**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **WASHINGTON,
        D.C.** **20549**
  **FORM
        10-Q**
  ý
              QUARTERLY
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF 1934
  For
        the
        quarter ended September 30, 2007.
  **OR**
   ̈
              TRANSITION
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF
                  1934
  For
        the
        transition period from ____________ to ____________
  Commission
        File Number 1-8635
  **AMERICAN
        MEDICAL ALERT CORP.**
 (Exact
        Name of Registrant as Specified in its Charter)
  New
                  York
              11-2571221(State
                  or other jurisdiction of
              (I.R.S.
                  Employerincorporation
                  or organization)
              Identification
                  Number)
 
 3265
        Lawson Boulevard, Oceanside, New York 11572
 (Address
        of principal executive offices)
 (Zip
        Code)
  (516)
        536-5850
 (Registrant’s
        telephone number, including area code)
  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 whether registrant is a large accelerated filer, accelerated
        filer
        or non-accelerated filer. See definition of accelerated filer and large
        accelerated filer in Rule 12b-2 of the Exchange Act.
 
 Large
        accelerated filer o Accelerated
        filer o Non-accelerated
        filer  x
  Indicate
          by check mark whether the registrant is a shell company (as defined in
          Rule
          12b-2 on the Exchange Act)
 Yes 
          oNo  x
 Indicate
        the number of shares outstanding of each of the issuer’s classes of common
        stock, as of the latest practicable date: 9,383,611 shares of $.01 par value
        common stock as of November 12, 2007.
 
  AMERICAN
        MEDICAL ALERT CORP. AND SUBSIDIARIES
  INDEX
              PAGEPart
                  I Financial InformationReport
                  of Independent Registered Public Accounting Firm
              1Condensed
                  Consolidated Balance Sheets for September 30, 2007 and December
                  31,
                  2006
              2Condensed
                    Consolidated Statements of Income for theNine
                    Months Ended September 30, 2007 and 2006
              4Condensed
                  Consolidated Statements of Income for the Three Months Ended September
                  30,
                  2007 and 2006
              5Condensed
                  Consolidated Statements of Cash Flows for the Nine Months Ended
                  September
                  30, 2007 and 2006
              6Notes
                  to Condensed Consolidated Financial Statements
              8Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              18Quantitative
                  and Qualitative Disclosures About Market Risk
              38Controls
                  and Procedures
              38Part
                  II Other Information
              39
  
 Report
        of
        Independent Registered Public Accounting Firm
 
 Board
        of
        Directors and Shareholders
 American
        Medical Alert Corp. and Subsidiaries
 Oceanside,
        New York
 
 We
        have
        reviewed the accompanying condensed consolidated balance sheet of American
        Medical Alert Corp. and Subsidiaries (the “Company”) as of September 30, 2007
        and the related condensed consolidated statements of income for the nine-month
        and three-month periods ended September 30, 2007 and 2006 and cash flows
        for the
        nine-months ended September 30, 2007 and 2006. These interim financial
        statements are the responsibility of the Company's management.
 
 We
        conducted our reviews in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). A review of interim financial
        information consists principally of applying analytical procedures and making
        inquiries of persons responsible for financial and accounting matters. It
        is
        substantially less in scope than an audit conducted in accordance with the
        standards of the Public Company Accounting Oversight Board, the objective
        of
        which is the expression of an opinion regarding the financial statements
        taken
        as a whole. Accordingly, we do not express such an opinion.
 
 Based
        on
        our reviews, we are not aware of any material modifications that should be
        made
        to the condensed consolidated interim financial statements referred to above
        for
        them to be in conformity with accounting principles generally accepted in
        the
        United States of America.
 
 We
        have
        previously audited, in accordance with the standards of the Public Company
        Accounting Oversight Board (United States), the consolidated balance sheet
        of
        American Medical Alert Corp. and Subsidiaries as of December 31, 2006, and
        the
        related consolidated statements of income, shareholders’ equity and cash flows
        for the year then ended (not presented herein), and in our report dated March
        30, 2007 we expressed an unqualified opinion on those consolidated financial
        statements. In our opinion, the information set forth in the accompanying
        condensed consolidated balance sheet as of December 31, 2006 is fairly stated,
        in all material respects, in relation to the consolidated balance sheet from
        which it has been derived.
 
 
 
 /s/
        Margolin, Winer & Evens LLP
 
 Margolin,
        Winer & Evens LLP
 Garden
        City, New York
 
 November
        12, 2007
 1
 **PART
        I - FINANCIAL INFORMATION**
 **Item
        1.** **Financial
        Statements** **.**
  AMERICAN
        MEDICAL ALERT CORP. AND SUBSIDIARIES
 CONDENSED
        CONSOLIDATED BALANCE SHEETS
  ASSETS
 September
                  30, 2007 (Unaudited)
              
              Dec. 31,
                  2006CURRENT
                  ASSETSCash
              
              $
              1,308,936
              
              $
              856,248Accounts
                  receivable(net
                  of allowance for doubtful accounts of $589,000****and
                  $547,000)
              
              
              5,562,130
              
              
              4,920,950Note
                  receivable
              
              
              26,621
              
              
              25,642Inventory
              
              
              588,361
              
              
              313,851Prepaid
                  taxes
              
              
              333,191
              
              
              434,631Prepaid
                  expenses and other current assets
              
              
              1,326,349
              
              
              860,863Deferred
                  income taxes
              
              
              275,000
              
              
              239,000Total
                  Current Assets
              
              
              9,420,588
              
              
              7,651,185FIXED
                  ASSETS(Net
                  of accumulated depreciation and amortization)
              
              
              10,326,648
              
              
              9,307,912OTHER
                  ASSETSLong-term
                  portion of note receivable
              
              
              27,981
              
              
              48,071Intangible
                  assets(net
                  of accumulated amortization of $4,109,862 and $3,194,677)
              
              
              4,496,877
              
              
              5,115,961Goodwill
                  (net of accumulated amortization of $58,868)
              
              
              9,691,663
              
              
              9,532,961Other
                  assets
              
              
              1,249,094
              
              
              1,386,28615,465,615
              
              
              16,083,279TOTAL
                  ASSETS
              
              $
              35,212,851
              
              $
              33,042,376LIABILITIES
                  AND SHAREHOLDERS' EQUITYCURRENT
                  LIABILITIES:Current
                  portion of long-term debt
              
              $
              1,531,170
              
              $
              1,527,327Accounts
                  payable
              
              
              1,227,897
              
              
              805,002Accounts
                  payable - acquisitions
              
              
              456,936
              
              
              477,308Accrued
                  expenses
              
              
              1,983,196
              
              
              1,509,887Current
                  portion of capital lease obligations
              
              
              41,289
              
              
              39,183Deferred
                  revenue
              
              
              285,262
              
              
              104,515Total
                  Current Liabilities
              
              
              5,525,750
              
              
              4,463,222DEFERRED
                  INCOME TAX LIABILITY
              
              
              1,028,000
              
              
              992,000LONG-TERM
                  DEBT, Net of Current Portion
              
              
              4,878,105
              
              
              5,677,068LONG
                  -TERM Portion of Capital Lease Obligations
              
              
              43,205
              
              
              74,440CUSTOMER
                  DEPOSITS
              
              
              72,700
              
              
              69,200ACCRUED
                  RENTAL OBLIGATION
              
              
              430,356
              
              
              381,256OTHER
                  LIABILITIES
              
              
              40,000
              
              
              40,000TOTAL
                  LIABILITIES
              
              
              12,018,116
              
              
              11,697,186COMMITMENTS
                  AND CONTINGENT LIABILITIES
              
              
              -
              
              
              -
  2
 SHAREHOLDERS’
                  EQUITYPreferred
                  stock, $.01 par value - authorized, 1,000,000 shares; none issued
                  and
                  outstandingCommon
                  stock, $.01 par value - authorized, 20,000,000 shares; issued 9,363,486
                  shares in 2007 and 9,230,086 shares in 2006
              
              
              93,635
              
              
              92,302Additional
                  paid-in capital
              
              
              15,242,553
              
              
              14,591,238Retained
                  earnings
              
              
              7,964,579
              
              
              6,767,68223,300,767
              
              
              21,451,222Less
                  treasury stock, at cost (43,910 shares)
              
              
              (106,032
              )
              
              (106,032
              )Total
                  Shareholders’ Equity
              
              
              23,194,735
              
              
              21,345,190TOTAL
                  LIABILITIES AND SHAREHOLDERS’ EQUITY
              
              $
              35,212,851
              
              $
              33,042,376
 See
        accompanying notes to condensed financial statements.
 3
 AMERICAN
        MEDICAL ALERT CORP. AND SUBSIDIARIES
 CONDENSED
        CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
  Nine
                    Months Ended September 30,2007
                
                2006Revenues:Services
                
                $
                26,033,534
                
                $
                22,465,242Product
                    sales
                
                
                339,778
                
                
                265,94626,373,312
                
                
                22,731,188Costs
                    and Expenses (Income):Costs
                    related to services
                
                
                12,470,401
                
                
                11,081,509Costs
                    of products sold
                
                
                204,511
                
                
                140,528Selling,
                    general and administrative expenses
                
                
                12,084,243
                
                
                10,155,835Interest
                    expense
                
                
                375,605
                
                
                262,788Other
                    income
                
                
                (871,345
                )
                
                (393,436
                )Income
                    before Provision for Income Taxes
                
                
                2,109,897
                
                
                1,483,964Provision
                    for Income Taxes
                
                
                913,000
                
                
                680,000NET
                    INCOME
                
                $
                1,196,897
                
                $
                803,964Net
                    income per share:Basic
                
                $
                .13
                
                $
                .09Diluted
                
                $
                .12
                
                $
                .09Weighted
                    average number of common shares outstanding:Basic
                
                
                9,257,776
                
                
                8,896,133Diluted
                
                
                9,708,253
                
                
                9,351,160
 See
        accompanying notes to condensed financial statements.
 4
 AMERICAN
        MEDICAL ALERT CORP. AND SUBSIDIARIES
 CONDENSED
        CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
  Three
                    Months Ended September 30,2007
                
                2006Revenues:Services
                
                $
                8,632,460
                
                $
                7,647,105Product
                    sales
                
                
                139,210
                
                
                137,5558,771,670
                
                
                7,784,660Costs
                    and Expenses (Income):Costs
                    related to services
                
                
                4,191,350
                
                
                3,787,249Costs
                    of products sold
                
                
                83,512
                
                
                70,000Selling,
                    general and administrative expenses
                
                
                4,161,564
                
                
                3,465,089Interest
                    expense
                
                
                120,469
                
                
                87,040Other
                    income
                
                
                (525,154
                )
                
                (136,139
                )Income
                    before Provision for Income Taxes
                
                
                739,929
                
                
                511,421Provision
                    for Income Taxes
                
                
                317,000
                
                
                232,000NET
                    INCOME
                
                $
                422,929
                
                $
                279,421Net
                    income per share:Basic
                
                $
                .05
                
                $
                .03Diluted
                
                $
                .04
                
                $
                .03Weighted
                    average number of common shares outstanding:Basic
                
                
                9,307,412
                
                
                8,989,042Diluted
                
                
                9,854,059
                
                
                9,352,802
  See
        accompanying notes to condensed financial statements.
  5
 AMERICAN
        MEDICAL ALERT CORP. AND SUBSIDIARIES
 CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
  Nine
                    Months Ended September 302007
                
                2006Cash
                    Flows From Operating Activities:Net
                    income
                
                $
                1,196,897
                
                $
                803,964Adjustments
                    to reconcile net income to net cash provided by operating
                    activities:Depreciation
                    and amortization
                
