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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549





FORM 10-K/A

Amendment No. 1





(Mark One)

|x | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2007

OR



| ̈ | 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 000-51200





ClearPoint Business Resources, Inc.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 98-0434371                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                                   |  |           
|-------------------------------------------------- |  | ----------
|1600 Manor Drive, Suite 110 Chalfont, Pennsylvania |  | 18914     
|(Address of principal executive offices)           |  | (Zip Code)

Registrants telephone number, including area code: (215) 997-7710





Securities registered pursuant to Section 12(b) of the Act:



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange on which registered
|Common Stock        |  | The NASDAQ Stock Market LLC              
|                    | 
|Warrants            |  | The NASDAQ Stock Market LLC              
|                    | 
|Units               |  | The NASDAQ Stock Market LLC              

Securities registered pursuant to Section 12(g) of the Act: None





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 (§229.405 of this chapter) 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.   ̈

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 the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                           |  |                             
|-------------------------- |  | ----------------------------
|Large accelerated filer   ̈ |  | Accelerated filer   ̈        
|                           | 
|Non-accelerated filer   ̈   |  | Smaller reporting company  x

(Do not check if a 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

As of June 29, 2007, the
aggregate market value of the registrants common stock held by non-affiliates of the registrant was $30,945,790 based on the closing sale price as reported on The NASDAQ Capital Market. For the purposes of determining this amount only, the
registrant has defined affiliates of the registrant to include the executive officers and directors of the registrant and holders of more than 10% of the registrants common stock on June 29, 2007.

The number of shares outstanding of the registrants common stock as of March 24, 2008 was 13,208,916 shares.

Documents Incorporated by Reference:

None.









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Explanatory Note

ClearPoint Business Resources, Inc., referred to as the Company, ClearPoint or we, us or our, is filing this Amendment No. 1 to the Annual Report on Form
10-K/A, referred to as the Amendment, to amend and restate Part III, Items 10 through 14, of the Annual Report on Form 10-K for the fiscal year ended December 31, 2007, filed with the Securities and Exchange Commission, referred to as
the SEC, on April 15, 2008, referred to as the Original Form 10-K, to include the information previously omitted in reliance on General Instruction G(3) to Form 10-K. General Instruction G(3) provides that registrants may
incorporate by reference certain information from a definitive proxy statement prepared in connection with the election of directors. We have determined to include such Part III information by amendment of the Original Form 10-K rather than by
incorporation by reference to the proxy statement.

The purpose of this Amendment is also to add certain clarifications to, and to correct
certain recently discovered typographical errors in, Part I, Item 1. Business, and Part II, Item 8. Financial Statements and Supplementary Data, of the Original Form 10-K.

We are adding the following language to clarify the disclosure in:



| | (i) | the second full paragraph on page 3 of Item 1. Business, Part I of the Original Form 10-K: The Company was not in compliance with the covenants at December 31,
2007, but received a waiver from M&T for the period ended December 31, 2007. In connection with the waiver, the Company paid a $100,000 waiver fee to M&T. and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | the third full paragraph on page 39 of Item 8. Financial Statements and Supplementary Data, Part II of the Original Form 10-K: and $10,812,981 of the December 31,
2007 balance of the Revolver has been classified as a current liability.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We are also making corrections to the
following information in Item 8. Financial Statements and Supplementary Data, Part II of the Original Form 10-K:



|                                                                                                                                                                                 |  |                            |              |                  |   |              |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------------ | ---------------- | - | ------------ | -
|Description of Corrected Item                                                                                                                                                    |  | Previously Reported Number |              | Corrected Number |  
|Consolidated Statements of Cash Flows, Gain on Sale of Subsidiary (page 16)                                                                                                      |  | $                          | 1,205,983    |                  | $ | (1,205,983   | )
|Note 14 to Consolidated Financial Statements, Stock-Based Compensation page 33                                                                                                   |  | $                          | 816,000 5.68 |                  | $ | 766,000 5.65 |  
|Note 21 to Consolidated Financial Statements, Quarterly Financial Information (unaudited) (page 42), Other income (expense) for the quarter
ended June 30, 2007 ($ in thousands) |  | $                          | 89           |                  | $ | 90           |  

We believe that the foregoing clarifications and corrections made in the Amendment are not,
individually or in the aggregate, material to our business, financial condition or results of operations.

Accordingly, Item
1. Business, of Part I, Item 8. Financial Statements and Supplementary Data, of Part II and Part III of the Original Form 10-K are hereby amended and restated as set forth in the Amendment.

As a smaller reporting company, we have elected to prepare Part III of this Amendment following scaled disclosure requirements for smaller
reporting companies consistent with the SEC rules effective February 4, 2008. Under the scaled disclosure obligations, we are not required to provide the Compensation Discussion and Analysis and certain other tabular and narrative disclosures
relating to executive compensation. Nor are we required to quantify payments due to the named executive officers upon termination of employment. Management believes that the scaled disclosure for our executive compensation policy and practices is
appropriate because we have a relatively simple compensation structure.

In addition, pursuant to the rules of the SEC, Item 15.
Exhibits and Financial Statement Schedules of Part IV of the Original 10-K has been amended to contain currently dated certifications from our Chief Executive Officer and Chief Financial Officer, as required by Rules 13a-14(a) and 13a-14(b)
under the Securities Exchange Act of 1934, as amended, which certifications are filed herewith as Exhibits 31.1, 31.2, 32.1 and 32.2. We have also included currently dated Exhibit 23.1 (Consent of Lazar Levine and Felix LLP) into the Amendment.

There are no other changes to the Original Form 10-K other than those outlined above. This Amendment does not reflect events occurring
after the filing of the Original Form 10-K, nor does it modify or update disclosures therein, in any way other than as required to reflect the amendments described above. Among other things, forward-looking statements made in the Original Form 10-K
have not been revised to reflect events that occurred or facts that became known to us after the filing of the Original Form 10-K, and such forward looking statements should be read in their historical context.



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CLEARPOINT BUSINESS RESOURCES, INC.

TABLE OF CONTENTS



|              |  |                                                                                                 |  |     
|------------- |  | ----------------------------------------------------------------------------------------------- |  | ----
|              |  |                                                                                                 |  | Page
|PART I        |  | 1                                                                                              
|Item   1.     |  | Business.                                                                                       |  | 1   
|              | 
|PART II       |  | 1                                                                                              
|Item   8.     |  | Financial Statements and Supplementary Data.                                                    |  | 10  
|              | 
|PART III      |  | 43                                                                                             
|Item 10.      |  | Directors, Executive Officers and Corporate Governance.                                         |  | 43  
|Item 11.      |  | Executive Compensation.                                                                         |  | 43  
|Item 12.      |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |  | 49  
|Item 13.      |  | Certain Relationships and Related Transactions, and Director Independence.                      |  | 59  
|Item 14.      |  | Principal Accounting Fees and Services.                                                         |  | 62  
|              | 
|PART IV       |  | 65                                                                                             
|Item 15.      |  | Exhibits and Financial Statement Schedules.                                                     |  | 67  
|              | 
|SIGNATURES    |  | 68                                                                                             
|              | 
|EXHIBIT INDEX |  | 69                                                                                             



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PART I

This Annual Report on Form 10-K/A of ClearPoint Business Resources, Inc. (ClearPoint or
the Company) and the documents incorporated herein contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of
the Securities Exchange Act of 1934, as amended (the Exchange Act). These forward-looking statements can be identified by the use of forward-looking terms such as believes, expects, may,
will, should, could, seek, intends, plans, estimates, anticipates or other comparable terms. Forward-looking statements involve inherent risks and
uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. The risks and uncertainties including those set forth in Part I, Item 1ARisk Factors of
ClearPoints Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2008 or elsewhere in this Annual Report on Form 10-K/A and in other reports filed by the Company with the SEC should be considered in
evaluating the Companys forward-looking statements. The Company has no plans to update its forward-looking statements to reflect events or circumstances after the date hereof. The Company cautions readers not to place undue reliance upon any
such forward-looking statements, which speak only as of the date made.



|Item 1. | Business.
|------- | ---------

Company Overview

The Company is a leading Workforce Management Solutions provider to clients ranging from small businesses to Fortune 500 companies. ClearPoints
iLabor network is a proprietary, technology-based platform that provides its clients a comprehensive web-based portal to streamline the process involved in procurement and management of temporary labor through a network of ClearPoint-approved
staffing vendors. The iLabor platform provides a virtual marketplace for the electronic procurement (e-procurement) of temporary labor and provides the client with one contract and one contact point to order temporary labor on a national
scale. ClearPoints proprietary suite of technologies provides an efficient human capital portal that allows companies to manage their workforce in one click. iLabor is an on-demand e-procurement solution that is hosted by ClearPoint which
eliminates the need for clients to install and maintain costly hardware and software applications. The client can access iLabor through standard Internet connections and web browsers, which also eliminates the need for time consuming and costly
systems integrations. The iLabor platform provides real time feedback on all posted positions and provides a centralized reporting mechanism for clients to review and monitor their spending on temporary labor on a national basis.

The introduction in 2007 of ClearPoints iLabor technology has allowed the Company to position itself uniquely in the Human Capital industry. The
iLabor network is a technology-based procurement method that provides a low cost and easy alternative for ClearPoints clients, as well as traditional staffing companies in the industry, to procure temporary labor through a ClearPoint-approved
staffing vendor network that has national coverage. It is the national scope of ClearPoints vendor base of temporary labor suppliers that enables the Company to effectively and efficiently meet the stringent demands of iLabor clients, often
within very tight time constraints. The iLabor platform is a fully scalable product offering that can accommodate significant growth in transaction volumes for ClearPoint without significant increases to the Companys existing cost structure.

In the second half of 2007, the Company moved the majority of its branch offices to a franchise model, enabling the Company to focus on
its technology platforms rather than the day to day recruitment and placement of temporary labor. Two franchisees, KOR Capital, LLC (KOR), a Florida limited liability company controlled by Kevin ODonnell, a former officer of the
Company, and TZG Enterprises, LLC (TZG), a Delaware limited liability company controlled by J. Todd Warner, a former officer of the Company, assumed responsibilities for operating and managing respective former branch offices. In return,
ClearPoint received from KOR, on a weekly basis, a royalty fee equal to 4.5% of all gross revenues earned by KOR from its operations. KOR also agreed to pay the Company a royalty equal to 50% of the net income from its operations. From TZG, the
Company received, on a weekly basis, a royalty fee equal to 6% of all gross revenues earned by TZG from its operations. This effectively allowed ClearPoint to significantly reduce its fixed operating costs while maintaining a recurring revenue
stream from its client base.



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In March 2008, the KOR franchise agreement was terminated and the associated customer contracts were sold
to StaffChex, Inc. (StaffChex). In return, ClearPoint Resources, Inc., a wholly owned subsidiary of ClearPoint (CPR), received 15,444 shares of common stock of StaffChex and is entitled to receive an additional 23,166 shares
of common stock of StaffChex subject to certain earnout provisions. In addition, StaffChex entered into an iLabor Network Supplier Agreement with CPR, whereby iLabor would be the technology for StaffChex to fulfill open positions for temporary
labor. In return, CPR would receive a percentage (initially 2.25%, but subject to reduction based on hitting certain volume targets) of StaffChexs total collections from its total billings for temporary staffing services provided by StaffChex,
regardless of whether such services were provided through the iLabor network.

In February 2008, the TZG franchise agreement was terminated
and the operations and management of the associated customer contracts were licensed to Optos Capital, LLC (Optos), a company owned by Christopher Ferguson, the former director, President and Secretary of the Company and CPR. CPR was
entitled to receive a license fee of 5.2% of total cash receipts from Optoss temporary staffing services.

These transactions in
February-March 2008 enabled ClearPoint to initiate a debt reduction strategy which included the outsourcing of workers compensation insurance policies and the transfer of payroll funding obligations for temporary employees to StaffChex and
Optos.

On April 8, 2008, the license agreement with Optos was terminated. A new license agreement and a new temporary help services
subcontract agreement was entered into with Koosharem Corp., a California corporation doing business as Select Staffing (Select), where CPR is entitled to receive annually the first 10% of all annual gross sales of the subcontracted
contracts up to $36 million of annual gross sales and whereby Select licensed the use of CPRs iLabor network in exchange for a $1.2 million payment ($900,000 on April 8, 2008 and $300,000 on July 1, 2008).

ClearPoints corporate headquarters are located at 1600 Manor Drive, Suite 110, Chalfont, Pennsylvania 18914. The Companys telephone number is
215-997-7710 and Internet website is www.clear-point.com.

Significant Transactions

ClearPoint was formed in Delaware on July 21, 2004. CPR, a wholly-owned subsidiary of ClearPoint, formerly known as Mercer Staffing, Inc.
(Mercer), was formed in Delaware on January 1, 2005, as a holding company of its wholly owned subsidiaries consisting of, among others, Mercer Ventures Inc. (MVI) and Allied Contract Services, LLC (Allied).
At that time, the owners of MVI and Allied exchanged their respective ownership interests for the common stock of Mercer. MVI, a Pennsylvania corporation, has been in existence since 2001. Allied, a Pennsylvania limited liability company, was formed
in 2004 to acquire certain assets of New Staff, Inc. Mercer acquired 100% of common stock of Quantum Resources Corporation (Quantum) on July 29, 2005. Effective July 12, 2006, Mercer changed its name to ClearPoint Business
Resources, Inc. and then after the merger (as described below), changed its name again to ClearPoint Resources, Inc.

On August 14,
2006, CPR acquired 100% of the common stock of StaffBridge, Inc. for $233,000 in cash and a note payable of $450,000 due December 31, 2007. The note payable bears interest at 6% per annum and is payable quarterly. On December 31,
2007, the note payable was amended to extend the maturity date to June 30, 2008. In addition, the amount of the note was increased to $487 to include accrued interest and the interest rate was increased to 8% per annum payable in monthly
installments starting January 15, 2008. CPR incurred an origination fee equal to 4% of the principal amount payable in the form of 9,496 shares of common stock of the Company.

On February 12, 2007, CPR merged with a wholly-owned subsidiary of Terra Nova Acquisition Corporation (Terra Nova), whereby as a result
of the merger (the merger), stockholders of CPR received 6,051,549 shares of Terra Nova common stock and CPR became a wholly-owned subsidiary of Terra Nova. A certain percentage



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of shares of common stock issued by Terra Nova to CPRs stockholders is being held in escrow to secure the indemnity
rights of Terra Nova under the merger agreement. The merger agreement also provides for the stockholders to receive additional performance payments in three separate annual payments based on the share price of Terra Novas common stock after
the merger. The performance payments are payable in a combination of cash and shares. No such payments have been made to date and none are yet due. Upon the closing of the merger, Terra Nova changed its name to ClearPoint Business Resources, Inc.
and its securities became listed on The NASDAQ Capital Market (symbol: CPBR).

Effective February 23, 2007, ClearPoint acquired
certain assets and current liabilities of ALS, LLC and its subsidiaries, doing business as Advantage Services Group (ASG) based in Florida. The purchase price of $24.4 million consisted of cash of $19 million, a note of $2.5 million,
shares of ClearPoints common stock with a value of $2.5 million (439,367 shares) and the assumption of $0.4 million of current liabilities. ASGs stockholders may also receive up to two additional $1 million payments in shares of
ClearPoints common stock based on financial and integration performance metrics of ClearPoint in calendar years 2007 and 2008. No such payments have been made to date.

On February 23, 2007, the Company entered into new credit facilities (the M&T Credit Agreement) with Manufacturers and Traders Trust
Company (M&T) consisting of a $20 million revolving credit facility (M&T Revolver) expiring in February 2010 and a $3 million term loan (Term Loan) expiring in February 2012. In July 2007, the Company
amended the M&T Credit Agreement to increase its Term Loan to $5 million in the First Amendment to the M&T Credit Agreement. Until the Second Amendment mentioned below, these credit facilities carried an interest rate of the London Interbank
Offered Rate (LIBOR) plus between 1.50% and 2.25%, depending on the Companys ratio of debt to earnings before interest, tax, depreciation and amortization. The available amount to be borrowed from the M&T Revolver is limited
based upon ratios of accounts receivable and unbilled revenue. The M&T Revolver and Term Loan contain certain financial covenants including leverage ratios and a fixed charge coverage ratio. The Company was not in compliance with the covenants
at December 31, 2007, but received a waiver from M&T for the period ended December 31, 2007. In connection with the waiver, the Company paid a $100,000 waiver fee to M&T. On March 21, 2008, ClearPoint entered into the Second Amendment
to M&T Credit Agreement (the Second Amendment), dated as of March 21, 2008, among ClearPoint, the M&T Lenders and M&T. Pursuant to the Second Amendment, the M&T Credit Agreement was amended, among other matters, as
follows: (i) the aggregate amount of the revolving credit commitments was gradually reduced from $20,000,000 to $15,000,000 at March 21, 2008 and $4,000,000 at June 30, 2008; (ii) the applicable margin, which is a component of
the interest rate calculations, was increased to (a) 3.5% and 1.25% for any revolving credit loan that is a Eurodollar loan and a base rate loan, respectively, and (b) 4.5% and 2.25% for any term loan that is a Eurodollar loan and a base
rate loan, respectively; (iii) the applicable commitment fee percentage, which is included in the calculations of commitment fees payable by ClearPoint on the amount of the unused revolving credit commitments, was increased to 0.25%; and
(iv) the covenants related to the ratios of total debt or senior debt, as applicable, to modified EBITDA were amended to lower the ratios as of September 30, 2008. The Second Amendment, and its reduction in revolving credit commitments, is
a byproduct of the Companys debt reduction strategy, mentioned above in the Company Overview.

On August 13, 2007,
the Company entered into an agreement (TZG Agreement) with TZG, pursuant to which the Company granted to TZG an exclusive right and license (i) to set up and operate a franchise of the Companys system and procedures for the
operation of transportation and light industrial temporary staffing services and (ii) to use in connection with the operation certain of the Companys proprietary intellectual property. In consideration for the grant and license, TZG was
required to pay to the Company, on a weekly basis, a royalty fee equal to 6% of all gross revenues earned by TZG from its operations. Through this relationship, TZG operated and managed up to twenty-five of the Companys former branches. The
TZG Agreement was amended on August 27, 2007 to include additional clients in southern California. As discussed below, this TZG Agreement was terminated on February 28, 2008.

On August 30, 2007, the Company entered into an agreement (KOR Agreement) with KOR, pursuant to which the Company granted to KOR an
exclusive right and license (i) to set up and operate, in parts of Northern California and Florida, a franchise of the Companys system and procedures for the operation of light industrial



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and clerical temporary staffing services and (ii) to use in connection with the operation certain of the Companys proprietary intellectual
property. In consideration for the grant and license, KOR was required to pay to the Company, on a weekly basis, a royalty equal to 4.5% of all gross revenues earned by KOR from its operations. KOR also agreed to pay the Company, on a weekly basis,
a royalty equal to 50% of the net income from KORs operations. Through this relationship, KOR operated and managed up to twelve of the Companys former branches. As discussed below, this KOR Agreement was terminated on March 5, 2008.

On December 31, 2007, CPR entered into a purchase agreement (the MVI Purchase Agreement) effective as of
December 31, 2007 with CPRs wholly owned subsidiary, Mercer Ventures, Inc., a Pennsylvania corporation (MVI), and TradeShow Products Inc. (TradeShow). Pursuant to the MVI Purchase Agreement, CPR sold all of the
issued and outstanding securities of MVI to TradeShow for the aggregate purchase price equal to the liabilities assumed of $1,205,983. In addition, CPR will earn a perpetual commission equal to 1.75% of the weekly revenue generated by a specified
list of MVI clients. TradeShow is obligated to pay such fee in arrears on the first business day of every month. Unpaid fees will be subject to interest at a rate of 1.5% per month.

On February 7, 2008, CPR entered into a purchase agreement (the HRO Purchase Agreement) effective as of February 7, 2008, with
CPRs wholly owned subsidiary, ClearPoint HRO, LLC, a Delaware limited liability company (HRO), and AMS Outsourcing, Inc., a Montana corporation (AMS). Pursuant to the HRO Purchase Agreement, CPR sold all of the issued
and outstanding securities of HRO to AMS for an aggregate purchase price payable in the form of an earnout payment equal to 20% of the earnings before interest, taxes, depreciation and amortization of the operations of HRO for a period of twenty
four (24) months following February 7, 2008. AMS is obligated to pay such fee in arrears on the first business day of every month. Unpaid fees will be subject to interest at a rate of 1.5% per month.

On February 22, 2008, CPR issued promissory notes (the Promissory Notes), in the aggregate principal amount of $800,000, with $400,000
to each of Michael Traina, the Companys and CPRs Chairman of the board of directors and Chief Executive Officer, and Christopher Ferguson, the Companys and CPRs former director, President and Secretary, in consideration for
loans totaling $800,000 made to CPR. Pursuant to a voting agreement, each of Messrs. Traina and Ferguson is also a beneficial owner of more than 50% of issued and outstanding shares of the Companys common stock. The terms of the Promissory
Notes issued to Messrs. Traina and Ferguson are identical. The principal amount of each Promissory Note is $400,000, they bear interest at the rate of 6% per annum, which will be paid quarterly, and they are due on February 22, 2009. The
Promissory Notes are subordinate and junior in right of payment to the prior payment of any and all amounts due to M&T pursuant to the M&T Credit Agreement.

On February 28, 2008, ClearPoint Workforce, LLC (CPW), a wholly owned subsidiary of CPR, advanced $800,000, on behalf of Optos, to the provider of Optoss outsourced employee leasing program. The
advanced funds were utilized for Optos payroll. In consideration of making the advance on its behalf, Optos assumed the Promissory Notes, and the underlying payment obligations, issued by CPR on February 22, 2008 which were payable to
Michael Traina and Christopher Ferguson in the aggregate amount of $800,000.

On February 28, 2008, CPR entered into an Asset Purchase
Agreement (the StaffChex Purchase Agreement), dated as of February 28, 2008, with StaffChex, subject to certain conditions for the completion of the transaction. Under the StaffChex Purchase Agreement, StaffChex assumed certain
liabilities of CPR and acquired from CPR all of the Customer Account Property, as defined in the StaffChex Purchase Agreement, related to the temporary staffing services serviced by (i) KOR, pursuant to the KOR Agreement, dated August 30,
2007, and (ii) StaffChex Servicing, LLC (StaffChex Servicing), an affiliate of StaffChex, pursuant to the Exclusive Supplier Agreement, dated September 2, 2007. In consideration for the Customer Account Property acquired from
CPR, StaffChex issued to CPR 15,444 shares of common stock of StaffChex and is obligated to issue up to 23,166 shares of StaffChex common stock, subject to the earnout provisions set forth in the StaffChex Purchase Agreement. In addition, CPR
entered into an iLabor agreement with StaffChex whereby



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StaffChex agreed to process its temporary labor requests through iLabor and to pay to CPR 2.25% (such percentage subject to reduction based on meeting
certain volume targets) of StaffChexs total collections from its total billings for temporary staffing services. On March 5, 2008, CPR completed the disposition of all of the Customer Account Property related to the temporary staffing
services formerly provided by StaffChex Servicing and KOR, agreements with whom were terminated on February 28, 2008 and March 5, 2008, respectively. The Company did not incur any early termination penalties in connection with such
terminations.

On February 28, 2008, CPR and its subsidiary, CPW, entered into a Licensing Agreement (the Optos Licensing
Agreement), with Optos, of which Christopher Ferguson, the Companys and CPRs former director, President and Secretary, is the sole member. Pursuant to a voting agreement, Mr. Ferguson is an indirect beneficial owner of more
than 50% of issued and outstanding shares of the Companys common stock. Pursuant to the Optos Licensing Agreement, ClearPoint (i) granted to Optos a non-exclusive license to use the ClearPoint Property and the Program, both as defined in
the Optos Licensing Agreement, which include certain intellectual property of CPR, and (ii) licensed and subcontracted to Optos the client list previously serviced by TZG, pursuant to the TZG Agreement, as amended, and all contracts and
contract rights for the clients included on such list. In consideration of the licensing of the Program, which is part of the ClearPoint Property, CPR was entitled to receive a fee equal to 5.2% of total cash receipts of Optos related to temporary
staffing services. With CPRs consent, Optos granted, as additional security under certain of its credit agreements, conditional assignment of Optos interest in the Optos Licensing Agreement to its lender under such credit agreements. The
TZG Agreement was terminated on February 28, 2008. The Company did not incur any early termination penalties in connection with such termination.

On February 28, 2008, Christopher Ferguson, the Companys former director, President and Secretary, resigned from the Company in connection with the Optos Licensing Agreement. In connection with
Mr. Fergusons resignation as the Companys and CPRs director, President and Secretary, the Company and Mr. Ferguson entered into the Separation of Employment Agreement and General Release (the Ferguson Separation
Agreement). In consideration for Mr. Fergusons agreement to be legally bound by the terms of the Ferguson Separation Agreement and his release of his claims, if any, under the Ferguson Separation Agreement, Mr. Ferguson is
entitled to be reimbursed for any health insurance payments for Mr. Ferguson for a period equal to 52 weeks. Pursuant to the Ferguson Separation Agreement, except for the parties continuing obligations under the Employment Agreement
between the Company and Mr. Ferguson, dated as of February 12, 2007 (the Employment Agreement), the Employment Agreement is of no further force and effect. Under the Ferguson Separation Agreement, Mr. Ferguson agreed not
to be a designee under the Voting Agreement and not to stand for election as a director of the Company, and, for as long as Mr. Ferguson beneficially owns at least 5% of the Companys outstanding shares of common stock, Mr. Ferguson
will be entitled to be an observer at each meeting of the Companys board of directors. Under the Ferguson Separation Agreement, the Company has agreed to enter into a consulting agreement with Mr. Ferguson pursuant to which he will be
paid $25,000 per month for twelve (12) months. In return, Mr. Ferguson shall assist the Company with any matters relating to the performance of his former duties and will work with the Company to effectively transition his
responsibilities. The Ferguson Separation Agreement also includes various representations, covenants and other provisions customary for an agreement of this nature.

On March 1, 2005, CPR issued a Promissory Note (Blue Lake Note) to Blue Lake Rancheria, a recognized Indian tribe (Blue Lake), for $1,290,000 in principal amount guaranteed by Michael
Traina, ClearPoints Chairman of the board of directors and Chief Executive Officer, and Christopher Ferguson, the former director, President and Secretary of ClearPoint and CPR. The Blue Lake Note matured on March 31, 2008.

Effective March 31, 2008, the Company amended and restated the Blue Lake Note and extended its maturity date under the Agreement, dated as of
March 31, 2008, by and between CPR and Blue Lake (the Blue Lake Agreement). The Blue Lake Agreement sets forth certain agreements between CPR and Blue Lake with respect to the amendment and restatement of the Blue Lake Note. CPR and
Blue Lake have acknowledged that the Blue Lake Agreement constitutes a legally binding obligation and commitment on the parties thereto which will be



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further documented in definitive, binding agreements to be completed no later than April 14, 2008. Pursuant to the Blue Lake Agreement, the principal
amount of $1,290,000 is due and payable as follows: (i) $200,000 was paid on April 8, 2008, (ii) $50,000 is payable on the first business day of each calendar month for 12 consecutive months (totaling $600,000 in the aggregate), the
first payment to occur on May 1, 2008 and the last to occur on April 1, 2009, and (iii) on April 30, 2009, CPR is obligated to pay to Blue Lake the balance of the principal amount, equal to $490,000, plus accrued interest. The
interest rate was increased from 6% to 10% per annum. ClearPoint agreed to issue 900,000 shares (Escrow Shares) of ClearPoints common stock in the name of Blue Lake to be held in escrow, pursuant to an escrow agreement, as
security for the payment of the principal amount and interest under the amended and restated Blue Lake Note.

