As of June 30, 2009, we were
in compliance with these regulations.

Financial Instruments with Off-Balance Sheet Risk

In the normal course of business, PCS executes, as agent, transactions on behalf
of customers. These activities may expose us to risk in the event customers,
other brokers and dealers, banks depositories or clearing organizations are
unable to fulfill their contractual obligations. We continuously monitor the
creditworthiness of customers and third party providers. If the agency
transactions do not settle because of failure to perform by either the customer
or the counter parties, PCS may be obligated to discharge the obligation of the
non-performing party and, as a result, may incur a loss if the market value of
the security is different from the contract amount of the transactions.

Litigation

On June 30, 2009, the SEC executed an Order Instituting Administrative and
Cease-And-Desist Proceedings (the "Order") Pursuant to Section 8A of the
Securities Act of 1933 (the "Securities Act"), Sections 15(b) and 21(c) of the
Securities Exchange Act of 1934 (the "Exchange Act"), and Section 203(f) of the
Investment Advisors Act of 1940 (the "Advisors Act") against the Company, Prime
Capital Services, Inc. a wholly owned subsidiary of the Company ("PCS"), Michael
P. Ryan, the Company's President and CEO ("Ryan"), Rose M. Rudden, the Chief
Compliance Officer of PCS ("Rudden") and certain other current and former
Company employee representatives registered with PCS (the "Representatives").
The Order alleged that the Company, PCS and the Representatives engaged in
fraudulent sales of variable annuities to senior citizens and that Ryan, Rudden
and two of the Representatives failed to supervise the variable annuity
transactions.

The Order alleged that PCS willfully: engaged in fraudulent conduct in the
offer, purchase and sale of securities; failed to make and keep current certain
books and records relating to its business for prescribed periods of time; and
failed reasonably to supervise with a view to prevent and detect violations of
the federal securities statutes, rules and regulations by the Representatives.

The Order alleged that the Company aided, abetted and caused PCS to engage in
fraudulent conduct in the offer, purchase and sale of securities.

The Order alleged that Ryan, Rudden and two of the Representatives failed
reasonably to supervise with a view to preventing and detecting violations of
the federal securities statutes, rules and regulations by the Representatives.

The Order alleged that four of the Representatives willfully: engaged in
fraudulent conduct in the offer, purchase and sale of securities; and aided,
abetted and caused PCS to fail to keep current certain books and records
relating to its business for prescribed periods of time.

It is possible that the Company and PCS may be required to pay judgments, suffer
penalties, incur settlements, or be obligated for non-financial undertakings in
amounts that could have a material adverse effect on our business, results of
operations, financial position or cash flows. As of June 30, 2009 we have
accrued $344.0 thousand as a reserve for potential fines and disgorgement of
profits related to the Order.

The Company and PCS are defendants and respondents in lawsuits and FINRA
arbitrations in the ordinary course of business. In accordance with Statement of
Financial Accounting Standards ("SFAS") No. 5 "Accounting for Contingencies," we
have established liabilities for potential losses from such complaints, legal
actions, investigations and proceedings. In establishing these liabilities, our
management uses its judgment to determine the probability that losses have been
incurred and a reasonable estimate of the amount of the losses. In making these
decisions, we base our judgments on our knowledge of the situations,
consultations with legal counsel and our historical experience in resolving
similar matters. In many lawsuits, arbitrations and regulatory proceedings, it
is not possible to determine whether a liability has been incurred or to
estimate the amount of that liability until the matter is close to resolution.
However, accruals are reviewed regularly and are adjusted to reflect our
estimate of the impact of developments, rulings, advice of counsel and any other
information pertinent to a particular matter. Because of the inherent difficulty
in predicting the ultimate outcome of legal and regulatory actions, we cannot
predict with certainty the eventual loss or range of loss related to such
matters. If our judgments prove to be incorrect, our liability for losses and
contingencies may not accurately reflect actual losses that result from these
actions, which could materially affect results in the period other expenses are
ultimately determined. We accrued $0.2 million as a reserve for potential
settlements, judgments and awards at June 30, 2009. PCS has errors and omissions
coverage that will cover a portion of such matters. In addition, under the PCS
registered representatives contract, each registered representative is
responsible for covering awards, settlements and costs in connection with these
claims. While we will vigorously defend our self in these matters and will
assert insurance coverage and indemnification to the maximum extent possible,
there can be no assurance that these lawsuits and arbitrations will not have a
material adverse impact on our financial position.