                
                3,127,300
                
                
                2,524,473Settlement
                    agreement
                
                
                (425,000
                )
                
                -Stock
                    compensation charge
                
                
                266,608
                
                
                189,911Decrease
                    (increase) in:Accounts
                    receivable
                
                
                (641,180
                )
                
                (670,188
                )Inventory
                
                
                (274,510
                )
                
                4,113Prepaid
                    expenses and other current assets
                
                
                (210,905
                )
                
                (292,561
                )Increase
                    (decrease) in:Accounts
                    payable, accrued expenses and other
                
                
                1,037,524
                
                
                612,376Deferred
                    revenue
                
                
                180,747
                
                
                138,329Net
                    Cash Provided by Operating Activities
                
                
                4,257,481
                
                
                3,310,417Cash
                    Flows From Investing Activities:Expenditures
                    for fixed assets
                
                
                (3,223,272
                )
                
                (2,902,529
                )Repayment
                    of notes receivable
                
                
                19,111
                
                
                18,181Payment
                    of accounts payable - acquisitions
                
                
                (171,532
                )
                
                (310,872
                )Purchase
                    of MD OnCall
                
                
                -
                
                
                (2,879,692
                )Purchases
                    - other acquisitions
                
                
                (303,642
                )
                
                (89,152
                )Deposit
                    on equipment and software
                
                
                -
                
                
                (95,826
                )(Increase)
                    decrease in other assets
                
                
                312,751
                
                
                (264,679
                )Payment
                    for account acquisitions andlicensing
                    agreement
                
                
                -
                
                
                (31,595
                )Net
                    Cash (Used In) Investing Activities
                
                
                (3,366,584
                )
                
                (6,556,164
                )Cash
                    Flows From Financing Activities:Principal
                    payments under capital lease obligations
                
                
                (29,129
                )
                
                (43,708
                )Proceeds
                    from long-term debt
                
                
                350,000
                
                
                2,500,000Repayment
                    of long-term debt
                
                
                (1,145,120
                )
                
                (712,640
                )Proceeds
                    upon exercise of stock options and warrants
                
                
                386,040
                
                
                478,268Net
                    Cash Provided by (Used In) Financing Activities
                
                
                (438,209
                )
                
                2,221,920
  See
        accompanying notes to condensed financial statements.
 6
  AMERICAN
        MEDICAL ALERT CORP. AND SUBSIDIARIES
 CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
 (Unaudited)
  Nine
                    Months Ended September 30,2007
                
                2006Net
                    Increase (decrease) in Cash
                
                $
                452,688
                
                $
                (1,023,827
                )Cash,
                    Beginning of Period
                
                
                856,248
                
                
                2,638,984Cash,
                    End of Period
                
                $
                1,308,936
                
                $
                1,615,157SUPPLEMENTAL
                    DISCLOSURE OF CASH FLOW INFORMATION:CASH
                    PAID DURING THE PERIOD FOR INTEREST
                
                $
                367,500
                
                $
                245,274CASH
                    PAID DURING THE PERIOD FOR INCOME TAXES
                
                **$**
                719,136
                
                **$**
                1,243,900SUPPLEMENTAL
                    SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:Common
                    Stock issued in connection with acquisition
                
                **$**
                **-**
                
                $
                343,064Accounts
                    payable due seller in connection with acquisition
                
                
                151,160
                
                
                343,064
 
 See
        accompanying notes to condensed financial statements.
 
 7
 AMERICAN
        MEDICAL ALERT CORP. AND SUBSIDIARIES
 Notes
        to
        Condensed Consolidated Financial Statements
 (Unaudited)
   1.  General:
 
 These
          financial statements should be read in conjunction with the financial statements
          and notes thereto for the year ended December 31, 2006 included in the
          Company’s
          Annual Report on Form 10-K.
 
 2.  Results
          of Operations:
 
 The
          accompanying condensed consolidated financial statements include the accounts
          of
          American Medical Alert Corp. and its wholly-owned subsidiaries; (together
          the
“Company”). All material inter-company balances and transactions have been
          eliminated.
 
 In
          the
          opinion of management, the accompanying unaudited condensed financial statements
          contain all adjustments (consisting only of normal recurring accruals)
          necessary
          to present fairly the financial position as of September 30, 2007 and the
          results of operations for the nine and three months ended September 30,
          2007 and
          2006, and cash flows for the nine months ended September 30, 2007 and
          2006.
 
 Except
          as
          described in Note 3, the accounting policies used in preparing these financial
          statements are the same as those described in the December 31, 2006 financial
          statements.
 
 Certain
          amounts in the 2006 condensed consolidated financial statements have been
          reclassified to conform to the 2007 presentation.
 
 The
          results of operations for the nine and three months ended September 30,
          2007 are
          not necessarily indicative of the results to be expected for any other
          interim
          period or for the full year.
 
 3.  Recent
          Accounting Pronouncements:
 
 In
          July 2006, FASB Interpretation No. 48, “Accounting for Uncertainty in
          Income Taxes—an Interpretation of FASB Statement No. 109” (“FIN 48”) was
          issued, clarifying the accounting for uncertainty in tax positions. This
          FASB
          Interpretation requires recognition in the financial statements of the
          impact of
          a tax position, if that position is more likely than not of being sustained
          on
          audit, based on the technical merits of the position. The provisions of
          FIN 48
          are effective as of the beginning of the Company’s 2007 fiscal year, with the
          cumulative effect of the change in accounting principle recorded as an
          adjustment to opening retained earnings. The Company adopted FIN 48 as
          of
          January 2007 and the adoption of this FASB Interpretation did not have
          a
          material impact on the consolidated results of operations or financial
          position.
 
 8
 In
          September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which
          defines fair value, establishes guidelines for measuring fair value and
          expands
          disclosure regarding fair value measurements. SFAS No. 157 does not require
          new
          fair value measurements but rather eliminates inconsistencies in guidance
          found
          in various prior accounting pronouncements. SFAS No. 157 is effective for
          financial statements issued for fiscal years beginning after November 15,
          2007.
          The Company does not expect the adoption of SFAS No. 157 to have a material
          effect on its financial statements.
 
 In
          September 2006, the Securities and Exchange Commission issued Staff Accounting
          Bulletin (SAB) No. 108, “Financial Statements - Considering the Effects of Prior
          Year Misstatements when Quantifying Misstatements in Current Year Financial
          Statements.” SAB No. 108 provides interpretive guidance on how the effects of
          prior year uncorrected misstatements should be considered when quantifying
          misstatements in the current year financial statements. SAB No. 108 is
          effective
          for years ending after November 15, 2006. The adoption of the provisions
          of SAB
          No. 108 did not have a material impact on the financial position or results
          of
          operations.
 
 In
          February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
          Financial Assets and Financial Liabilities” ("SFAS 159"). SFAS 159 provides
          companies with an option to report selected financial assets and liabilities
          at
          fair value. SFAS 159 also establishes presentation and disclosure requirements
          designed to facilitate comparisons between companies that choose different
          measurement attributes for similar types of assets and liabilities and
          to
          provide additional information that will help investors and other financial
          statement users to more easily understand the effect of the company's choice
          to
          use fair value on its earnings. Finally, SFAS 159 requires entities to
          display
          the fair value of those assets and liabilities for which the company has
          chosen
          to use fair value on the face of the balance sheet. SFAS 159 is effective
          as of
          the beginning of an entity's first fiscal year beginning after November
          15,
          2007. Early adoption is permitted as of the beginning of the previous fiscal
          year provided that the entity makes that choice in the first 120 days of
          that
          fiscal year and also elects to apply the provisions of SFAS 157 (see above).
          The
          Company does not expect the adoption of SFAS 159 to have a material effect
          on
          the financial statements.
 
 4.  Accounting
          for Stock-Based Compensation:
 
 On
          January 1, 2006, the Company adopted FASB Statement No. 123 (revised
          2004), “Share-Based Payment” ** (“Statement
          No. 123(R)”), which requires the measurement and recognition of
          compensation expense for all share-based payments to employees, including
          grants
          of stock and employee stock options, based on estimated fair values. Statement
          No. 123(R) supersedes the Company’s previous accounting under APB
          No. 25 for periods beginning in 2006. The Company adopted Statement
          No. 123(R) using the modified prospective transition method. The
          Company’s consolidated financial statements for the year ended December 31,
          2006, reflects the impact of Statement No. 123(R).
 
 Stock-based
          compensation expense recognized during the period is based on the value
          of the
          portion of share-based payment awards that is ultimately expected to vest
          during
          the period. Stock-based compensation expense recognized in the Company's
          condensed consolidated statements for the nine and three months ended September
          30, 2007 and 2006 includes compensation expense for share-based payment
          awards
          granted prior to, but not yet vested as of December 31 2005, based on the
          grant date fair value estimated in accordance with the pro forma disclosure
          provisions of Statement No. 123 and compensation expense for the
          share-based payment awards granted subsequent to December 31, 2005 based on
          the grant date fair value estimated in accordance with the provisions of
          Statement No. 123(R).
 
 9
 No
          stock
          options were granted during the nine month period ended September 30, 2007
          and
          options to purchase 50,000 shares were granted for the nine month period
          ended
          September 30, 2006.
 
 The
          following tables summarize stock option activity for the nine months ended
          September 30, 2007 and 2006 .
 2007
  WeightedAverage
              
              AggregateWeighted
              
              Remaining
              
              IntrinsicNumber
                  of
              
              Average
              
              Contractual
              
              ValueOptions
              
              Option
                  Price
              
              Term
                  (years)Balance
                  at January 1
              
              
              1,052,818
              
              $
              4.02Granted
              
              
              -
              
              
              -Exercised
              
              
              (71,917
              )
              
              4.19Expired/Forfeited
              
              
              (10,400
              )
              
              3.92Balance
                  at September 30
              
              
              970,501
              
              $
              4.01
              
              
              4.39
              
              $
              4,878,788Vested
                  and exercisable
              
              
              970,501
              
              $
              4.01
              
              
              4.39
              
              $
              4,878,788
 
 
  2006
  WeightedAverage
              
              AggregateWeighted
              
              Remaining
              
              IntrinsicNumber
                  of
              
              Average
              
              Contractual
              
              ValueOptions
              
              Option
                  Price
              
              Term
                  (years)Balance
                  at January 1
              
              
              1,287,283
              
              $
              3.56Granted
              
              
              50,000
              
              
              5.14Exercised
              
              
              (199,358
              )
              
              1.87Expired/Forfeited
              
              
              (38,464
              )
              
              4.24Balance
                  at September 30
              
              
              1,099,461
              
              $
              3.92
              
              
              5.22
              
              $
              1,771,872Vested
                  and exercisable
              
              
              1,099,461
              
              $
              3.92
              
              
              5.22
              
              $
              1,771,872
 
 10
 The
        aggregate intrinsic value of options exercised during the nine months ended
        September 30, 2007 and 2006 was $267,479 and $782,580, respectively. At January
        1, 2006 there were 7,500 nonvested stock options outstanding. During the
        nine
        months ended September 30, 2006, 2,500 options vested and 5,000 options were
        forfeited. There are no nonvested stock options outstanding as of September
        30,
        2007 and 2006.
 
 During
        the nine months ended September 30, 2007 and 2006 there were 22,250 and 27,750
        warrants exercised, respectively, to purchase common shares of the
        Company.
 