On March 1, 2005, CPR
issued the Amended and Restated Notes (collectively the Sub Notes and each Amended and Restated Note, a Sub Note) to each of Matthew Kingfield, B&N Associates, LLC, Alyson P. Drew and Fergco Bros. Partnership
(collectively, the Sub Noteholders, and individually, a Sub Noteholder), stockholders of ClearPoint, for $50,000, $100,000, $100,000 and $300,000, respectively. Ms. Drew is the spouse of ClearPoints director Parker
Drew. Fergco Bros. Partnership is controlled by Christopher Ferguson, the former director, President and Secretary of ClearPoint and CPR. The Sub Notes matured on March 31, 2008.

Effective March 31, 2008, the Company amended and restated the Sub Notes and extended their maturity dates under the following agreements:
(i) the Second Amended and Restated Promissory Note, dated March 31, 2008 (the Amended Sub Note and collectively, the Amended Sub Notes) issued by CPR to each Sub Noteholder; and (ii) a Warrant (the Sub
Note Warrant) to purchase 15,000 shares (Sub Note Warrant Shares) of ClearPoints common stock issued to each Sub Noteholder for every $100,000 of Amended Sub Notes held, on a pro rata basis. Each Amended Sub Note is due and
payable on March 31, 2009, provided that CPR has the right to extend this maturity date to March 31, 2010 by providing notice to the Sub Noteholder. All sums outstanding from time to time under each Amended Sub Note bear the same interest
of 12% per annum as under the Sub Note. CPRs failure to make any payment of principal or interest under the Amended Sub Note when such payment is due constitutes an event of default, if such default remains uncured for 5 business days
after written notice of such failure is given to CPR by the Sub Noteholder. In consideration of each Sub Noteholder agreeing to extend the maturity date of their Sub Note, ClearPoint agreed to issue the Sub Note Warrant to the Sub Noteholders to
purchase, in the aggregate, 82,500 Sub Note Warrant Shares as described below. The Sub Note Warrant gives the Sub Noteholders the right to purchase, in the aggregate, 82,500 Sub Note Warrant Shares at an exercise price per share equal to $1.55, the
closing price per share of common stock on March 31, 2008. If CPR extends the maturity date of the Amended Sub Note to March 31, 2010, then the Sub Noteholders will have the right to receive additional Sub Note Warrants to purchase, in the
aggregate, additional 82,500 shares of common stock at an exercise price equal to the closing price of common stock on March 31, 2009, but in no event at an exercise price lower than $1.55. The initial Sub Note Warrant is immediately
exercisable during the period commencing on March 31, 2008 and ending on March 31, 2010. The exercise price and the number of Sub Note Warrant Shares are subject to adjustment in certain events, including a stock split and reverse stock
split.

On April 8, 2008 the Optos Licensing Agreement was terminated. A new license agreement and a new temporary help services
subcontract agreement was entered into with Select, where CPR is entitled to receive annually the first 10% of all gross billings of the subcontracted contracts up to $36 million of gross billings ($3.6 million per year to CPR) and whereby Select
licensed use of CPRs iLabor network in exchange for a $1.2 million payment ($900,000 on April 8, 2008 and $300,000 on July 1, 2008). In consideration for terminating the Optos Licensing Agreement, CPR and Optos have agreed that there
will be a net termination fee for any reasonable net costs or profit incurred, if any, when winding up the operations associated with termination.

Technology and Services Offered by ClearPoint

ClearPoint has emerged as a technology based service provider in the
electronic procurement of temporary labor through its iLabor platform and StaffPillar platform. In addition, the Company, through its partners or vendor network, continues to provide its traditional workforce management services to its clients,
throughout the



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United States, utilizing customized contracting and pricing methodologies to meet the needs of each client. The Company derives its revenues predominantly
from the following key services:



| |  |  | iLabor. ClearPoints iLabor network is a proprietary technology-based platform which is hosted by ClearPoint and which provides its clients a
comprehensive web-based portal to streamline the process involved in procurement and management of contingent workforces through a network of ClearPoint-approved staffing vendors. The iLabor platform provides a virtual marketplace for the
e-procurement of temporary labor and provides the client with one contract and one contact point to order temporary staff on a national scale, without the requirement to implement a costly systems integration. ClearPoints proprietary suite of
technology provides an efficient human capital portal that allows companies to manage their workforce in one click.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | StaffPillar.ClearPoints StaffPillar technology, used by clients, provides a system for human resource outsourcing, customized managed services
programs, and workforce optimization embedded within the clients internal technology infrastructure. ClearPoints human resource outsourcing service becomes an extension of its clients human resource department as a sole source
provider of staffing services for both contract and direct positions. ClearPoint will also design and implement performance based solutions for its clients and provide value-added consulting services tailored to the clients business.
ClearPoints vendor management services system is a management program that encompasses every facet of coordinating, ordering, planning and tracking of all contract/temporary personnel, including contract employees from other staffing
companies, and utilizes ClearPoints personnel onsite with its clients to help them optimize their workforce and reduce expenses.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Business Services. ClearPoint, through its approved partners, provides business process outsourcing, support services and benefits solutions and
administration for clients. ClearPoint designs its business services and outsourcing programs to be client-specific business service solutions tailored to meet the needs of the particular client, which are easier and more cost effective for the
client than building the necessary in-house recruiting and credentialing infrastructure. The goal of each outsourced program is to improve the clients process and outcomes for the particular division that will be operated by ClearPoint.
ClearPoints outsourcing offering also includes managing other functions for the client, such as payroll administration, training and retention programs, risk management and call centers.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Project-Based Staff Augmentation. Primarily from ClearPoints approved vendor network, ClearPoint provides full service project solutions, executive
search and temporary and permanent placement, contract recruiting services and short- and long-term hourly-based assignments for clients in both commercial services and professional services. ClearPoints Project-Based Staff Augmentation for
commercial services specializes in the transportation, logistics and distribution industry, with regional hubs located in the top five transportation markets in the United States.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | License Fees.Where ClearPoint has sold, subcontracted or licensed contracts to partners, ClearPoint receives a license fee based on the revenues generated
by the partners.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Temporary Staffing E-Procurement and Services Industry

Temporary staffing and outsourcing have become an integral way for companies to increase scale and focus on core competencies while controlling employment
costs and mitigating certain employment-related risks. The temporary staffing industry provides flexible, efficient and cost-effective staffing solutions to help companies meet a variety of human resource needs. Companies rely on staffing providers
to meet personnel needs during periods of peak workloads caused by factors such as seasonality, special projects, vacation, illness, emergency and rapidly changing economic conditions. In addition, companies realize cost savings from using flexible
staffing services by outsourcing the process and expense of advertising, screening, interviewing, testing and training job candidates to outsourced staffing providers.

iLabor is a tool for companies that take advantage of the temporary labor workforce. iLabor is a virtual marketplace for such companies to e-procure temporary labor from a national network of more than 1,000



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ClearPoint vendors that compete for each position. The strength of ClearPoints vendor base ensures that posted positions are filled on a timely basis
and the robust and flexible iLabor architecture provides its clients with the ability to monitor their total spends on temporary labor with real-time feedback. ClearPoint has made it simple and inexpensive for its clients to access a pool of
temporary labor by avoiding time consuming systems integrations and costly hardware and software application purchases and installations.

The entire spectrum of staffing companies stands to benefit from the widespread and growing practice of outsourcing human capital needs. Typically, the industry has generated strong growth in periods of economic expansion. ClearPoint
management believes that growth in demand for staffing services may become strengthened by anticipated labor market tightness resulting from demographic trends such as the baby boomers leaving the workforce. Companies that provide access to
qualified labor in a scarce labor environment are expected to be increasingly valuable to employers.

Clients

ClearPoints clients range in size from small businesses to Fortune 500 companies located throughout the United States. ClearPoints clients
operate primarily in the transportation, logistics, engineering, scientific, aerospace, allied health, information technology, manufacturing, distribution, call center, financial, hospitality, food service, retail, data processing, legal and
administration industries. With the introduction of iLabor, ClearPoints client base now includes other providers of temporary labor which use iLabor to fill open positions they are not able to fill themselves due to resource constraints or
limitations in geographic coverage, providing them with incremental revenues and earnings.

Historically, ClearPoint has sought to maintain
a diverse client base in an effort to reduce the impact of client turnover. However, ClearPoint cannot assure that the diversity in client base will be maintained. No single customer accounted for more than 5% of ClearPoints revenues for the
year ended December 31, 2007. The top ten customers of ClearPoint generated, in the aggregate, approximately 21% of ClearPoints revenue in 2007.

Competition

ClearPoint competes with e-procurement technology providers in the temporary staffing industry as well as other
traditional temporary staffing firms offering similar services on a national, regional or local basis. The staffing business is very competitive and highly fragmented, with limited barriers to entry into the market, and no company has a dominant
market share in the United States. ClearPoint is not aware of any competitors that compete directly with its iLabor platform.

In the
temporary staffing industry, historically, ClearPoints strongest competitors include national staffing companies that have greater financial resources and larger marketing presence, as well as specialty providers in certain verticals. However,
with the introduction of iLabor, ClearPoint today operates as a clearing house for clients temporary staffing requirements, where many of the national staffing companies have now signed on to the iLabor network, thereby becoming the
fulfillment arm of ClearPoints iLabor ordering system. Small, local providers are also signing on to the iLabor network. ClearPoints future success will depend on the adoption rate of the iLabor procurement system by corporate buyers of
temporary staffing as well as by larger staffing companies looking to generate incremental revenues and earnings.

Seasonality

ClearPoint experiences fluctuation in revenue and operating results based on a number of factors including but not limited to competition in its markets,
availability of qualified personnel and the personnel demands of its clients. Historically, ClearPoint has experienced a rise in demand from its transportation clients in the fourth quarter due to the increase in the shipment of products for the
holiday season. The first quarter has been traditionally the slowest quarter from a revenue perspective due to national holidays and customer planning cycles. Inclement weather can cause a slowdown in ClearPoints business due to business
shutdowns by its clients. ClearPoints recent transactions and focus on iLabor help to mitigate the seasonality.



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Insurance

ClearPoint currently maintains insurance coverage for general liability, workers compensation, property insurance, professional liability, auto insurance, umbrella coverage, commercial crime and directors and officers. Management of
ClearPoint believes that the types of coverage, deductibles, reserves and limits of liability currently in place are adequate.

Intellectual Property

ClearPoint currently owns several trademarks and trade names. It will continue to develop trademarks where appropriate and take the
necessary steps to protect such marks. ClearPoint also utilizes copyright protection for such intellectual property as the source code to our proprietary software technologies iLabor and StaffPillar. From time to time, ClearPoint may license its
technology to clients and negotiate for exclusive development rights or other ownership rights that may arise from the relationship with the client.

Employees

As at December 31, 2007, ClearPoint employed 46 full-time staff employees in Chalfont, Pennsylvania and
Maitland, Florida. ClearPoint currently employs approximately 19 full-time staff employees located in Chalfont, Pennsylvania.



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PART II



|Item 8. | Financial Statements and Supplementary Data.
|------- | --------------------------------------------

ClearPoint Business Resources, Inc. and Subsidiaries

Index to Consolidated Financial Statements



|                                                                                                               |  |      
|-------------------------------------------------------------------------------------------------------------- |  | -----
|                                                                                                               |  | Pages
|                                                                                                               | 
|Report of Independent Registered Public Accounting Firm                                                        |  | 11   
|                                                                                                               | 
|Consolidated Balance Sheets as of December 31, 2007 and 2006                                                   |  | 12   
|                                                                                                               | 
|Consolidated Statements of Operations for the Years Ended December 31, 2007, 2006 and 2005                     |  | 14   
|                                                                                                               | 
|Consolidated Statements of Stockholders Equity (Deficit) for the Years Ended December 31, 2007, 2006 and 2005 |  | 15   
|                                                                                                               | 
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005                     |  | 16   
|                                                                                                               | 
|Notes to Consolidated Financial Statements                                                                     |  | 18   



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

ClearPoint Business Resources, Inc. and Subsidiaries

Chalfont, Pennsylvania

We have audited the accompanying consolidated balance sheets of ClearPoint Business Resources, Inc. and Subsidiaries (the
Company) as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders equity (deficit), and cash flows for each of the years in the three year period ended December 31, 2007. In
connection with our audits of the aforementioned financial statements, we also audited the related financial statement schedule (as listed in Part IV, Item 15). These consolidated financial statements and financial statement schedule 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 audits to obtain reasonable assurance
about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over
financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles uses 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 ClearPoint Business Resources, Inc. and Subsidiaries as of December 31,
2007 and 2006, and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. Also, in
our opinion, the related financial statement schedule, presents fairly, in all material respects, the information set forth therein.



/s/Lazar Levine & Felix LLPLazar Levine & Felix LLP


Morristown, New Jersey

April 15, 2008



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

-ASSETS-



|                                                                                                                                   |  |              |            |      |   |           
|---------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | ---- | - | ----------
|                                                                                                                                   |  | December 31,
|                                                                                                                                   |  | 2007         |            | 2006
|CURRENT ASSETS                                                                                                                     |  |              |            |      |   |           
|Cash and cash equivalents                                                                                                          |  | $            | 1,993,641  |      | $ | 499,654   
|Accounts receivable, net of allowance for doubtful accounts of $3,178,891 and $405,000 at December 31, 2007 and 2006,
respectively |  |              | 17,370,806 |      |   | 11,198,359
|Unbilled revenue                                                                                                                   |  |              | 2,164,332  |      |   | 2,055,511 
|Prepaid expenses and other current assets                                                                                          |  |              | 3,245,757  |      |   | 1,584,670 
|Refundable federal income tax                                                                                                      |  |              | 1,050,000  |      |   |          
|Deferred tax asset                                                                                                                 |  |              | 1,631,318  |      |   | 157,950   
|                                                                                                                                   |  |              |            |      |   |           
|TOTAL CURRENT ASSETS                                                                                                               |  |              | 27,455,854 |      |   | 15,496,144
|EQUIPMENT, FURNITURE AND FIXTURES, net                                                                                             |  |              | 2,162,260  |      |   | 650,568   
|INTANGIBLE ASSETS, net                                                                                                             |  |              | 183,333    |      |   | 2,455,452 
|GOODWILL                                                                                                                           |  |              | 16,821,586 |      |   | 255,586   
|DEFERRED TAX ASSET                                                                                                                 |  |              | 3,375,862  |      |   | 570,795   
|DEFERRED FINANCING COSTS, net                                                                                                      |  |              | 102,198    |      |   | 399,463   
|OTHER ASSETS                                                                                                                       |  |              | 5,175,519  |      |   | 2,424,950 
|                                                                                                                                   |  |              |            |      |   |           
|TOTAL ASSETS                                                                                                                       |  | $            | 55,276,612 |      | $ | 22,252,958
|                                                                                                                                   |  |              |            |      |   |           



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS(Continued)

-LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)-



|                                                                                                                                                                                                                     |  |              |             |   |      |   |            |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------- | - | ---- | - | ---------- | -
|                                                                                                                                                                                                                     |  | December 31, |            
|                                                                                                                                                                                                                     |  | 2007         |             |   | 2006 |  
|CURRENT LIABILITIES                                                                                                                                                                                                  |  |              |             |   |      |   |            |  
|Accounts payable                                                                                                                                                                                                     |  | $            | 2,880,523   |   |      | $ | 1,719,696  |  
|Accrued expenses and other current liabilities                                                                                                                                                                       |  |              | 5,122,251   |   |      |   | 2,064,379  |  
|Accrued payroll and related taxes                                                                                                                                                                                    |  |              | 6,819,496   |   |      |   | 2,124,008  |  
|Current portion of revolving credit facility                                                                                                                                                                         |  |              | 10,812,981  |   |      |   |           |  
|Current portion of retirement benefit payable                                                                                                                                                                        |  |              | 77,257      |   |      |   | 68,065     |  
|Current portion of long-term debt                                                                                                                                                                                    |  |              | 1,600,000   |   |      |   |           |  
|Notes payable other                                                                                                                                                                                                  |  |              | 2,509,681   |   |      |   | 450,000    |  
|Current portion of accrued restructuring costs                                                                                                                                                                       |  |              | 821,178     |   |      |   |           |  
|                                                                                                                                                                                                                     |  |              |             |   |      |   |            |  
|TOTAL CURRENT LIABILITIES                                                                                                                                                                                            |  |              | 30,643,367  |   |      |   | 6,426,148  |  
|REVOLVING CREDIT FACILITY, net of current                                                                                                                                                                            |  |              | 4,000,000   |   |      |   |           |  
|ACCRUED RESTRUCTURING COSTS, net of current                                                                                                                                                                          |  |              | 203,424     |   |      |   |           |  
|LONG-TERM DEBT, net of current                                                                                                                                                                                       |  |              | 3,973,333   |   |      |   | 13,755,255 |  
|                                                                                                                                                                                                                     |  |             
|NOTES PAYABLE-STOCKHOLDERS                                                                                                                                                                                           |  |              | 550,000     |   |      |   | 1,210,000  |  
|LIABILITY FOR WARRANTS ISSUED                                                                                                                                                                                        |  |              |            |   |      |   | 3,291,775  |  
|RETIREMENT BENEFIT PAYABLE, net of current                                                                                                                                                                           |  |              | 260,793     |   |      |   | 283,911    |  
|                                                                                                                                                                                                                     |  |              |             |   |      |   |            |  
|TOTAL LIABILITIES                                                                                                                                                                                                    |  |              | 39,630,917  |   |      |   | 24,967,089 |  
|Commitments and contingencies                                                                                                                                                                                        |  |              |             |   |      |   |            |  
|STOCKHOLDERS EQUITY (DEFICIT)                                                                                                                                                                                       |  |              |             |   |      |   |            |  
|Preferred stock, $.0001 par value, Authorized 1,000,000 shares; none issued                                                                                                                                          |  |              |            |   |      |   |           |  
|Common stock, $.0001 par value (December 31, 2007: 60,000,000 shares authorized, 13,208,916 shares issued and outstanding. December 31,
2006: 30,000,000 shares authorized, 6,051,549 shares issued and outstanding) |  |              | 1,321       |   |      |   | 605        |  
|Additional paid in capital                                                                                                                                                                                           |  |              | 31,349,176  |   |      |   | 599,461    |  
|Accumulated deficit                                                                                                                                                                                                  |  |              | (15,704,802 | ) |      |   | (3,314,197 | )
|                                                                                                                                                                                                                     |  |              |             |   |      |   |            |  
|TOTAL STOCKHOLDERS EQUITY (DEFICIT)                                                                                                                                                                                 |  |              | 15,645,695  |   |      |   | (2,714,131 | )
|                                                                                                                                                                                                                     |  |              |             |   |      |   |            |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                                                                                                                                                 |  | $            | 55,276,612  |   |      | $ | 22,252,958 |  
|                                                                                                                                                                                                                     |  |              |             |   |      |   |            |  



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                                                     |  |                          |             |   |      |   |             |      |  |   |            |  
|------------------------------------------------------------------------------------ |  | ------------------------ | ----------- | - | ---- | - | ----------- | ---- |  | - | ---------- | -
|                                                                                     |  | Years ended December 31, |            
|                                                                                     |  | 2007                     |             |   | 2006 |   |             | 2005 | 
|REVENUE                                                                              |  | $                        | 191,684,483 |   |      | $ | 113,942,202 |      |  | $ | 84,199,881 |  
|COST OF SERVICES                                                                     |  |                          | 166,630,534 |   |      |   | 93,336,960  |      |  |   | 68,788,502 |  
|                                                                                     |  |                          |             |   |      |   |             |      |  |   |            |  
|GROSS PROFIT                                                                         |  |                          | 25,053,949  |   |      |   | 20,605,242  |      |  |   | 15,411,379 |  
|SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                                         |  |                          | 26,705,051  |   |      |   | 13,550,640  |      |  |   | 11,024,939 |  
|RESTRUCTURING EXPENSE                                                                |  |                          | 2,201,116   |   |      |   |            |      |  |   |           |  
|DEPRECIATION AND AMORTIZATION (including an impairment charge of $5,029,020 in 2007) |  |                          | 10,313,285  |   |      |   | 2,488,559   |      |  |   | 2,013,147  |  
|                                                                                     |  |                          |             |   |      |   |             |      |  |   |            |  
|INCOME (LOSS) FROM OPERATIONS                                                        |  |                          | (14,165,503 | ) |      |   | 4,566,043   |      |  |   | 2,373,293  |  
|OTHER INCOME (EXPENSE)                                                               |  |                          |             |   |      |   |             |      |  |   |            |  
|Other income                                                                         |  |                          | 181,688     |   |      |   | 61,926      |      |  |   | 60,089     |  
|Interest expense and factoring fees                                                  |  |                          | (1,871,614  | ) |      |   | (3,348,626  | )    |  |   | (2,475,844 | )
|Interest expense on warrant liability                                                |  |                          |            |   |      |   | (1,723,221  | )    |  |   | (1,172,554 | )
|Other expense                                                                        |  |                          | (911,795    | ) |      |   | (35,920     | )    |  |   | (60,679    | )
|Gain on sale of subsidiary                                                           |  |                          | 1,205,983   |   |      |   |            |      |  |   |           |  
|Prepayment penalty on early retirement of debt                                       |  |                          | (1,949,928  | ) |      |   |            |      |  |   |           |  
|                                                                                     |  |                          |             |   |      |   |             |      |  |   |            |  
|TOTAL OTHER INCOME (EXPENSE)                                                         |  |                          | (3,345,666  | ) |      |   | (5,045,841  | )    |  |   | (3,648,988 | )
|                                                                                     |  |                          |             |   |      |   |             |      |  |   |            |  
|LOSS BEFORE INCOME TAX (BENEFIT) EXPENSE                                             |  |                          | (17,511,169 | ) |      |   | (479,798    | )    |  |   | (1,275,695 | )
|INCOME TAX (BENEFIT) EXPENSE                                                         |  |                          | (5,120,564  | ) |      |   | 945,271     |      |  |   | (76,955    | )
|                                                                                     |  |                          |             |   |      |   |             |      |  |   |            |  
|NET LOSS                                                                             |  | $                        | (12,390,605 | ) |      | $ | (1,425,069  | )    |  | $ | (1,198,740 | )
|                                                                                     |  |                          |             |   |      |   |             |      |  |   |            |  
|NET LOSS PER COMMON SHARE                                                            |  |                          |             |   |      |   |             |      |  |   |            |  
|Basic and Diluted                                                                    |  | $                        | (1.00       | ) |      | $ | (0.24       | )    |  | $ | (0.20      | )
|                                                                                     |  |                          |             |   |      |   |             |      |  |   |            |  
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                           |  |                          |             |   |      |   |             |      |  |   |            |  
|Basic and Diluted                                                                    |  |                          | 12,372,170  |   |      |   | 6,051,549   |      |  |   | 6,051,549  |  
|                                                                                     |  |                          |             |   |      |   |             |      |  |   |            |  



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(DEFICIT)



|                                                                                                                         |  |              |   |                          |        |       |                      |   |            |                                    |  |   |             |   |  |   |             |  
|------------------------------------------------------------------------------------------------------------------------ |  | ------------ | - | ------------------------ | ------ | ----- | -------------------- | - | ---------- | ---------------------------------- |  | - | ----------- | - |  | - | ----------- | -
|                                                                                                                         |  | Common Stock |   | AdditionalPaid inCapital |        |       | Accumulated(Deficit) |   |            | TotalStockholdersEquity (Deficit) | 
|                                                                                                                         |  | Shares       |   |                          | Amount |       |                      |  
|Balance as of December 31, 2004                                                                                          |  | 6,051,549    |   |                          | $      | 605   |                      | $ | 5,561      |                                    |  | $ | (690,388    | ) |  | $ | (684,222    | )
|Net loss                                                                                                                 |  |              |   |                          |        |       |                      |   |            |                                    |  |   | (1,198,740  | ) |  |   | (1,198,740  | )
|                                                                                                                         |  |              |   |                          |        |       |                      |   |            |                                    |  |   |             |   |  |   |             |  
|Balance as of December 31, 2005                                                                                          |  | 6,051,549    |   |                          |        | 605   |                      |   | 5,561      |                                    |  |   | (1,889,128  | ) |  |   | (1,882,962  | )
|Contribution of capital by principal stockholders                                                                        |  |              |   |                          |        |       |                      |   | 593,900    |                                    |  |   |             |   |  |   | 593,900     |  
|Net loss                                                                                                                 |  |              |   |                          |        |       |                      |   |            |                                    |  |   | (1,425,069  | ) |  |   | (1,425,069  | )
|                                                                                                                         |  |              |   |                          |        |       |                      |   |            |                                    |  |   |             |   |  |   |             |  
|Balance as of December 31, 2006                                                                                          |  | 6,051,549    |   |                          |        | 605   |                      |   | 599,461    |                                    |  |   | (3,314,197  | ) |  |   | (2,714,131  | )
|Issuance of common stock in connection with reverse acquisition of Terra Nova Acquisition Corp, net of acquisition costs |  | 6,720,000    |   |                          |        | 672   |                      |   | 27,256,857 |                                    |  |   |            |   |  |   | 27,257,529  |  
|Shares converted on vote against merger                                                                                  |  | (2,000       | ) |                          |        |      |                      |   | (11,076    | )                                  |  |   |            |   |  |   | (11,076     | )
|Issuance of common stock in connection with the acquisition of certain assets and liabilities of ALS, LLC                |  | 439,367      |   |                          |        | 44    |                      |   | 2,499,956  |                                    |  |   |            |   |  |   | 2,500,000   |  
|Issuance of stock options                                                                                                |  |             |   |                          |        |      |                      |   | 1,003,978  |                                    |  |   |            |   |  |   | 1,003,978   |  
|Net loss                                                                                                                 |  |             |   |                          |        |      |                      |   |           |                                    |  |   | (12,390,605 | ) |  |   | (12,390,605 | )
|                                                                                                                         |  |              |   |                          |        |       |                      |   |            |                                    |  |   |             |   |  |   |             |  
|Balance as of December 31, 2007                                                                                          |  | 13,208,916   |   |                          | $      | 1,321 |                      | $ | 31,349,176 |                                    |  | $ | (15,704,802 | ) |  | $ | 15,645,695  |  
|                                                                                                                         |  |              |   |                          |        |       |                      |   |            |                                    |  |   |             |   |  |   |             |  