                                      F-18
<PAGE>

On February 4, 2004, we were served with a Summons and a Shareholder's Class
Action and Derivative Complaint with the following caption: "Gary Kosseff,
Plaintiff, against James Ciocia, Thomas Povinelli, Michael Ryan, Kathryn Travis,
Seth A. Akabas, Louis P. Karol, Edward Cohen, Steven Gilbert and Doreen
Biebusch, Defendants and Gilman & Ciocia, Inc., Nominal Defendant". The nature
of the action is that the Company, our board of directors and our management,
breached their fiduciary duty of loyalty in connection with the sale of certain
of the Company's offices. The action was filed in the Court of Chancery of the
State of Delaware in and for New Castle County under Civil Action No. 188-N. The
case was scheduled for trial on June 4, 2007. The trial was postponed without a
new date pending settlement negotiations. On February 15, 2008, a written
Settlement Agreement was executed settling the lawsuit, subject to approval by
the Court of Chancery. At a hearing on September 22, 2008, the Court of Chancery
of the State of Delaware approved the Settlement Agreement and reserved decision
on setting an award of attorney's fees and expenses for plaintiff's counsel. On
October 31, 2008 Master in Chancery Sam Glasscock III issued a Master's Final
Report awarding the plaintiff's attorney's fees in the amount of $1.2 million
together with out-of-pocket costs in the amount of $0.1 million. We filed an
exception contesting the Master's Final Report with the Court of Chancery, which
was denied. The award of attorneys' fees and out-of-pocket costs was then paid
by our Executive Liability and Organization Reimbursement Policy with National
Union Fire Insurance Company of Pittsburgh, PA, ending the lawsuit.

14. EQUITY COMPENSATION PLANS

Stock Option Agreements and Stock Option Plans

Prior to June 30, 2007, we adopted and the shareholders had approved various
stock option plans covering 1.6 million shares of stock issued pursuant to such
plans. We granted stock options to employees, directors and consultants pursuant
to individual agreements or to our incentive and non-qualified stock option
plans. In addition, from time to time, we issued, and in the future may issue
additional non-qualified options pursuant to individual option agreements, the
terms of which vary from case to case. We maintain records of option grants by
year, exercise price, vesting schedule and grantee. In certain cases we
estimated, based on all available information, the number of such options that
were issued pursuant to each plan. The material terms of such option grants vary
according to the discretion of the board of directors.

On July 19, 2007 the shareholders approved the adoption of our 2007 Stock
Incentive Plan (the "2007 Plan"). Subject to anti-dilution adjustments as
provided in the 2007 Plan, (i) the 2007 Plan provides for a total of 16.1
million shares of our common stock to be available for distribution pursuant to
the 2007 Plan, and (ii) the maximum number of shares of our common stock with
respect to which stock options, restricted stock, deferred stock, or other
stock-based awards may be granted to any participant under the 2007 Plan during
any calendar year or part of a year may not exceed 0.6 million shares.

During fiscal 2009, there was an $8.0 thousand charge to earnings related to
stock-option awards, and during fiscal 2008 there was no charge to earnings
related to stock-option awards.

The table below summarizes plan and non-plan stock option activity for the
fiscal years ended June 30, 2009 and 2008:

                                                                 Weighted
                                            Number of             Average
                                              Shares          Exercise Price
                                      ------------------------------------------
Outstanding, June 30, 2007                           788,500             $ 7.11
                                      ------------------------------------------
   Granted                                                 -                  -
   Exercised                                               -                  -
   Expired                                          (708,500)              7.80
   Canceled                                                -                  -
                                      ------------------------------------------
Outstanding, June 30, 2008                            80,000             $ 1.04
                                      ------------------------------------------
   Granted                                         2,165,800               0.17
   Exercised                                               -                  -
   Expired                                           (70,000)              0.33
   Canceled                                                -                  -
                                      ------------------------------------------
Outstanding, June 30, 2009                         2,175,800             $ 0.20
                                      ------------------------------------------

Exercisable June 30, 2008                             80,000             $ 1.04
Exercisable June 30, 2009                             10,000             $ 6.00


                                      F-19
<PAGE>

The weighted average fair value of options granted during the years ended June
30, 2009 and 2008 was $0.17 and zero, respectively.