 The
        following table summarizes stock-based compensation expense, which is included
        in selling, general and administrative expense, related to all share-based
        payments recognized in the condensed consolidated statements of
        income.
  Three
                  Months
                Ended
                  Sept 30,
              
              Three
                  Months
                Ended
                  Sept 30,2007
              
              2006Stock
                  options
              
              $
              -
              
              $
              45,261Stock
                  grants - other
              
              
              23,260
              
              
              -Service
                  based awards
              
              
              31,069
              
              
              20,000Performance
                  based awards
              
              
              35,468
              
              
              39,650Tax
                  benefit
              
              
              (38,500
              )
              
              (48,260
              )Stock-based
                  compensation expense, net of tax
              
              $
              51,297
              
              $
              56,651
 
  Nine
                  Months
                Ended
                  Sept 30,
              
              Nine
                  Months
                Ended
                  Sept 30,2007
              
              2006Stock
                  options
              
              $
              -
              
              $
              48,911Stock
                  grants - other
              
              
              66,771
              
              
              -Service
                  based awards
              
              
              93,206
              
              
              60,000Performance
                  based awards
              
              
              106,631
              
              
              81,000Tax
                  benefit
              
              
              (114,700
              )
              
              (87,360
              )Stock-based
                  compensation expense, net of tax
              
              $
              151,908
              
              $
              102,551
 
 Stock
        Grants - Other
 
 The
        outside Board of Directors are granted shares of common stock at the end
        of each
        quarter as compensation for services provided as members of the Board of
        Directors and other committees. These share grants vest
        immediately.
 
 11
 Service
        Based Awards
 
 In
        January 2006 and May 2007, the Company granted 60,000 and 22,000 restricted
        shares, respectively, to certain executives at no cost. These shares vest
        ratably over periods ranging from 3 to 5 years, on December 31 of each year.
        As
        of September 30, 2007 there were 12,500 shares vested. As of September 30,
        2006
        no shares were vested. Fair value for restricted stock awards is based on
        the
        Company's closing common stock price on the date of grant. The aggregate
        grant
        date fair value of restricted stock was $537,100. As of September 30, 2007
        and
        2006, the Company had $363,896 and $300,000, respectively, of total unrecognized
        compensation costs related to unvested restricted stock expected to be
        recognized over a weighted average period of 3.02 years.
 
 Performance
        Based Awards
 
 In
        January 2006 and May 2007, respectively, the Company granted share awards
        for
        90,000 shares (up to 18,000 shares per year through December 31, 2010) and
        46,000 shares (up to 11,500 shares per year through December 31, 2010) to
        certain executives. Vesting of such shares is contingent upon the Company
        achieving certain specified consolidated gross revenue and Earnings before
        Interest and Taxes (“EBIT”) objectives in each of the next four fiscal years
        ending December 31. The fair value of the performance shares is based on
        the
        closing trading value of the Company’s stock on the date of grant and assumes
        that performance goals will be achieved. The fair value of the shares is
        expensed over the performance period for those shares that are expected to
        ultimately vest. If such objectives are not met, no compensation cost is
        recognized and any recognized compensation cost is reversed. As of September
        30,
        2007, 18,000 shares were vested. As of September 30, 2006, no shares were
        vested. As of September 30, 2007 and 2006, there was $599,069 and $459,000,
        respectively, of total unrecognized compensation cost related to unvested
        share
        awards, which cost is expected to be recognized over a period of 3.25 years.
 
 5.  Earnings
        Per Share:
  Earnings
        per share data for the nine and three months ended September 30, 2007 and
        2006
        is presented in conformity with SFAS No. 128, “Earnings Per Share.”
 
 The
        following table is a reconciliation of the numerators and denominators in
        computing earnings per share:
  12
 Income
                  
                  Shares
                  
                  Per-ShareNine
                      Months Ended September 30, 2007
                  
                  (Numerator)
                  
                  (Denominator)
                  
                  AmountsBasic
                      EPS - Income available to common stockholders
                  
                  $
                  1,196,897
                  
                  
                  9,257,776
                  
                  $
                  0.13Effect
                      of dilutive securities - Options and warrants
                  
                  
                  -
                  
                  
                  450,477Diluted
                      EPS - Income available to common stockholders and assumed
                      conversions
                  
                  $
                  1,196,897
                  
                  
                  9,708,253
                  
                  $
                  0.12Three
                      Months Ended September 30, 2007Basic
                      EPS -Income available to common stockholders
                  
                  $
                  422,929
                  
                  
                  9,307,412
                  
                  $
                  0.05Effect
                      of dilutive securities - Options and warrants
                  
                  
                  -
                  
                  
                  546,647Diluted
                      EPS - Income available to common stockholders and assumed conversions
                  
                  $
                  422,929
                  
                  
                  9,854,059
                  
                  $
                  0.04Nine
                      Months Ended September 30, 2006Basic
                      EPS - Income available to common stockholders
                  
                  $
                  803,964
                  
                  
                  8,896,133
                  
                  $
                  0.09Effect
                      of dilutive securities - Options and warrants
                  
                  
                  -
                  
                  
                  455,027Diluted
                      EPS - Income available to common stockholders and assumed conversions
                  
                  $
                  803,964
                  
                  
                  9,351,160
                  
                  $
                  0.09Three
                      Months Ended September 30, 2006Basic
                      EPS - Income available to common stockholders
                  
                  $
                  279,421
                  
                  
                  8,989,042
                  
                  $
                  0.03Effect
                      of dilutive securities - Options and warrants
                  
                  
                  -
                  
                  
                  363,760Diluted
                      EPS - Income available to common stockholders and assumed conversions
                  
                  $
                  279,421
                  
                  
                  9,352,802
                  
                  $
                  0.03
 6.  Acquisitions:
 
 On
        December 21, 2006, the Company acquired substantially all of the assets
        of American
        Mediconnect, Inc. and PhoneScreen, Inc., Illinois based companies under common
        ownership (collectively “AMI”) .
        American Mediconnect, Inc. is a provider of telephone after-hour answering
        services primarily focused on hospitals, physicians and other health care
        providers. PhoneScreen, Inc. is a provider of call center and compliance
        monitoring services to hospitals, pharmaceutical companies and clinical resource
        organizations. The purchase price was $2,028,830 and consisted of an initial
        cash payment of $1,493,730, common stock valued at $229,324 and a future
        cash
        payment of $305,776, which is due in December 2007. In addition, for the
        three
        years following the acquisition, the Company is required to pay Seller an
        amount
        equal to twenty-five (25%) percent of the cash receipts collected by the
        Company, excluding sales taxes, from the PhoneScreen business. For the nine
        months ended September 30, 2007, the Company recorded $151,160 due to Seller
        based on PhoneScreen cash receipts. The Company also incurred professional
        fees
        of approximately $65,000. A potential exists for the payment of additional
        purchase price consideration if certain thresholds concerning revenue and
        earnings of the acquired business are met as of December 31, 2007, 2008 and
        2009. The results of operations of AMI are included in the Telephone Based
        Communications Services (“TBCS”) segment as of the date of
        acquisition.
  13
 The
        following table summarizes the fair values of the assets acquired as of
        September 30, 2007.
 
 Fixed
                  assets
              
              $
              175,000Non-compete
                  agreement
              
              
              50,000Customer
                  list
              
              
              700,000Goodwill
              
              
              1,318,938Cost
                  to acquire AMI
              
              $
              2,243,938
 
 On
        March
        10, 2006, the Company acquired substantially all of the assets of MD
        OnCall, a Rhode Island based company and Capitol Medical
        Bureau, **** a
        Maryland based company (collectively “MD OnCall”) ,
        providers of telephone after-hour answering services and stand-alone voice
        mail
        services. The purchase price was $3,382,443 and consisted of an initial cash
        payment of $2,696,315, common stock valued at $343,064 and future cash payments
        of $343,064, which were paid in full as of March 2007. The Company
        also incurred finder and professional fees of approximately $181,000. A
        potential exists for the payment of additional purchase price consideration
        if
        certain thresholds concerning revenue and earnings of the acquired business
        are
        met as of March 31, 2007, 2008 and 2009. The first threshold as of March
        31,
        2007 was not met. The results of operations of MD OnCall are included in
        the
        TBCS segment as of the date of acquisition.
 
 The
        following table summarizes the fair values of the assets acquired and
        liabilities assumed at the date of acquisition.
 
 Accounts
                  receivable
              
              $
              138,798Fixed
                  assets
              
              
              260,000Non-compete
                  agreement
              
              
              50,000Customer
                  list
              
              
              1,050,000Goodwill
              
              
              2,255,804Capital
                  lease obligations
              
              
              (142,625
              )Customer
                  deposits
              
              
              (48,200
              )Cost
                  to acquire MD OnCall
              
              $
              3,563,777
 
 14
 In
        the
        case of each of the acquisitions, the Company received a third party valuation
        from Chartered Capital Advisors, Inc. of certain intangible assets in
        determining the allocation of purchase price.
 
 The
        purchase price of each acquisition exceeded the fair value of the identifiable
        net assets acquired inasmuch as these acquisitions were consummated to enable
        the Company to expand its presence in the telephone answering service business
        into new regions. Furthermore, the acquisitions were done for the businesses
        future cash flows and net earnings as opposed to solely for the identifiable
        tangible and intangible assets.
 
 The
        results of operations for MD OnCall and American Mediconnect, Inc. are included
        in the condensed consolidated statements of income for the nine and three
        months
        ended September 30, 2007. Unaudited pro forma results of operations for the
        nine
        and three months ended September 30, 2006 as if MD OnCall and American
        Mediconnect, Inc. had been acquired as of the beginning of the earliest period
        presented are as follows. The pro forma results for the nine and three months
        ended September 30, 2006 include estimates which management believes are
        reasonable.
 
 Nine
                  Months Ended September 30,
              
              Three
                  Months Ended September 30,2007
              
              2006
              
              2007
              
              2006Actual
              
              Proforma
              
              Actual
              
              ProformaRevenue
              
              $
              26,373,000
              
              $
              25,408,000
              
              $
              8,772,000
              
              $
              8,503,000Net
                  income
              
              
              1,197,000
              
              
              806,000
              
              
              423,000
              
              
              288,000Net
                  income per shareBasic
              
              $
              .13
              
              $
              .09
              
              $
              .05
              
              $
              .03Diluted
              
              $
              .12
              
              $
              .09
              
              $
              .04
              
              $
              .03
  The
        unaudited pro forma results of operations for the nine and three months ended
        September 30, 2006 do not purport to represent what the Company’s results of
        operations would actually have been had the acquisition been effected for
        the
        period presented, or to predict the Company’s results of operations for any
        future period.
 
 7.  Long-term
        Debt:
 
 As
        of
        January 1, 2006 the Company had a credit facility arrangement for $4,500,000
        which included a revolving credit line which permitted borrowings of $1,500,000
        (based on eligible receivables as defined) and a $3,000,000 term loan payable
        in
        equal monthly principal installments of $50,000 over five years commencing
        January 2006.
  In
        March
        2006 and December 2006, the Company’s credit facility was amended whereby the
        Company obtained an additional $2,500,000 and $1,600,000 of term loans, the
        proceeds of which were utilized to finance the acquisitions of MD OnCall
        and
        American Mediconnect, Inc. These term loans are payable over five years in
        equal
        monthly principal installments of $41,666.67 and $26,666.67, respectively.
        Additionally, certain of the covenants were amended.
  15
 In
        December 2006, the credit facility was amended to reduce the interest rates
        charged by the bank such that borrowings under the term loan will bear interest
        at either (a) LIBOR plus 2.00% or (b) the prime rate or the federal funds
        effective rate plus .5%, whichever is greater, and the revolving credit line
        will bear interest at either (a) LIBOR plus 1.75% or (b) the prime rate or
        the
        federal funds effective rate plus .5%, whichever is greater.  The LIBOR
        interest rate charge shall be adjusted in .25% intervals based on the Company’s
        ratio of Consolidated Funded Debt to Consolidated EBITDA. In the third quarter
        of 2007, the interest rate was reduced by .25% based on this ratio. The Company
        has the option to choose between the two interest rate options under the
        amended
        term loan and revolving credit line. Borrowings under the credit facility
        are
        collateralized by substantially all of the assets of the Company.
  On
        April
        30, 2007, the Company amended its credit facility whereby the term of the
        revolving credit line was extended through June 2010 and the amount of credit
        available under the revolving credit line was increased to
        $2,500,000.
 