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                          |  |                          |             |   |      |   |            |      |  |   |            |  
|----------------------------------------------------------------------------------------- |  | ------------------------ | ----------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                          |  | Years Ended December 31, |            
|                                                                                          |  | 2007                     |             |   | 2006 |   |            | 2005 | 
|CASH FLOWS FROM OPERATING ACTIVITIES                                                      |  |                          |             |   |      |   |            |      |  |   |            |  
|Net loss                                                                                  |  | $                        | (12,390,605 | ) |      | $ | (1,425,069 | )    |  | $ | (1,198,740 | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |                          |             |   |      |   |            |      |  |   |            |  
|Deferred income taxes (benefit)                                                           |  |                          | (4,278,434  | ) |      |   | (328,753   | )    |  |   | (168,355   | )
|Depreciation and amortization                                                             |  |                          | 10,313,285  |   |      |   | 2,488,559  |      |  |   | 2,013,149  |  
|Provision for (reduction in) doubtful accounts                                            |  |                          | 2,773,891   |   |      |   | (13,865    | )    |  |   | 178,494    |  
|Gain on sale of subsidiary                                                                |  |                          | (1,205,983  | ) |      |   |           |      |  |   |           |  
|Interest on warrant liability                                                             |  |                          |            |   |      |   | 1,723,221  |      |  |   | 1,172,554  |  
|Stock based compensation                                                                  |  |                          | 1,003,978   |   |      |   |           |      |  |   |           |  
|Amortization of discount on note payable                                                  |  |                          |            |   |      |   | 134,409    |      |  |   | 129,534    |  
|Changes in operating assets and liabilities:                                              |  |                          |             |   |      |   |            |      |  |   |            |  
|(Increase) decrease in accounts receivable                                                |  |                          | (8,946,338  | ) |      |   | 527,342    |      |  |   | (761,035   | )
|(Increase) in unbilled revenue                                                            |  |                          | (108,821    | ) |      |   | (427,256   | )    |  |   | (651,991   | )
|(Increase) decrease in prepaid expenses and other current assets                          |  |                          | (2,711,087  | ) |      |   | 612,434    |      |  |   | (1,839,474 | )
|(Increase) in other assets                                                                |  |                          | (2,750,569  | ) |      |   | (1,301,863 | )    |  |   | (1,084,872 | )
|Increase (decrease) in accounts payable                                                   |  |                          | 774,827     |   |      |   | (276,280   | )    |  |   | 949,874    |  
|Increase (decrease) in accrued expense and other accrued liabilities                      |  |                          | 3,057,869   |   |      |   | (757,621   | )    |  |   | 164,521    |  
|Increase (decrease) in accrued payroll and related taxes                                  |  |                          | 5,901,471   |   |      |   | (142,803   | )    |  |   | 1,645,241  |  
|Increase in accrued restructuring costs                                                   |  |                          | 1,024,602   |   |      |   |           |      |  |   |           |  
|(Decrease) in accrued compensationofficer                                                |  |                          |            |   |      |   | (75,000    | )    |  |   |           |  
|(Decrease) in retirement benefits due                                                     |  |                          | (13,926     | ) |      |   | (3,659     | )    |  |   | (162,867   | )
|                                                                                          |  |                          |             |   |      |   |            |      |  |   |            |  
|Total adjustments to net loss                                                             |  |                          | 4,834,765   |   |      |   | 2,158,865  |      |  |   | 1,584,773  |  
|                                                                                          |  |                          |             |   |      |   |            |      |  |   |            |  
|Net cash provided by (used in) operating activities                                       |  |                          | (7,555,840  | ) |      |   | 733,796    |      |  |   | 386,033    |  
|                                                                                          |  |                          |            
|CASH FLOWS FROM INVESTING ACTIVITIES                                                      |  |                          |             |   |      |   |            |      |  |   |            |  
|Purchase of equipment, furniture and fixtures                                             |  |                          | (1,294,086  | ) |      |   | (198,306   | )    |  |   | (38,865    | )
|Acquisition of business (net of cash acquired)                                            |  |                          | (19,000,000 | ) |      |   | (232,936   | )    |  |   | (9,200,000 | )
|                                                                                          |  |                          |             |   |      |   |            |      |  |   |            |  
|Net cash (used in) investing activities                                                   |  |                          | (20,294,086 | ) |      |   | (431,242   | )    |  |   | (9,238,865 | )
|                                                                                          |  |                          |            
|CASH FLOWS FROM FINANCING ACTIVITIES                                                      |  |                          |             |   |      |   |            |      |  |   |            |  
|Proceeds from issuance of common stock in merger, net of acquisition costs                |  |                          | 27,257,529  |   |      |   |           |      |  |   |           |  
|Repayment of long-term debtBridge                                                        |  |                          | (12,465,255 | ) |      |   |           |      |  |   |           |  
|Net borrowing (repayments) on long-term debt                                              |  |                          | 4,283,333   |   |      |   |           |      |  |   | 14,193,003 |  
|Fees incurred in refinancing                                                              |  |                          | (141,505    | ) |      |   | (100,000   | )    |  |   | (904,201   | )
|Net borrowings (repayments) of financing of accounts receivable                           |  |                          |            |   |      |   |           |      |  |   | (2,321,492 | )
|Net borrowings (repayments) on line of credit                                             |  |                          | 14,812,981  |   |      |   | 144,309    |      |  |   | (150,000   | )
|Principal payments and payoff of short-term debt                                          |  |                          |            |   |      |   |           |      |  |   | (1,545,000 | )
|Net (repayments) on notes payablestockholders                                            |  |                          | (660,000    | ) |      |   | (50,000    | )    |  |   | (50,000    | )
|Net (repayments) on notes payableother                                                   |  |                          | (440,319    | ) |      |   |           |      |  |   |           |  
|Contributions of capital by principal stockholders                                        |  |                          |            |   |      |   | 593,900    |      |  |   |           |  
|Retirement of warranty liability                                                          |  |                          | (3,291,775  | ) |      |   |           |      |  |   |           |  
|Conversion of shares voted against Merger                                                 |  |                          | (11,076     | ) |      |   |           |      |  |   |           |  
|Principal payments on long-term debt                                                      |  |                          |            |   |      |   | (450,000   | )    |  |   | (414,778   | )
|                                                                                          |  |                          |             |   |      |   |            |      |  |   |            |  
|Net cash provided by financing activities                                                 |  |                          | 29,343,913  |   |      |   | 138,209    |      |  |   | 8,807,532  |  
|                                                                                          |  |                          |             |   |      |   |            |      |  |   |            |  
|Net increase (decrease) in cash and cash equivalents                                      |  |                          | 1,493,987   |   |      |   | 440,763    |      |  |   | (45,300    | )
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                          |  |                          | 499,654     |   |      |   | 58,891     |      |  |   | 104,191    |  
|                                                                                          |  |                          |             |   |      |   |            |      |  |   |            |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                |  | $                        | 1,993,641   |   |      | $ | 499,654    |      |  | $ | 58,891     |  
|                                                                                          |  |                          |             |   |      |   |            |      |  |   |            |  



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION



|                               |  |                          |           |      |   |           |  |   |          
|------------------------------ |  | ------------------------ | --------- | ---- | - | --------- |  | - | ---------
|                               |  | Years Ended December 31,
|                               |  | 2007                     |           | 2006 |   | 2005     
|Cash paid during the year for: |  |                          |           |      |   |           |  |   |          
|Interest                       |  | $                        | 1,690,388 |      | $ | 1,371,797 |  | $ | 1,999,948
|Income taxes                   |  | $                        | 1,141,578 |      | $ | 296,892   |  | $ | 6,015    

SUPPLEMENTAL SCHEDULE OF NON-CASH, INVESTING AND FINANCING ACTIVITIES:

On December 31, 2007, the Company sold all of the issued and outstanding securities of its wholly-owned subsidiary, Mercer Ventures, Inc.
(MVI) for the aggregate purchase price equal to the liabilities assumed of $1,205,983.

On February 23, 2007, the Company
acquired certain assets and liabilities of ALS, LLC and its subsidiaries for $19,000,000 in cash, a note payable of $2,500,000, shares of common stock with a value of $2,500,000 and the assumption of approximately $400,000 of current liabilities
(see Note 3).

On August 14, 2006, the Company acquired 100% of the common stock of StaffBridge, Inc. for $233,000 in cash and a note
payable of $450,000.

In 2005, as a result of a settlement with New Staff, Inc., the Company wrote down a note payable by $350,000 and the
value of contract rights by the same amount.



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1ORGANIZATION AND BUSINESS:

ClearPoint Business Resources, Inc. (ClearPoint or the Company) was formed in Delaware on July 21, 2004. ClearPoint Resources Inc. (CPR), a wholly-owned subsidiary of ClearPoint, formerly Mercer
Staffing, Inc. (Mercer), a Delaware corporation, was formed in 2005 as a holding company. ClearPoint provided comprehensive workforce management solutions throughout the United States, including outsourcing placement and recruiting
services, vendor management services (VMS) and staff augmentation programs. Since its inception, the Company has enhanced its platform through organic growth and the integration of acquisitions. As of December 31, 2007, the Company
derived its revenues predominantly from fees for professional services as well as from franchise fees generated from its recently implemented franchise network (see note 20). Strategically, all core operations, including recruiting, credentialing,
compliance, payroll, benefits administration and risk management, are centralized at its offices in Chalfont, Pennsylvania.

Terra Nova
Acquisition Corporation Merger and Accounting Treatment:

Terra Nova Acquisition Corporation (Terra Nova), incorporated in
Delaware, was a blank check company formed on July 21, 2004 to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business. On April 22, 2005, Terra Nova consummated an
Initial Public Offering (Offering) of 4,800,000 units (Units) with each Unit consisting of one share of Terra Novas common stock, $0.0001 par value, and two redeemable common stock purchase warrants
(Warrants) as described in Note 15. On April 26, 2005, Terra Nova consummated the closing of an additional 720,000 Units which were subject to the over-allotment option. The units were sold at an offering price of $6.00 per Unit,
generating total gross proceeds of $33,120,000. After deducting the underwriting discounts and commissions and the offering expenses, the total net proceeds to Terra Nova from the Offering were approximately $29,556,400, of which $28,648,800 was
deposited into a trust fund (Trust Fund).

On February 12, 2007, CPR consummated a merger (the Merger) with
Terra Nova. As a result, CPBR Acquisition, Inc. (CPBR), a Delaware corporation and wholly-owned subsidiary of Terra Nova, merged with and into CPR. At the closing of the Merger, the CPR stockholders were issued an aggregate of 6,051,549
shares of Terra Nova common stock. Ten percent (10%) of the Terra Nova common stock being issued to the CPR stockholders at the time of the Merger was placed into escrow to secure the indemnity rights of Terra Nova under the Merger agreement
and are governed by the terms of an escrow agreement. A further ten percent (10%) of the Terra Nova common stock being issued to the CPR stockholders at the time of the Merger was placed into escrow to be released upon finalization of certain
closing conditions pursuant to the Merger agreement, which release has since occured.

The Merger agreement also provides for CPRs
original stockholders to receive additional performance payments, in the form of cash and/or shares, contingent upon the future performance of the combined companys share price. The performance payments are payable in a combination of cash and
shares. No such payments have been made to date and none are yet due. Upon the closing, Terra Nova changed its name to ClearPoint Business Resources, Inc.

Upon consummation of the Merger, $30.6 million was released from the Trust Fund to be used by the combined company. After payments totaling approximately $3.3 million for professional fees and other direct and
indirect costs related to the Merger, the net proceeds amounted to $27.3 million, all of which were used by ClearPoint and/or CPR as follows: (i) to retire the outstanding debt to Bridge, (see note 12), of $12.45 million, (ii) to pay an
early debt retirement penalty in the amount of $1.95 million to Bridge, (iii) to pay the redemption of warrants related to its credit facility with Bridge in the amount of $3.29 million, and (iv) to partially fund



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



the acquisition of ALS, LLC (see note 3), and certain other related transaction costs. The Merger was accounted for under the purchase method of accounting
as a reverse acquisition in accordance with accounting principles generally accepted in the United States of America for accounting and financial reporting purposes. Under this method of accounting, Terra Nova was treated as the acquired
company for financial reporting purposes. In accordance with guidance applicable to these circumstances, this Merger was considered to be a capital transaction in substance. Accordingly, for accounting purposes, the Merger was treated as the
equivalent of CPR issuing stock for the net monetary assets of Terra Nova, accompanied by a recapitalization. All historical share and per share amounts have been retroactively adjusted to give effect to the reverse acquisition of ClearPoint and
related recapitalization.

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The Companys accounting policies are in accordance with accounting principles generally accepted in the United States of America. Outlined below are
those policies considered particularly significant.

(a) Basis of Presentation:

The accompanying consolidated financial statements include the accounts of ClearPoint and its wholly owned subsidiaries. All significant inter-company
transactions and balances have been eliminated.

(b) Use of Estimates:

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

(c) Revenue Recognition:

The Company recognizes revenue in accordance with Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 104,
Revenue Recognition (SAB 104). Under SAB 104, revenue is recognized when there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the sales price is determinable, and
collectibility is reasonably assured. Revenues from the temporary placement of workers is recognized when earned and realizable and therefore when the following criteria have been met: (a) persuasive evidence of an arrangement exists;
(b) services have been rendered; (c) the fee is fixed or determinable; and (d) collectibility is reasonably assured. Revenue is recognized in the period in which services are provided based on hours worked by the workers. Revenue
earned but not billed is recorded as unbilled revenue. Vendor managed services revenue consists of management fees, which is recognized on the net method, and is recorded as revenue as the service is rendered.

During the year ended December 31, 2007, the Company entered into two franchise agreements whereby approximately 40 branch locations owned by the
Company were converted into franchise operations. Under the terms of the franchise agreements, the Company provided billing and certain administrative services and provided temporary personnel to the franchisee. In exchange, the Company was
reimbursed for the use of its temporary personnel and received a franchise fee based upon the gross billings of the franchisee and other performance metrics and recognized when invoiced. Franchise fees, which were recorded net and are included in
revenues, were approximately $2.58 million for the year ended December 31, 2007. See Note 20 for subsequent events.



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



(d) Cash and Cash Equivalents:

Cash and cash equivalents is comprised of cash and highly liquid short-term investments with maturities of less than three (3) months from the date
of purchase.

(e) Accounts Receivable:

The Companys trade accounts receivable are generally uncollateralized. Management closely monitors outstanding accounts receivable and provides an allowance for doubtful accounts equal to the estimated
collection losses that will be incurred in collection of all receivables.

(f) Vendor Managed Services Receivables and Payables:

The Company manages networks of temporary service providers (vendors) on behalf of clients and receives a fee for this service.
The Companys obligation to pay the vendor is conditioned upon receiving payment from the client for services rendered on behalf of the vendors personnel. As the right of offset between client and vendor does not exist, the receivable
from the client which is included in accounts receivable and payable to the vendor, which is included as a liability, are not offset and are recorded on a gross basis. Included in the Companys accounts receivable at December 31, 2007 and
2006 was Vendor Managed Services receivables of $2,049,205 and $1,316,356, respectively. Included in the Companys accounts payable at December 31, 2007 and 2006 was Vendor Managed Services payables of $2,247,723 and $1,275,633,
respectively.

(g) Workers Compensation:

The Company is responsible for and pays workers compensation costs for its temporary and regular employees and is self-insured for the deductible amount related to domestic workers compensation claims
($250,000 or $500,000 per claim, depending on which policy, for fiscal 2007, 2006, and 2005). The Company accrues the estimated costs of workers compensation claims based upon the expected loss rates within the various temporary employment
categories provided by the Company. At least annually, the Company obtains an independent actuarial valuation of the estimated costs of claims reported but not settled, and claims incurred but not reported, and may adjust the accruals based on the
results of the valuations. As a result of the estimated costs, the Company estimates that the insurance carriers will issue rebates based on its findings. As of December 31, 2007, the Company has estimated a refund of $4,351,242 for the fiscal
years 2007, 2006 and 2005, which is included in other assets.

Periodically, the terms of the agreement with the insurance carriers are
renegotiated. The insurance carriers require the Company to secure its recorded obligations under the workers compensation insurance contracts through the use of irrevocable letters of credit, surety bonds or cash. As of December 31, 2007
the Company had $1,500,000 of letters of credit securing its domestic workers compensation obligations.

(h) Equipment, Furniture
and Fixtures:

Equipment, furniture, and fixtures are stated at cost. Depreciation and amortization is provided using the straight-line
method over the estimated useful asset lives of three (3) to seven (7) years. The Company also provides for amortization of leasehold improvements over the lives of the respective lease term or the service life of the improvement,
whichever is shorter.



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



(i) Intangible Assets:

In accordance with the Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets
(SFAS No. 142), definite lived intangible assets are amortized over their expected lives of two (2) to five (5) years. The Companys identifiable intangible assets with definitive lives are comprised of contract
rights and a covenant not to compete. The Company determined that an impairment of certain intangibles existed as at December 31, 2007 and recognized an impairment charge of $5,029,020 in amortization expense for 2007.

(j) Goodwill:

In accordance with
SFAS No. 142, goodwill is not amortized and is assigned to specific reporting units and reviewed for possible impairment at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the reporting
units carrying amount of goodwill is greater than its fair value.

The following table shows the change to goodwill during the fiscal
year ended December 31, 2007:



|                                     |  |       |           
|------------------------------------ |  | ----- | ----------
|                                     |  | Total
|Balance at December 31, 2006         |  | $     | 255,586   
|Acquisition of assets related to ASG |  |       | 16,566,000
|                                     |  |       |           
|Balance at December 31, 2007         |  | $     | 16,821,586
|                                     |  |       |           

(k) Advertising Expense:

The Company expenses advertising costs in the period in which they are incurred. Advertising expenses for the years ended December 31, 2007, 2006 and
2005 were $520,350, $467,613 and $431,941, respectively.

(l) Deferred Financing Costs:

Deferred financing costs consist of legal, banking, and other related fees that were capitalized in connection with obtaining various loans and are being
amortized over the life of the related loan. Deferred financing costs of $102,198 at December 31, 2007 and $399,463 at December 31, 2006 were net of accumulated amortization of $1,043,509 and $604,740, respectively.

Amortization of financing costs for the years ended December 31, 2007, 2006 and 2005 was $438,769, $356,240 and $248,499, respectively.

(m) Income Taxes:

The Company
accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes (SFAS No. 109). Under SFAS No. 109, deferred tax assets and liabilities are determined based on the difference between the
financial statement and tax basis of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reflected on the balance sheet when it is determined that it is
more likely than not that the asset will be realized.

(n) Earnings (Loss) Per Share:

Basic earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of shares of common
stock outstanding during the period. Diluted earnings per share is calculated by dividing income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period adjusted to reflect potentially
dilutive securities.



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In accordance with SFAS No. 128, Earnings Per Share, stock options and warrants
outstanding at December 31, 2007 to purchase 11,856,000 shares of common stock were not included in the computation of diluted earnings per share as they were antidilutive. The stock options and warrants were not issued at December 31,
2006.

(o) Impairment of Long Lived Assets:

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long Lived Assets, long-lived assets such as equipment, furniture and fixtures, and amortizable intangible assets are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset many not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset
undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the
fair value of the asset. The Company determined that an impairment of contract rights existed as at December 31, 2007 and recognized an impairment charge of $5,029,020 in amortization expense for 2007, which is included in depreciation and
amortization.

(p) Concentration of Credit Risk:

Financial instruments that potentially subject the Company to concentrations of credit risk as defined by SFAS No. 105, Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk and
Financial Instruments with Concentrations of Credit Risk, consist principally of cash and cash equivalents and accounts receivable and unbilled revenues.

(i) Cash and Cash Equivalents:

The Company places its cash and cash equivalents with
financial institutions. It is the Companys policy to monitor the financial strength of these institutions on a regular basis and perform periodic reviews of the relative credit rating of these institutions to lower its risk. At times, during
2007 and 2006, the Companys cash and cash equivalent balances exceeded the Federal Deposit Insurance Corporation insurance limit of $100,000 per financial institution. The Company has not experienced any losses in such accounts, and it
believes it is not exposed to any significant credit risk on cash and cash equivalents.

(ii) Accounts Receivable and Unbilled Revenues:

The Company does not require collateral or other security to support customer receivables or unbilled revenues. One
(1) customer account accounted for 6.1% and 6.7% of the accounts receivable balance as of December 31, 2007 and 2006, respectively. The Company believes that credit risk is dispersed and low due to large number of customers in different
regions and different industries.

(q) Fair Value of Financial Instruments:

As of December 31, 2007 and 2006, the carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable and accrued expenses
approximated fair value because of the short-term maturities of these items.

The carrying amount of the debt approximates fair market
balance since the debt is based on current rates and market conditions, at which the Company could borrow funds with similar remaining maturities.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



(r) Reclassifications

Certain reclassifications have been made to 2006 and 2005 amounts to conform with the 2007 presentation.

(s) Recent Accounting Pronouncements:

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, Fair Value Measurements (SFAS No. 157), which defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This statement does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair
value hierarchy used to classify the source of the information. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and all interim periods within those fiscal years. In February 2008, the FASB released FASB Staff
Position (FSP FAS 157-2  Effective Date of FASB Statement No. 157) which delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value
in the financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. The Company is currently assessing the potential impact that adoption of this
statement would have on its consolidated financial statements, if any.

In February 2007, the FASB issued SFAS No. 159, The Fair
Value Option for Financial Assets and Financial Liabilities (SFAS No. 159). SFAS No. 159 permits entities to choose to measure, on an item-by-item basis, specified financial instruments and certain other items at fair
value. Unrealized gains and losses on items for which the fair value option has been elected are required to be reported in earnings at each reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007, the
provisions of which are required to be applied prospectively. The Company expects to adopt SFAS No. 159 in the first quarter of fiscal 2008 and is still evaluating the effect, if any, on its financial position or results of operations.

In December 2007, FASB issued Statement of Financial Accounting Standards (SFAS) No. 141 (revised 2007), Business
Combinations (SFAS No. 141R), which replaces SFAS No. 141. The statement retains the purchase method of accounting for acquisitions, but requires a number of changes, including changes in the way assets and liabilities
are recognized in the purchase accounting. It also changes the recognition of assets acquired and liabilities assumed arising from contingencies, requires the capitalization of in-process research and development at fair value, and requires the
expensing of acquisition-related costs as incurred. SFAS No. 141R is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15,
2008. The Company is currently evaluating the impact, if any, that the adoption of SFAS No. 141R will have on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB 51 (SFAS No. 160), which changes the
accounting and reporting for minority interests. Minority interests will be recharacterized as noncontrolling interests and will be reported as a component of equity separate from the parents equity, and purchases or sales of equity interests
that do not result in a change in control will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement and, upon a
loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. SFAS No. 160 is effective for annual periods beginning after December 15, 2008. The Company
is currently evaluating the impact, if any, that the adoption of SFAS No. 160 will have on its consolidated financial statements.

In
March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS No. 161). The new standard is intended to improve financial reporting about derivative



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instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entitys financial
position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company is currently evaluating what
the impact will be, if any, of adopting SFAS. No. 161 on its consolidated financial statements.

NOTE 3BUSINESS AND ASSET ACQUISITIONS AND
DISPOSITIONS:

The gain on sale of subsidiary is due to: on December 31, 2007, CPR entered into a purchase agreement (the MVI
Purchase Agreement) effective as of December 31, 2007 with CPRs wholly owned subsidiary, MVI, and TradeShow Products Inc. (TradeShow). Pursuant to the MVI Purchase Agreement, CPR sold all of the issued and outstanding
securities of MVI to TradeShow for the aggregate purchase price equal to the liabilities assumed of $1,205,983. In addition, CPR will earn a perpetual commission equal to 1.75% of the weekly revenue generated by a specified list of MVI clients.
TradeShow is obligated to pay such fee in arrears on the first business day of every month. Unpaid fees will be subject to interest at a rate of 1.5% per month.

The Company considered the guidance in EITF 03-13 Applying the Conditions in Paragraph 42 of FASB Statement No. 144 in Determining Whether to Report Discontinued Operations and concluded that the
operations of MVI should not be reported as discontinued operations. The Company conclusion included an assessment of the qualitative and quantitative impact of the direct cash flows to be received from the ongoing operations of MVI through the
commission structure as well as the Companys involvement in the management of the ongoing MVI business.

On February 23, 2007,
the Company acquired certain assets and liabilities of ALS, LLC and its subsidiaries, doing business as Advantage Services Group (ASG) based in Florida that expanded the Companys operations to clients in California and Florida. The
purchase price of $24.4 million consisted of cash of $19 million, a note of $2.5 million, shares of the Companys common stock with a value of $2.5 million (439,367 shares) and the assumption of $0.4 million of current liabilities. ASGs
stockholders may also receive up to two additional $1 million payments in shares of the Companys common stock based on financial and integration performance metrics of the Company in calendar years 2007 and 2008. No such payments have been
made to date. The Company has allocated the purchase price to the assets acquired and the liabilities assumed at their estimated values as of the acquisition date as stated below. There have been no changes in circumstances that would indicate a
change in the carrying amount recoverable.



|                                  |  |   |            |  
|--------------------------------- |  | - | ---------- | -
|Equipment, furniture and fixtures |  | $ | 630,000    |  
|Contract rights                   |  |   | 7,190,000  |  
|Goodwill                          |  |   | 16,566,000 |  
|                                  |  |   |            |  
|                                  |  |   | 24,386,000 |  
|Liabilities assumed               |  |   | (386,000   | )
|                                  |  |   |            |  
|Net assets acquired               |  | $ | 24,000,000 |  
|                                  |  |   |            |  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



On July 29, 2005, the Company acquired 100% of the common stock of Quantum from Aramark
Corporation for $9,200,000 in cash. The transaction was financed through borrowings. The acquisition expanded the Companys operations in the engineering, information technology, aerospace and scientific industries and added branch locations
from Quantum in the Eastern and Southern regions of the United States. The results of operations of Quantum were included in the consolidated statement of operations beginning from July 29, 2005, the date of acquisition. The Company allocated
the purchase price to the assets acquired and the liabilities assumed at their estimated fair values as of the acquisition date as stated below:



|                                  |  |   |            |  
|--------------------------------- |  | - | ---------- | -
|Cash                              |  | $ | (618,142   | )
|Accounts receivable, net          |  |   | 7,486,849  |  
|Other current assets              |  |   | 651,320    |  
|Equipment, furniture and fixtures |  |   | 236,459    |  
|Contract rights                   |  |   | 4,161,300  |  
|Deferred taxes                    |  |   | 207,400    |  
|Security deposits                 |  |   | 39,963     |  
|                                  |  |   |            |  
|                                  |  |   | 12,165,149 |  
|Liabilities assumed               |  |   | (2,965,149 | )
|                                  |  |   |            |  
|Net assets acquired               |  | $ | 9,200,000  |  
|                                  |  |   |            |  

In 2005, as a result of a settlement with New Staff, Inc., the asset acquisition price was reduced
by $350,000 and the Company, as a result, wrote-down note payable and contract rights in the amount of $350,000.