<TABLE>
<CAPTION>
                                  Stock Option Price Schedule
                                      As of June 30, 2009

                                         Weighted
                                         Average       Weighted        Number       Weighted
                       Number of        Remaining       Average     Exercisable      Average
     Range of           Options        Contractual     Exercise       Options       Exercise
  Exercise Price      Outstanding      Life (Years)      Price      Outstanding       Price
------------------------------------------------------------------------------------------------
<S>                     <C>                  <C>         <C>            <C>           <C>
    $0.01-$2.50         2,165,800            9           $ 0.17              -        $    -
    $5.01-$7.50            10,000            2           $ 6.00         10,000        $ 6.00
                   -------------------                            -----------------
                        2,175,800            9           $ 0.20         10,000        $ 6.00
                   ===================                            =================
</TABLE>

The fair value of options at date of grant was estimated using the Black-Scholes
model with the following assumptions:

                                       2009           2008
                                    -------------------------
Expected Life (Years)                      9             2
Risk Free Interest Rate                 3.79%         2.17%
Volatility                            209.05%       190.05%
Dividend Yield                          0.00%         0.00%

2007 Stock Incentive Plan

At the July 19, 2007 annual meeting of shareholders ("Annual Meeting"), the
shareholders of Gilman Ciocia, Inc., approved the adoption of our 2007 Plan.

The 2007 Plan provides that it will be administered by our Board of Directors
(the "Board") or a committee of two or more members of the Board appointed by
the Board (the "Committee"). The Board or the Committee will generally have the
authority to administer the 2007 Plan, determine participants who will be
granted awards under the 2007 Plan, the size and types of awards, the terms and
conditions of awards and the form and content of the award agreements
representing awards.

The 2007 Plan provides for the grant of any or all of the following types of
awards: (a) common stock options, (b) restricted common stock, (c) deferred
common stock and (d) other common stock-based awards. Awards may be granted
singly, in combination, or in tandem. Subject to anti-dilution adjustments as
provided in the 2007 Plan, (i) the 2007 Plan provides for a total of 16.1
million shares of our common stock to be available for distribution pursuant to
the 2007 Plan, and (ii) the maximum number of shares of our common stock with
respect to which stock options, restricted stock, deferred stock, or other
stock-based awards may be granted to any participant under the 2007 Plan during
any calendar year or part of a year may not exceed 0.6 million shares.

Awards under the 2007 Plan may be granted to employees, directors, consultants
and advisors of the Company and its subsidiaries. However, only employees of the
Company and its subsidiaries will be eligible to receive options that are
designated as incentive stock options.

With respect to options granted under the 2007 Plan, the exercise price must be
at least 100% (110% in the case of an incentive stock option granted to a ten
percent shareholder within the meaning of Section 422(b)(6) of the Internal
Revenue Code of 1986) of the fair market value of the common stock subject to
the award, determined as of the date of grant. Restricted stock awards are
shares of common stock that are awarded subject to the satisfaction of the terms
and conditions established by the administrator. In general, awards that do not
require exercise may be made in exchange for such lawful consideration,
including services, as determined by the administrator.

15. EMPLOYEE BENEFIT PLAN

We maintain a 401(k) plan for the benefit of our eligible employees. We have not
made any discretionary annual matching contributions.