 As
        of
        September 30, 2007 the Company was not in compliance with one of its financial
        covenants in its loan agreement. The lender waived the non-compliance as
        of such
        date and entered into an amendment to the credit facility. As of June 30,
        2007
        and March 31, 2007, the Company was in compliance with its financial covenants
        in its loan agreement.
 
 8.  Other
        Income:
 
 In
        August
        2007 the Company entered into a settlement agreement whereby a third party
        has
        agreed to reimburse the Company a net amount of $425,000 for matters related
        to
        certain product and warranty disputes . This
        reimbursement is associated with costs that have primarily been incurred
        in
        previous years relating to engineering, payroll and related costs and
        depreciation pertaining to the affected assets. The Company anticipates
        receiving this reimbursement over approximately two years. As a result of
        this
        agreement, the Company has recorded an amount of $425,000 to Other
        Income.  During
        the third quarter 2007, the Company has recorded a write-down on the assets
        affected of approximately $111,000 which is reflected in the Cost of
        Services.
 
 9.  Major
        Customers:
  Since
        1983, the Company has provided Personal Emergency Response Systems (“PERS”)
        services to the City of New York’s Human Resources Administration Home Care
        Service Program ("HCSP"). The Company has been operating since 1993 with
        a
        contract, and related extensions, to provide HCSP with these
        services.
  In
        September 2006, Human Resource Administration (“HRA”) issued a bid proposal
        relating to the providing of the PERS services which are the subject of the
        Company’s contract. In October 2007, the Company was informed they were awarded
        the contract with respect to this proposal and executed such contract. The
        contract term is two years, commencing September 21, 2007, with two options
        to
        renew in favor of HRA for two additional two year terms. Under the terms
        of the
        agreement, a downward rate adjustment was made in conjunction with reduced
        equipment requirements from previous years. The impact of this reduced rate
        is
        estimated to reduce this contract’s contribution to gross revenues by
        approximately $270,000 and its contribution to net income by approximately
        $130,000 on an annual basis. During the nine months ended September 30, 2007
        and
        2006, the Company’s revenue from this contract represented 7 % and
        9%,  respectively,
        of its total revenue.
  16
 The
        Company was notified that one of the bidders has filed an Article 78 proceeding
        seeking a reversal of HRA's determination that AMAC was the lowest qualified
        bidder. HRA and AMAC are defending the proceeding. AMAC management believes
        the
        claim to be without merit.
  As
        of
        September 30, 2007 and December 31, 2006, accounts receivable from the contract
        represented 9% of accounts receivable and medical devices in service under
        the
        contract represented approximately 13% and 14%, respectively, of the total
        medical devices.
  10.  Segment
        Reporting:
 
 Effective
        January 1, 2007, the Company has two reportable segments, (i) Health and
        Safety
        Monitoring Systems (“HSMS”) and (ii) Telephone Based Communication Services
        (“TBCS”). Prior to January 1, 2007, the Company reported three reportable
        segments; HSMS, TBCS and Safe Com. Since the business activities of Safe
        Com
        fall within line of the Health and Safety monitoring, the Company included
        the
        activities of its Safe Com segment in its HSMS segment.
  The
        table
        below provides a reconciliation of segment information to total consolidated
        information for the nine and three months ended September 30, 2007 and
        2006:
  2007
 
 HSMS
              
              TBCS
              
              ConsolidatedNine
                  Months Ended September 30, 2007Revenue
              
              $
              12,848,791
              
              $
              13,524,521
              
              $
              26,373,312Income
                  before provision for income taxes (*)
              
              
              1,075,188
              
              
              1,034,052
              
              
              2,109,897Total
                  assets
              
              
              16,393,630
              
              
              18,819,221
              
              
              35,212,851
  HSMS
              
              TBCS
              
              ConsolidatedThree
                  Months Ended September 30, 2007Revenue
              
              $
              4,339,999
              
              $
              4,431,671
              
              $
              8,771,670Income
                  before provision for income taxes (*)
              
              
              537,004
              
              
              202,925
              
              
              739,929
 
 2006
 
 HSMS
              
              TBCS
              
              ConsolidatedNine
                Months Ended September 30, 2006Revenue
              
              $
              11,969,805
              
              $
              10,761,383
              
              $
              22,731,188Income
                  before provision for income taxes
              
              
              734,312
              
              
              749,652
              
              
              1,483,964Total
                  assets
              
              
              13,989,190
              
              
              17,189,726
              
              
              31,178,916
 
 HSMS
              
              TBCS
              
              ConsolidatedThree
                  Months Ended September 30, 2006Revenue
              
              $
              3,990,188
              
              $
              3,794,472
              
              $
              7,784,660Income
                  before provision for income taxes
              
              
              321,943
              
              
              189,478
              
              
              511,421
 
 *
        -
        Amount in HSMS segment includes approximately $314,000 from a settlement
        agreement described in Note 8 above.
 
 17
 11.  Commitments
        and Contingencies:
 
 The
        Company is aware of various threatened or pending litigation claims against
        the
        Company relating to its products and services and other claims arising in
        the
        ordinary course of its business. The Company has given its insurance carrier
        notice of such claims and it believes there is sufficient insurance coverage
        to
        cover any such claims. Currently, there are no litigation claims for which
        an
        estimate of loss, if any, can be reasonably made as they are in the preliminary
        stages and therefore, no liability or corresponding insurance receivable
        has
        been recorded.  In any event, the Company believes the disposition of these
        matters will not have a material adverse effect on the results of operations
        and
        financial condition of the Company.
 
 **Item
        2.** **Management’s
        Discussion and Analysis of Financial Condition and Results of
        Operations** .
  The
        following discussion and analysis provides information which management believes
        is relevant to an assessment and understanding of the Company’s results of
        operations and financial condition. This discussion and analysis should be
        read
        in conjunction with the consolidated financial statements contained in the
        latest Annual Report on Form 10-K dated December 31, 2006.
  *Statements
        contained in this Quarterly Report on Form 10-Q include “forward-looking
        statements” within the meaning of Section 27A of the Securities Act and Section
        21E of the Exchange Act, including, in particular and without limitation,
        statements contained herein under the heading “Management’s Discussion and
        Analysis of Financial Condition and Results of Operations.” Forward-looking
        statements involve known and unknown risks, uncertainties and other factors
        which could cause the Company’s actual results, performance and achievements,
        whether expressed or implied by such forward-looking statements, not to occur
        or
        be realized. These include uncertainties relating to government regulation,
        technological changes, our expansion plans, our contract with the City of
        New
        York and product liability risks. Such forward-looking statements generally
        are
        based upon the Company’s best estimates of future results, performance or
        achievement, based upon current conditions and the most recent results of
        operations. Forward-looking statements may be identified by the use of
        forward-looking terminology such as “may,” “will,” “expect,” “believe,”
“estimate,” “project,” “anticipate,” “continue” or similar terms, variations of
        those terms or the negative of those terms.*
  18
 *You
        should carefully consider such risks, uncertainties and other information,
        disclosures and discussions which contain cautionary statements identifying
        important factors that could cause actual results to differ materially from
        those provided in the forward-looking statements. Readers should carefully
        review the risk factors and any other cautionary statements contained in
        the
        Company’s Annual Report on Form 10-K and other public filings. The Company
        undertakes no obligation to publicly update or revise any forward-looking
        statements, whether as a result of new information, future events or
        otherwise.*
  **Overview:**
 
 The
        Company’s primary business is the provision of healthcare communication services
        through (1) the development, marketing and monitoring of health and safety
        monitoring systems ( “ HSMS **”** )
        that
        include personal emergency response systems, telehealth/disease management
        monitoring systems, medication management systems and pharmacy security
        monitoring systems; and (2) telephony based communication services and solutions
        primarily for the healthcare community (“TBCS”). The Company’s products and
        services are primarily marketed to the healthcare community, including home
        care, durable medical equipment, medical facility, hospice, pharmacy, managed
        care and other healthcare oriented organizations. The Company also offers
        certain products and services directly to consumers. Until 2000, the Company’s
        principal business was the marketing of personal emergency response systems
        ( “ PERS ” ),
        a
        device that allows a patient to signal an emergency response center for help
        in
        the event of a debilitating illness or accident. The Company provides PERS
        nationwide to private pay customers, Medicaid programs and healthcare related
        entities. In 2003, the Company initiated a relationship with a large, managed
        care organization operating on the west coast of the US that recognized the
        value associated with provisioning PERS to its senior population and contracted
        AMAC to roll out its PERS product to its subscribers. Today, the number of
        PERS
        units in service under that program has more than doubled and continues to
        expand throughout the west coast of the US. In February of 2007, the Company
        announced it had entered into an exclusive relationship with Walgreen Co.
        to
        provide the Company’s flagship personal emergency response systems under the
        Walgreens brand. Walgreens Ready ResponseTM Medical Alert system is currently
        being offered at Walgreens stores in the United States and Puerto Rico. The
        Company believes the Walgreen relationship will provide a significant
        opportunity to increase its PERS market share through Walgreens direct to
        consumer distribution channel.
 
 In
        2001,
        the Company entered the emerging telehealth market, a market in its embryonic
        stage, recognizing the opportunity to provide new monitoring technologies
        to
        assist healthcare professionals in home-based, health management activities.
        The
        Company has made a significant investment in its initial endeavors in the
        disease management monitoring market. This market focuses on various
        technologies to permit chronic disease management through remote patient
        monitoring. During the last several years, the Company has learned how this
        market functions and has explored a variety of methods of making a meaningful
        entry into this market. The Company has experienced technological difficulties
        with certain products provided by its primary vendor, Health Hero Networks,
        Inc.
        ("HHN").  The Company commenced arbitration in April 2007 against HHN in
        connection with these difficulties.  In the third quarter of 2007, the
        arbitration was settled and has been withdrawn.  AMAC has since begun
        working constructively with HHN, which has recently appointed a new chief
        executive officer.  AMAC is optimistic that, with this change in management
        at HHN, and HHN having committed to a plan to correct certain technical issues
        in its products, the Company's relationship with HHN will progress on a more
        positive note going forward. The Company continues to focus efforts on other
        alternatives to exploit this promising market. The Company believes that
        it is
        uniquely positioned to be successful in this market.
 
 19
 Beginning
        in 2000, the Company began a program of product diversification and customer
        base **** expansion
        to decrease its reliance on a single product line by marketing complementary
        call center and monitoring services to the healthcare community.
  The
        Company diversified its products/service mix to include telephony based
        communication services ( “ TBCS ” )
        for
        professionals in the healthcare community. The rationale to enter this segment
        had several components. These include targeting existing customer relationships,
        leveraging existing infrastructure capability, and establishing an additional
        significant revenue source. T he
        Company’s entry into the TBCS market was
        accomplished initially **** through
        acquisition and later
        through internally generated sales growth coupled
        with acquisitions .
  The
        Company has since further expanded its communication infrastructure and capacity
        and now operates a total of eight communication centers in Long Island City
        and
        Port Jefferson, New York, New Jersey, Maryland, Connecticut, Massachusetts,
        Rhode Island and Illinois. The TBCS segment now accounts for 51% of the
        Company’s revenues for the nine months ended September 30, 2007.
 