The following unaudited
pro forma information presents a summary of condensed consolidated financial results of the operations of the Company, Quantum and ASG as if the acquisitions had occurred on January 1, 2006. The unaudited pro forma amounts below reflect
interest on the debt incurred as a result of the acquisition of ASG, with interest calculated at the Companys borrowing rate under its credit facilities. The unaudited pro forma financial information in the schedule below does not purport to
be indicative of the results of operations that would have occurred had the acquisition taken place at the beginning of the periods presented or of future results of operations.



|                               |  |             |             |   |             |   |            
|------------------------------ |  | ----------- | ----------- | - | ----------- | - | -----------
|                               |  | 2007        |             |   | 2006       
|                               |  | (unaudited) |             |   | (unaudited)
|Revenue                        |  | $           | 204,140,935 |   |             | $ | 216,793,110
|Net income (loss)              |  | $           | (12,637,198 | ) |             | $ | 636,374    
|Income (Loss) per common share |  | $           | (1.02       | ) |             | $ | 0.11       



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



On August 14, 2006, the Company acquired 100% of the common stock of StaffBridge, Inc. for
$233,000 in cash and a note payable of $450,000. The acquisition provides the Company the ability to further develop its VMS service line due to the acquisition of the underlying software that the Company was already utilizing to service its
clients. The results of operations of StaffBridge, Inc. were included in the consolidated statement of operations beginning from August 14, 2006, the date of acquisition. Pro forma financial information for the acquisition of StaffBridge, Inc.
for periods prior to its acquisition has not been presented due to its immaterial impact on revenue and net income (loss). The Company allocated the purchase price to the assets acquired and the liabilities assumed at their estimated values as of
the acquisition date as stated below:



|                                  |  |   |        
|--------------------------------- |  | - | -------
|Cash                              |  | $ | 64     
|Equipment, furniture and fixtures |  |   | 77,350 
|Computer software                 |  |   | 100,000
|Goodwill                          |  |   | 255,586
|Covenant not to compete           |  |   | 250,000
|                                  |  |   |        
|                                  |  | $ | 683,000
|                                  |  |   |        

NOTE 4PREPAID EXPENSES AND OTHER CURRENT ASSETS:



|                                                |  |             |           |      |   |          
|----------------------------------------------- |  | ----------- | --------- | ---- | - | ---------
|                                                |  | December 31
|                                                |  | 2007        |           | 2006
|Prepaid insurance                               |  | $           | 1,752,711 |      | $ | 1,063,280
|Security deposit  workers compensation policy |  |             | 1,128,271 |      |   |         
|Other current assets                            |  |             | 364,775   |      |   | 521,390  
|                                                |  |             |           |      |   |          
|                                                |  | $           | 3,245,757 |      | $ | 1,584,670
|                                                |  |             |           |      |   |          

NOTE 5EQUIPMENT, FURNITURE AND FIXTURES:



|                                       |  |             |           |   |      |   |           |  
|-------------------------------------- |  | ----------- | --------- | - | ---- | - | --------- | -
|                                       |  | December 31 |          
|                                       |  | 2007        |           |   | 2006 |  
|Furniture and fixtures                 |  | $           | 691,519   |   |      | $ | 730,656   |  
|Computer software and equipment        |  |             | 1,172,705 |   |      |   | 272,188   |  
|Capital assets in process              |  |             | 897,060   |   |      |   |          |  
|Leasehold improvements                 |  |             | 183,648   |   |      |   | 18,002    |  
|                                       |  |             |           |   |      |   |           |  
|                                       |  |             | 2,944,932 |   |      |   | 1,020,846 |  
|Less, accumulated depreciation         |  |             | (782,672  | ) |      |   | (370,278  | )
|                                       |  |             |           |   |      |   |           |  
|Equipment, furniture and fixtures, net |  | $           | 2,162,260 |   |      | $ | 650,568   |  
|                                       |  |             |           |   |      |   |           |  

Depreciation expense for the years ended December 31, 2007, 2006 and 2005 was $412,394,
$198,899 and $111,280, respectively.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 6INTANGIBLE ASSETS:



|                        |  |                    |            |                         |   |                  |  |                   |         |  |   |          
|----------------------- |  | ------------------ | ---------- | ----------------------- | - | ---------------- |  | ----------------- | ------- |  | - | ---------
|                        |  | December 31, 2007  |            | December 31,2006       
|                        |  | GrossCarryingValue |            | AccumulatedAmortization |   | NetCarryingValue |  | Net CarryingValue
|Contract rights         |  | $                  | 13,542,975 |                         | $ | 13,542,975       |  | $                 |        |  | $ | 2,222,119
|Covenant not to compete |  |                    | 250,000    |                         |   | 66,667           |  |                   | 183,333 |  |   | 233,333  
|                        |  |                    |            |                         |   |                  |  |                   |         |  |   |          
|                        |  | $                  | 13,792,975 |                         | $ | 13,609,642       |  | $                 | 183,333 |  | $ | 2,455,452
|                        |  |                    |            |                         |   |                  |  |                   |         |  |   |          

All contract rights are amortized over their estimated asset lives of two (2) to three
(3) years. The covenant not to compete is amortized over its five (5) year life. Amortization expense of intangible assets for the years ended December 31, 2007, 2006 and 2005 was $9,462,122, $1,933,420 and $1,653,370. Amortization
expense expected to be incurred for the fiscal years ending December 31, 2008, 2009, 2010, 2011 and 2012 is $50,000, $50,000, $50,000, $33,333 and $0, respectively. The Company determined that an impairment in Contract Rights existed as at
December 31, 2007 and recognized an impairment charge of $5,029,020 which was included in amortization expense for the year ended December 31, 2007.

NOTE 7OTHER ASSETS



|                                   |  |             |           |      |   |          
|---------------------------------- |  | ----------- | --------- | ---- | - | ---------
|                                   |  | December 31
|                                   |  | 2007        |           | 2006
|Refundable insurance premium       |  | $           | 4,351,242 |      | $ | 1,620,557
|Security deposits and other assets |  |             | 824,277   |      |   | 804,393  
|                                   |  |             |           |      |   |          
|                                   |  | $           | 5,175,519 |      | $ | 2,424,950
|                                   |  |             |           |      |   |          

NOTE 8ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:



|                                                |  |             |           |      |   |          
|----------------------------------------------- |  | ----------- | --------- | ---- | - | ---------
|                                                |  | December 31
|                                                |  | 2007        |           | 2006
|Other accrued expenses                          |  | $           | 1,120,380 |      | $ | 540,948  
|Insurance premiums payable                      |  |             | 2,276,872 |      |   | 185,990  
|Letter of credit  workers compensation policy |  |             | 1,500,000 |      |   |         
|Customer deposits                               |  |             | 79,699    |      |   | 304,575  
|Income taxes payable                            |  |             | 145,300   |      |   | 1,032,866
|                                                |  |             |           |      |   |          
|                                                |  | $           | 5,122,251 |      | $ | 2,064,379
|                                                |  |             |           |      |   |          

NOTE 9ACCRUED RESTRUCTURING COSTS:

Effective June 29, 2007, the Companys management-approved a restructuring program of its field and administrative operations. As part of the
restructuring program, the Company closed 24 branch and administrative offices and eliminated approximately 75 positions. The Company recorded $1,902,000 of restructuring charges for costs of severance, related benefits and outplacement services
related to the termination of these employees and $950,000 of charges relating to the early termination of office spaces leases for a total of $2,852,000 in 2007. These expenses were present valued and accrued on a one time basis and will be paid
out over a three year period. During the year ended December 31, 2007, the Company paid out $1,176,514 and



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



recognized a reduction of initially estimated restructuring costs of $650,884 due to severance and related benefits which the Company is no longer liable for
since one of the Companys former franchisees hired the employees to whom severance was expected to be paid out, and these former employees waived their right to receive severance. The Company calculated the restructuring costs as follows:



|                                            |  |                         |           |   |                            |   |          |       |  |   |            |  
|------------------------------------------- |  | ----------------------- | --------- | - | -------------------------- | - | -------- | ----- |  | - | ---------- | -
|                                            |  | EmployeeSeparationCosts |           |   | LeaseTerminationObligation |   |          | Total | 
|Accrued restructuring costs at inception    |  | $                       | 1,902,000 |   |                            | $ | 950,000  |       |  | $ | 2,852,000  |  
|Payments                                    |  |                         | (548,253  | ) |                            |   | (628,261 | )     |  |   | (1,176,514 | )
|Reductions in costs previously accrued      |  |                         | (650,884  | ) |                            |   |         |       |  |   | (650,884   | )
|                                            |  |                         |           |   |                            |   |          |       |  |   |            |  
|Total accrued restructuring costs           |  |                         | 702,863   |   |                            |   | 321,739  |       |  |   | 1,024,602  |  
|Less: current portion                       |  |                         | 619,267   |   |                            |   | 201,911  |       |  |   | 821,178    |  
|                                            |  |                         |           |   |                            |   |          |       |  |   |            |  
|Total accrued restructuring costslong-term |  | $                       | 83,596    |   |                            | $ | 119,828  |       |  | $ | 203,424    |  
|                                            |  |                         |           |   |                            |   |          |       |  |   |            |  

NOTE 10REVOLVING CREDIT FACILITY:

Effective February 23, 2007, the Company entered into a $20 million revolving credit facility (the Revolver) with Manufacturers and
Traders Trust Company (M&T) which is not payable until February 23, 2010. The Company may borrow up to the sum of 85% of eligible accounts receivable as defined in the credit agreement and 65% of unbilled revenue. Interest is
payable monthly at variable rates for each drawdown based on either the London Interbank Offered Rate (LIBOR) + 1.5% to 2.25% or at the lenders Prime rate. As of December 31, 2007, the balance on the Revolver was $14,812,981.
As of December 31, 2007, the weighted average interest rate for amounts drawn on the Revolver was 7.73%. The Company paid closing fees of $141,505 related to the M&T Revolver and M&T term loan (the Term Loan) (see Note 12
for a description of the M&T Term Loan). The M&T Revolver is collateralized by a first priority lien on all assets and is cross-collateralized and cross-guaranteed with the M&T Term Loan. See Note 20 for subsequent events.

NOTE 11NOTES PAYABLE:



|                                                                                                                                                                                                             |  |             |         |      |   |          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------- | ------- | ---- | - | ---------
|                                                                                                                                                                                                             |  | December 31
|                                                                                                                                                                                                             |  | 2007        |         | 2006
|NOTES PAYABLE STOCKHOLDERS                                                                                                                                                                                   |  |             |         |     
|Subordinated note payable to Optos Capital, LLC, a stockholder with interest payable at 9%. The note payable was subordinated to the M&T
Revolver and Term Loan, and was due February 28, 2008 *             |  | $           |        |      | $ | 250,000  
|Subordinated note payable to Optos Capital, LLC, a stockholder, with interest payable at 12%. The note payable was subordinated to the M&T
Revolver and Term Loan, and was due March 1, 2008 *               |  |             |        |      |   | 300,000  
|Subordinated notes payable to various noteholders due March 31, 2008. The notes have an interest rate of 12%. These notes include
$100,000 payable to the spouse of a director of ClearPoint (see Note 20)** |  |             | 550,000 |      |   | 660,000  
|                                                                                                                                                                                                             |  |             |         |      |   |          
|Total notes payable-noteholders                                                                                                                                                                              |  | $           | 550,000 |      | $ | 1,210,000
|                                                                                                                                                                                                             |  |             |         |      |   |          



|* | The note was repaid during the fiscal year ended December 31, 2007.
|- | -------------------------------------------------------------------

|** | A $100,000 note due to Richard Traina and Margaret Traina, the parents of the Chairman and Chief Executive Officer of ClearPoint, was repaid during the fiscal year ended
December 31, 2007.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The above notes payable were classified as long-term based on their subordination to the M&T
Revolver and Term Loan.



|                                                                                                                                                                                                                                                                                       |  |             |            |   |      |   |          |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ---------- | - | ---- | - | -------- | -
|                                                                                                                                                                                                                                                                                       |  | December 31 |           
|                                                                                                                                                                                                                                                                                       |  | 2007        |            |   | 2006 |  
|NOTES PAYABLEOTHER                                                                                                                                                                                                                                                                    |  |             |            |   |      |   |          |  
|Notes payable to former owners of ASG for the purchase of certain assets and liabilities of ALS, LLC, dated February 23, 2007, which
mature on October 23, 2008. Principal and interest payments of $398,392 are payable on a quarterly basis at an interest rate of 7% (see Note 19). |  | $           | 2,022,991  |   |      | $ |         |  
|Note payable to unrelated individuals for purchase of the common stock of StaffBridge, Inc. dated August 14, 2006 and is due and payable
June 30, 2008. Interest is calculated at 8% per annum.                                                                                        |  |             | 486,690    |   |      |   | 450,000  |  
|                                                                                                                                                                                                                                                                                       |  |             |            |   |      |   |          |  
|                                                                                                                                                                                                                                                                                       |  |             | 2,509,681  |   |      |   | 450,000  |  
|Less: current portion                                                                                                                                                                                                                                                                  |  | $           | (2,509,681 | ) |      |   | (450,000 | )
|                                                                                                                                                                                                                                                                                       |  |             |            |   |      |   |          |  
|Total notes payablelong-term                                                                                                                                                                                                                                                          |  | $           |           |   |      | $ |         |  
|                                                                                                                                                                                                                                                                                       |  |             |            |   |      |   |          |  

On December 31, 2007, the note payable to former shareholders of StaffBridge, Inc. for
purchase of the common stock of StaffBridge, Inc. dated August 14, 2006 was amended from an original maturity date of December 31, 2007 to a new maturity date of June 30, 2008. In addition, the amount of the note was increased to
$486,690 for accrued interest and the interest rate was increased to eight percent from six percent per annum payable in monthly installments starting January 15, 2008. The Company incurred an origination fee in the amount of $19,467, which
equaled four percent of the principal amount in the form of 9,496 shares of common stock of the Company. As at December 31, 2007, the 9,496 shares of common stock had not been issued.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 12LONG-TERM DEBT:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |             |            |   |      |   |           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ---------- | - | ---- | - | ----------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | December 31
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | 2007        |            |   | 2006
|M&T Term Loan$5,000,000 with a maturity date of February 23, 2012. Principal payments of $83,333, plus interest are payable
monthly at LIBOR + 1.5% to 2.25% (7.25% at December 31, 2007). The M&T Term Loan is collateralized by a first priority lien on all assets and is cross-collateralized and cross-guaranteed with the M&T Revolver. (See Note
10).                                                                                                                                                                                                                                                                                                                    |  | $           | 4,283,333  |   |      | $ |          
|Subordinated note payable to Blue Lake Rancheria due March 31, 2008. Interest of 6% per annum is payable quarterly. This note has
been guaranteed by two of the principal stockholders of the Company and is classified as long-term based on its subordination to the M&T Revolver and Term Loan. (See Note 20.)                                                                                                                                                                                                                                                                                                                                                                |  |             | 1,290,000  |   |      |   | 1,290,000 
|Bridge Healthcare Finance (Bridge)Under a revolving loan, the Company could borrow up to 90% of eligible accounts, as
defined in the applicable credit agreement, up to $12,500,000. Any amounts borrowed were due on February 28, 2008. Interest was payable monthly at prime plus 4.5% (12.75% at December 31, 2006, but could not be less than 9.50%). The Company
paid a $200,000 closing fee, which was included in deferred financing costs, and paid a monthly mandatory fee of $30,000 and a fee of 3% on the unused revolving loan. The loan was collateralized by all of the assets of the Company and was guaranteed
by the principal stockholders of the Company. |  |             |           |   |      |   | 7,575,488 
|Note payable to BridgeTerm loan with borrowings up to $10,000,000 due on February 28, 2008. Interest was payable monthly at a fixed
rate of 16% on an annual basis. The loan was collateralized by all of the assets of the Company and was guaranteed by the principal stockholders of the Company. The amount at December 31, 2006 is shown net of unamortized discount of $132,057
relating to the issuance of detachable warrants described below.                                                                                                                                                                                                                          |  |             |           |   |      |   | 4,889,767 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |             |            |   |      |   |           
|Total long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |             | 5,573,333  |   |      |   | 13,755,255
|Less: current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |             | (1,600,000 | ) |      |   |          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |             |            |   |      |   |           
|Total long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | $           | 3,973,333  |   |      | $ | 13,755,255
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |             |            |   |      |   |           

The revolving loan and term loan from Bridge were completely paid off on February 12, 2007
from the proceeds received as a result of the Merger. This resulted in a pre-payment penalty of $1,949,928 which was expensed in the first quarter of fiscal 2007. In addition, the unamortized deferred finance costs related to the Bridge debt
amounted to $370,712 at the time of pre-payment. This amount was expensed as part of the amortization of deferred financing costs in the first quarter of fiscal 2007.

Maturities of long-term debt are as follows based upon subordination to the M&T Revolver and Term Loan:



|            |  |        |          
|----------- |  | ------ | ---------
|            |  | Amount
|Fiscal 2008 |  | $      | 1,600,000
|Fiscal 2009 |  |        | 1,690,000
|Fiscal 2010 |  |        | 1,000,000
|Fiscal 2011 |  |        | 1,000,000
|Fiscal 2012 |  |        | 283,333  
|            |  |        |          
|Total       |  | $      | 5,573,333
|            |  |        |          



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The M&T Revolver (see Note 10) and Term Loan contain certain financial covenants including
leverage ratios and a fixed charge coverage ratio. The Company was not in compliance with the covenants at December 31, 2007 but received a waiver from M&T for the period ended December 31, 2007. In connection with the waiver, the Company
paid a $100,000 waiver fee to M&T.

WarrantsBridge

In connection with the Bridge $10,000,000 term loan at February 28, 2005, the Company simultaneously issued three detachable warrants to purchase an
aggregate of 9% of the Companys outstanding stock, on a fully diluted basis, at the exercise price of $0.001 per share. The warrants vested immediately upon issuance and could be exercised until February 28, 2015. The Company accounted
for the warrants issued to the investors as a liability under the provisions of FAS 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (FAS 150). The warrants were initially
valued at $396,000 by an independent valuation company. This initial value had been recorded as debt discount and was being amortized over the three year life of the loan by the interest method. Amortization of $132,000, $134,409 and $129,534 was
recorded by the Company as interest expense for the years ended December 31, 2007, 2006 and 2005, respectively. The warrants were fair valued each reporting period and the increase/decrease reflected as interest expense/income in the condensed
consolidated statement of operations. As of December 31, 2006, the warrants were valued at $3,291,775. The warrant holders were paid $3,291,775 to redeem the warrants on February 12, 2007 from proceeds received as a result of the Merger.

NOTE 13INCOME TAXES:

An
analysis of the Companys deferred tax asset is as follows:



|                                        |  |             |            |   |      |   |          |  
|--------------------------------------- |  | ----------- | ---------- | - | ---- | - | -------- | -
|                                        |  | December 31 |           
|                                        |  | 2007        |            |   | 2006 |  
|Deferred income tax asset:              |  |             |            |   |      |   |          |  
|Allowance for doubtful accounts         |  | $           | 1,239,767  |   |      | $ | 157,950  |  
|Amortization of intangible assets       |  |             | 3,041,977  |   |      |   | 981,948  |  
|Depreciation                            |  |             | (89,042    | ) |      |   | 91,329   |  
|Deferred restructuring costs            |  |             | 399,595    |   |      |   |         |  
|Charitable contribution carryover       |  |             | 5,502      |   |      |   |         |  
|Stock based compensation                |  |             | 391,551    |   |      |   |         |  
|Net operating loss carryforward         |  |             | 1,582,974  |   |      |   |         |  
|Discount on notes payable               |  |             |           |   |      |   | 12,847   |  
|Accrued retirement benefits             |  |             | 131,840    |   |      |   | 116,688  |  
|Workers compensation insurance premium |  |             | (1,696,984 | ) |      |   | (632,017 | )
|                                        |  |             |            |   |      |   |          |  
|Deferred income tax asset, net          |  | $           | 5,007,180  |   |      | $ | 728,745  |  
|                                        |  |             |            |   |      |   |          |  

The net deferred tax asset was presented in the Companys consolidated balance sheets as
follows:



|                               |  |             |           |      |   |        
|------------------------------ |  | ----------- | --------- | ---- | - | -------
|                               |  | December 31
|                               |  | 2007        |           | 2006
|Current deferred tax asset     |  | $           | 1,631,318 |      | $ | 157,950
|Non-current deferred tax asset |  |             | 3,375,862 |      |   | 570,795
|                               |  |             |           |      |   |        
|                               |  | $           | 5,007,180 |      | $ | 728,745
|                               |  |             |           |      |   |        



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Management believes that based on all facts and estimated Companys future taxable income, it is
more likely than not that the net deferred tax asset will be realized and as such, no valuation allowance has been provided.

Current
federal and state income taxes payable of $145,300 and $1,032,866 are included in other current liabilities as of December 31, 2007 and 2006, respectively. The Company has recorded a receivable for the carryback of current year losses to prior
years.

The Company has net operating loss carryforwards for federal purposes of $1,380,029 and for state purposes of $202,945 which expire
in 2027.

The components of the income tax expense (benefit) are summarized as follows:



|                                     |  |             |            |   |      |   |           |      |  |   |          |  
|------------------------------------ |  | ----------- | ---------- | - | ---- | - | --------- | ---- |  | - | -------- | -
|                                     |  | December 31 |           
|                                     |  | 2007        |            |   | 2006 |   |           | 2005 | 
|Current:                             |  |             |            |   |      |   |           |      |  |   |          |  
|Federal income tax expense (benefit) |  | $           | (1,050,000 | ) |      | $ | 960,781   |      |  | $ | 40,000   |  
|State tax expense                    |  |             | 207,870    |   |      |   | 313,243   |      |  |   | 51,400   |  
|                                     |  |             |            |   |      |   |           |      |  |   |          |  
|Total current tax expense (benefit)  |  |             | (842,130   | ) |      |   | 1,274,024 |      |  |   | 91,400   |  
|Deferred:                            |  |             |            |   |      |   |           |      |  |   |          |  
|Federal tax (benefit)                |  |             | (3,729,961 | ) |      |   | (265,531  | )    |  |   | (102,277 | )
|State tax (benefit)                  |  |             | (548,473   | ) |      |   | (63,222   | )    |  |   | (66,078  | )
|                                     |  |             |            |   |      |   |           |      |  |   |          |  
|Total deferred tax (benefit)         |  |             | (4,278,434 | ) |      |   | (328,753  | )    |  |   | (168,355 | )
|                                     |  |             |            |   |      |   |           |      |  |   |          |  
|Total income tax expense (benefit)   |  | $           | (5,120,564 | ) |      | $ | 945,271   |      |  | $ | (76,955  | )
|                                     |  |             |            |   |      |   |           |      |  |   |          |  

On January 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxesan interpretation of FASB Statement No. 109 (FIN 48). There was no impact on the Companys consolidated financial position, results of operations or cash flows at December 31, 2007
and for the year then ended as a result of implementing FIN 48. At the adoption date of January 1, 2007 and at December 31, 2007, the Company did not have any unrecognized tax benefits. The Companys practice is to recognize interest
and/or penalties related to income tax matters in income tax expense. As of January 1, 2007 and December 31, 2007, the Company had no accrued interest or penalties. The Company currently has no federal or state tax audits in progress.

The differences between the statutory federal income tax rate and the effective income tax rate as reflected in the accompanying
consolidated statements of operations are:



|                                                                             |  |             |            |   |      |   |           |      |  |   |          |  
|---------------------------------------------------------------------------- |  | ----------- | ---------- | - | ---- | - | --------- | ---- |  | - | -------- | -
|                                                                             |  | December 31 |           
|                                                                             |  | 2007        |            |   | 2006 |   |           | 2005 | 
|Statutory federal income tax                                                 |  | $           | (5,919,841 | ) |      | $ | (163,131  | )    |  | $ | (433,731 | )
|State income tax                                                             |  |             | (574,573   | ) |      |   | (23,990   | )    |  |   | (63,785  | )
|Non-deductible intangible asset amortization and other permanent differences |  |             | 1,168,037  |   |      |   | 1,205,901 |      |  |   | 680,231  |  
|Other                                                                        |  |             | 205,813    |   |      |   | (73,509   | )    |  |   | (259,670 | )
|                                                                             |  |             |            |   |      |   |           |      |  |   |          |  
|                                                                             |  | $           | (5,120,564 | ) |      | $ | 945,271   |      |  | $ | (76,955  | )
|                                                                             |  |             |            |   |      |   |           |      |  |   |          |  

In the fiscal years ended December 31, 2007, 2006 and 2005, non-deductible intangible asset
amortization included non-deductible contracts rights of $2,305,933, $533,845 and $672,056, respectively, and non-deductible interest expense related to warrant liability of $0, $672,056 and $457,296, respectively.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 14STOCK-BASED COMPENSATION:

The Company has adopted the provisions of FASB Statement No. 123 (revised 2004), Share-Based Payment, (SFAS 123(R)) and the
guidance provided by the SEC Staff Accounting Bulletin No. 107 (SAB 107), which established the accounting for stock-based compensation awards exchanged for employee services and requires companies to expense the estimated fair
value of these awards over the requisite employee service period. SFAS 123(R) requires companies to record compensation expense for stock options measured at fair value, on the date of grant, using an option-pricing model. The fair value of stock
options is determined using the Black-Scholes valuation model.

Stock options granted under the Companys 2006 Long-Term Incentive
Plan (the LTI Plan), which was approved by the stockholders on February 12, 2007, may expire up to ten years after the date of grant or earlier at the determination of the Board of Directors. Under the LTI Plan, the Company reserved
2,750,000 shares of stock in accordance with the plans terms. The number of shares covered by stock options that may be exercised by any participant during any calendar year cannot have an aggregate fair market value in excess of $100,000,
measured at the date of the grant. The exercise price for options cannot be less than the fair market value of the Companys common stock on the date of the grant. As of December 31, 2007, 816,000 options were granted to key employees and
directors of the Company which vest over 3.39 years and have an intrinsic value of $0.

The Companys results of operations for the
fiscal year ended December 31, 2007 included share-based employee compensation totaling $1,003,978. Such amount was included in the Statements of Operations in selling, general and administrative expenses. As of December 31, 2007, there
was $123,612 of unrecognized compensation cost related to all unvested stock options. The fair value of these options was estimated using the Black-Scholes valuation model with the following weighted-average assumptions and fair values:



|                        |  |                            
|----------------------- |  | ---------------------------
|                        |  | Year endedDecember 31, 2007
|Volatility              |  | 23.5%                      
|Expected term in years  |  | 3.8 years                  
|Risk-free interest rate |  | 4.6%                       
|Expected dividend yield |  | 0                          

The following information relates to the stock option activity under the LTI Plan for the year
ended December 31, 2007:



|                                               |  |         |  |                              |      |                                         |           
|---------------------------------------------- |  | ------- |  | ---------------------------- | ---- | --------------------------------------- | ----------
|                                               |  | Shares  |  | WeightedAverageExercisePrice |      | WeightedAverageRemainingContractualLife
|Outstanding at January 1, 2007                 |  |        |  |                              |     |                                         |          
|Granted                                        |  | 766,000 |  | $                            | 5.65 |                                         | 3.78 years
|Exercised                                      |  |        |  |                              |     |                                         |          
|Cancelled                                      |  |        |  |                              |     |                                         |          
|                                               |  |         |  |                              |      |                                         |           
|Outstanding & Exercisable at December 31, 2007 |  | 766,000 |  | $                            | 5.65 |                                         | 3.39 years

The aggregate intrinsic value for the options in the table above was zero as at December 31,
2007 based on the closing common share price of $2.11 as at December 31, 2007. The aggregate intrinsic value represents the total pre-intrinsic value (the difference between the Companys closing stock price on the last trading day of the
fourth quarter of 2007 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2007. This amount changes based
on the fair market value of the Companys common stock.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 15WARRANTS:

In connection with Terra Novas Offering on April 22, 2005, there were 11,040,000 warrants issued and outstanding at December 31, 2007, which included warrants that were part of the outstanding units.
Each warrant entitles the holder to purchase from the Company one share of common stock at an exercise price of $5.00 commencing on February 12, 2007 (the completion of the merger) and expiring on April 17, 2009 (four years from the
effective date of Terra Novas Offering). The warrants are redeemable at a price of $0.01 per warrant upon 30 days notice after the warrants become exercisable, only in the event that the last sale price of the common stock is at least $8.50
per share for any 20 trading days within a 30 trading day period ending on the third day prior to the date on which notice of redemption is given. In connection with Terra Novas Offering, Terra Nova issued an option for $100 to the
representative of the underwriters to purchase 240,000 units at an exercise price of $9.90 per unit. In addition, the warrants underlying such units were exercisable at $6.65 per share.