                                      F-20
<PAGE>

16. RELATED PARTY DEBT AND TRANSACTIONS

                                                               As of June 30,
(in thousands)                                                2009        2008
--------------------------------------------------------------------------------

Prime Partners Note(a)(c)                                   $   739     $ 1,251
Trust Note(b)(c)(d)                                             470          --
Ciocia as Trustee Note(e)                                       300          --
Enisman Note(f)                                                 170          --
Finkelstein Note(g)                                              50          --
Other Officer's Notes                                            49          90
                                                            -------------------
        Total                                                 1,778       1,341
Less: Current Portion                                        (1,252)     (1,155)
                                                            -------------------
        Total                                               $   526     $   186
                                                            -------------------

(a) During fiscal 2007, Prime Partners loaned us an aggregate of $1.7 million at
an interest rate of 10%. During fiscal 2007, we repaid $0.7 million to Prime
Partners and as of June 30, 2007, we owed Prime Partners $2.8 million. Michael
Ryan is a director, an officer and a significant shareholder of Prime Partners.
On August 16, 2007, Prime Partners sold to Prime Partners II, LLC $1.5 million
of the $2.8 million owed to it by the Company. Prime Partners II, LLC is a
limited liability company. Michael Ryan is a significant member and a manager of
Prime Partners II, LLC. On August 20, 2007, Prime Partners II, LLC converted the
$1.5 million of our debt into 15.4 million shares of our common stock. As of
June 30, 2008, we owed Prime Partners a total of $1.3 million in principal. A
$1.0 million note to Prime Partners dated as of January 31, 2008 was due on June
30, 2008 (the "$1.0 Million Note"). On December 26, 2007, we entered into a
promissory note in the amount of $0.3 million with Prime Partners for related
party debt which was previously included in accrued expenses. The note pays
interest at the rate of 10.0% per annum. The note is payable over 31 months and
the first payment of approximately $11.0 thousand was paid in January 2008 and
continues to be paid monthly.

(b) A trust, of which Mr. Finkelstein is the trustee ("the Trust"), made a
short-term loan to Prime Partners for $0.3 million on July 18, 2006, which paid
interest at 10% per annum. On October 16, 2006, the Trust made an additional
short-term loan to Prime Partners for $0.2 million, which accrued interest at
10% per annum. As of June 30, 2008, Prime Partners owed the Trust $0.5 million
in principal pursuant to a promissory note dated January 31, 2008 (the "Old
Note"). As security for the total loan in the amount of $0.5 million, Prime
Partners gave the Trust a security interest in the note related to the sale of
two of our offices that we assigned to Prime Partners and a security interest in
the notes that we owed to Prime Partners.

(c) As of September 1, 2008, Prime Partners assigned $0.5 million from the $1.0
Million Note to the Trust in payment of the Old Note. As of September 1, 2008,
we entered into a new $0.5 million promissory note with Prime Partners at 10%
interest to be paid in arrears through the end of the previous month on the 15th
day of each month commencing on October 15, 2008 and principal due on or before
July 1, 2009 (the "New Prime Partners Note"). The New Prime Partners Note was
amended as of June 30, 2009 to extend the due date of principal to July 1, 2010.

(d) As of September 1, 2008, we entered into a new $0.5 million promissory note
with the Trust (the "New Trust Note"). The New Trust Note was amended on January
30, 2009. The New Trust Note provided for 10% interest to be paid in arrears
through the end of the previous month on the 15th day of each month commencing
on October 15, 2008. The principal of the New Trust Note was to be paid to the
Trust as follows: $117.5 thousand on March 31, 2009, April 30, 2009, May 31,
2009 and June 30, 2009. On May 8, 2009 the New Trust Note was amended to extend
the full principal payment of $0.5 million to June 30, 2009. The New Trust Note
was again amended as of September 25, 2009 to extend the due dates of principal
to be paid as follows: $120.0 thousand due on March 1, 2010 and $175.0 thousand
due on April 1, 2010 and April 15, 2010. We gave the Trust a collateral security
interest in all of its assets, including the stock of PCS, subordinate only to
the outstanding security interest of Wachovia Bank. We agreed that the only loan
debt principal that we are permitted to pay until the New Trust Note is paid in
full is: the existing Wachovia debt which was paid in full on March 31, 2009,
the scheduled principal payments on certain executive notes with de minimis
balances and the scheduled principal payments to Prime Partners for the $0.3
million Promissory Note dated December 26, 2007. No payments of loan principal
can be paid to any other existing or future lenders, including to Prime Partners
on the New Prime Partners Note. Prime Partners and Ted Finkelstein guaranteed
the New Trust Note. The guarantee of Prime Partners is secured by a collateral
assignment of the promissory note dated January 23, 2004 between Daniel R. Levy
and the Company in the original amount of $0.9 million which was assigned to
Prime Partners, Inc. on June 26, 2006.