 In
        December 2006 the Company acquired PhoneScreen, Inc (“PhoneScreen”). PhoneScreen
        is a company founded 15 years ago that specializes in the recruitment of
        patients for clinical trials. PhoneScreen’s customers are pharmaceutical
        companies and Contract Research Organizations (“CROs”). CROs are organizations
        that offer pharmaceutical companies and medical entities a wide range of
        pharmaceutical research services which include the development and execution
        of
        clinical trials.
 
 The
        Company believes it has identified other communication needs as expressed
        by the
        expanded TBCS **** client
        base. In response to these expressed needs, the Company has developed
        specialized healthcare communication solutions. These solutions are creating
        additional opportunities for long-term revenue enhancement. The Company has
        broadened its service offerings and is in the process of significantly expanding the
        TBCS reporting segment.
 
 The
        Company believes that the overall mix of cash flow generating businesses
        from
        PERS and TBCS, combined with its emphasis on developing products and services
        in
        the telehealth field, provides the correct blend of stability and growth
        opportunity. The Company believes this strategy will enable it to maintain
        and
        increase its role in the healthcare communications field.
  20
 **Components
        of Statements of Income by Operating Segment:**
 The
        following table shows the components of the Statement of Income for the nine
        and
        three months ended September 30, 2007 and 2006.
 
 In
                  thousands (000’s)
              
              Three
                  Months Ended September 30,
              
              Nine
                  Months Ended September 30,2007
              
              %
              
              2006
              
              %
              
              2007
              
              %
              
              2006
              
              %RevenuesHSMS
              
              
              4,340
              
              
              **49**
              **%**
              
              3,990
              
              
              **51**
              **%**
              
              12,849
              
              
              **49**
              **%**
              
              11,970
              
              
              **53**
              **%**TBCS
              
              
              4,431
              
              
              **51**
              **%**
              
              3,795
              
              
              **49**
              **%**
              
              13,524
              
              
              **51**
              **%**
              
              10,761
              
              
              **47**
              **%**Total
                  Revenues
              
              
              8,771
              
              
              **100**
              **%**
              
              7,785
              
              
              **100**
              **%**
              
              26,373
              
              
              **100**
              **%**
              
              22,731
              
              
              **100**
              **%**Cost
                  of Services and Goods SoldHSMS
              
              
              1,878
              
              
              **43**
              **%**
              
              1,846
              
              
              **46**
              **%**
              
              5,602
              
              
              **44**
              **%**
              
              5,367
              
              
              **45**
              **%**TBCS
              
              
              2,397
              
              
              **54**
              **%**
              
              2,012
              
              
              **53**
              **%**
              
              7,073
              
              
              **52**
              **%**
              
              5,855
              
              
              **54**
              **%**Total
                  Cost of Services and Goods Sold
              
              
              4,275
              
              
              **49**
              **%**
              
              3,858
              
              
              **50**
              **%**
              
              12,675
              
              
              **48**
              **%**
              
              11,222
              
              
              **49**
              **%**Gross
                  ProfitHSMS
              
              
              2,462
              
              
              **57**
              **%**
              
              2,144
              
              
              **54**
              **%**
              
              7,247
              
              
              **56**
              **%**
              
              6,603
              
              
              **55**
              **%**TBCS
              
              
              2,034
              
              
              **46**
              **%**
              
              1,783
              
              
              **47**
              **%**
              
              6,451
              
              
              **48**
              **%**
              
              4,906
              
              
              **46**
              **%**Total
                  Gross Profit
              
              
              4,496
              
              
              **51**
              **%**
              
              3,927
              
              
              **50**
              **%**
              
              13,698
              
              
              **52**
              **%**
              
              11,509
              
              
              **51**
              **%**Selling,
                  General & Administrative
              
              
              4,161
              
              
              **47**
              **%**
              
              3,465
              
              
              **45**
              **%**
              
              12,084
              
              
              **46**
              **%**
              
              10,156
              
              
              **45**
              **%**Interest
                  Expense
              
              
              121
              
              
              **1**
              **%**
              
              87
              
              
              **1**
              **%**
              
              376
              
              
              **1**
              **%**
              
              263
              
              
              **1**
              **%**Other
                  Income
              
              
              (525
              )
              
              **(6**
              **)%**
              
              (135
              )
              
              **(2**
              **)%**
              
              (871
              )
              
              **(3**
              **)%**
              
              (393
              )
              
              **(2**
              **)%**Income
                  before Income Taxes
              
              
              740
              
              
              **8**
              **%**
              
              511
              
              
              **7**
              **%**
              
              2,110
              
              
              **8**
              **%**
              
              1,484
              
              
              **7**
              **%**Provision
                  for Income Taxes
              
              
              317
              
              
              
              
              
              232
              
              
              
              
              
              913
              
              
              
              
              
              680Net
                  Income
              
              
              423
              
              
              
              
              
              279
              
              
              
              
              
              1,197
              
              
              
              
              
              804
 **Note:** The
        percentages for Cost of Services and Goods Sold and Gross Profit are calculated
        based on a percentage of revenue.
  **Results
        of Operations:**
 
 The
        Company has two distinct operating business segments, which are HSMS and
        TBCS.
        Prior to January 1, 2007, the Company reported three reportable segments;
        HSMS,
        TBCS and Safe Com. Since the business activities of Safe Com fall within
        the
        Health and Safety monitoring line of business, the Company included the
        activities of its Safe Com segment in its HSMS segment.
 
 21
 **Three
        Months Ended September 30, 2007 Compared to Three Months Ended September
        30,
        2006**
 
 **Revenues** **:**
 
 **** **HSMS**
 
 Revenues,
        which consist primarily of monthly rental revenues, increased approximately
        $350,000, or 9%, for the three months ended September 30, 2007 as compared
        to
        the same period in 2006. Monthly rental revenues represent revenues that
        are
        generated from the leasing and monitoring of the medical devices placed in
        subscribers’ residences. The increase is primarily attributed to the
        following:
 
 §
              The
                  Company continues to experience growth primarily in its existing
                  customer
                  base. The largest growth continues to be as a result of an agreement
                  with
                  a west coast managed care organization, which was executed in November
                  2003. The number of Personal Emergency Response Systems (“PERS”) in
                  service under this agreement has more than doubled since its inception
                  and
                  has resulted in approximately $70,000 more revenue in 2007 as compared
                  to
                  the same period in 2006. The Company anticipates that the growth
                  in this
                  account will continue for the balance of
                  2007.
 
 §
              In
                  late 2006 and in 2007, the Company has executed new agreements
                  with
                  various customers whereby PERS were placed online. Since inception,
                  the
                  subscriber base associated with these agreements has grown throughout
                  2007
                  and accounted for an approximate $230,000 increase in revenue during
                  the
                  three months ended September 30, 2007 as compared to the same period
                  in
                  the prior year. The Company anticipates that the growth from these
                  new
                  agreements will continue for the balance of
                  2007.
 
 **** **TBCS**
 
 The
        increase in revenues of approximately $636,000, or 17%, for the three months
        ended September 30, 2007 as compared to the same period in 2006 was primarily
        due to the following:
 
 §
              In
                  December 2006, the Company purchased the assets ofAmerican
                  Mediconnect, Inc. and PhoneScreen, Inc.As
                  a result of this acquisition, the Company realized approximately
                  $630,000
                  of revenue in the three months ended September 30, 2007. The Company
                  completed this acquisition to further facilitate its expansion
                  of its
                  telephone answering services businesses and allow them to increase
                  its
                  market base outside the Northeast geographical
                  area.
 
 22
 In
        2007,
        with regard to the TBCS segment, the Company shifted its
        focus
        from an acquisition driven growth strategy, to one that will place primary
        emphasis on internally driven business development efforts. For 2008, the
        Company is looking to pursue additional acquisitions in the TBCS segment
        which
        will compliment its existing call center infrastructure.
 
 
 **Costs
        Related to Services and Goods Sold:**
 
 **HSMS**
 
 Costs
        related to services and goods increased by approximately $32,000 for the
        three
        months ended September 30, 2007 as compared to the same period in 2006, a
        decrease of 2%, primarily due to the following:
 
 §
              During
                  the third quarter the Company recorded a write down of fixed assets
                  of its
                  PERS Buddy device in the approximate amount of $111,000. The Company
                  determined that the PERS Buddy would only be used on a minimal
                  basis due
                  to technical issues regarding some of the circuit boards associated
                  with
                  these devices.
 
 §
              During
                  2006, the Company relocated its fulfillment and warehouse
                  distribution center into Long Island City, New York from Mt. Laurel,
                  New
                  Jersey. As part of this relocation process, the Company also took
                  the
                  upgrade and repairs of its PERS units in-house, which required
                  the Company
                  to hire additional employees. These items accounted for approximately
                  $60,000 of increased costs as compared to the same period in the
                  prior
                  year, which were partially offset by the reduction in costs related
                  to
                  repairs and upgrades.
 
 These
        increases were partially offset by:
 
 The
        Company capitalized additional labor and overhead costs in the three months
        ended September 30, 2007 as compared to the same period in 2006 resulting
        in a
        decrease in expense by approximately $70,000. The Company has increased
        purchases of its PERS device and associated components requiring additional
        labor to properly prepare these products, including quality assurance,
        programming and packaging, to be shipped. The Company has increased
        its purchases due to the increased volume as a result of new agreements with
        various customers.
 
 **** **TBCS:**
 
 Costs
        related to services and goods increased by approximately $385,000 for the
        three
        months ended September 30, 2007 as compared to the same period in 2006, an
        increase of 19%, primarily due to the following:
 
 23
   §
              During
                  2006, as discussed above, the Company purchased the assets of a
                  telephone
                  answering service businesses which resulted in additional costs
                  related to
                  services for the three months ended September 30, 2007 of approximately
                  $345,000.
  §
              In
                  July 2007 the Company opened a new call center. During the third
                  quarter
                  the Company hired call center operators which resulted in payroll
                  and
                  related payroll costs of approximately $70,000. The Company plans
                  to
                  continue to expand this call center throughout the remainder of
                  2007 and
                  into 2008. In connection with opening this new call center, the
                  Company is eligible to receive certain incentives going forward
                  which will
                  help to offset some of these costs. These costs were partially
                  offset by
                  the Company reducing call center operators at its existing call
                  centers.
 
 **Selling,
        General and Administrative Expenses:**
 
 Selling,
        general and administrative expenses increased by approximately $696,000 for
        the
        three months ended September 30, 2007 as compared to the same period in 2006,
        an
        increase of 20%. The increase is primarily attributable to the
        following:
 
 §
              The
                  Company incurred approximately $277,000 of additional selling,
                  general and
                  administrative expenses, as compared to the same period in 2006,
                  as a
                  result of the acquisition of a telephone answering service businesses
                  in
                  December 2006. The more significant expenses consist primarily of
                  salaries and related payroll taxes as well as amortization relating
                  to
                  customer lists and non-compete
                  agreements.
 
 §
              An
                  executive entered into a new employment agreement effective January
                  1, 2007. As a result of this new agreement, the Company recorded
                  approximately $47,000 of additional compensation expense, including
                  stock
                  compensation expenses, for the three months ended September 30,
                  2007 as
                  compared to the same period in 2006.
 
 §
              The
                  Company has incurred approximately $52,000 of additional travel
                  and
                  entertainment expense as compared to the same period in 2006, as
                  a result
                  of the Company executing on its opening of a new call center which
                  has
                  required travel expenses as well as conducting meetings with new
                  and
                  existing customers, including Walgreen’s to facilitate
                  growth.
 
 §
              The
                  Company incurred approximately $42,000 of additional costs relating
                  to
                  advertising/marketing expense, as compared to the same period in
                  2006.
                  This is primarily due to costs incurred with regard to an internet
                  advertising campaign through one of its TBCS locations and costs
                  related to the production of marketing materials associated with
                  the
                  Walgreen’s Ready ResponseTM Program.
 