NOTE 16COMMITMENTS AND CONTINGENCIES:

Leases:

The Company typically leases office space and equipment under operating leases that expire over one to three years. Future minimum rental payments
required under operating leases that have remaining lease terms in excess of one year as of December 31, 2007 were as follows:



|                         |  |   |          
|------------------------ |  | - | ---------
|Year Ending December 31, |  |  
|2008                     |  | $ | 736,729  
|2009                     |  |   | 530,132  
|2010                     |  |   | 296,101  
|                         |  |   |          
|Total                    |  | $ | 1,562,962
|                         |  |   |          

Rent expense under all operating leases was $1,307,841, $614,511 and $638,189 for each of the
years ended December 31, 2007, 2006 and 2005, respectively.

The above lease commitments do not include future minimum rental payments
that have been accrued for in restructuring costs (see Note 9).

Employee Benefit Plan:

In 1991 Quantum established a savings and profit sharing (IRC Section 401(k)) plan (Plan). As of January 1, 2006, the Plan was
amended to include additional employees of Quantum and to meet IRS safe harbor provisions. Employees are eligible to participate upon their date of hire. Participants may elect to defer a percentage of their compensation subject to the Internal
Revenue Service limit on elective deferrals. The Plan also allows for a discretionary Company match of elective deferrals that will vest on a three-year cliff vesting schedule. There was no Company match for the Plan year ended September 30,
2005. Effective October 1, 2005, the Company elected to change the Plans fiscal year ending date to December 31. There was no Company match for the years ended December 31, 2007, 2006 and 2005.

Retirement Benefit Liability:

Upon
its acquisition of Quantum, the Company assumed a stock purchase agreement dated December 30, 1986 with a former owner. The agreement called for the payment of retirement benefits in equal monthly payments, adjusted for the cost of living
increases equal to the Consumer Price Index. The former owner is entitled to these benefits until his death.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The Company recorded an estimated liability of $338,050 based upon the expected remaining life of the
former owner, and made payments of $78,126, $74,076 and $30,865 in the years ended December 31, 2007, 2006 and 2005, respectively. Estimated future payments to the former owner are as follows:



|                                                                        |  |   |         |  
|----------------------------------------------------------------------- |  | - | ------- | -
|Year Ending December 31,                                                |  |   |        
|2008                                                                    |  | $ | 79,574  |  
|2009                                                                    |  |   | 79,574  |  
|2010                                                                    |  |   | 79,574  |  
|2011                                                                    |  |   | 79,574  |  
|2012                                                                    |  |   | 79,574  |  
|Thereafter                                                              |  |   | 88,874  |  
|                                                                        |  |   |         |  
|Total minimum payments                                                  |  | $ | 486,744 |  
|                                                                        |  |   |         |  
|Present value (at 12.25% discount rate) net minimum retirement payments |  | $ | 338,050 |  
|Less, current portion                                                   |  |   | (77,257 | )
|                                                                        |  |   |         |  
|                                                                        |  | $ | 260,793 |  
|                                                                        |  |   |         |  

NOTE 17FRANCHISE AGREEMENTS:

On August 30, 2007, the Company entered into an Agreement with KOR Capital, LLC (KOR), a Florida limited liability company controlled by
Kevin ODonnell, a former officer of the Company, pursuant to which the Company granted to KOR an exclusive right and license (i) to set up and operate, in parts of Northern California and Florida, a franchise of the Companys system
and procedures for the operation of light industrial and clerical temporary staffing services and (ii) to use in connection with the operation certain of the Companys proprietary intellectual property. The Agreement with KOR replaced the
agreement between the Company and KOR entered on July 9, 2007. In consideration for the grant and license, KOR was required to pay to the Company, on a weekly basis, a royalty equal to 4.5% of all gross revenues earned by KOR from its
operations. KOR also agreed to pay the Company, on a weekly basis, a royalty equal to 50% of its net income from its operations. Through this relationship KOR operated and managed up to twelve of the Companys former branches.

Under the Agreement, the Company processed the weekly payroll for all temporary and contract staff placed on assignment by KOR and KORs weekly
invoices. The Agreement had a term of 99 years, but was subject to earlier termination upon certain material breaches or defaults and it could only be assigned by KOR if the assignee satisfied certain financial, business experience and character
criteria acceptable to the Company.

On August 13, 2007, the Company entered into an Agreement (the TZG Agreement) with
TZG Enterprises, LLC (TZG), a Delaware limited liability company controlled by J. Todd Warner, a former officer of the Company, pursuant to which the Company granted to TZG an exclusive right and license (i) to set up and operate a
franchise of the Companys system and procedures for the operation of transportation and light industrial temporary staffing services and (ii) to use in connection with the operation certain of the Companys proprietary intellectual
property. In consideration for the grant and license, TZG was required to pay to the Company, on a weekly basis, a royalty equal to 6% of all gross revenues earned by TZG from the operation. Through this relationship TZG operated and managed up to
twenty-five of the Companys former branches.

Under the Agreement, the Company processed the weekly payroll for all temporary and
contract staff placed on assignment by TZG and TZGs weekly invoices. The Agreement had a term of 99 years, but was subject to earlier termination upon certain material breaches or defaults and it could only be assigned by TZG if the assignee
satisfied certain financial, business experience and character criteria acceptable to the Company.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Subsequent to December 31, 2007, both franchise agreements were terminated. See Note
20Subsequent Events.

NOTE 18MANAGEMENT AND EMPLOYMENT AGREEMENTS:

On February 12, 2007, the Company entered into an employment agreement with the Chief Executive Officer (CEO) and President of the
Company, whereby the Company agreed to pay each of the CEO and President $25,000 per month, plus benefits, with the term of each agreement being 3 years. At December 31, 2007, the CEO and the President each owned, as per a voting agreement,
approximately 57% of the outstanding common stock of the Company.

The Company has entered into an employment agreement with the Chief
Financial Officer of the Company. The agreement provides for basic compensation, incentive compensation and a severance package.

On
February 28, 2008, Christopher Ferguson, the Companys former director, President and Secretary, resigned from the Company and his employment agreement was terminated (see Note 20Subsequent Events).

NOTE 19LITIGATION:

In February of 2007, the
Company entered into a three party settlement agreement between the Company, Westaff, Inc (Westaff) and 26 employees hired by the Company who formerly worked for Westaff. The settlement arose out of lawsuits filed by Westaff against
certain of those employees. The terms of the settlement required the Company to make a one time cash payment of $266,000 to Westaff, plus legal fees of $56,000, and in return for such consideration Westaff agreed to release all 26 former employees
of Westaff and now employed by the Company from their non-compete and non-solicitation agreements that the employees had signed while employed by Westaff. As an additional term of the settlement agreement, the Company agreed to cease the
solicitation of Westaff employees. The total cost to the Company including legal expenses was $0 and $322,000 for the three and nine months ended September 30, 2007.

The Company also hired a high level transportation sales executive. The former partner of the high level executive, threatened litigation against the Company based on covenants not to compete related to customers that
the Company was soliciting. To settle the potential claim, the Company made a one-time cash payment of $80,000 in the first quarter of fiscal 2007 to the former partner of the transportation executive in exchange for full settlement and release of
all potential claims against the Company and the executive.

On September 21, 2007, Temporary Services Insurance Ltd.
(TSIL), which claims to be a captive reinsurance company offering workers compensation insurance to its shareholders through an insurance program, filed a complaint (the TSIL Litigation) in the U.S. District Court in
Florida against ALS, LLC (ALS), Advantage Services Group, LLC (Advantage Services), certain officers and shareholders of ALS and Advantage Services as well as certain other third party companies (collectively, the ALS
Defendants), alleging that it was owed at least $2,161,172 in unpaid insurance assessments, as well as other requested damages, from the ALS Defendants. Kevin ODonnell, a former officer of the ALS companies and a named defendant in the
TSIL Litigation, controls KOR, a former franchisee of the Company.

The Company is also named as a defendant because it acquired certain
assets from ALS and its wholly owned subsidiaries, including Advantage Services Group II, LLC (ASG II), in February 2007, for which it paid a portion of the purchase price at closing to the ALS Defendants, through ALS. It is alleged that
this transfer rendered ASG II, one of the named insureds on the TSIL policy, insolvent and unable to pay the insurance



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



assessments and damages owed to TSIL. TSIL requests in its complaint that its damages be satisfied from the assets transferred to the Company. Agreements
related to the acquisition of certain assets and liabilities of ALS in February 2007 contain provisions under which the Company may seek indemnification from ALS in connection with the foregoing. The Company intends to pursue all appropriate claims
for such indemnification and cannot estimate the potential liability, if any.

On January 11, 2008, the Company filed its Answer denying
all claims in the TSIL Litigation and also filed a Crossclaim against ALS making claims for contractual and common law indemnity. On January 31, 2008, ALS filed its Answer to the Companys Crossclaim, denying all claims, and filed a
Counterclaim asking for a declaratory judgment that it does not have to indemnify the Company and asserting a breach of contract claim based on an alleged failure to pay ALS certain amounts due under a promissory note arising out of the acquisition
of certain assets and liabilities of ALS in February 2007. The court in the TSIL Litigation entered an Order, dated February 22, 2008, requiring the Company not to make any payments to ALS pursuant to the purchase agreement without first seeking
leave of court.

On or about October 29, 2007, the Company received a copy of a letter sent by a law firm to the California
Labor & Workforce Development Agency, pursuant to which such law firm sought permission under the California Labor Code Private Attorney General Act of 2004 to file a complaint against the Company, a wholly owned subsidiary of the Company
and ALS and one of its subsidiaries, on behalf of a class of employees currently and formerly employed by the defendants in California (the employees had not been named). On January 30, 2008, James W. Brown (Brown), on behalf of
himself and all others similarly situated, on behalf of the general public and as an aggrieved employee under the California Labor Code Private Attorneys General Act, filed a complaint in the Superior Court of the State of California
(Alameda County) (the Brown Litigation) against ClearPoint Advantage, LLC (CP Advantage), a wholly owned subsidiary of CPR. Agreements related to the acquisition of certain assets and liabilities of ALS in February 2007
contain provisions under which the Company may seek indemnification from ALS in connection with the foregoing. The Company intends to pursue all appropriate claims for such indemnification. (See also Part IItem 1A (Risk Factors)).

The complaint in the Brown Litigation alleges that CP Advantage has (i) failed to pay overtime compensation (Calif. Labor Code
Section 1194 and 2699(f)) to him and to all California employees similarly situated, (ii) failed to pay wages at time of discharge (Calif. Labor Code Sections 201, 202 and 203 and 2699(f)) to him and to all California employees similarly
situated, (iii) failed to pay all wages at the time required (Calif. Labor Code Sections 204 and/or 204b and 2699(f)) to him and to all California employees similarly situated, (iv) failed to provide proper itemized wage statements (Calif.
Labor Code Section 226(a)) to him and to all California employees similarly situated, and (v) issued checks drawn on out-of-state banks with no in-state address for presentation (Calif. Labor Code Section 212 and 2699(f)) to him and
to all California employees similarly situated. On March 25, 2008, CP Advantage filed its Answer and denied all claims. In addition, on March 26, 2008, CP Advantage filed a Notice of Removal to remove the Brown Litigation to the United States
District Court of the Northern District of California. Brown seeks unspecified penalties, damages, interest, attorneys fees, costs of suit and, in relation to the claim regarding the alleged issuance of checks drawn on out-of-state banks with
no in-state address for presentation, an injunction to preclude such alleged conduct.

Generally, the Company is engaged in various
litigation from time to time in the normal course of business. Management does not believe that the ultimate outcome of such matters, including the matters above, either individually or in the aggregate, will have a material adverse impact on the
financial condition or results of operations of the Company.

In the ordinary course of its business, ClearPoint is periodically threatened
with or named as a defendant in various lawsuits, claims and pending actions, and is typically engaged in various litigation from time to time. The



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



principal risks that ClearPoint insures against are workers compensation, general liability, automobile liability, property damage, alternative
staffing errors and omissions, fiduciary liability and fidelity losses. If a potential loss arising from these lawsuits, claims and actions is probable, reasonably estimable, and is not an insured risk, ClearPoint records the estimated liability
based on circumstances and assumptions existing at the time. Whereas management believes the recorded liabilities are adequate, there are inherent limitations in the estimation process whereby future actual losses may exceed projected losses, which
could materially adversely affect the financial condition of ClearPoint.

NOTE 20SUBSEQUENT EVENTS:

On February 7, 2008, ClearPoint Resources, Inc. (CPR), a wholly owned subsidiary of ClearPoint, entered into a Purchase Agreement (the
HRO Purchase Agreement) effective as of February 7, 2008, with CPRs wholly owned subsidiary, ClearPoint HRO, LLC, a Delaware limited liability company (HRO), and AMS Outsourcing, Inc., a Montana corporation
(AMS). Pursuant to the HRO Purchase Agreement, CPR sold all of the issued and outstanding securities of HRO to AMS for an aggregate purchase price payable in the form of an earnout payment equal to 20% of the earnings before interest,
taxes, depreciation and amortization of the operations of HRO for a period of twenty four (24) months following February 7, 2008. AMS is obligated to pay such fee in arrears on the first business day of every month. Unpaid fees will be
subject to interest at a rate of 1.5% per month.

On February 22, 2008, CPR issued promissory notes (the Promissory
Notes), in the aggregate principal amount of $800,000, with $400,000 to each of Michael Traina, the Companys and CPRs Chairman of the board of directors and Chief Executive Officer, and Christopher Ferguson, the Companys and
CPRs former director, President and Secretary, in consideration for loans totaling $800,000 made to CPR. Pursuant to a voting agreement, each of Messrs. Traina and Ferguson is also a beneficial owner of more than 50% of issued and outstanding
shares of the Companys common stock. The terms of the Promissory Notes issued to Messrs. Traina and Ferguson are identical. The principal amount of each Promissory Note is $400,000, they bear interest at the rate of 6% per annum, which
will be paid quarterly, and they are due on February 22, 2009. The Promissory Notes are subordinate and junior in right of payment to the prior payment of any and all amounts due to Manufacturers and Traders Trust Company (M&T)
pursuant to the Credit Agreement, as amended, by and between M&T and the Company.

On February 28, 2008, CPR entered into an Asset
Purchase Agreement (the StaffChex Purchase Agreement), dated as of February 28, 2008, with StaffChex, Inc. (StaffChex), subject to certain conditions for the completion of the transaction. Under the StaffChex Purchase
Agreement, StaffChex assumed certain liabilities of CPR and acquired from CPR all of the Customer Account Property (primarily contract rights), as defined in the StaffChex Purchase Agreement, related to the temporary staffing services serviced by
(i) KOR pursuant to the Franchise Agreement  Management Agreement, dated August 30, 2007, and (ii) StaffChex Servicing, LLC (StaffChex Servicing), an affiliate of StaffChex, pursuant to the Exclusive Supplier
Agreement, dated September 2, 2007. The prior agreements with StaffChex Servicing and KOR were terminated on February 28, 2008 and March 5, 2008, respectively. The Company did not incur any early termination penalties in connection
with such terminations. In consideration for the Customer Account Property acquired from CPR, StaffChex issued to CPR 15,444 shares of common stock of StaffChex and is obligated to issue up to 23,166 shares of StaffChex common stock, subject
to the earnout provisions set forth in the StaffChex Purchase Agreement. In addition, CPR entered into an iLabor agreement with StaffChex whereby StaffChex agreed to process its temporary labor requests through CPRs iLabor network and to pay
to CPR 2.25% (such percentage subject to reduction based on meeting certain volume targets) of StaffChexs total dollar volume of business for temporary staffing services. On March 5, 2008, CPR completed the disposition of all of the
Customer Account Property. The Company did not incur any early termination penalties in connection with such termination.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



On February 28, 2008, CPR and its subsidiary, ClearPoint Workforce, LLC (CPW),
entered into a Licensing Agreement (the Optos Licensing Agreement) with Optos Capital, LLC (Optos), of which Christopher Ferguson, the Companys and CPRs former director, President and Secretary, is the sole
member. Pursuant to the Optos Licensing Agreement, ClearPoint (i) granted to Optos a non-exclusive license to use the ClearPoint Property and the Program, both as defined in the Optos Licensing Agreement, which include certain intellectual
property of CPR, and (ii) licensed and subcontracted to Optos the client list previously serviced by TZG, pursuant to the TZG Agreement dated August 13, 2007, as amended, and all contracts and contract rights for the clients included on
such list. In consideration of the licensing of the Program, which is part of the ClearPoint Property, CPR was entitled to receive a fee equal to 5.2% of total cash receipts of Optos related to temporary staffing services. With CPRs consent,
Optos granted, as additional security under certain of its credit agreements, conditional assignment of Optos interest in the Optos Licensing Agreement to its lender under such credit agreements. The foregoing agreement with TZG was terminated
on February 28, 2008. The Company did not incur any early termination penalties in connection with such termination.

On
February 28, 2008, CPW advanced $800,000, on behalf of Optos, to the provider of Optos outsourced employee leasing program. The advanced funds were utilized for Optos payroll. In consideration of making the advance on its behalf,
Optos assumed the Promissory Notes, and the underlying payment obligations, issued by CPR on February 22, 2008 which were payable to Michael Traina and Christopher Ferguson in the aggregate amount of $800,000.

On February 28, 2008, Christopher Ferguson, the Companys former director, President and Secretary, resigned from the Company in connection
with the Optos Licensing Agreement. In connection with Mr. Fergusons resignation as the Companys and CPRs director, President and Secretary, the Company and Mr. Ferguson entered into the Separation of Employment Agreement
and General Release (the Ferguson Separation Agreement). In consideration for Mr. Fergusons agreement to be legally bound by the terms of the Ferguson Separation Agreement and his release of his claims, if any, under the
Ferguson Separation Agreement, Mr. Ferguson is entitled to be reimbursed for any health insurance payments for Mr. Ferguson for a period equal to 52 weeks. Pursuant to the Ferguson Separation Agreement, except for the parties
continuing obligations under the Employment Agreement between the Company and Mr. Ferguson, dated as of February 12, 2007 (the Employment Agreement), the Employment Agreement is of no further force and effect. Under the
Ferguson Separation Agreement, Mr. Ferguson agreed not to be a designee under the Voting Agreement and not to stand for election as a director of the Company, and, for as long as Mr. Ferguson beneficially owns at least 5% of the
Companys outstanding shares of common stock, Mr. Ferguson will be entitled to be an observer at each meeting of the Companys board of directors. Under the Ferguson Separation Agreement, the Company has agreed to enter into a
consulting agreement with Mr. Ferguson pursuant to which he will be paid $25,000 per month for twelve (12) months. In return, Mr. Ferguson shall assist the Company with any matters relating to the performance of his former duties and
will work with the Company to effectively transition his responsibilities.

The Company entered into the M&T Credit Agreement with
several banks and other financial institutions parties to the M&T Credit Agreement (collectively, the M&T Lenders) and M&T as Administrative Agent, dated as of February 23, 2007, as amended. Under the M&T Credit
Agreement, the M&T Lenders agreed to make Revolving Credit Loans up to $20,000,000 in the aggregate principal amount and issued a $5,000,000 Term Loan. Capitalized terms not defined herein shall have the meanings set forth in the M&T Credit
Agreement. On March 21, 2008, ClearPoint entered into the Second Amendment to M&T Credit Agreement (the Second Amendment), dated as of March 21, 2008, among ClearPoint, the M&T Lenders and M&T. Pursuant to the
Second Amendment, the Credit Agreement was amended, among other matters, as follows: (i) the aggregate amount of the Revolving Credit Commitments was gradually reduced from $20,000,000 to $15,000,000 at March 21, 2008 and $4,000,000 at
June 30, 2008 and $10,812,981 of the December 31, 2007 balance of the Revolver has been classified as a current liability; (ii) the Applicable Margin, which is a component of the



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



interest rate calculations, was increased to (a) 3.5% and 1.25% for any Revolving Credit Loan that is a Eurodollar Loan and a Base Rate Loan,
respectively, and (b) 4.5% and 2.25% for any Term Loan that is a Eurodollar Loan and a Base Rate Loan, respectively; (iii) the Applicable Commitment Fee Percentage, which is included in the calculations of Commitment Fees payable by
ClearPoint on the amount of the Unused Revolving Credit Commitments, was increased to 0.25%; and (iv) the covenants related to the ratios of Total Debt or Senior Debt, as applicable, to Modified EBITDA were amended to lower the ratios as of
September 30, 2008.

On April 14, 2008, the Company entered into a Waiver (the Waiver) to the M&T Credit
Agreement. Pursuant to the Waiver, the required lenders under the M&T Credit Agreement waived compliance with certain financial covenants set forth in the M&T Credit Agreement for the period ending December 31, 2007. In connection with
the Waiver, the Company paid a $100,000 Waiver fee to M&T.

On March 1, 2005, CPR issued a Promissory Note (Blue Lake
Note) to Blue Lake Rancheria, a fully recognized Indian tribe (Blue Lake), for $1,290,000 in principal amount guaranteed by Michael Traina, ClearPoints Chairman of the board of directors and Chief Executive Officer, and
Christopher Ferguson, the former director, President and Secretary of ClearPoint and CPR. The Blue Lake Note matured on March 31, 2008. Effective March 31, 2008, the Company amended and restated the Blue Lake Note and extended its maturity
date under the Agreement, dated as of March 31, 2008, by and between CPR and Blue Lake (the Blue Lake Agreement). The Blue Lake Agreement sets forth certain agreements between CPR and Blue Lake with respect to the amendment and
restatement of the Blue Lake Note. CPR and Blue Lake have acknowledged that the Blue Lake Agreement constitutes a legally binding obligation and commitment on the parties thereto which will be further documented in definitive, binding agreements to
be completed no later than April 14, 2008. Pursuant to the Blue Lake Agreement, the principal amount of $1,290,000 is due and payable as follows: (i) $200,000 was paid on April 8, 2008, (ii) $50,000 is payable on the first
business day of each calendar month for 12 consecutive months (totaling $600,000 in the aggregate), the first payment to occur on May 1, 2008 and the last to occur on April 1, 2009, and (iii) on April 30, 2009, CPR is obligated
to pay to Blue Lake the balance of the principal amount, equal to $490,000, plus accrued interest. The interest rate was increased from 6% to 10% per annum. ClearPoint agreed to issue 900,000 shares (Escrow Shares) of
ClearPoints common stock in the name of Blue Lake to be held in escrow, pursuant to an escrow agreement, as security for the payment of the principal amount and interest under the amended and restated Blue Lake Note.

On March 1, 2005, CPR issued the Amended and Restated Notes (collectively the Sub Notes and each Amended and Restate Note, a Sub
Note) to each of Matthew Kingfield, B&N Associates, LLC, Alyson P. Drew and Fergco Bros. Partnership (collectively, the Sub Noteholders, and individually, a Sub Noteholder), for $50,000, $100,000, $100,000 and
$300,000, respectively. Ms. Drew is the spouse of ClearPoints director Parker Drew. Fergco Bros. Partnership is controlled by Christopher Ferguson, the former director, President and Secretary of ClearPoint and CPR. The Sub Notes matured
on March 31, 2008. Effective March 31, 2008, the Company amended and restated the Sub Notes and extended their maturity dates under the following agreements: (i) the Second Amended and Restated Promissory Note, dated March 31,
2008 (the Amended Sub Note and collectively, the Amended Sub Notes) issued by CPR to each Sub Noteholder; and (ii) a Warrant (the Sub Note Warrant) to purchase 15,000 shares (Sub Note Warrant
Shares) of ClearPoints common stock issued to each Sub Noteholder for every $100,000 of Amended Sub Notes held, on a pro rata basis. Each Amended Sub Note is due and payable on March 31, 2009, provided that CPR has the right to
extend this maturity date to March 31, 2010 by providing notice to the Sub Noteholder. All sums outstanding from time to time under each Amended Sub Note bear the same interest of 12% per annum as under the Sub Note. CPRs failure to
make any payment of principal or interest under the Amended Sub Note when such payment is due constitutes an event of default, if such default remains uncured for 5 business days after written notice of such failure is given to CPR by the Sub
Noteholder. In consideration of each Sub Noteholder agreeing to extend the maturity date of their Sub



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note, ClearPoint agreed to issue the Sub Note Warrant to the Sub Noteholders to purchase, in the aggregate, 82,500 Sub Note Warrant Shares as described
below. The Sub Note Warrant gives the Sub Noteholders the right to purchase, in the aggregate, 82,500 Sub Note Warrant Shares at an exercise price per share equal to $1.55, the closing price per share of common stock on March 31, 2008. If CPR
extends the maturity date of the Amended Sub Note to March 31, 2010, then the Sub Noteholders will have the right to receive additional Sub Note Warrants to purchase, in the aggregate, additional 82,500 shares of common stock at an exercise
price equal to the closing price of common stock on March 31, 2009, but in no event at an exercise price lower than $1.55. The initial Sub Note Warrant is immediately exercisable during the period commencing on March 31, 2008 and ending on
March 31, 2010. The exercise price and the number of Sub Note Warrant Shares are subject to adjustment in certain events, including a stock split and reverse stock split.

On April 8, 2008 the Optos Licensing Agreement was terminated. A new license agreement and a new temporary help services subcontract agreement was
entered into with Koosharem Corp., a California corporation doing business as Select Staffing (Select), where CPR is entitled to receive annually the first 10% of all annual gross sales of the subcontracted contracts up to $36 million of
annual gross sales and whereby Select licensed use of CPRs iLabor network in exchange for a $1.2 million payment ($900,000 on April 8, 2008 and $300,000 on July 1, 2008). In consideration for terminating the Optos Licensing
Agreement, CPR and Optos have agreed that there will be a net termination fee for any reasonable net costs or profit incurred, if any, when winding up the operations associated with termination.