                                      F-21
<PAGE>

(e) On December 3, 2008, three trusts of which James Ciocia is a trustee,
purchased an aggregate of $0.3 million of the Notes issued pursuant to the
Offering in reliance upon the exemption from registration in Rule 506 of
Regulation D. On August 19, 2009, these trusts purchased an additional $0.3
million of the Notes. See Note 18.

(f) On January 27, 2009, Carole Enisman purchased a $0.2 million Note pursuant
to the Offering. See Note 18.

(g) On November 28, 2008 we issued a promissory note in the amount of $50.0
thousand to Ted Finkelstein, our Vice President, General Counsel and Secretary.
The note provides for 10.0% interest to be paid monthly with the principal
balance to be paid before June 30, 2009. The promissory note was amended as of
June 30, 2009 to extend the due date of principal to May 1, 2010.

Other Related Party Transactions

On August 20, 2007, we sold 40.0 million shares of our common stock to certain
private placement purchasers, including officers, directors and employees of the
Company and Prime Partners II, LLC, a holding company owned in part by Michael
Ryan (our President and Chief Executive Officer and a member of our Board of
Directors). See Note 18.

On October 30, 2001 we borrowed $1.0 million from Rappaport Gamma Limited
Partnership ("Rappaport") pursuant to a written promissory note (the "Rappaport
Loan"). On April 29, 2005, the Rappaport Loan, together with 785,298 shares of
Company common stock held by Rappaport were sold to a group of our management
and employees (the "Purchasing Group") for $0.8 million. The members of the
Purchasing Group included Prime Partners, Inc., a corporation controlled by
Michael Ryan, James Ciocia, Christopher Kelly, former General Counsel, Kathryn
Travis, former Secretary, Dennis Conroy former Chief Accounting Officer, Ted
Finkelstein and certain other employees. Since the resulting debt reduction of
$0.2 million agreed to by the Purchasing Group resulted from a related party
transaction, paid-in-capital was appropriately increased. Pursuant to the terms
of the Rappaport Loan, the Purchasing Group, as holders of the Rappaport Loan,
was entitled to receive, in the aggregate, as interest, 180,000 shares of
Company common stock annually while the debt remained unpaid. Upon the purchase
of the Rappaport Loan by the Purchasing Group, the Rappaport Loan was
reclassified as a related party transaction. On August 20, 2007, as part of the
Private Placement Closing, $0.7 million of the loan was converted to 7.1 million
shares of Company common stock, leaving a $37,500 debt balance to one member of
the Purchasing Group, who was not a related party. The $0.10 per share
conversion price was the same price paid by all other participants in the
Private Placement, which included purchasers unaffiliated with us. The $0.10
price was the result of an arms length negotiation with unaffiliated investors
who purchased 40.0 million shares of Company common stock for $4.0 million. The
$37,500 was paid on October 25, 2007 leaving no continuing obligations to the
Purchasing Group.

On August 28, 2002, we entered into a promissory note in the amount of $0.1
million with James Ciocia, a Director of the Company. The note pays interest at
the rate of 10% per annum. The note is payable on demand and may be prepaid in
whole or in part at any time and from time to time without premium or penalty.
As of June 30, 2007 the principal balance was $0.1 million. On August 20, 2007,
$0.2 million of debt owed to Mr. Ciocia, including $8,881 from his note, was
converted to 2.3 million shares of our common stock.

On December 23, 2003, we entered into a promissory note in the amount of $0.2
million with Ted Finkelstein, our Vice President and General Counsel. The note
paid interest at the rate of 10% per annum payable monthly. At June 30, 2007,
the principal balance we owed Mr. Finkelstein was $25.8 thousand. On August 20,
2007, $30.0 thousand of Mr. Finkelstein's note, including accrued interest, was
converted to 0.3 million shares of our common stock.

James Ciocia, our Chairman of the Board of Directors and a financial planner for
the Company, receives commissions based on a variable percentage of his own
business production and under which he received an aggregate of $0.4 million in
fiscal 2009.