 24
 
 §
              In
                  conjunction with various new programs and agreements, the Company
                  has
                  hired additional marketing and sales personnel. As a result of
                  this, the
                  Company recorded an increase in payroll and payroll related costs
                  of
                  approximately $60,000.
 
 There
        were other increases in selling, general and administrative expenses which
        arose
        out of the normal course of business such as accounting fees, printing expense
        and depreciation expense, which were partially offset by a reduction in legal
        fees.
 
 **Interest
        Expense:**
 
 Interest
        expense for the three months ended September 30, 2007 and 2006 was approximately
        $121,000 and $87,000, respectively. The increase was primarily due to the
        Company borrowing additional funds in December 2006 of $1,600,000 for the
        purpose of financing its acquisitions of AMI.
 
 **Other
        Income:**
 
 Other
        income for the three months ended September 30, 2007 and 2006 was approximately
        $525,000 and $135,000, respectively. Other Income for the three months ended
        September 30, 2007 and 2006 includes a Relocation and Employment Assistance
        Program (“REAP”) credit in the approximate amounts of $118,000 and $104,000,
        respectively. In connection with the relocation of certain operations to
        Long
        Island City, New York in April 2003, the Company became eligible for the
        REAP
        credit which is based upon the number of employees relocated to this designated
        REAP area. The REAP is in effect for a twelve year period; during the first
        five
        years the Company will be refunded the full amount of the eligible credit
        and,
        thereafter, the benefit will be available only as a credit against New York
        City
        income taxes. Additionally, Other Income for the three months ended September
        30, 2007 includes approximately $425,000 with respect to a settlement agreement
        for matters related to certain product and warranty disputes.
 
 **Income
        Before Provision for Income Taxes:**
 
 The
        Company’s income before provision for income taxes for the three months ended
        September 30, 2007 was approximately $740,000 as compared to $511,000 for
        the
        same period in 2006. The increase of $229,000 for the three months ended
        September 30, 2007 primarily resulted from an increase in the Company's other
        income offset by an increase in the Company’s selling, general and
        administrative costs.
  25
 **Nine
        Months Ended September 30, 2007 Compared to Nine Months Ended September 30,
        2006**
 
 **Revenues** **:**
 
 **** **HSMS**
 
 Revenues,
        which consist primarily of monthly rental revenues, increased approximately
        $879,000, or 7%, for the nine months ended September 30, 2007 as compared
        to the
        same period in 2006. Monthly rental revenues represent revenues that are
        generated from the leasing and monitoring of the medical devices placed in
        subscribers’ residences. The increase is primarily attributed to the
        following:
 
 §
              The
                  Company continues to experience growth primarily in its existing
                  customer
                  base. The largest growth continues to be as a result of an agreement
                  with
                  a west coast managed care organization, which was executed in November
                  2003. The number of Personal Emergency Response Systems (“PERS”) in
                  service under this agreement has more than doubled since its inception
                  and
                  has resulted in approximately $230,000 more revenue in 2007 as
                  compared to
                  the same period in 2006. The Company anticipates that the growth
                  in this
                  account will continue for the balance of
                  2007.
 
 §
              In
                  late 2006 and in 2007, the Company has executed new agreements
                  with
                  various customers whereby PERS were placed online. Since inception,
                  the
                  subscriber base associated with these agreements has grown throughout
                  2007
                  and accounted for an approximate $430,000 increase in revenue during
                  the
                  three months ended September 30, 2007 as compared to the same period
                  in
                  the prior year. The Company anticipates that the growth from these
                  new
                  agreements will continue for the balance of
                  2007.
 
 §
              In
                  December 2006, the Company purchased subscribers utilizing PERS
                  from a
                  third party who previously was a customer of the Company. As a
                  result of
                  this transaction, the Company has generated approximately $135,000
                  of
                  additional revenue for the nine months ended September 30, 2007
                  as
                  compared to the same period last year.
 
 §
              In
                  the second half of 2006, the Company increased its product sales
                  to
                  retirement communities. During 2006, the Company developed new
                  software
                  and is now selling this in conjunction with hardware to retirement
                  communities for the purposes of monitoring their residents. This
                  resulted
                  in approximately a $74,000 increase in product sales in 2007 as
                  compared
                  to the same period in 2006.
  **** **TBCS**
 
 The
        increase in revenues of approximately $2,763,000, or 26%, for the nine months
        ended September 30, 2007 as compared to the same period in 2006 was primarily
        due to the following:
 
 §
              During
                  2006, the Company purchased the assets of two separate telephone
                  answering
                  service businesses which resulted in additional revenue for the
                  nine
                  months ended September 30, 2007, as compared to the same period
                  in 2006,
                  of approximately $2,636,000. The acquisitions were as follows:
 
 o
              In
                  March 2006, the Company purchased the assets of MD OnCall and Capitol
                  Medical Bureau (collectively “MD OnCall”). As a result of this
                  acquisition, the Company realized approximately $621,000 of additional
                  revenue in the first nine months of 2007 as compared to the same
                  period in
                  2006. The Company completed this acquisition to facilitate its
                  expansion
                  into the Northeast geographical
                  area.
 
 26
   o
              In
                  December 2006, the Company purchased the assets ofAmerican
                  Mediconnect, Inc. and PhoneScreen, Inc.As
                  a result of this acquisition, the Company realized approximately
                  $2,015,000 of revenue in the first nine months of 2007. The Company
                  completed this acquisition to further facilitate its expansion
                  of its
                  telephone answering services businesses and allow them to increase
                  its
                  market base outside the Northeast geographical
                  area.
 
 In
        2007,
        with regard to the TBCS segment, the Company shifted its
        focus
        from an acquisition driven growth strategy, to one that will place primary
        emphasis on internally driven business development efforts. For 2008, the
        Company is looking to pursue additional acquisitions in the TBCS segment
        which
        will compliment its existing call center infrastructure.
  **Costs
        Related to Services and Goods Sold:**
 
 **HSMS**
 
 Costs
        related to services and goods increased by approximately $235,000 for the
        nine
        months ended September 30, 2007 as compared to the same period in 2006, an
        increase of 4%, primarily due to the following:
 
 §
              The
                  relocation of the Company’s fulfillment and warehouse distribution center
                  into Long Island City, New York from Mt. Laurel, New Jersey during
                  the
                  second quarter of 2006 resulted in increased rent expense due to
                  the
                  Company leasing more space and paying a higher rate per square
                  foot for
                  rent. As part of this relocation process, the Company also took
                  the
                  upgrade and repairs of its PERS units in-house, which required
                  the Company
                  to hire additional employees, including a Manager of Engineering
                  and
                  Fulfillment. These items accounted for approximately $240,000 of
                  increased
                  costs as compared to the same period in the prior year, which were
                  offset
                  by the reduction in costs related to repairs and upgrades of approximately
                  $100,000 which were previously performed by a third party vendor.
 
 §
              During
                  2006 and into 2007, the Company has increased the number of personnel
                  working in its Emergency Response Center (“ERC”) department which
                  accounted for increased costs of approximately $106,000 in 2007
                  as
                  compared to the same period in 2006. The Company hired additional
                  personnel due to the increased volume of calls which is directly
                  correlated to the increased subscriber base, as well as to prepare
                  for the
                  rollout of the Walgreen’s Ready ResponseTM Program, which is now in
                  progress.
 
 27
   §
              During
                  the third quarter the Company recorded a write down of fixed assets
                  of its
                  PERS Buddy device in the approximate amount of $111,000. The Company
                  determined that the PERS Buddy would only be used on a minimal
                  basis due
                  to matters regarding product and warranty disputes relating to
                  some of the
                  boards associated with these
                  devices.
 
 §
              The
                  Company has incurred additional depreciation expense of approximately
                  $130,000 primarily due to the increased purchases made during the
                  latter
                  part of 2006 and 2007. The increased purchases is a result of the
                  increase
                  in the number of subscribers
                  online.
 
 These
        increases were offset by the Company capitalizing labor and overhead costs
        in
        2007 as compared to the same period in 2006 resulting in a decrease in expense
        by approximately $250,000. The Company has increased purchases of its PERS
        devices and associated components requiring additional labor to properly
        prepare
        these products, including quality assurance, programming and packaging, to
        be
        shipped. The Company has increased its purchases due to the increased volume
        as
        a result of new agreements with various customers.
  **** **TBCS:**
 
 Costs
        related to services and goods increased by approximately $1,218,000 for the
        nine
        months ended September 30, 2007 as compared to the same period in 2006, an
        increase of 21%, primarily due to the following:
 
 §
              During
                  2006, as discussed above, the Company purchased the assets of two
                  separate
                  telephone answering service businesses which resulted in additional
                  costs
                  related to services for the nine months ended September 30, 2007
                  of
                  approximately $1,418,000. The increased costs related to services
                  in
                  regard to the acquisitions were as follows: MD OnCall approximated
                  $315,000 and AMI approximated
                  $1,103,000.
  §
              In
                  July 2007 the Company opened a new call center. During the third
                  quarter
                  the Company hired call center operators which resulted in payroll
                  and
                  related payroll costs of approximately $70,000. The Company plans
                  to
                  continue to expand this call center throughout the remainder of
                  2007 and
                  into 2008. In connection with opening this new call center, the
                  Company is eligible to receive certain incentives going forward
                  which will
                  help to offset some of these costs.
  §
              During
                  the latter part of 2006 and into 2007, the Company reduced the
                  number of
                  telephone answering service operators at its existing call centers.
                  This
                  has been accomplished through overall efficiencies which are being
                  realized by the Company throughout its TBCS segment. Additionally,
                  the
                  Company is now utilizing its newly established call center and
                  has
                  allocated some of the call volume to this location. This accounted
                  for a
                  reduction in costs of approximately $114,000 at its existing call
                  centers
                  for the period ended September 30, 2007 as compared to the same
                  period in
                  2006. As the Company continues to realize these operational efficiencies
                  and utilize its new call center, it will continue to evaluate personnel
                  levels and continue to evaluate the consolidation strategy of its
                  communications infrastructure, yielding greater per seat through-put
                  with
                  an associated reduction in overall labor
                  expense.
  28
 
 **Selling,
        General and Administrative Expenses:**
 
 Selling,
        general and administrative expenses increased by approximately $1,928,000
        for
        the nine months ended September 30, 2007 as compared to the same period in
        2006,
        an increase of 19%. The increase is primarily attributable to the
        following:
 
 §
              The
                  Company incurred approximately $946,000 of additional selling,
                  general and
                  administrative expenses, as compared to the same period in 2006,
                  as a
                  result of the acquisition of two telephone answering service businesses
                  during 2006. The more significant expenses relate to salaries and
                  related payroll taxes and amortization relating to customer lists
                  and
                  non-compete agreements.
 
 §
              The
                  Company incurred approximately $105,000 of additional costs relating
                  to
                  advertising/marketing expense, as compared to the same period in
                  2006.
                  This is primarily due to costs incurred with regard to an internet
                  advertising campaign through one of its TBCS locations and costs
                  related to the production of  marketing materials associated with the
                  Walgreen’s Ready ResponseTM Program.
 
 §
              In
                  conjunction with various new programs and agreements, the Company
                  has
                  hired additional marketing and sales personnel. As a result of
                  this, the
                  Company recorded an increase in this expense of approximately
                  $107,000.
 
 §
              The
                  Company purchased subscribers utilizing PERS from a third party
                  in
                  December 2006. As part of this transaction, it was agreed that
                  the third
                  party would continue to manage and service these accounts on behalf
                  of the
                  Company. As a result of this arrangement, the Company pays an
                  administrative fee to this third party amounting to approximately
                  $96,000.
 