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CLEARPOINT BUSINESS RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 21QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

The following is a summary of the unaudited quarterly financial information for the fiscal years ended December 31, 2007 and 2006:



|                                             |  |                                         |        |      |               |   |        |          |  |   |           |      |  |   |        |     
|-------------------------------------------- |  | --------------------------------------- | ------ | ---- | ------------- | - | ------ | -------- |  | - | --------- | ---- |  | - | ------ | ----
|                                             |  | 2007Quarter Ended (unaudited)          |       
|                                             |  | December 31,                            |        |      | September 30, |   |        | June 30, |  |   | March 31, |     
|                                             |  | ($ in thousands, except per share data) |       
|Revenue                                      |  | $                                       | 52,015 |      |               | $ | 52,427 |          |  | $ | 54,394    |      |  | $ | 32,849 |     
|Cost of Services                             |  |                                         | 46,616 |      |               |   | 46,548 |          |  |   | 46,525    |      |  |   | 26,942 |     
|                                             |  |                                         |        |      |               |   |        |          |  |   |           |      |  |   |        |     
|Gross Profit                                 |  |                                         | 5,399  |      |               |   | 5,879  |          |  |   | 7,869     |      |  |   | 5,907  |     
|Selling, general and administrative expenses |  |                                         | 6,795  |      |               |   | 4,719  |          |  |   | 8,086     |      |  |   | 7,105  |     
|Restructuring expenses                       |  |                                         |       |      |               |   | (651   | )        |  |   | 2,852     |      |  |   |       |     
|Depreciation and amortization expense        |  |                                         | 6,387  |      |               |   | 1,401  |          |  |   | 1,387     |      |  |   | 1,139  |     
|                                             |  |                                         |        |      |               |   |        |          |  |   |           |      |  |   |        |     
|Income (loss) before income taxes            |  |                                         | (7,783 | )    |               |   | 410    |          |  |   | (4,456    | )    |  |   | (2,337 | )   
|Interest income (expense)                    |  |                                         | (245   | )    |               |   | (529   | )        |  |   | (537      | )    |  |   | (561   | )   
|Other income (expense)                       |  |                                         | 260    |      |               |   |       |          |  |   | 90        |      |  |   | (1,823 | )(3)
|                                             |  |                                         |        |      |               |   |        |          |  |   |           |      |  |   |        |     
|Net loss before income taxes                 |  |                                         | (7,768 | )    |               |   | (119   | )        |  |   | (4,903    | )    |  |   | (4,721 | )   
|Income tax expense (benefit)                 |  |                                         | (1,767 | )    |               |   | 39     |          |  |   | (2,918    | )    |  |   | (474   | )   
|                                             |  |                                         |        |      |               |   |        |          |  |   |           |      |  |   |        |     
|Net loss                                     |  | $                                       | (6,001 | )(1) |               | $ | (158   | )        |  | $ | (1,985    | )(2) |  | $ | (4,247 | )   
|                                             |  |                                         |        |      |               |   |        |          |  |   |           |      |  |   |        |     
|Net loss per share                           |  | $                                       | (0.45  | )    |               | $ | (0.01  | )        |  | $ | (0.15     | )    |  | $ | (0.43  | )   
|                                             |  |                                         |        |      |               |   |        |          |  |   |           |      |  |   |        |     



|                                             |  |                                         |        |      |               |   |        |          |      |   |           |   |       |   |        |   |       |  
|-------------------------------------------- |  | --------------------------------------- | ------ | ---- | ------------- | - | ------ | -------- | ---- | - | --------- | - | ----- | - | ------ | - | ----- | -
|                                             |  | 2006Quarter Ended (unaudited)          |       
|                                             |  | December 31,                            |        |      | September 30, |   |        | June 30, |      |   | March 31, |  
|                                             |  | ($ in thousands, except per share data) |       
|Revenue                                      |  | $                                       | 29,142 |      |               | $ | 29,261 |          |      | $ | 31,780    |   |       | $ | 23,759 |  
|Cost of Services                             |  |                                         | 23,344 |      |               |   | 24,200 |          |      |   | 26,503    |   |       |   | 19,290 |  
|                                             |  |                                         |        |      |               |   |        |          |      |   |           |   |       |   |        |   |       |  
|Gross Profit                                 |  |                                         | 5,798  |      |               |   | 5,061  |          |      |   | 5,277     |   |       |   | 4,469  |  
|Selling, general and administrative expenses |  |                                         | 3,461  |      |               |   | 3,060  |          |      |   | 3,594     |   |       |   | 3,435  |  
|Depreciation and amortization expense        |  |                                         | 479    |      |               |   | 479    |          |      |   | 755       |   |       |   | 776    |  
|                                             |  |                                         |        |      |               |   |        |          |      |   |           |   |       |   |        |   |       |  
|Income (loss) before income taxes            |  |                                         | 1,858  |      |               |   | 1,522  |          |      |   | 928       |   |       |   | 258    |  
|Interest income (expense)                    |  |                                         | (2,474 | )(4) |               |   | (690   | )        |      |   | (972      | ) |       |   | (936   | )
|Other income (expense)                       |  |                                         | 23     |      |               |   | 6      |          |      |   | (10       | ) |       |   | 7      |  
|                                             |  |                                         |        |      |               |   |        |          |      |   |           |   |       |   |        |   |       |  
|Net income (loss) before income taxes        |  |                                         | (593   | )    |               |   | 838    |          |      |   | (54       | ) |       |   | (671   | )
|Income tax expense (benefit)                 |  |                                         | 420    |      |               |   | 491    |          |      |   | 264       |   |       |   | (230   | )
|                                             |  |                                         |        |      |               |   |        |          |      |   |           |   |       |   |        |   |       |  
|Net income (loss)                            |  | $                                       | (1,013 | )    |               | $ | 347    |          |      | $ | (318      | ) |       | $ | (441   | )
|                                             |  |                                         |        |      |               |   |        |          |      |   |           |   |       |   |        |   |       |  
|Net income (loss) per share                  |  |                                         |        | $    | (0.17         | ) |        | $        | 0.06 |   |           | $ | (0.05 | ) |        | $ | (0.07 | )
|                                             |  |                                         |        |      |               |   |        |          |      |   |           |   |       |   |        |   |       |  



| | (1) | The net loss in the forth quarter of 2007 includes a writedown in the carrying value of contract rights and increased provision for doubtful accounts.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | The net loss in the second quarter of 2007 includes the impact of a restructuring charge.
| | --- | -----------------------------------------------------------------------------------------

| | (3) | Includes prepayment penalty on early retirement of Bridge debt.
| | --- | ---------------------------------------------------------------

| | (4) | Reflects the revaluation of warrants related to the Bridge term loan.
| | --- | ---------------------------------------------------------------------

Net income (loss) per share is computed independently for each quarter presented. Therefore, the sum of the quarterly net income (loss) per share figures in 2007 and 2006 does not necessarily equal to the total
computed for the entire year.



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PART III



| | Item 10. | Directors, Executive Officers and Corporate Governance.
| | -------- | -------------------------------------------------------

The following table sets forth certain information regarding our directors and executive officers as of April 29, 2008:



|                           |  |     |  |                                                   |  |       |  |                |  |                        
|-------------------------- |  | --- |  | ------------------------------------------------- |  | ----- |  | -------------- |  | -----------------------
|Name                       |  | Age |  | Position                                          |  | Class |  | Director Since |  | Term asDirector Expires
|Michael D. Traina          |  | 37  |  | Chairman of the Board and Chief Executive Officer |  | A     |  | 2007           |  | 2008                   
|Kurt A. Braun              |  | 41  |  | Chief Financial Officer and Treasurer             |  |      |  |               |  |                       
|Lee W. Chung               |  | 42  |  | Interim V.P., Administration                      |  |      |  |               |  |                       
|Vahan Kololian             |  | 54  |  | Lead Director                                     |  | A     |  | 2004           |  | 2008                   
|Brendan Calder(1)          |  | 61  |  | Director                                          |  | C     |  | 2004           |  | 2010                   
|Parker Drew(2)(3)          |  | 39  |  | Director                                          |  | B     |  | 2007           |  | 2009                   
|Harry Glasspiegel(1)(2)(3) |  | 58  |  | Director                                          |  | C     |  | 2007           |  | 2010                   
|Michael Perrucci(1)(2)(3)  |  | 54  |  | Director                                          |  | B     |  | 2007           |  | 2009                   



|(1) | Member of the Audit Committee
|--- | -----------------------------

|(2) | Member of the Compensation Committee
|--- | ------------------------------------

|(3) | Member of the Nominating Committee
|--- | ----------------------------------

Terra Nova
Acquisition Corporation, referred to as Terra Nova, incorporated in Delaware, was a blank check company formed on July 21, 2004 to effect a merger, capital stock exchange, asset acquisition or other similar business combination with
an operating business. On February 12, 2007, ClearPoint Resources, Inc. (formerly known as Mercer Staffing, Inc.) merged with a wholly owned subsidiary of Terra Nova, whereby as a result of the merger, ClearPoint Resources, Inc. became a wholly
owned subsidiary of Terra Nova. Upon the closing of the merger, Terra Nova changed its name to ClearPoint Business Resources, Inc. In connection with the merger, Messrs. Traina, Perrucci, Drew and Glasspiegel were elected as members of our board of
directors and Messrs. Traina and Braun were appointed as our executive officers. In connection with the merger, the following individuals resigned as a director: Randy Benson, Roman Fedus, Jesse Gill and Lee Chung.

Directors and Executive Officers

Michael D.
Traina has served as our Chairman of the board of directors and the Chief Executive Officer since February 2007 and as the Chairman of the board of directors and the Chief Executive Officer of ClearPoint Resources, Inc., a wholly owned
subsidiary of ClearPoint, since its founding in October 2001. Previously, from January 1999 to October 2000, Mr. Traina was Chief Executive Officer for Correctional Healthcare Solutions, Inc., a portfolio company of the Lomax Companies involved
in the privatization of health care in correctional facilities. From 1997 to May 2001, Mr. Traina was President and CEO of Foster America, Inc., a portfolio company of the Lomax Companies that provided privately managed foster care services.
Mr. Traina was the Director of New Business Development for The Lomax Companies from 1996 to October 2000, where he was responsible for evaluating venture capital investment opportunities, raising capital for transactions, and advising the
Lomax portfolio companies in the areas of marketing and finance. Prior to joining the Lomax team, Mr. Traina ran VICEN, Inc., a privately held direct marketing firm, from 1995 to 1996 and worked for Salomon Brothers as a corporate bond trader
from 1994 to 1995. Mr. Traina holds a B.A. from Brown University and an MBA from the Darden School at the University of Virginia.



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Kurt A. Braun has served as our Chief Financial Officer since February 2007 and as the Chief
Financial Officer of ClearPoint Resources, Inc., a wholly owned subsidiary of ClearPoint, since September 2004. From January 2003 to June 2004, Mr. Braun was Interim Manager of Financial Reporting and Analysis at American Water Works Co., Inc.,
a publicly held utility, working through Resources Global Professionals, a professional services firm. From September 1995 to December 2002, Mr. Braun was Chief Financial Officer of LEM Products, Inc., an industrial identification manufacturer,
where he was responsible for all financial and administrative matters of the company. From 1994 to 1995, he was a Senior Consultant at KPMG Consulting, LLP, where he was responsible for a number of executive information systems implementations at
Fortune 50 companies. Mr. Braun holds a B.B.A. and an M.B.A. in Finance and International Business from the Fox School of Business at Temple University.

Lee W. Chung has served as our Interim Vice President, Administration since April 2008. Mr. Chung has been a partner of TerraNova Partners, L.P., referred to as TerraNova Partners, a private
investment firm, and a Vice President of TerraNova Management Corp., referred to as TerraNova Management, the manager of TerraNova Partners, since September 2004. TerraNova Partners and TerraNova Management are affiliates of ClearPoint.
Previously, Mr. Chung served as ClearPoints (TerraNovas) Chief Financial Officer and a member of its board of directors from its inception in July 2004 until February 2007. Following the merger, Mr. Chung served as our Vice
President. Mr. Chung was the Chief Financial Officer and Vice President of Finance of Precinda Corporation, a private industrial holding company based in Toronto, Canada, from May 2002 until July 2004. From January 1997 to May 2002,
Mr. Chung served as a corporate controller of Husky Injection Molding Systems Ltd., a supplier of injection molding equipment and services to the plastics industry. From November 1991 to January 1997, he served as a finance manager of Nortel
Networks Corporation, a New York and Toronto Stock Exchange listed telecommunications company. Mr. Chung holds a Bachelor of Commerce and Finance degree from the University of Toronto and is a Chartered Accountant.

Vahan Kololian has served as our lead director since February 2007. Previously, Mr. Kololian was ClearPoints (TerraNovas)
Chairman of the board of directors and Chief Executive Officer from its inception in July 2004 until February 2007. Mr. Kololian has been the Chairman of the board of directors of Precinda Corporation, a private industrial holding company based
in Toronto, since its formation in March 2000. He has also been the founder and managing Partner of TerraNova Partners, a private investment partnership and an affiliate of Precinda Corporation, since September 2004 and President of TerraNova
Management since September 2004. TerraNova Partners and TerraNova Management are affiliates of ClearPoint.



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Mr. Kololian is a director of Manicouagan Minerals Inc., Western Goldfields Inc. and Midlake Oil & Gas Limited. Mr. Kololian holds a B.A. from
the University of Western Ontario and an LL.B. from the University of Ottawa.

Brendan Calder has served as a member of our board of
directors since inception in July 2004. Since April 2001, Mr. Calder has been an adjunct professor of strategic management at the Rotman School of Management of the University of Toronto. From January 1996 until March 2000, Mr. Calder was
the Chairman of the board of directors, President and Chief Executive Officer of CIBC Mortgages in Toronto Ontario and was president and a director of Firstline Trust Company from April 1988 to January 1996, both mortgage banking companies.
Mr. Calder is a director of FirstService Corporation, EllisDon Construction, Coventree Capital, Inc. and The Toronto International Film Festival Group. Mr. Calder holds a Bachelor of Mathematics degree from the University of Waterloo and
attended the Advanced Management Program at Harvard University.

Parker Drew has served as a member of our board of directors since
February 2007. Mr. Drew was a Managing Director at JP Morgan Chase from April 2005 until December 2006, and was the Global Head of Trading for Natural Gas and Crude Oil. Prior to joining JP Morgan Chase, Mr. Drew was a Managing Partner at
Drew Advisors, an energy focused hedge fund, where he was also a founder, from June 2004 to April 2005. From 1996 to June 2004, Mr. Drew was an Executive Director of Commodity Trading at Morgan Stanley, where he managed a large, predominantly
proprietary derivatives portfolio. From 1994 to 1996, Mr. Drew was an Assistant Vice President of Natural Gas at Merrill Lynch, where he facilitated customer flow and managed a proprietary portfolio. From 1991 to 1994, Mr. Drew held
various positions at Cooper Neff and Associates, Kevis Bender Investment Group, and Mabon Securities. Mr. Drew received a Finance MBA from NYU Stern School of Business and an AB Economics and History degree from Brown University.

Harry Glasspiegel has served as a member of our board of directors since February 2007. Mr. Glasspiegel has been Chairman of Glasspiegel
Ventures, LLC, which advises and invests in various outsourcing businesses since May 1999. Prior to founding the firm in 1999, Mr.



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Glasspiegel was CEO of a venture and advisory unit of CNA, a commercial and property and casualty insurer from 1997-1999. He previously served as a partner
in the law firm of Pillsbury Winthrop Shaw Pittman, from April 2005 through June 2006, and as an associate and partner in its predecessor firm, Shaw Pittman Potts & Trowbridge, from 1979 to 1997, where he co-founded the firms global
sourcing advisory practice. Since 2000, Mr. Glasspiegel has also been active in the funding, startup and oversight of CRAIG/is, Ltd., a business processing outsourcing services firm serving the insurance industry, headquartered in Jacksonville,
Florida. From 1991-2008, Mr. Glasspiegel served as a Founding Advisor to the Sourcing Interests Group (SIG), an international outsourcing organization. Mr. Glasspiegel holds a B.A. from Wesleyan University and a J.D. from Wisconsin Law
School.

Michael Perrucci has served as a member of our board of directors since February 2007. Mr. Perrucci is currently a
Partner of Florio Perrucci Steinhardt & Fader, LLC, a law firm which he founded in April 2004. Previously Mr. Perrucci was a Partner at the law firm Fischbein-Badillo-Wagner-Harding, from 1999 to April 2004. From 1995 to 1999,
Mr. Perrucci was a founder and Partner with the law firm of Florio & Perrucci. From 1990 to 1995, Mr. Perrucci was a Partner at the law offices of Mudge, Rose, Guthrie, Alexander & Ferdon. From 1979 to 1990,
Mr. Perrucci had his own private law firm. From 1978 to 1979, Mr. Perrucci was a law clerk. Mr. Perrucci is both director and founder of Peron Construction Co., Inc. and a director at both Team Capital Bank and Phoenix Container Corp.
Mr. Perrucci holds a B.A. from Moravian College and a J.D. from Seton Hall Law School.

Committees of the Board of Directors

Upon consummation of the merger, our securities became listed on The NASDAQ Capital Market and our board of directors established an audit committee, a
compensation committee and a nominating committee.

Audit Committee

Messrs. Calder, Glasspiegel and Perrucci, each an independent director under NASDAQ listing standards, are members of our audit committee. Mr. Calder
is the chairman of the audit committee. The purpose of the audit committee is to assist our board of directors in monitoring (i) the integrity of our annual, quarterly and other financial statements, (ii) the independent auditors
qualifications and independence, (iii) the performance of our internal audit function and independent auditor, and (iv) our compliance with legal and regulatory requirements. The audit committee also reviews and approves all related-party
transactions. The audit committee also prepares the report required by the SEC rules to be included in our annual proxy statement. Our board of directors has determined that Brendan Calder qualifies as an audit committee financial expert
as such term is defined in the SEC regulations.

Compensation Committee

Messrs. Drew, Glasspiegel and Perrucci, each an independent director under NASDAQ listing standards, are members of our compensation committee. The
purpose of the compensation committee is to review and approve compensation paid to our officers and directors and to administer ClearPoints 2006 Long-Term Incentive Plan, referred to as the 2006 Plan, including authority to make
and modify awards under such plan.

Nominating Committee

Messrs. Drew, Glasspiegel and Perrucci, each an independent director under NASDAQ listing standards, are members of our nominating committee. The
nominating committee is responsible for overseeing the appropriate size, functioning and needs of our board of directors including, but not limited to, recruitment and retention of high quality board members and committee composition and structure.
The nominating committee will identify, evaluate and



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recommend candidates to become members of the board of directors with the goal of creating a balance of knowledge and experience. Candidates will be reviewed
in the context of current composition of the board, our operating requirements and the long-term interests of our stockholders. In conducting its assessment, the nominating committee considers and evaluates each director-candidate based upon its
assessment of the criteria contained in its board of director candidate guidelines, a copy of which is attached to the nominating committees charter.

In connection with the merger, Messrs. Traina and Kololian and Optos Capital, LLC, controlled by Christopher Ferguson, the then President, director and Secretary of ClearPoint and ClearPoint Resources, Inc., a wholly
owned subsidiary of ClearPoint, entered into a voting agreement, referred to as the voting agreement, pursuant to which each party agreed to vote for the election of the following directors: (i) Messrs. Traina, Ferguson and Perrucci
as designees of Mr. Traina and Optos Capital, LLC, (ii) Messrs. Kololian, Glasspiegel and Calder as designees of Mr. Kololian, and (iii) Mr. Drew as the designee of Mr. Traina, Optos Capital, LLC and Mr. Kololian.
The obligations of Messrs. Traina and Kololian and Optos Capital, LLC pursuant to the voting agreement will terminate after the election of the foregoing directors at the 2008 annual meeting of our stockholders.

Mr. Ferguson resigned, effective February 28, 2008, as ClearPoints and ClearPoint Resources, Inc.s President, director and
Secretary, ClearPoint Resources, Inc. is a wholly owned subsidiary of ClearPoint. Pursuant to a Separation of Employment Agreement and General Release entered into between us and Mr. Ferguson in relation to his resignation, Mr. Ferguson
agreed not to be a designee under the voting agreement and not to stand for election as our director.



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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, and persons who own more than ten
percent of a registered class of our equity securities (collectively referred to as the reporting persons), to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and our other equity
securities. Reporting persons are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.

To
our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2007, all Section 16(a) filing requirements
applicable to the reporting persons were complied with, except that two reports were filed late by Jack Silver, a more than ten percent stockholder. The late reports covered three transactions: one purchase of common stock and two purchases of
warrants.

Code of Ethics

In April
2005, Terra Novas board of directors adopted a code of ethics which applies to all of our directors, officers and employees as well as those of our subsidiaries. A copy of our code of ethics may be obtained free of charge by submitting a
request in writing to ClearPoint Business Resources, Inc., Attn: General Counsel, 1600 Manor Drive, Suite 110, Chalfont, Pennsylvania, 18914.



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| | Item 11. | Executive Compensation.
| | -------- | -----------------------

Summary Compensation Table

The following table sets forth the compensation awarded to, earned by or paid to our Chief Executive Officer and our other most highly
compensated executive officers, referred to as named executive officers, for all services rendered in all capacities to us and our subsidiaries during 2006 and 2007:



|                                                                      |  |           |  |                 |         |  |           |  |                      |     |  |                               |     |  |                
|--------------------------------------------------------------------- |  | --------- |  | --------------- | ------- |  | --------- |  | -------------------- | --- |  | ----------------------------- | --- |  | ---------------
|SUMMARY COMPENSATION TABLE                                           
|                                                                      |  |           |  |                 |         | 
|Name and principal position                                           |  | Year      |  | Salary ($)      |         |  | Bonus ($) |  | Option Awards ($)(1) |     |  | All Other Compensation ($)(2) |     |  | Total ($)      
|                                                                      |  |           |  |                 |         | 
|Michael D. TrainaChief Executive Officer(principal executive officer) |  | 2007 2006 |  | 286,152 180,000 | (3) (5) |  |         |  | 41,430              | (4) |  | 30,091 30,997                 |     |  | 357,673 210,997
|Vahan Kololian(6)Former Chief
Executive Officer                       |  | 2007 2006 |  |               |         |  |         |  | 41,430              | (4) |  | 13,125                       |     |  | 54,555        
|Christopher Ferguson(7)Former
President and Secretary                 |  | 2007 2006 |  | 279,229 120,000 | (3) (5) |  |         |  | 41,430              | (4) |  | 29,233 81,960                 |     |  | 349,892 201,960
|Kurt A. BraunChief Financial Officer and Treasurer                    |  | 2007 2006 |  | 158,524 132,000 | (3) (5) |  |         |  | 69,050              | (4) |  | 151,242 19,509                | (4) |  | 378,816 151,509
|J. Todd Warner(8)Former Chief
Operating Officer                       |  | 2007 2006 |  | 131,725 180,000 | (3) (5) |  |  30,000  |  | 69,050              | (4) |  | 128,152 21,509                | (9) |  | 328,927 231,509



|(1) | The amount reflected in this column is the compensation cost recognized by us during the fiscal year 2007 under Financial Accounting Standards Board Statement of Financial
Accounting Standard No. 123 (revised 2004), Share-Based Payment, as modified or supplemented, referred to as SFAS 123(R), for grants made in the applicable fiscal year and prior years, if any, and does not reflect cash
compensation received by the executive. A discussion of the assumptions used in calculating these values may be found in Note 14 to the consolidated financial statements in our Annual Report for the year ended December 31, 2007, filed on April 15,
2008.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | In fiscal years 2006 and 2007, respectively, we paid the following amounts for Mr. Traina: $14,047 and $6,498 (auto allowance); $14,309 and $20,952 (health insurance premiums);
$2,641 and $2,641 (life insurance premiums). In fiscal year 2007, we paid $13,125 ($15,000 pro-rated for a partial year) to Mr. Kololian in connection with his service as a director of ClearPoint after the merger. In fiscal years 2006 and 2007,
respectively, we paid the following amounts for Mr. Ferguson: $7,651 and $8,282 (auto allowance); $14,309 and $20,952 (health insurance premiums); in 2006, $60,000 to Optos Capital, LLC, of which Mr. Ferguson is the sole member, pursuant to a
consulting agreement. In fiscal years 2006 and 2007, respectively, we paid the following amounts for Mr. Braun: $5,200 and $6,000 (auto allowance); $14,309 and $20,952 (health insurance premiums). In fiscal years 2006 and 2007, respectively, we paid
the following amounts for Mr. Warner: $7,200 and $7,200 (auto allowance); $14,309 and $20,952 (health insurance premiums).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | This amount represents the named executive officers salary prior to and after the merger.
|--- | ------------------------------------------------------------------------------------------

|(4) | On March 29, 2007, we granted an option to each of Messrs. Traina, Kololian and Ferguson to purchase 30,000 shares of our common stock, immediately exercisable, at an exercise price
of $6.10. Mr. Kololian received his option grant as a director of ClearPoint. On March 29, 2007, we granted an option to Mr. Braun to purchase 140,000 shares of our common stock, immediately exercisable, at an exercise price of $6.10. Ninety
thousand of Mr. Brauns 140,000 option shares were granted in lieu of the $124,290 payment due to him in connection with the merger. Compensation cost recognized by us during the fiscal year 2007 under SFAS 123(R) in connection with an option
to purchase 90,000 shares of our common stock granted to Mr. Braun in lieu of the $124,290 payment has been excluded from the Option Awards column and the $124,290 payment has been included in the All Other Compensation
column. On March 29, 2007, we granted an option to Mr. Warner to purchase 50,000 shares of our common stock, immediately exercisable, at an exercise price of $6.10. Generally, the foregoing options expire on March 29, 2010. Both Mr. Fergusons
option to purchase 30,000 shares of our common stock and Mr. Warners option to purchase 50,000 shares of our common stock expired in connection with their respective resignations.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | This amount represents salary earned prior to the merger.
|--- | ---------------------------------------------------------

|(6) | Mr. Kololian received no compensation as our (Terra Novas) Chief Executive Officer during 2006 or 2007. In addition, as a result of the merger, Mr. Kololian resigned as Chief
Executive Officer on February 12, 2007.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Mr. Ferguson resigned on February 28, 2008.
|--- | -------------------------------------------

|(8) | Mr. Warner resigned on August 13, 2007.
|--- | ---------------------------------------

|(9) | In accordance with an Employment Agreement, dated February 16, 2005, by and between Mr. Warner and ClearPoint Resources, Inc., our wholly owned subsidiary, Mr. Warner was paid
$100,000 in connection with the merger.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Employment Agreements

Michael D. Traina and Christopher Ferguson

In connection with the merger with Terra Nova, Michael
Traina and Christopher Ferguson, each referred to as executive, entered into employment agreements with us on February 12, 2007. Pursuant to the employment agreements, Michael Traina serves as our Chief Executive Officer and
Christopher Ferguson served as our President until his resignation on February 28, 2008, as discussed below. The terms of the employment agreements are substantially similar and the following summary of certain material terms of the employment
agreement is applicable to both Messrs. Traina and Ferguson.

The employment agreement is for a three-year term, subject to earlier
termination in certain circumstances, and is automatically extended for one year unless the executive or we elect to terminate the automatic extension upon written notice to the other of at least six months. The employment agreement provides for an
initial annual base salary of $300,000, which is periodically reviewed by our board of directors. The executive is entitled to a bonus as determined by our board of directors and our compensation committee. The agreement also provides that the
executive is entitled to participate in any benefit plan of ClearPoint available to executive officers. In addition, we reimburse the executive for ordinary, necessary and reasonable expenses incurred in the course of our business including:
cellular phone expenses; lease of an automobile (up to $1,000 per month) and all related expenses; and supplemental health, life or disability related expenses. We also provide the executive with health insurance that covers the executive and his
immediate family, term life insurance and long-term disability insurance.

In the event of termination of employment upon the death of an
executive, the executives heirs, personal representatives or estate are entitled to any unpaid portion of salary and benefits up to the date of termination and any approved but unpaid bonus for the fiscal year in which termination occurs. In
the event the executive becomes disabled, the executive is entitled to receive all compensation and benefits due to him reduced dollar-for-dollar by amounts received under a disability insurance policy or plan provided by us. If the executive
becomes fully disabled, as defined in the employment agreement, we has the right to terminate the executives employment by a vote of at least 60% of our board of directors, excluding the executive. In such event, the executive is entitled to
any earned but unpaid portion of salary and benefits up to the date of termination and any approved but unpaid bonus for the then current fiscal year.