James Ciocia and Michael Ryan personally guaranteed the repayment of our loan
from Wachovia. Such shareholders received no consideration for such guarantees
other than their salaries and other compensation.

On October 30, 2008 Michael Ryan and Carole Enisman each purchased 250,000
Shares of our common stock at $0.10 per Share pursuant to the Offering in
reliance upon the exemption afforded by Section 4(2) of the Securities Act and
Rule 506 of Regulation D. See Note 18.


                                      F-22
<PAGE>

17. TAXES ON INCOME

For fiscal year ended June 30, 2009 there was no income taxes recorded in the
Consolidated Financial Statements. For fiscal year ended June 30, 2008, $80.0
thousand was recorded for income taxes in the Consolidated Financial Statements.

A valuation allowance has been established against the deferred tax assets as of
June 30, 2009 and June 30, 2008.

Our net operating loss carryovers of $19.0 million at June 30, 2009 expire
generally from 2022 to 2029. The ability to utilize net operating loss
carryovers may be restricted based on Internal Revenue Code Section 382 "changes
in ownership."

A reconciliation of the federal statutory rate to the provision for income taxes
is as follows:

<TABLE>
<CAPTION>
                                                     For Fiscal Years Ended June 30,
(in thousands)                                         2009                   2008
-----------------------------------------------------------------------------------------
<S>                                            <C>           <C>      <C>          <C>
Pre-tax income (loss) from
   Continuing operations                       $(1,797)               $ 3,698
Federal income taxes/(benefit)
   computed at statutory rates                    (629)      35.00%     1,294       35.00%
Reduction of taxable income for forgiveness
of indebtedness under Section
108(a)(1)(B) of the Internal Revenue Code                              (1,214)     -32.80%
State and local taxes/(benefit)
   net of federal tax benefit                       --          -%         --          -%
Accrual for non-deductible expense                  88          -%         --          -%
Valuation reserve                                  541          -%         --          -%
                                               -------                -------
Total income tax expense provision             $    --          -%    $    80          -%
                                               =======                =======
</TABLE>

Net deferred assets were comprised of the following:
                                                      As of June 30,
(in thousands)                                     2009           2008
---------------------------------------------------------------------------
Net operating loss carry forward                     $ 6,600       $ 6,000
Intangibles                                            1,400         1,500
Other, net                                               900           900
                                              -----------------------------
   Total                                               8,900         8,400
Less Valuation reserve                                (8,900)       (8,400)
                                              -----------------------------
   Net                                               $     -       $     -
                                              =============================

18. EQUITY TRANSACTIONS

On August 20, 2007, we closed the sale (the "Investment Purchase Closing") of
40.0 million shares of our common stock, par value $0.01 per share, at a price
of $0.10 per share (the "Investment Purchase") for proceeds of $4.0 million
pursuant to an Investor Purchase Agreement dated April 25, 2007 (the "Purchase
Agreement") with Wynnefield Small Cap Value Offshore Fund, Ltd., Wynnefield
Partners Small Cap Value, L.P., Wynnefield Partners Small Cap Value, L.P.I and
WebFinancial Corporation (the "Investment Purchasers"). The 40.0 million shares
of common stock were issued pursuant to an exemption from the registration
requirements of the Securities Act of 1933 under Regulation D, Rule 506 ("Rule
506"). The proceeds from the Investment Purchase Closing were used as follows:
$2.4 million was paid to Met Life Insurance Company of Connecticut ("Met Life"),
formerly known as the Travelers Insurance Company, in full satisfaction of the
approximately $6.8 million, including principal and interest, owed to Met Life
by us; $50.0 thousand was paid to Wachovia Bank, National Association
("Wachovia") as a principal payment, which reduced our loan balance with
Wachovia to approximately $0.7 million; $19.2 thousand was paid to Wachovia for
a loan fee and legal fees; and the $1.6 million balance was retained by us to be
used as working capital.