 §
              The
                  Company incurred increased costs of approximately $69,000, as compared
                  to
                  the same period in 2006, associated with the research and development.
                  These costs primarily associated with the new generation Med-Time
                  dispenser, smoke detector and retirement community flush mount
                  console
                  unit. The Company continues to move forward with the development
                  of these
                  new generation products and anticipates having them available within
                  the
                  next three to nine months.
  There
        were other increases in selling, general and administrative expenses which
        arose
        out of the normal course of business such as accounting expense, amortization
        expense and travel and entertainment expense which were partially offset
        by
        decreases in legal and bad debt expense.
 
 29
 **Interest
        Expense:**
 
 Interest
        expense for the nine months ended September 30, 2007 and 2006 was approximately
        $376,000 and $263,000, respectively. The increase was primarily due to the
        Company borrowing additional funds in March 2006 of $2,500,000 and in December
        2006 of $1,600,000 for the purpose of financing its acquisitions of MD OnCall
        and AMI, respectively.
 
 **Other
        Income:**
 
 Other
        Income for the nine months ended September 30, 2007 and 2006 was approximately
        $871,000 and $393,000, respectively. Other Income for the nine months ended
        September 30, 2007 and 2006 includes a Relocation and Employment Assistance
        Program (“REAP”) credit in the approximate amounts of $237,000 and $202,000,
        respectively. In connection with the relocation of certain operations to
        Long
        Island City, New York in April 2003, the Company became eligible for the
        REAP
        credit which is based upon the number of employees relocated to this designated
        REAP area. The REAP is in effect for a twelve year period; during the first
        five
        years the Company will be refunded the full amount of the eligible credit
        and,
        thereafter, the benefit will be available only as a credit against New York
        City
        income taxes. Additionally, Other Income for the nine months ended September
        30,
        2007 includes approximately $425,000 with respect to a settlement agreement
        for
        matters related to certain product and warranty disputes.
 
 
 **Income
        Before Provision for Income Taxes:**
 
 The
        Company’s income before provision for income taxes for the nine months ended
        September 30, 2007 was approximately $2,110,000 as compared to $1,484,000
        for
        the same period in 2006. The increase of $626,000 for the nine months ended
        September 30, 2007 primarily resulted from an increase in the Company's service
        revenues and other income offset by an increase in the Company’s costs related
        to services and selling, general and administrative costs.
 
 **Liquidity
        and Capital Resources:**
  As
        of
        January 1, 2006 the Company had a credit facility arrangement for $4,500,000
        which included a revolving credit line which permitted borrowings of $1,500,000
        (based on eligible receivables as defined) and a $3,000,000 term loan payable
        in
        equal monthly principal installments of $50,000 over five years commencing
        January 2006.
  In
        March
        2006 and December 2006, the Company’s credit facility was amended whereby the
        Company obtained an additional $2,500,000 and $1,600,000 of term loans, the
        proceeds of which were utilized to finance the acquisitions of MD OnCall
        and
        AMI. These term loans are payable over five years in equal monthly principal
        installments of $41,666.67 and $26,666.67, respectively. Additionally, one
        of
        the covenants was amended.
  In
        December 2006, the credit facility was amended to reduce the interest rates
        charged by the bank such that borrowings under the term loan will bear interest
        at either (a) LIBOR plus 2.00% or (b) the prime rate or the federal funds
        effective rate plus .5%, whichever is greater, and the revolving credit line
        will bear interest at either (a) LIBOR plus 1.75% or (b) the prime rate or
        the
        federal funds effective rate plus .5%, whichever is greater.  The LIBOR
        interest rate charge shall be adjusted in .25% intervals based on the Company’s
        ratio of Consolidated Funded Debt to Consolidated EBITDA. In the third quarter
        of 2007, the interest rate was reduced by .25% based on this ratio. The Company
        has the option to choose between the two interest rate options under the
        amended
        term loan and revolving credit line. Borrowings under the credit facility
        are
        collateralized by substantially all of the assets of the Company.
  30
 On
        April
        30, 2007, the Company amended its credit facility whereby the term of the
        revolving credit line was extended through June 2010 and the amount of credit
        available under the revolving credit line was increased to
        $2,500,000.
 
 As
        of
        September 30, 2007 the Company was not in compliance with one of its financial
        covenants in its loan agreement. The lender waived the non-compliance as
        of such
        date and entered into an amendment to the credit facility.
 
 The
        following table is a summary of contractual obligations as of September 30,
        2007:
  Payments
                  Due by PeriodContractual
                  Obligations
              
              Total
              
              Less
                  than 1 year
              
              1-3
                  years
              
              4-5
                  years
              
              After
                  5 yearsRevolving
                  Credit Line
              
              $
              1,100,000
              
              
              
              
              $
              1,100,000Debt
                  (a)
              
              $
              5,309,275
              
              $
              1,531,170
              
              $
              3,698,105
              
              $
              80,000Capital
                  Leases (b)
              
              $
              84,494
              
              $
              41,289
              
              $
              43,205Operating
                  Leases (c)
              
              $
              8,439,154
              
              $
              922,211
              
              $
              2,316,615
              
              $
              1,495,833
              
              $
              3,704,495Purchase
                  Commitments (d)
              
              $
              1,815,746
              
              $
              1,815,746Interest
                  Expense (e)
              
              $
              871,232
              
              $
              397,508
              
              $
              472,774
              
              $
              950Acquisition
                  related Commitment (f)
              
              $
              305,776
              
              $
              305,776Total
                  Contractual Obligations
              
              $
              17,925,677
              
              $
              5,013,700
              
              $
              7,630,699
              
              $
              1,576,783
              
              $
              3,704,495
  (a)
              -
                  Debt includes the Company’s aggregate term loans of $7,100,000 which
                  mature in 2010 and 2011, as well as loans associated with the purchase
                  of
                  automobiles.
  (b)
              -
                  Capital lease obligations relate to the telephone answering service
                  equipment.  These capital leases mature in the second quarter of
                  2009.
  (c)
              -
                  Operating leases include rental of facilities at various locations
                  within
                  the United States. These operating leases include the rental of
                  the
                  Company’s call center, warehouse and the office facilities. These
                  operating leases have various maturity dates. The Company currently
                  leases
                  office space from the Chairman and principal shareholder pursuant
                  to a
                  lease which expires in March 2008.
  31
   (d)
              -Purchase
                  commitments relate to orders for the Company’s traditional
                  PERS.
  (e)
              -
                  Interest expense relates to interest on the Company’s revolving credit
                  line and debt at the Company’s current rate of
                  interest.
  (f)
              -
                  Acquisition related commitment relates to holdback associated with
                  acquisition of a telephone answering service made by the company.
                  This
                  commitment is due in December 2007.
  Net
        cash
        provided by operating activities was approximately $4.3 million for the nine
        months ended September 30, 2007, as compared to approximately $3.3 million
        for
        the same period in 2006. During 2007, increases in cash provided by operating
        activities from depreciation and amortization of approximately $3.1 million,
        increase in liabilities of $1.0 million and net earnings of approximately
        $1.2
        million were partially offset by an increase in trade receivables of
        approximately $0.6 million. The components of depreciation and amortization
        primarily relate to the purchases of the Company’s traditional PERS product and
        the customer lists associated with the acquisition of telephone answering
        service businesses. The increase in liabilities is due to an increase in
        the
        purchase of its PERS product not paid for at September 30, 2007, 2007 taxes
        and
        timing of payments of other expenses in the ordinary course of business.
        The
        increase in trade receivables is primarily due to the Company consummating
        an
        acquisition in December 2006, which resulted in approximately $0.4 million
        of
        increased receivables through the normal course of business. Increases in
        cash
        provided by operating activities during 2006 were the result of depreciation
        and
        amortization of approximately $1.6 million, increase in liabilities of $0.8
        million and net earnings of approximately $0.5 million. These increases were
        partially offset by an increase in trade receivables of approximately $0.8
        million.
  Net
        cash
        used in investing activities for the nine months ended September 30, 2007
        was
        approximately $3.4 million as compared to $6.6 million in the same period
        in
        2006. The primary component of net cash used in investing activities in 2007
        was
        capital expenditures of approximately $3.2 million. Capital expenditures
        in 2007
        primarily related to the continued production and purchase of the traditional
        PERS system. The primary components of net cash used in investing activities
        in
        2006 were the acquisition of telephone answering service businesses and capital
        expenditures of $3.3 and $2.9 million, respectively.
  Cash
        flows for the nine months ended September 30, 2007 used in financing activities
        were approximately $0.4 million compared to cash flows provided by financing
        activities of $2.2 million for the same period in 2006. The primary component
        of
        cash flow used in financing activities in 2007 was the payments of long-term
        debt of approximately $1.1 million. This was partially offset by proceeds
        received from the exercise of the Company’s stock options and warrants of
        approximately $0.4 million and the additional borrowings used under its
        revolving credit facility of approximately $0.4 million. The primary component
        of cash flow provided by financing activities in 2006 was proceeds received
        from
        additional borrowings of $2.5 million which were primarily used for the
        acquisition of a telephone answering service.
  32
 During
        the next twelve months, the Company anticipates it will make capital
        expenditures of approximately $3.25 - $3.75 million for the production and
        purchase of the traditional PERS systems and telehealth systems, enhancements
        to
        its computer operating systems and the production of its Med-Time pill dispenser
        (this includes outstanding purchase orders issued to purchase approximately
        $1.8
        million of the traditional PERS systems). This amount is subject to fluctuations
        based on customer demand. The Company also anticipates incurring approximately
        $0.2 - $0.4 million of costs relating to research and development of its
        telehealth product, Med-Time dispenser and retirement community flush mount
        console unit. In July 2005, the Company entered into a technology, licensing,
        development, distribution and marketing agreement with a supplier for its
        HSMS
        sector. Pursuant to this agreement the Company anticipates spending
        approximately $0.2 - $0.4 million over the next twelve to eighteen months.
  As
        of
        September 30, 2007, the Company had approximately $1.3 million in cash and
        the
        Company’s working capital was approximately $3.9 million. The Company believes
        that with its present cash balance and with operations of the business
        generating positive cash flow, it will be able to meet its cash, working
        capital
        and capital expenditure needs for at least the next twelve months. The Company
        also has a revolving credit line, which expires in June 2010 that permits
        borrowings up to $2.5 million, of which $1.1 million was outstanding at
        September 30, 2007.
  **Off-Balance
        Sheet Arrangements** :
  As
        of
        September 30, 2007, the Company has not entered into any off-balance sheet
        arrangements that have or are reasonably likely to have a current of future
        effect on the Company’s current and future financial condition, revenues or
        expenses, results
        of operations, liquidity, capital expenditures or capital resources that
        is
        material to investors **.**
  **Other
        Factors** :
  In
        August
        2007 the Company entered into a settlement agreement whereby a third party
        has
        agreed to reimburse the Company in a net amount of $425,000 for matters related
        to certain product and warranty disputes. This reimbursement is associated
        with
        costs that have primarily been incurred in previous years relating to
        engineering, payroll and related costs and depreciation pertaining to the
        affected assets. The Company anticipates receiving this reimbursement over
        approximately two years.  As a result of this agreement, the Company has
        recorded an amount of $425,000 to Other Income. The Company has also recorded
        a
        write-down on the assets affected of approximately $111,000 which is reflected
        in the Cost of Services.
 