We may terminate the executives employment with or without cause, as defined in the employment agreement, upon a vote of at least 60% of our board of directors, excluding the executive. In the event of
termination by us for cause, the executive is entitled to any earned but unpaid portion of salary and benefits up to the date of termination. In addition, the executive may terminate his employment for good reason, which is defined generally as a
change in office location resulting in increased commute by 60 miles or more; an assignment of duties or limitation of power not contemplated by the employment agreement; any removal or failure to re-elect the executive; or a reduction in
compensation or fringe benefits. In the event of the termination of the executives employment by us without cause or by the executive for good reason, the executive is entitled to receive: (i) the executives then current base salary
for the greater of the period of time remaining under the term of the agreement or two years and (ii) any approved but unpaid bonus, if any, with respect to the then current fiscal year.



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The employment agreement also contains a general non-competition and non-solicitation covenant which
applies to the executive during the employment term and for two years after the date of termination of the executives employment agreement. The provision prohibits the executive from competing with, soliciting employees from or interfering
with our business relationships. The non-competition provision also prohibits the executive from engaging in any business competing with us.

On February 28, 2008, Christopher Ferguson, the director, President and Secretary of ClearPoint and ClearPoint Resources, Inc., a wholly owned subsidiary of ClearPoint, resigned effective February 28, 2008. The employment
agreement discussed above governed his employment until his resignation. In connection with Mr. Fergusons resignation, we entered into a Separation of Employment Agreement and General Release, referred to as the separation
agreement, with Mr. Ferguson. In consideration for Mr. Fergusons agreement to be legally bound by the terms of the separation agreement and his release of his claims, if any, under the separation agreement, Mr. Ferguson is
entitled to be reimbursed for any COBRA payments for Mr. Ferguson for a period equal to 52 weeks.

Pursuant to the separation
agreement, except for the parties continuing obligations under Mr. Fergusons employment agreement with us, the employment agreement is of no further force and effect. Under the separation agreement, Mr. Ferguson agreed not to
be a designee under the voting agreement and not to stand for election as our director, and, for as long as Mr. Ferguson beneficially owns at least 5% of our outstanding shares of common stock, Mr. Ferguson will be entitled to be an
observer at each meeting of our board of directors.

Pursuant to the separation agreement, we entered into a consulting agreement with
Mr. Ferguson pursuant to which he will be paid $25,000 per month for twelve (12) months. In return, Mr. Ferguson shall assist us with any matters relating to the performance of his former duties and will work with us to effectively
transition his current responsibilities.

Kurt A. Braun and J. Todd Warner

ClearPoint Resources, Inc., a wholly owned subsidiary of ClearPoint, entered into employment agreements with Kurt A. Braun and J. Todd Warner dated
April 18, 2005 and February 16, 2005, respectively. Pursuant to the employment agreements, Mr. Braun serves as ClearPoint Resource, Inc.s Chief Financial Officer and Mr. Warner served as ClearPoint,Resources, Inc.s
National Sales Director and then as its Chief Operating Officer until his resignation on August 13, 2007, as discussed below. The employment agreements also provide for an initial annual base salary of $125,000 for Mr. Braun, which has since
been increased to $150,000, and $180,000 for Mr. Warner. In addition, Mr. Braun may receive an initial discretionary bonus of up to $30,000 per year based on ClearPoint Resources achievement of certain EBITDA targets. Mr. Warner
was eligible to receive a discretionary bonus of up to $100,000 per year based on ClearPoint Resources achievement of annual revenue and profit targets. Mr. Braun is, and Mr. Warner was, eligible to participate in our health and dental
benefits programs, and we contribute 100% of the cost of



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such coverage for their families. Mr. Braun is, and Mr. Warner was, entitled to a monthly car allowance of $400, which has since been increased to $500, and
$700, which has since been modified to $600, respectively.

In addition, Messrs. Braun and Warner were entitled to receive certain payments
upon an initial public offering of at least a portion of our stock, a partial sale of ClearPoint or a sale of substantially all of our assets. Upon the occurrence of such events, Messrs. Braun and Warner were entitled to a payment of up to $100,000
provided they remained employed with us for a period of at least three months. The consummation of the merger entitled each of Messrs. Braun and Warner to receive such payments in accordance with the employment agreements.

Each employment agreement provides that Messrs. Braun and Warner are terminable at will. Pursuant to Mr. Brauns employment agreement, upon
termination by us for any reason other than for cause, as defined in the employment agreement, Mr. Braun is entitled to a severance payment in the amount of $65,000, paid over a six month period. Upon termination of Mr. Brauns
employment by us for cause, Mr. Braun is not entitled to any severance payment.

Each employment agreement also contains restrictive
covenants relating to confidentiality, non-competition and non-solicitation. The confidentiality provisions protect our confidential information and work product. In addition, Messrs. Braun and Warner may not compete with, solicit employees from or
interfere with our business relationships. The non-competition provision in Mr. Brauns employment agreement prohibits him from engaging in any business competing with our business within twenty-five miles of any ClearPoint office for a
period of one year following termination of his employment agreement. Mr. Warners employment agreement contains the same covenant, except that Mr. Warners covenant extends to competition within fifty miles of any ClearPoint
office.



On August 13, 2007, J. Todd Warner, the Chief Operating
Officer of ClearPoint and ClearPoint Resources, Inc., a wholly owned subsidiary of ClearPoint, resigned effective August 13, 2007. The employment agreement discussed above governed his employment until his resignation.

2006 Long-Term Incentive Plan

Background

The 2006 Plan reserves 2,750,000 shares of common stock for issuance in accordance with its terms. The purpose of the 2006 Plan is to
enable us to offer our employees, officers, directors and consultants whose past, present and/or potential contributions to ClearPoint have been, are or will be important to our success, an opportunity to acquire a proprietary interest in us. The
various types of incentive awards that may be provided under the 2006 Plan will enable us to respond to changes in compensation practices, tax laws, accounting regulations and the size and diversity of our business.

Administration

The 2006 Plan may be
administered by our board or our compensation committee, or any other committee designated by our board for this purpose. Subject to the provisions of the 2006 Plan, the board or committee determines, among other things, the persons to whom from
time to time awards may be granted, the specific type of awards to be granted, the number of shares



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subject to each award, share prices, any restrictions or limitations on the, and any vesting, exchange, deferral, surrender, cancellation, acceleration,
termination, exercise or forfeiture provisions related to the awards.

Stock Subject to the 2006 Plan

At no time shall the aggregate number of shares of common stock subject to awards granted and outstanding under the 2006 Plan exceed 10% of the number of
shares of common stock then outstanding; and provided further, that no reduction in the number of shares of common stock outstanding shall cause a reduction in the number of shares of common stock subject to awards then granted and outstanding under
the 2006 Plan. Shares of stock subject to other awards that are forfeited or terminated will be available for future award grants under the 2006 Plan. If a holder pays the exercise price of a stock option by surrendering any previously owned shares
of common stock or arranges to have the appropriate number of shares otherwise issuable upon exercise withheld to cover the withholding tax liability associated with the stock option exercise, then in our boards or our committees
discretion, the number of shares available under the 2006 Plan may be increased by the lesser of the number of such surrendered shares and shares used to pay taxes and the number of shares purchased under the stock option.

Under the 2006 Plan, on a change in the number of shares of common stock as a result of a dividend on shares of common stock payable in shares of common
stock, common stock split or reverse split or other extraordinary or unusual event that results in a change in the shares of common stock as a whole, our board or committee may determine whether the change requires equitably adjusting the terms of
the award or the aggregate number of shares reserved for issuance under the 2006 Plan.

Types of Awards

Options. The 2006 Plan provides both for incentive stock options as defined in Section 422 of the Internal Revenue Code of 1986,
as amended, referred to as the Code, and for options not qualifying as incentive options, both of which may be granted with any other stock-based award under the 2006 Plan. Our board or committee determines the exercise price per share
of common stock purchasable under an incentive or non-qualified stock option, which may not be less than 100% of the fair market value on the day of the grant or, if greater, the par value of a share of common stock. However, the exercise price of
an incentive stock option granted to a person possessing more than 10% of the total combined voting power of all classes of our stock may not be less than 110% of the fair market value on the date of grant. The number of shares covered by incentive
stock options that may be exercised by any participant during any calendar year cannot have an aggregate fair market value in excess of $100,000, measured at the date of grant.

An incentive stock option may only be granted within a ten-year period from the date of the consummation of merger and may only be exercised within ten
years from the date of the grant, or within five years in the case of an incentive stock option granted to a person who, at the time of the grant, owns common stock possessing more than 10% of the total combined voting



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power of all classes of our stock. Subject to any limitations or conditions the board or committee may impose, stock options may be exercised, in whole or in
part, at any time during the term of the stock option by giving written notice of exercise to us specifying the number of shares of common stock to be purchased. The notice must be accompanied by payment in full of the purchase price, either in cash
or, if provided in the agreement, in our securities or in combination of the two.

Generally, stock options granted under the 2006 Plan may
not be transferred other than by will or by the laws of descent and distribution and all stock options are exercisable during the holders lifetime, or in the event of legal incapacity or incompetency, the holders guardian or legal
representative. However, a holder, with the approval of the board or committee, may transfer a non-qualified stock option by gift to a family member of the holder, by domestic relations order to a family member of the holder or by transfer to an
entity in which more than fifty percent of the voting interests are owned by family members of the holder or the holder, in exchange for an interest in that entity.

Generally, if the holder is an employee, no stock options granted under the 2006 Plan may be exercised by the holder unless he or she is employed by us or a subsidiary of ours at the time of the exercise and has been
so employed continuously from the time the stock options were granted. However, in the event the holders employment is terminated due to disability, the holder may still exercise his or her vested stock options for a period of 12 months or
such other greater or lesser period as the board or committee may determine, from the date of termination or until the expiration of the stated term of the stock option, whichever period is shorter. Similarly, should a holder die while employed by
us or a subsidiary, his or her legal representative or legatee under his or her will may exercise the decedent holders vested stock options for a period of 12 months from the date of his or her death, or such other greater or lesser period as
the board or committee may determine or until the expiration of the stated term of the stock option, whichever period is shorter. If the holders employment is terminated due to normal retirement, the holder may still exercise his or her vested
stock options for a period of one year from the date of termination or until the expiration of the stated term of the stock option, whichever period is shorter. If the holders employment is terminated for any reason other than death,
disability or normal retirement, the stock option will automatically terminate, except that if the holders employment is terminated by us without cause, then the portion of any stock option that has vested on the date of termination may be
exercised for the lesser of three months after termination of employment, or such other greater or lesser period as the board or committee may determine but not beyond the balance of the stock options term.

Stock Reload Options. Under the 2006 Plan, we may grant stock reload options to a holder who tenders shares of common stock to pay the exercise
price of a stock option or arranges to have a portion of the shares otherwise issuable upon exercise withheld to pay the applicable withholding taxes. A stock reload option permits a holder who exercises a stock option by delivering stock owned by
the holder for a minimum of six months to receive a new stock option at the current market price for the same number of shares delivered to exercise the option. The board or committee determines the terms, conditions, restrictions and limitations of



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the stock reload options. The exercise price of stock reload options shall be the fair market value as of the date of exercise of the underlying option.
Unless otherwise determined, a stock reload option may be exercised commencing one year after it is granted and expires on the expiration date of the underlying option.

Stock Appreciation Rights. Under the 2006 Plan, we may grant stock appreciation rights to participants who have been, or are being, granted stock options under the 2006 Plan as a means of allowing the
participants to exercise their stock options without the need to pay the exercise price in cash. In conjunction with non-qualified stock options, stock appreciation rights may be granted either at or after the time of the grant of the non-qualified
stock options. In conjunction with incentive stock options, stock appreciation rights may be granted only at the time of the grant of the incentive stock options. A stock appreciation right entitles the holder to receive a number of shares of common
stock having a fair market value equal to the excess fair market value of one share of common stock over the exercise price of the related stock option, multiplied by the number of shares subject to the stock appreciation rights. The granting of a
stock appreciation right will not affect the number of shares of common stock available for awards under the 2006 Plan. The number of shares available for awards under the 2006 Plan will, however, be reduced by the number of shares of common stock
acquirable upon exercise of the stock option to which the stock appreciation right relates.

Restricted Stock. Under the 2006 Plan,
we may award shares of restricted stock either alone or in addition to other awards granted under the 2006 Plan. The board or committee determines the persons to whom grants of restricted stock are made, the number of shares to be awarded, the price
if any to be paid for the restricted stock by the person receiving the stock from us, the time or times within which awards of restricted stock may be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other
terms and conditions of the restricted stock awards.

Restricted stock awarded under the 2006 Plan may not be sold, exchanged, assigned,
transferred, pledged, encumbered or otherwise disposed of, other than to us, during the applicable restriction period. In order to enforce these restrictions, the 2006 Plan requires that all shares of restricted stock awarded to the holder remain in
our physical custody until the restrictions have terminated and all vesting requirements with respect to the restricted stock have been fulfilled. Other than regular cash dividends and other cash equivalent distributions as we may designate, pay or
distribute, we will retain custody of all distributions made or declared with respect to the restricted stock during the restriction period. A breach of any restriction regarding the restricted stock will cause a forfeiture of the restricted stock
and any retained distributions. Except for the foregoing restrictions, the holder will, even during the restriction period, have all of the rights of a stockholder, including the right to receive and retain all regular cash dividends and other cash
equivalent distributions as we may designate, pay or distribute on the restricted stock and the right to vote the shares.

Deferred
Stock. Under the 2006 Plan, we may award shares of deferred stock either alone or in addition to other awards granted under the 2006 Plan. The board or committee determines



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the eligible persons to whom, and the time or times at which, deferred stock will be awarded, the number of shares of deferred stock to be awarded to any
person, the duration of the period during which, and the conditions under which, receipt of the stock will be deferred, and all the other terms and conditions of deferred stock awards.

Deferred stock awards granted under the 2006 Plan may not be sold, exchanged, assigned, transferred, pledged, encumbered or otherwise disposed of other
than to us during the applicable deferral period. The holder shall not have any rights of a stockholder until the expiration of the applicable deferral period and the issuance and delivery of the certificates representing the common stock. The
holder may request to defer the receipt of a deferred stock award for an additional specified period or until a specified event. This request must generally be made at least one year prior to the expiration of the deferral period for the deferred
stock award.

Other Stock-Based Awards. Under the 2006 Plan, we may grant other stock-based awards, subject to limitations under
applicable law, that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares of common stock, as deemed consistent with the purposes of the 2006 Plan. These other stock-based awards may
be in the form of purchase rights, shares of common stock awarded that are not subject to any restrictions or conditions, convertible or exchangeable debentures or other rights convertible into shares of common stock and awards valued by reference
to the value of securities of, or the performance of, one of our subsidiaries. These other stock-based awards may be awarded either alone, in addition to, or in tandem with any other awards under the 2006 Plan or any of our other plans.

Accelerated Vesting and Exercisability. Unless otherwise provided in the grant of an award, if any person, as defined in Sections
13(d) and 14(d) of the Exchange Act is or becomes the beneficial owner, as referred in Rule 13d-3 under the Exchange Act, directly or indirectly, of our securities representing 50% or more of the combined voting power of our then
outstanding voting securities in one or more transactions, and our board of directors does not authorize or approve the acquisition, then the vesting periods with respect to options and awards granted and outstanding under the 2006 Plan will be
accelerated and will immediately vest, and each participant of an option and award will have the immediate right to purchase and receive all shares of common stock subject to the option and award in accordance with the terms set forth in the 2006
Plan and in the corresponding award agreements.

Unless otherwise provided in the grant of an award, the compensation committee may, in the
event of an acquisition of substantially all of our assets or at least 50% of the combined voting power of our then outstanding securities in one or more transactions, including by way of merger or reorganization, which has been approved by our
board of directors, accelerate the vesting of any and all stock options and other awards granted and outstanding under the 2006 Plan. No acceleration may occur with respect to any award if such acceleration would cause the 2006 Plan or any award to
fail to comply with Code Section 409A.



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Repurchases. Unless otherwise provided in the grant of an award, the compensation committee may,
in the event of an acquisition of substantially all of our assets or at least 50% of the combined voting power of our then outstanding securities in one or more transactions, including by way of merger or reorganization, which has been approved by
our board of directors, require a holder of any award granted under the 2006 Plan to relinquish the award to us upon payment by us to the holder of cash in an amount equal to the fair market value of the award.

Award Limitation. No participant may be granted awards for more than 500,000 shares in any calendar year.

Competition; Solicitation of Customers and Employees; Disclosure of Confidential Information

If a holders employment with us or a subsidiary of ours is terminated for any reason whatsoever, and within 12 months after the date of
termination, the holder either:



| |  |  | accepts employment with any competitor of, or otherwise engages in competition with, us,
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | solicits any of our customers or employees to do business with or render services to the holder or any business with which the holder becomes affiliated or to which
the holder renders services, or
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | uses or discloses to anyone outside our company any of our confidential information or material in violation of our policies or any agreement between us and the
holder,
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our board or the committee may require the holder to return to us the economic value of any award that was
realized or obtained by the holder at any time during the period beginning on the date that is 12 months prior to the date the holders employment with us is terminated.

Term and Amendments

Unless
terminated by the board, the 2006 Plan shall continue to remain effective until no further awards may be granted and all awards granted under the 2006 Plan are no longer outstanding. Notwithstanding the foregoing, grants of incentive stock options
may be made only until ten years from the date of the consummation of the merger. Our board may at any time, and from time to time, amend the 2006 Plan, provided that no amendment will be made that would impair the rights of a holder under any
agreement entered into pursuant to the 2006 Plan without the holders consent.



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Outstanding Equity Awards at Fiscal Year-End for 2007

The following table includes certain information with respect to the unexercised options awarded to our named executive officers.



|                     |  |                                                                  |     |  |                         |  |                     
|-------------------- |  | ---------------------------------------------------------------- | --- |  | ----------------------- |  | --------------------
|                     |  | Option Awards                                                   
|Name                 |  | Number ofSecuritiesUnderlyingUnexercisedOptions(#)Exercisable(1) |     |  | OptionExercise Price($) |  | OptionExpirationDate
|Michael D. Traina    |  | 30,000                                                           |     |  | 6.10                    |  | 3/29/2010           
|Vahan Kololian       |  | 30,000                                                           |     |  | 6.10                    |  | 3/29/2010           
|Christopher Ferguson |  | 30,000                                                           |     |  | 6.10                    |  | 3/29/2010           
|Kurt A. Braun        |  | 140,000                                                          |     |  | 6.10                    |  | 3/29/2010           
|J. Todd Warner       |  |                                                                 | (2) |  | 6.10                    |  | 3/29/2010           



|(1) | Represents options granted under the 2006 Plan. All options were immediately exercisable upon grant on March 29, 2007.
|--- | ----------------------------------------------------------------------------------------------------------------------

|(2) | Mr. Warners option to purchase 50,000 shares expired as a result of his resignation in 2007.
|--- | ---------------------------------------------------------------------------------------------

Director Compensation for 2007

The following table sets forth certain information with respect to
the compensation of our non-employee directors during 2007. For information regarding the compensation of Messrs. Kololian and Traina, who served as our Chief Executive Officer prior to and after the merger, respectively, see the Summary
Compensation Table above.



|                  |  |                                |  |                     |  |          
|----------------- |  | ------------------------------ |  | ------------------- |  | ---------
|                  |  |                                | 
|Name              |  | Fees Earned orPaid in cash ($) |  | OptionAwards ($)(1) |  | Total ($)
|Brendan Calder    |  | 13,125                         |  | 41,430              |  | 54,555   
|Parker Drew       |  | 13,125                         |  | 41,430              |  | 54,555   
|Harry Glasspiegel |  | 13,125                         |  | 41,430              |  | 54,555   
|Michael Perrucci  |  | 13,125                         |  | 41,430              |  | 54,555   



|(1) | The amount reflected in this column is the compensation cost recognized by us during the fiscal year 2007 under SFAS 123(R) for grants made in the applicable fiscal year and prior
years, if any, and does not reflect cash compensation received by the director. A discussion of the assumptions used in calculating these values may be found in Note 14 to the consolidated financial statements in our Annual Report for the year ended
December 31, 2007, filed on April 15, 2008. In fiscal year 2007, we granted an option to each of Messrs. Calder, Drew, Glasspiegel and Perrucci to purchase 30,000 shares of our common stock, immediately exercisable, at an exercise price of $6.10.
These options expire on March 29, 2010.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Following the consummation of the merger, each of our directors has been compensated $15,000 per year,
payable quarterly, and, on March 29, 2007, received a grant of options to purchase 30,000 shares of our common stock. Due to the merger, the $15,000 annual director compensation in the table above was pro-rated for fiscal year 2007 to $13,125.
In connection with the merger, the following individuals resigned as a director effective February 12, 2007: Randy Benson, Roman Fedus, Jesse Gill and Lee Chung. None of the foregoing received any compensation for their service in 2007.



| | Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
| | -------- | -----------------------------------------------------------------------------------------------

Equity Compensation Plan Information

The following table sets forth information regarding the 2006
Plan as of December 31, 2007.



|                                                           |  |                                                                                             |  |                                                                             |      |                                                                                                                                            |          
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------- | ---- | ------------------------------------------------------------------------------------------------------------------------------------------ | ---------
|                                                           |  |                                                                                             | 
|Plan category                                              |  | Number of securities to beissued upon exercise ofoutstanding options,warrants and
rights(a) |  | Weighted-averageexercise price ofoutstanding options,warrants and rights(b) |      | Number of securities remainingavailable for future issuanceunder equity compensationplans (excluding
securitiesreflected in column (a))(c)
|Equity compensation plans approved by security holders     |  | 766,000                                                                                     |  | $                                                                           | 5.65 |                                                                                                                                            | 1,984,000
|Equity compensation plans not approved by security holders |  | 0                                                                                           |  |                                                                             | 0    |                                                                                                                                            | 0        
|Total                                                      |  | 766,000                                                                                     |  | $                                                                           | 5.68 |                                                                                                                                            | 1,984,000

Beneficial Ownership Information

The following table sets forth information regarding the beneficial ownership of our common stock as of March 24, 2008 by:



| |  |  | each of our named executive officers and directors;
| | - |  | ---------------------------------------------------



| |  |  | all our current executive officers and directors as a group; and
| | - |  | ----------------------------------------------------------------



| |  |  | each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock.
| | - |  | -------------------------------------------------------------------------------------------------------------

The information about the beneficial owners contained in the table below is based on information supplied by such persons or SEC filings. Beneficial
ownership of shares of common stock is determined in accordance with the rules of the SEC and includes voting or investment power with respect to common stock. Shares of common stock issuable upon the exercise of securities currently exercisable or
exercisable within 60 days of March 24, 2008 are deemed



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outstanding for computing the share ownership and percentage ownership of the person holding such securities, but are not deemed outstanding for computing
the percentage of any other person.

Except as otherwise indicated, to the knowledge of ClearPoint, the beneficial owners of common stock
listed below have sole investment and voting power with respect to such shares.

As of March 24, 2008, 13,208,916 shares of our common
stock were issued and outstanding.



|                                                                                                                                                                                           |  |                                          |      |  |                 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------- | ---- |  | --------------- | -
|Name and Address of Beneficial Owner(1)                                                                                                                                                    |  | Amount and Nature ofBeneficial Ownership |      |  | Percent ofClass |  
|Michael Traina                                                                                                                                                                             |  | 8,435,886                                | (2)  |  | 56.9            | %
|Vahan Kololian                                                                                                                                                                             |  | 8,435,886                                | (3)  |  | 56.9            | %
|Christopher Ferguson                                                                                                                                                                       |  | 8,435,886                                | (4)  |  | 56.9            | %
|Kurt Braun                                                                                                                                                                                 |  | 140,000                                  | (5)  |  | 1.0             | %
|Brendan Calder                                                                                                                                                                             |  | 145,500                                  | (6)  |  | 1.1             | %
|Parker Drew                                                                                                                                                                                |  | 90,516                                   | (7)  |  | *               |  
|Harry Glasspiegel                                                                                                                                                                          |  | 30,000                                   | (8)  |  | *               |  
|Michael Perrucci                                                                                                                                                                           |  | 40,000                                   | (9)  |  | *               |  
|J. Todd Warner                                                                                                                                                                             |  |                                         | (10) |  | *               |  
|All current directors and executive officers as a group (7 persons)                                                                                                                        |  | 8,881,902                                | (11) |  | 58.8            | %
|Jack Silver                                                                                                                                                                                |  | 1,524,240                                | (12) |  | 10.4            | %
|Sherleigh Associates Inc. Profit Sharing Plan Sherleigh Associates Inc. Defined Benefit Pension Plan                                                                                       |  |                                          |      |  |                 |  
|Corsair Capital Management, L.L.C.                                                                                                                                                         |  |                                          |      |  |                 |  
|Corsair Capital Partners, L.P. Corsair Long Short International, Ltd. Corsair Select, L.P. Corsair Capital Partners 100, L.P. Corsair Capital Investors, Ltd. Jay R. Petschek Steven Major |  | 883,006                                  | (13) |  | 6.5             | %
|Roynat Merchant Capital Inc.                                                                                                                                                               |  | 840,000                                  | (14) |  | 6.1             | %
|Perritt Capital Management, Inc.                                                                                                                                                           |  |                                          |      |  |                 |  
|Perritt MicroCap Opportunities Fund, Inc. Perritt Funds, Inc.                                                                                                                              |  | 703,570                                  | (15) |  | 5.3             | %
|Brian Taylor                                                                                                                                                                               |  |                                          |      |  |                 |  
|Pine River Capital Management L.P. Nisswa Master Fund Ltd.                                                                                                                                 |  | 672,106                                  | (16) |  | 5.1             | %



|* | Denotes less than 1%.
|- | ---------------------

|(1) | Unless otherwise noted, the business address of each of the following beneficial owners is c/o ClearPoint Business Resources, Inc., 1600 Manor Drive, Suite 110, Chalfont, PA 18914.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents: (i) 30,000 shares of common stock issuable upon exercise of an option; (ii) 3,260,573 shares of common stock held by Mr. Traina; and (iii) 5,145,313
shares beneficially owned by Messrs. Kololian and Ferguson, over which Mr. Traina has shared voting power pursuant to a voting agreement. Mr. Traina disclaims beneficial ownership of 5,145,313 shares of common stock over which he has no
dispositive power.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Represents: (i) 30,000 shares of common stock issuable upon exercise of an option; (ii) 1,184,000 shares of common stock held by TerraNova Partners L.P. and 20,000 shares
of common stock held by The Kololian Foundation (Mr. Kololian beneficially owns 100% of the limited partnership interest of TerraNova Partners L.P.; he also controls 100% of the voting interest in the general partner and 55% of the non-voting equity
interest in the general partner of TerraNova Partners L.P. Mr. Kololian is President and Director of The Kololian Foundation.); (iii) 1,500,000 shares of common stock issuable upon exercise of warrants held by TerraNova Partners, L.P.;
(iv) 50,000 shares of common stock issuable upon exercise of warrants held by Cartesian Investments Inc., of which Mr. Kololian beneficially owns 50% of the outstanding common stock; and (v) 5,651,886 shares beneficially owned by
Messrs. Ferguson and Traina, over which Mr. Kololian has shared voting power pursuant to a voting agreement. Mr. Kololian disclaims beneficial ownership of 5,651,886 shares of common stock over which he has no dispositive power.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Represents: (i) 2,361,313 shares of common stock held by Optos Capital, LLC, an entity controlled by Mr. Ferguson and (ii) 6,074,573 shares of common stock beneficially
owned by Messrs. Kololian and Traina, over which Mr. Ferguson has shared voting power pursuant to a voting agreement. Mr. Ferguson disclaims beneficial ownership of 6,074,573 shares of common stock over which he has no dispositive power.
Mr. Ferguson resigned as ClearPoints President, director and Secretary effective February 28, 2008. Excludes Mr. Fergusons option to purchase 30,000 shares of our common stock, which expired as a result of his resignation.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(5) | Represents 140,000 shares of common stock issuable upon exercise of an option.
|--- | ------------------------------------------------------------------------------