                                      F-23
<PAGE>

The Investment Purchase Closing was contingent upon, among other things, the
purchase of an additional 40.0 million shares of common stock at a price of
$0.10 per share in cash or by the conversion of outstanding debt or other
liabilities of ours (the "Private Placement") by other purchasers (the "Private
Placement Purchasers") including officers, directors and employees of ours.
Prime Partners II, LLC ("Prime Partners II"), a holding company owned in part by
Michael Ryan (the Company's President and Chief Executive Officer and a member
of the Company's Board of Directors) purchased 15.4 million shares of common
stock in the Private Placement by the conversion of $1.5 million of Company
debt. The closing of the Private Placement (the "Private Placement Closing")
occurred on August 20, 2007 simultaneously with the Investment Purchase Closing.

At the Private Placement Closing, we issued 16.9 million shares of Company Stock
for cash proceeds of $1.7 million and 23.1 million shares of common stock for
the conversion of $2.3 million of our debt, including 15.4 million shares issued
to Prime Partners II, for the conversion of $1.5 million of our debt. Such
shares were issued pursuant to an exemption from the registration requirements
under Rule 506. The $1.7 million of cash proceeds from the Private Placement
Closing were disbursed as follows: $3.8 thousand for escrow agent fees; and the
$1.7 million balance was retained by us to be used to retire the debt of
affiliates.

In connection with the Investment Purchase Closing, we entered into a
Shareholders Agreement dated August 20, 2007 with the Investment Purchasers,
Michael Ryan, Carole Enisman (our Executive Vice President of Operations), Ted
Finkelstein (our Vice President and General Counsel), Dennis Conroy, and Prime
Partners, Inc. and Prime Partners II, holding companies owned in part by Michael
Ryan (the "Existing Shareholders").

Pursuant to the terms of the Shareholders Agreement: at the Investment Purchase
Closing, the Investment Purchasers were given the right to designate two
directors (the "Investor Directors") for election to our Board of Directors (the
"Board"); so long as the Existing Shareholders own at least 10% of the
outstanding shares of Common Stock, the Existing Shareholders have the right to
nominate two directors (the "Existing Shareholder Directors") for election to
the Board; the Investor Directors and the Existing Shareholder Directors shall
jointly nominate three independent directors; the Investor Purchasers and the
Existing Shareholders agreed to take such action as may be reasonably required
under applicable law to cause the Investor Purchasers' designees and the
Existing Shareholders' designees to be elected to the Board; we agreed to
include each of the Director designees of the Investor Purchasers and the
Existing Shareholders on each slate of nominees for election to the Board
proposed by us, to recommend the election of such designees to the shareholders
of the Company, and to use commercially reasonable efforts to cause such
designees to be elected to the Board; one of the Investor Directors shall be
appointed as a member of the Compensation Committee of the Board and one of the
Investor Directors shall have the right to attend all Audit Committee meetings;
the consent of one of the Investor Directors is required for certain Company
actions above designated thresholds, including the issuance, redemption or
purchase of equity or debt, the issuance of an omnibus stock plan, the creation
of any new class of securities, certain affiliate transactions, changes to our
certificate of incorporation or bylaws, entering into a merger, reorganization
or sale of the Company or acquiring any significant business assets, or material
changes to the business line of the Company; the Investor Shareholders agreed to
a one year standstill agreement concerning the acquisition of our assets, our
securities, proxy solicitations, voting trusts or tender offers; the Investor
Purchasers were granted a right of first refusal for future securities issued by
the Company; and the Company was granted a right of first refusal for sales of
Common Stock by the Investment Purchasers and by the Existing Shareholders.

Nelson Obus and Frederick Wasserman are the Investor Directors designated by the
Investment Purchasers. James Ciocia and Michael Ryan are the Existing
Shareholder Directors designated by the Existing Shareholders.