|(6) | Represents (i) 90,000 shares of common stock held by Mr. Calder; (ii) 8,500 shares of common stock held by the Calbren Trust, a trust established for the benefit of
Mr. Calder; (iii) 17,000 shares of common stock issuable upon exercise of warrants held by the Calbren Trust; and (iv) 30,000 shares of common stock issuable upon exercise of an option.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Represents 60,516 shares of common stock held by Mr. Drews spouse and 30,000 shares of common stock issuable upon exercise of an option.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

|(8) | Represents 30,000 shares of common stock issuable upon exercise of an option.
|--- | -----------------------------------------------------------------------------

|(9) | Represents 10,000 shares of common stock held by Mr. Perrucci and 30,000 shares of common stock issuable upon exercise of an option.
|--- | ------------------------------------------------------------------------------------------------------------------------------------

|(10) | Mr. Warner resigned as ClearPoints Chief Operating Officer effective August 13, 2007. Mr. Warners option to purchase 50,000 shares expired as a result of his
resignation.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | Includes 320,000 shares of common stock issuable upon exercise of options and 1,567,000 shares of common stock issuable upon exercise of warrants.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------

|(12) | Based on a Schedule 13G/A filed with the SEC on February 8, 2008 for Jack Silver, Sherleigh Associates Inc. Profit Sharing Plan and Sherleigh Associates Inc. Defined Benefit
Pension Plan a Form 4 filed with the SEC on February 7, 2008 for Jack Silver. Represents (i) 29,550 shares of common stock held by Sherleigh Associates Inc. Profit Sharing Plan, a trust of which Mr. Silver is the trustee;
(ii) 660,000 shares of common stock issuable upon exercise of warrants, held by Sherleigh Associates Inc. Profit Sharing Plan; and (iii) 834,690 shares of common stock issuable upon exercise of warrants held by Sherleigh Associates Inc.
Defined Benefit Pension Plan, a trust of which Mr. Silver is the trustee. The filings indicate that Jack Silver has sole voting and dispositive power over 1,524,240 shares of common stock. The address of the principal business office of Jack
Silver is SIAR Capital LLC, 660 Madison Avenue, New York, NY 10021.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(13) | Based solely on a Schedule 13G/A filed with the SEC on February 14, 2008 by Corsair Capital Partners, L.P. (referred to as Corsair Capital), Corsair Long Short
International, Ltd. (referred to as Corsair International), Corsair Select, L.P. (referred to as Corsair Select), Corsair Capital Partners 100, L.P. (referred to as Corsair 100), Corsair Capital Investors, Ltd.
(referred to as Corsair Investors), Corsair Capital Management, L.L.C. (referred to as Corsair Management), Jay R. Petschek and Steven Major. Represents (i) 308,141 shares of common stock and 223,530 shares of common
stock issuable upon exercise of warrants held by Corsair Capital, (ii) 11,041 shares of common stock and 13,539 shares of common stock issuable upon exercise of warrants held by Corsair International, (iii) 141,215 shares of common stock
and 101,123 shares of common stock issuable upon exercise of warrants held by Corsair Select, (iv) 14,909 shares of common stock and 10,655 shares of common stock issuable upon exercise of warrants held by Corsair 100, and (v) 33,156
shares of common stock and 25,697 shares of common stock issuable upon exercise of warrants held by Corsair Investors. Corsair Management, as the investment manager of each of Corsair Capital, Corsair International, Corsair 100 and Corsair
Investors, and each of Messrs. Petschek and Major, as the controlling persons of Corsair Management, may be deemed to beneficially own the above shares. The filing indicates that (a) each of Corsair Capital, Corsair Management,
Mr. Petschek and Mr. Major have shared voting and dispositive power over 531,671 shares of common stock held by Corsair Capital; (b) each of Corsair International, Corsair Management, Mr. Petschek and Mr. Major have shared
voting and dispositive power over 24,580 shares of common stock; (c) each of Corsair Select, Corsair Management, Mr. Petschek and Mr. Major have shared and dispositive power over 242,338 shares of common stock; (d) each of
Corsair 100, Corsair Management, Mr. Petschek and Mr. Major have shared and dispositive power over 25,564 shares of common stock; and (e) each of Corsair Investors, Corsair Management, Mr. Petschek and Mr. Major have shared
and dispositive power over 58,853 shares of common stock. The principal business address for each of Corsair Capital, Corsair Select, Corsair 100, Corsair Management, Mr. Petschek and Mr. Major is 350 Madison Avenue, 9th Floor, New York,
NY 10017. The principal business address for each of Corsair International and Corsair Investors is c/o M&C Corporate Services Limited, P.O. Box 309, Ugland House, 113 South Church Street, George Town, Grand Cayman, Cayman Islands, British West
Indies.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(14) | Based solely on a Schedule 13G/A filed with the SEC on February 21, 2007 by Roynat Merchant Capital Inc. Represents 340,000 shares of common stock and 500,000 shares of common
stock issuable upon the exercise of warrants. The filing indicates that Roynat Merchant Capital Inc. has sole voting and dispositive power over the securities. The principal business address of Roynat Merchant Capital Inc. is Bank of America
Corporate Ctr., 100 North Tryon St., Suite 3720, Charlotte, NC 28202.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(15) | Based solely on a Schedule 13G filed with the SEC on February 13, 2008 by Perritt Capital Management, Inc. (referred to as Capital), Perritt MicroCap Opportunities
Fund, Inc. (referred to as MicroCap) and Perritt Funds, Inc. (referred to as Funds). The filing indicates that: (i) Capital has sole voting and dispositive power over 17,275 shares of common stock and shared voting
dispositive power over 686,295 shares of common stock; (ii) MicroCap has shared voting and dispositive power over 502,295 shares of common stock and (iii) Funds has shared voting and dispositive power over 184,000 shares of common stock.
The filing states that Capital is an investment adviser and that MicroCap and Funds are investment companies. Capital is the investment adviser to MicroCap and to Funds. The principal business address of each of Capital, MicroCap and Funds is 300
South Wacker Drive, Suite 2880, Chicago, Illinois 60606.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(16) | Based solely on a Schedule 13G/A filed with the SEC on February 8, 2008 by Brian Taylor, Pine River Capital Management L.P. and Nisswa Master Fund
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------



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| | Ltd. The filing indicates that each of Brian Taylor, Pine River Capital Management L.P. and Nisswa Master Fund Ltd have shared voting and dispositive power
over 672,016 shares of common stock. Each of the reporting persons disclaim beneficial ownership in the common stock reported in the filing except to the extent of their pecuniary interest therein. The principal business address of each of Brian
Taylor, Pine River Capital Management L.P. and Nisswa Master Fund Ltd. is c/o Pine River Capital Management L.P., 601 Carlson Parkway, Suite 330, Minnetonka, MN 55305.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Item 13. | Certain Relationships and Related Transactions, and Director Independence.
| | -------- | --------------------------------------------------------------------------

Related Party Transactions

On March 1, 2005, we issued a 12% Amended and Restated Subordinated Note in the original
principal amount of $300,000 due 2008 and a 9% Amended and Restated Subordinated Note in the original principal amount of $250,000 due 2008 to Optos Capital, LLC, referred to as Optos Capital, a Pennsylvania limited liability company
which provided business consulting services and which is wholly-owned by Christopher Ferguson, the former President, Secretary and director of ClearPoint and ClearPoint Resources, Inc., our wholly owned subsidiary. Pursuant to a voting agreement,
Mr. Ferguson is an indirect beneficial owner, as a sole member of Optos Capital, of more than 50% of issued and outstanding shares of our common stock. On March 1, 2005, we issued a 12% Amended and Restated Subordinated Note, referred to as the
Fergco Note, in the original principal amount of $300,000 due 2008 to Fergco Bros Partnership, a New Jersey partnership of which Christopher Ferguson owns a twenty five percent (25%) ownership interest. On March 1, 2005, we issued a
12% Amended and Restated Subordinated Note in the original principal amount of $100,000 due 2008 to Alyson Drew, referred to as the Drew Note, the spouse of our director Parker Drew. On March 1, 2005, we issued a 12% Subordinated
Note in the original principal amount of $100,000 due 2008 to Richard Traina and Margaret Traina, the parents of Michael Traina, our Chairman of the board of directors, Chief Executive Officer and majority stockholder.

On July 20, 2007 we repaid the $300,000 note and $250,000 note due to Optos Capital. On September 18, 2007, we repaid the $100,000 note due to Richard
Traina and Margaret Traina.

On March 31, 2008, we amended the Fergco Note by issuing a Second Amended and Restated Note in the
original principal amount of $300,000 to Fergco Bros Partnership. The amended Fergco Note extended the maturity date from March 31, 2008 until March 31, 2009. In consideration of Fergco Bros Partnership agreeing to amend the Fergco Note,
we agreed to issue a Warrant to Fergco Bros Partnership giving it the right to purchase 45,000 shares of our common stock at an exercise price per share equal to $1.55, the closing price per share of our common stock on March 31, 2008. The
Warrant is immediately exercisable during the period commencing on March 31, 2008 and ending on March 31, 2010. If we extend the maturity date of the amended Fergco Note to March 31, 2010, which we have the right to do in our sole
discretion, then the Fergco Bros Partnership will have the right to receive the second Warrant to purchase an additional 45,000 shares of our common stock at an exercise price equal to the closing price of our common stock on March 31, 2009,
but in no event at an exercise price lower than $1.55.

On March 31, 2008, we amended the Drew Note by issuing a Second Amended and
Restated Note in the original principal amount of $100,000 to Alyson Drew. The amended Drew Note extended the maturity date from March 31, 2008 until March 31, 2009. In consideration of Alyson Drew agreeing to amend the Drew Note, we agreed to issue
a Warrant to Alyson Drew giving her the right to purchase 15,000 shares of our common stock at an exercise price per share equal to $1.55, the closing price per share of our common stock on March 31, 2008. The Warrant is immediately exercisable
during the period commencing on March 31, 2008 and ending on March 31, 2010. If we extend the maturity date of the amended Drew Note to March 31, 2010, which we have the right to do in our sole discretion, then the Alyson Drew will have the right to
receive the second Warrant to purchase an additional 15,000 shares of our common stock at an exercise price equal to the closing price of our common stock on March 31, 2009, but in no event at an exercise price lower than $1.55.

The proceeds of these notes issued to Optos Capital, Fergco Bros Partnership, Alyson Drew and Richard Traina and Margaret Traina were used to fund
acquisitions. Pursuant to the terms of these notes, ClearPoint has made interest only payments until the repayment of the notes, as applicable. During 2006, ClearPoint made interest payments of $105,750, $36,000 and $14,000 to Optos



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Capital, Fergco Bros Partnership, and Richard Traina and Margaret Traina, respectively. During 2007, ClearPoint made interest payments of $32,250, $45,000,
$15,000 and $14,000 to Optos Capital, Fergco Bros Partnership, Alyson Drew and Richard Traina and Margaret Traina, respectively.

ClearPoint entered into a verbal agreement with Optos Capital, pursuant to which Optos Capital received a monthly management fee of $5,000 in 2006. In connection with the consummation of the merger, this agreement was terminated.

ClearPoint Resources, Inc., a wholly owned subsidiary of ClearPoint, issued promissory notes, dated February 22, 2008, in the
aggregate principal amount of $800,000, to each of Michael Traina, our Chairman of the board of directors and Chief Executive Officer, and Christopher Ferguson, our former director, President and Secretary, in consideration for loans of $800,000
made to ClearPoint Resources, Inc. Pursuant to a voting agreement, each of Messrs. Traina and Ferguson is also a beneficial owner of more than 50% of issued and outstanding shares of our common stock. The terms of the promissory notes issued to
Messrs. Traina and Ferguson are identical. The principal amount of each promissory note is $400,000, it bears interest at the rate of 6% per annum, which will be paid quarterly, and it is due on February 22, 2009. The promissory notes are
subordinate and junior in right of payment to the prior payment of any and all amounts due to Manufacturers and Traders Trust Company, referred to as M&T, pursuant to the Credit Agreement, as amended, by and between us and M&T.
On February 28, 2008, ClearPoint Workforce, LLC, a wholly owned subsidiary of ClearPoint Resources, Inc., advanced $800,000, on behalf of Optos Capital, to the provider of its outsourced employee leasing program. The advanced funds were
utilized for Optos Capitals payroll. In consideration of making the advance on its behalf, Optos Capital assumed the foregoing promissory notes, and the underlying payment obligations.

On February 28, 2008, Christopher Ferguson, our former director, President and Secretary resigned effective February 28, 2008. In connection
with Mr. Fergusons resignation, we entered into a Separation of Employment Agreement and General Release, referred to as the separation agreement, with Mr. Ferguson. In consideration for Mr. Fergusons agreement
to be legally bound by the terms of the separation agreement and his release of his claims, if any, under the separation agreement, Mr. Ferguson is entitled to be reimbursed for any health insurance payments for Mr. Ferguson for a period
equal to 52 weeks.



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Pursuant to the separation agreement, on April 18, 2008, ClearPoint Resources, Inc., a wholly owned
subsidiary of ClearPoint, entered into a consulting agreement, referred to as the consulting agreement, with Mr. Ferguson pursuant to which he will be paid $25,000 per month for twelve (12) months. In return, Mr. Ferguson
shall (i) cooperate fully with any reasonable request of us to provide truthful information and/or materials to us, (ii) provide us with litigation support, (iii) assist us in matters relating to the performance of
Mr. Fergusons former duties with us and our subsidiary companies and affiliates, and (iv) work with us to effectively transition Mr. Fergusons former duties and responsibilities with us and our subsidiary companies and
affiliates. The consulting agreement terminates on March 1, 2009, unless terminated earlier as provided in the consulting agreement.

On August 13, 2007, we entered into a Franchise Agreement  Management Agreement, dated August 13, 2007, referred to as the TZG Franchise Agreement, with TZG Enterprises, LLC, referred to as TZG, a Delaware
limited liability company controlled by J. Todd Warner, a former executive officer of ClearPoint, pursuant to which we granted to TZG an exclusive right and license (i) to set up and operate our system and procedures for the operation of
transportation and light industrial temporary staffing services and (ii) to use in connection with the operation certain of our proprietary intellectual property. In consideration for the grant and license, TZG was required to pay us, on a weekly
basis, a royalty equal to six percent of all gross revenues earned by TZG from the operation. Through this relationship TZG operated and managed up to twenty-five of our former branches.

On February 28, 2008, ClearPoint Resources, Inc., our wholly owned subsidiary, and ClearPoint Workforce, LLC, our indirect wholly owned subsidiary,
entered into a licensing agreement, referred to as the Licensing Agreement, with Optos Capital.

Pursuant to the Licensing
Agreement, ClearPoint (i) granted to Optos Capital a non-exclusive license to use the ClearPoint Property and the Program, both as defined in the License Agreement, which includes certain intellectual property of ClearPoint Resources, Inc., and (ii)
licensed and subcontracted to Optos Capital the client list previously serviced by TZG, and all contracts and contract rights for the clients included on such list. In consideration of the licensing of the Program, which is part of the ClearPoint
Property, ClearPoint Resources, Inc., our wholly owned subsidiary, was entitled to receive a fee equal to 5.2% of total cash receipts of Optos Capital related to temporary staffing services. With ClearPoint Resources, Inc.s consent, Optos
Capital granted, as additional security under certain of its credit agreements, conditional assignment of Optos Capitals interest in the Licensing Agreement to its lender under such credit agreements.

In connection with the Licensing Agreement, on February 28, 2008, we entered into a termination agreement with TZG pursuant to which the TZG Franchise
Agreement was mutually terminated. We did not incur any early termination penalties in connection with such termination. On April 8, 2008, ClearPoint Resources, Inc., our wholly owned subsidiary, and Optos Capital mutually terminated the foregoing
Licensing Agreement, effective as of March 30, 2008, pursuant to a termination agreement dated April 8, 2008. Pursuant to the termination agreement, all rights, duties, obligations, liabilities and other provisions of the Licensing Agreement that
survive after termination continue in effect following termination. The parties agreed that in connection with the termination of the Licensing Agreement, ClearPoint Resources, Inc., our wholly owned subsidiary, will pay to Optos Capital a net
termination fee to cover Optos Capitals reasonable net costs incurred, if any, when winding up the temporary staffing operations of Optos Capital associated with terminating the Licensing Agreement, less any net profit earned by Optos Capital
as a licensee of ClearPoint Resources, Inc. prior to the termination agreement. Optos Capital will pay ClearPoint Resources, Inc. should such net amount be negative. The parties agreed to negotiate in good faith to determine a fair and reasonable
net termination fee in a timely manner.

On March 1, 2005, ClearPoint Resources, Inc., our wholly owned subsidiary, issued a Promissory
Note, referred to as the Blue Lake Note to Blue Lake Rancheria, referred to as Blue Lake, for $1,290,000 in principal amount guaranteed by Michael Traina, our Chairman of the board of directors and Chief Executive Officer,
and Christopher Ferguson, our former director, President and Secretary. The Note matured on March 31, 2008. On March 31, 2008, ClearPoint Resources, Inc. entered into an Agreement, dated as of March 31, 2008, with Blue Lake, referred to as the
Blue Lake Agreement. The Blue Lake Agreement set forth certain agreements between ClearPoint Resources, Inc. and Blue Lake with respect to the amendment and restatement of the Blue Lake Note. ClearPoint Resources, Inc. and Blue Lake
acknowledged that the Blue Lake Agreement constituted a legally binding obligation and commitment of the parties thereto which would be further documented in definitive, binding agreements to be completed no later than April 14, 2008.

Pursuant to the Blue Lake Agreement, on April 14, 2008, ClearPoint Resources, Inc. and Blue Lake amended and restated the Note, referred to as the
Amended Blue Lake Note, which states that the principal amount of $1,290,000 is due and payable as follows: (i) $200,000 was due and paid on April 8, 2008, (ii) $50,000 is payable on the first business day of each calendar month for 12
consecutive months (totaling $600,000 in the aggregate), the first payment to occur on May 1, 2008 and the last to occur on April 1, 2009, and (iii) on April 30, 2009, ClearPoint Resources, Inc. is obligated to pay to Blue Lake the balance of the
principal amount, equal to $490,000. All interest is due on April 30, 2009. The interest rate was increased from 6% to 10% per annum.

In
accordance with the Amended Blue Lake Note, if ClearPoint Resources, Inc. were to sell twenty-five percent (25%) or more of its assets, or, if ClearPoint Resources, Inc. were to consolidate or merge (excluding a merger for the purpose of changing
the state of incorporation or a merger of ClearPoint Resources, Inc. into a wholly owned subsidiary) and the holders of ClearPoint Resources, Inc.s voting stock outstanding immediately prior to such consolidation or merger did not in the
aggregate hold a majority of the voting stock of the surviving or resulting entity outstanding immediately following such consolidation or merger, then without any further notice or demand the Amended Blue Lake Note would be immediately due and
payable.

In addition, we agreed to have 900,000 shares, referred to as the Escrow Shares, of our common stock issued in the
name of Blue Lake, such Escrow Shares to be held in escrow, pursuant to an escrow agreement, dated as of April 14, 2008, referred to as the Escrow Agreement, as security for ClearPoint Resources, Inc.s due performance of all its
obligations under the Amended Blue Lake Note. If ClearPoint Resources, Inc. defaults under the Amended Blue Lake Note, then Blue Lake has the option under the Escrow Agreement of having the unpaid principal and interest paid with the Escrow Shares.
The number of Escrow Shares issuable is determined in accordance with the calculations set forth in the Escrow Agreement; however, Blue Lake is not entitled to receive more than 900,000 shares under the Escrow Agreement. As a result of the issuance
of the Escrow Shares, Blue Lake is now a holder of more than 5% of our outstanding common stock.

TerraNova Management, an affiliate of
Mr. Kololian, our lead director, and Mr. Chung, our Interim Vice President, Administration, was retained to provide certain advisory services to us, effective upon the closing of the merger with Terra Nova, pursuant to the Advisory
Services Agreement between TerraNova Management and us, dated February 12, 2007, referred to as the advisory agreement. Mr. Kololian controls 100% of the voting interest and 55% of the non-voting equity interest of TerraNova
Management. Mr. Chung owns 20% of the non-voting equity interest of TerraNova Management. Pursuant to the advisory agreement, TerraNova Management provided services to us including: advice and assistance to us in our analysis and consideration
of various financial and strategic alternatives, as well as assisting with transition services. During the fiscal year ended December 31, 2007, TerraNova Management received a fixed advisory fee of $175,000 (prorated for a partial year) for
such services. Pursuant to the terms of the advisory agreement, it was terminated effective February 11, 2008, however TerraNova Management continues to provide substantially similar services under substantially similar terms to us on a monthly
basis. As of the date of this Annual Report on Form 10-K/A, we have incurred approximately $50,000 in fees owing to TerraNova Management for such services in fiscal year ending 2008.

Prior to the merger, we incurred a fee from TerraNova Management of $7,500 per month for providing Terra Nova with office space and certain general and
administrative services, which, in 2006 amounted to $90,000, and in 2007 amounted to $11,250. In addition, in November 2004 and March 2005, TerraNova Partners advanced $70,000 and $20,000, respectively, to us for payment on Terra Novas behalf
of offering expenses. We repaid these loans in 2006 following our initial public offering from the net proceeds of the offering. Prior to the merger with Terra Nova, TerraNova Partners advanced an aggregate of $150,000 in unsecured and non-interest
bearing loans to us, which we repaid in February 2007 upon the consummation of the merger.



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Independence of Directors

As required under The Nasdaq Stock Market, referred to as Nasdaq, listing standards, a majority of the members of a listed companys board of directors must qualify as independent, as
affirmatively determined by the board of directors. Our board consults with the its counsel to ensure that the our boards determinations are consistent with relevant securities and other laws and regulations regarding the definition of
independent, including those set forth in pertinent listing standards of Nasdaq, as in effect from time to time.

Consistent
with these considerations, after review of all relevant transactions or relationships between each director, or any of his family members, and the Company, its senior management and its independent auditors, our board has affirmatively determined
that the following four directors are independent directors within the meaning of the applicable Nasdaq listing standards: Messrs. Drew, Calder, Glasspiegel and Perrucci. In making this determination, our board found that none of these directors had
a material or other disqualifying relationship with the Company.



| | Item 14. | Principal Accounting Fees and Services.
| | -------- | ---------------------------------------

Principal Accounting
Fees

The following table presents fees for professional audit and other services rendered by Lazar Levine & Felix LLP for
fiscal 2007 and 2006:



|                   |  |      |         |      |   |        
|------------------ |  | ---- | ------- | ---- | - | -------
|                   |  | 2007 |         | 2006
|Audit Fees         |  | $    | 517,376 |      | $ | 116,500
|Audit-Related Fees |  |      | 15,500  |      |   | 176,250
|Tax Fees           |  |      | 70,000  |      |   | 10,000 
|All Other Fees     |  |      |        |      |   |       
|                   |  |      |         |      |   |        
|Total              |  | $    | 602,876 |      | $ | 302,750
|                   |  |      |         |      |   |        

Audit fees.Audit fees include fees for the audit of our consolidated financials statements
for the years ended December 31, 2007 and 2006, reviews of our quarterly financial statements for the each of the quarters in the year ended December 31, 2007 and fees for SEC registration statements in connection with the merger, the acquisition of
Advantage Service Group and other transactions, consents and consultation on accounting standards or transactions.

Audit-related fees.Audit related fees for 2007 primarily relate to services rendered in connection with the issuance of agreed-upon procedures reports and comfort letters in connection with the merger. Audit related fees for 2006 consisted of fees for
acquisitions, reviews of the accounting for several agreements and other audit related fees.

Tax fees.Tax fees consist of tax
compliance and consultation services.



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Audit Committee Pre-Approval

Prior to the merger with Terra Nova, ClearPoint had no designated audit committee; the board of directors, however, pre-approved all audit services and permitted non-audit services provided by the independent
auditors, and the compensation, fees and terms for such services. Since its formation, the audit committee has determined not to adopt any blanket pre-approval policy but instead to require that the audit committee pre-approve the compensation and
terms of service for audit services provided by the independent auditors and any changes in terms and compensation resulting from changes in audit scope, company structure or other matters. The audit committee has also determined to require
pre-approval by the audit committee or its chairman of the compensation and terms of service for any permitted non-audit services provided by the independent auditors. Any proposed non-audit services exceeding any pre-approval fee levels require
further pre-approval by the audit committee or its chairman. The chief financial officer reports regularly to the audit committee on the services performed and fees charged by the independent auditors for audit and permitted non-audit services
during the prior quarter.



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PART IV



| | Item 15. | Exhibits and Financial Statement Schedules.
| | -------- | -------------------------------------------

(a) The following
documents are filed as a part of this Annual Report on Form 10-K/A:

3. Exhibits



|            |  |                                                                                                                                                                
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                    
|            | 
|23.1        |  | Consent of Lazar Levine & Felix LLP.                                                                                                                           
|            | 
|31.1        |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act).    
|            | 
|31.2        |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) promulgated under the Exchange Act.                                                        
|            | 
|32.1        |  | Certification of ClearPoints Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|            | 
|32.2        |  | Certification of ClearPoints Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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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.

Dated: April 29,
2008



CLEARPOINT BUSINESS RESOURCES, INC.By:

/s/ Michael D. TrainaName:

Michael D. TrainaTitle:

Chief Executive 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 and on the dates indicated.



|                                        |  |                                                                                            |  |               
|--------------------------------------- |  | ------------------------------------------------------------------------------------------ |  | --------------
|Signature                               |  | Capacity                                                                                   |  | Date          
|                                        |  |                                                                                           
|/s/ Michael D. Traina Michael D. Traina |  | Chief Executive Officer andChairman of the Board of Directors(principal executive officer) |  | April 29, 2008
|                                        |  |                                                                                           
|/s/ Kurt A. Braun Kurt
A. Braun         |  | Chief Financial Officer and Treasurer(principal financial and accounting officer)          |  | April 29, 2008
|                                        |  |                                                                                           
|/s/ Vahan Kololian Vahan
Kololian       |  | Lead Director                                                                              |  | April 29, 2008
|                                        |  |                                                                                           
|/s/ Brendan Calder Brendan Calder       |  | Director                                                                                   |  | April 29, 2008
|                                        |  |                                                                                           
|/s/ Michael Perucci Michael Perucci     |  | Director                                                                                   |  | April 29, 2008
|                                        |  |                                                                                           
|/s/ Parker Drew Parker
Drew             |  | Director                                                                                   |  | April 29, 2008
|                                        |  |                                                                                           
|/s/ Harry Glasspiegel Harry Glasspiegel |  | Director                                                                                   |  | April 29, 2008



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EXHIBIT INDEX



|            |  |                                                                                                                                                                
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                    
|            | 
|23.1        |  | Consent of Lazar Levine & Felix LLP.                                                                                                                           
|            | 
|31.1        |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act).    
|            | 
|31.2        |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) promulgated under the Exchange Act.                                                        
|            | 
|32.1        |  | Certification of ClearPoints Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|            | 
|32.2        |  | Certification of ClearPoints Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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