Also in connection with the Investment Purchase Closing, we entered into a
Registration Rights Agreement dated August 20, 2007 with the Investment
Purchasers and the Private Placement Purchasers (the "Holders"). Pursuant to the
terms of the Registration Rights Agreement: subject to certain conditions, we
agreed to file for the Holders an Automatic Registration Statement (the
"Automatic Registration") no later than the later of forty five days after the
Investment Purchase Closing and thirty days after we filed our Form 10-K for the
fiscal year ending June 30, 2007; if we are unable to register all Registrable
Securities in the Automatic Registration, we agreed to certain demand
registrations by the Holders; we granted to the Holders certain Tag-Along
Registration rights; the Holders were given demand registration rights on the
happening of certain events; and we agreed to delineate registration procedures.
We evaluated the accounting for terms of the registration rights, pursuant to
FASB Staff Position on the Emerging Issues Tax Force 00-19-2 (FSP EITF
00-19-2"). We recorded $0.1 million as a liability for liquidated damages should
we fail to file timely an Automatic Registration Statement for certain
purchasers of the Company's common stock. On October 25, 2007, we filed a
Registration Statement on Form S-1 with the SEC and reversed the $0.1 million
liability recorded for liquidated damages as of December 31, 2007. The
Registration Statement was declared effective by the SEC on March 17, 2008.

On April 14, 2008, the SEC declared effective our registration statement, which
included a prospectus filed with the SEC on April 14, 2008 for a public stock
offering (the "Public Stock Offering"). Pursuant to this offering, we
distributed, for no consideration to our holders of common stock,
non-transferable subscription rights to purchase shares of our common stock.
Each eligible shareholder received one subscription right for each share of
common stock owned at the close of business on April 14, 2008, the record date.
We distributed subscription rights exercisable for up to an aggregate of 20.0
million shares of our common stock.


                                      F-24
<PAGE>

Each subscription right entitled an eligible shareholder to purchase up to four
shares of common stock, subject to adjustment, at a subscription price of $0.10
per share. This is the same price at which we sold 80.0 million shares of common
stock in the two private placements described above. Shareholders who exercised
their basic subscription rights in full could over-subscribe for additional
shares to the extent additional shares were available. The Public Stock Offering
expired on June 20, 2008. A total of 3.9 million shares of the common stock were
issued pursuant to the Public Stock Offering.

The Investment Purchasers and the Private Placement Purchasers (collectively,
the "2007 Investors") did not receive subscription rights, but had the right
until September 15, 2008 to purchase at $0.10 per share the shares that remained
unsold on June 20, 2008. On September 12, 2008, we filed a supplement to our
prospectus extending until December 31, 2008 the period during which the 2007
Investors have a right to purchase up to the 16.1 million shares of common stock
offered under the Prospectus that remained unsold at the expiration of the
Public Stock Offering. A total of 0.7 million shares were purchased by the 2007
Investors during the extension period which expired on December 31, 2008.

On October 10, 2008 we issued 300,000 shares to certain of our Board of
Directors in consideration for services as director compensation pursuant to our
2007 Stock Incentive Plan.

On October 31, 2008 we commenced the Gilman Ciocia Common Stock and Promissory
Note Offering, a private offering of our securities pursuant to SEC Regulation D
(the "Offering"). The Offering was amended on December 8, 2008 and on September
3, 2009. The securities offered for sale in the Offering, as amended are: $2.3
million of notes with interest at 10% due on July 1, 2010 (the "Notes") and $0.4
million, or 3.5 million shares of our $0.01 par value common stock with a price
of $0.10 per share (the "Shares"). Through September 15, 2009, $1.7 million of
Notes and $0.1 million, or 1.0 million shares, of our common stock were issued
pursuant to the Offering.

On November 14, 2008 we issued 250,000 shares to VFinance for consulting
services rendered in reliance upon the exemption afforded by Rule 506 of
Regulation D.

19. SUBSEQUENT EVENT

On October 31, 2008 we commenced the Gilman Ciocia Common Stock and Promissory
Note Offering, a private offering of our securities pursuant to SEC Regulation D
(the "Offering"). The Offering was amended on December 8, 2008 and on September
3, 2009. The securities offered for sale in the Offering, as amended are: $2.3
million of notes with interest at 10% due on July 1, 2010 (the "Notes") and $0.4
million, or 3.5 million shares of our $0.01 par value common stock with a price
of $0.10 per share (the "Shares"). Through June 30, 2009, $1.2 million of Notes
and $0.1 million, or 1.0 million shares, of our common stock were issued
pursuant to the Offering. During August 2009, we issued another $0.5 of Notes.


                                      F-25