 On
        December 21, 2006, the Company acquired substantially all of the assets
        of American
        Mediconnect, Inc. and PhoneScreen, Inc., **** Illinois
        based companies under common ownership (collectively “AMI”) .
        American Mediconnect, Inc. is a provider of telephone after-hour answering
        services primarily focused on hospitals, physicians and other health care
        providers. PhoneScreen, Inc. is a provider of call center and compliance
        monitoring services to hospitals, pharmaceutical companies and clinical resource
        organizations. The purchase price was $2,028,830 and consisted of an initial
        cash payment of $1,493,730, common stock valued at $229,324 and a future
        cash
        payment of $305,776, which is due in December 2007. In addition, for the
        three
        years following the acquisition, the Company is required to pay AMI an amount
        equal to twenty-five (25%) percent of the cash receipts collected by the
        Company, excluding sales taxes, from the PhoneScreen business. For the period
        ended September 30, 2007, the Company recorded $151,160 due to Seller based
        on
        PhoneScreen cash receipts. The Company also incurred professional fees of
        approximately $65,000. A potential exists for the payment of additional purchase
        price consideration if certain thresholds concerning revenues and earnings
        of
        the acquired business are met as of December 31, 2007, 2008 and 2009.
 
 33
 On
        March
        10, 2006, the Company acquired substantially all of the assets of MD
        OnCall, a Rhode Island based company and Capitol Medical
        Bureau, **** a
        Maryland based company (collectively "MD OnCall") ,
        providers of telephone after-hour answering services and stand-alone voice
        mail
        services. The purchase price was $3,382,443 and consisted of an initial cash
        payment of $2,696,315, common stock valued at $343,064, and future cash payments
        of $343,064, which was paid in full as of March 2007. The Company also
        incurred finder and professional fees of approximately $181,000. A
        potential exists for payments of additional purchase price consideration
        if
        certain thresholds concerning revenue and earnings of the acquired business are
        met as of March 31, 2007, 2008 and 2009. The first threshold as of March
        31,
        2007 was not met.
 
 During
        2005, the Company entered into two operating lease agreements for additional
        space at its Long Island City, New York, location in order to consolidate
        its
        warehouse and distribution center and accounting department into this location.
        The leases, which commenced in January 2006 and expire in March 2018, call
        for
        minimum annual rentals of $220,000 and $122,000, respectively, and are subject
        to increases in accordance with the term of the agreements. The Company is
        also
        responsible for the reimbursement of real estate taxes.
 
 On
        January 14, 2002, the Company entered into an operating lease agreement for
        space in Long Island City, New York, in order to consolidate its HCI TBCS
        and
        PERS ERC/ Customer Service facilities.  The centralization of the ERC,
        Customer Service and H-LINK® OnCall operations has provided certain operating
        efficiencies and allowed for continued growth of the H-LINK and PERS
        divisions.  The fifteen (15) year lease term commenced in April 2003. 
The lease calls for minimum annual rentals of $307,900, subject to a 3% annual
        increase plus reimbursement for real estate taxes.
  On
        November 1, 2001, the Company entered into a five-year Cooperative Licensing,
        Development, Services and Marketing Agreement with HHN (the “HHN Agreement”)
        pursuant to which the Company developed, with the
        assistance of HHN , a
        new
        integrated appliance combining the features of the Company’s PERS product with
        HHN’s technology .
        The
        agreement was amended on June 30, 2005 and includes an extension of the initial
        term for an additional three years, through October 31, 2009.
  Since
        1983, the Company has provided Personal Emergency Response Systems (“PERS”)
        services to the City of New York’s Human Resources Administration (“HRA”) Home
        Care Service Program ("HCSP"). The Company has been operating since 1993
        with a
        contract to provide HCSP with these services, which has been extended for
        1-2
        year periods since this time.
  34
 In
        September 2006, HRA issued a bid proposal relating to the providing of the
        PERS
        services which are the subject of the Company’s contract. In October 2007, the
        Company was informed they were awarded the contract with respect to this
        proposal and executed such contract. The contract term is two years, commencing
        September 21, 2007, with two options to renew in favor of HRA for two additional
        two year terms. Under the terms of the agreement, a downward rate adjustment
        was
        made in conjunction with reduced equipment requirements from previous years.
        The
        impact of this reduced rate is estimated to reduce this contract’s contribution
        to gross revenues by approximately $270,000 and its contribution to net income
        by approximately $130,000 on an annual basis. During the nine months ended
        September 30, 2007 and 2006, the Company’s revenue from this contract
        represented 7 % and
        9%,  respectively,
        of its total revenue.
  As
        of
        September 30, 2007 and December 31, 2006, accounts receivable from the contract
        represented 9% of accounts receivable and medical devices in service under
        the
        contract represented approximately 13% and 14% of medical devices, respectively.
 
 **Recent
        Accounting Pronouncements:**
  In
        July 2006, FASB Interpretation No. 48, “Accounting for Uncertainty in
        Income Taxes—an interpretation of FASB Statement No. 109” (“FIN 48”) was
        issued, clarifying the accounting for uncertainty in tax positions. This
        Interpretation requires that we recognize in our financial statements, the
        impact of a tax position, if that position is more likely than not of being
        sustained on audit, based on the technical merits of the position. The
        provisions of FIN 48 are effective as of the beginning of our 2007 fiscal
        year,
        with the cumulative effect of the change in accounting principle recorded
        as an
        adjustment to opening retained earnings. The Company adapted FIN 48 as of
        January 2007 and the adoption of this Interpretation did not have a material
        impact on the consolidated results of operations or financial position.
 
 In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which
        defines fair value, establishes guidelines for measuring fair value and expands
        disclosure regarding fair value measurements. SFAS No. 157 does not require
        new
        fair value measurements but rather eliminates inconsistencies in guidance
        found
        in various prior accounting pronouncements. SFAS No. 157 is effective for
        financial statements issued for fiscal years beginning after November 15,
        2007.
        We do not expect the adoption of SFAS No. 157 to have a material effect on
        our
        financial statements.
 
 In
        September 2006, the Securities and Exchange Commission issued Staff Accounting
        Bulletin (SAB) No. 108, “Financial Statements - Considering the Effects of Prior
        Year Misstatements when Quantifying Misstatements in Current Year Financial
        Statements”. SAB No. 108 provides interpretive guidance on how the effects of
        prior year uncorrected misstatements should be considered when quantifying
        misstatements in the current year financial statements. SAB No. 108 is effective
        for years ending after November 15, 2006. The adoption of the provisions
        of SAB
        No. 108 did not have a material impact on the financial position or results
        of
        operations.
 
 35
 In
        February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
        Assets and Financial Liabilities ("SFAS 159"). SFAS 159 provides companies
        with
        an option to report selected financial assets and liabilities at fair value.
        SFAS 159 also establishes presentation and disclosure requirements designed
        to
        facilitate comparisons between companies that choose different measurement
        attributes for similar types of assets and liabilities and to provide additional
        information that will help investors and other financial statement users
        to more
        easily understand the effect of the company's choice to use fair value on
        its
        earnings. Finally, SFAS 159 requires entities to display the fair value of
        those
        assets and liabilities for which the company has chosen to use fair value
        on the
        face of the balance sheet. SFAS 159 is effective as of the beginning of an
        entity's first fiscal year beginning after November 15, 2007. Early adoption
        is
        permitted as of the beginning of the previous fiscal year provided that the
        entity makes that choice in the first 120 days of that fiscal year and also
        elects to apply the provisions of SFAS 157 (see above). The Company is currently
        assessing the impact of SFAS 159.
  **Critical
        Accounting Policies:**
 
 In
        preparing the financial statements, the Company makes estimates, assumptions
        and
        judgments that can have a significant impact on our revenue, operating income
        and net income, as well as on the reported amounts of certain assets and
        liabilities on the balance sheet. The Company believes that the estimates,
        assumptions and judgments involved in the accounting policies described below
        have the greatest potential impact on its financial statements due to the
        materiality of the accounts involved, and therefore, considers these to be
        its
        critical accounting policies. Estimates in each of these areas are based
        on
        historical experience and a variety of assumptions that the Company believes
        are
        appropriate. Actual results may differ from these estimates.
 
 **Reserves
        for Uncollectible Accounts Receivable**
 The
        Company makes ongoing assumptions relating to the collectibility of its accounts
        receivable. The accounts receivable amount on the balance sheet includes
        a
        reserve for accounts that might not be paid. In determining the amount of
        the
        reserve, the Company considers its historical level of credit losses. The
        Company also makes judgments about the creditworthiness of significant customers
        based on ongoing credit evaluations, and it assesses current economic trends
        that might impact the level of credit losses in the future. The Company recorded
        reserves for uncollectible accounts receivable of $589,000 as of September
        30,
        2007, which is equal to 9.6% of total accounts receivable. While the Company
        believes that the current reserves are adequate to cover potential credit
        losses, it cannot predict future changes in the financial stability of its
        customers and the Company cannot guarantee that its reserves will continue
        to be
        adequate. For each 1% that actual credit losses exceed the reserves established,
        there would be an increase in general and administrative expenses and a
        reduction in reported net income of approximately $62,000. Conversely, for
        each
        1% that actual credit losses are less than the reserve, this would decrease
        the
        Company’s general and administrative expenses and increase the reported net
        income by approximately $62,000.
 
 36
 **Fixed
        Assets**
 Fixed
        assets are stated at cost. Depreciation for financial reporting purposes
        is
        being provided by the straight-line method over the estimated useful lives
        of
        the related assets. The valuation and classification of these assets and
        the
        assignment of useful depreciable lives involves significant judgments and
        the
        use of estimates. Fixed assets are reviewed for impairment whenever events
        or
        changes in circumstances indicate that the carrying amount of an asset may
        not
        be recoverable. Historically, impairment losses have not been required. Any
        change in the assumption of estimated useful lives could either result in
        a
        decrease or increase the Company’s financial results. A decrease in estimated
        useful life would reduce the Company’s net income and an increase in estimated
        useful life would increase the Company’s net income. If the estimated useful
        lives of the PERS medical device were decreased by one year, the cost of
        goods
        related to services would increase and net income would decrease by
        approximately $185,000 per annum. Conversely, if the estimated useful lives
        of
        the PERS medical device were increased by one year, the cost of goods related
        to
        services would decrease and net income would increase by approximately $145,000
        per annum.
 
 **Valuation
        of Goodwill**
 Pursuant
        to Statement of Financial Accounting Standards No. 142, “Goodwill and Other
        Intangible Assets,” goodwill and indefinite life intangible assets are no longer
        amortized, but are subject to annual impairment tests. To date, the Company
        has
        not been required to recognize an impairment of goodwill. The Company tests
        goodwill for impairment annually or more frequently when events or circumstances
        occur indicating goodwill might be impaired. This process involves estimating
        fair value using discounted cash flow analyses. Considerable management judgment
        is necessary to estimate discounted future cash flows. Assumptions used for
        these estimated cash flows were based on a combination of historical results
        and
        current internal forecasts. The Company cannot predict certain events that
        could
        adversely affect the reported value of goodwill, which totaled $9,691,663
        and
        $9,532,961 at September 30, 2007 and December 31, 2006, respectively. If
        the
        Company were to experience a significant adverse impact on goodwill, it would
        negatively impact the Company’s net income.
 
 **Accounting
        for Stock-Based Awards**
 On
        January 1, 2006, the Company adopted Statement of Financial Accounting Standards
        No. 123R, "Share-Based Payment." Prior to January 1, 2006, the Company had
        applied the intrinsic value method of accounting for stock options granted
        to
        our employees and directors under the provisions of Accounting Principles
        Board
        Opinion No. 25, "Accounting for Stock Issued to Employees," and related
        interpretations, as permitted by SFAS No. 123, "Accounting for Stock-Based
        Compensation." Accordingly, employee and director compensation expense was
        recognized only for those options whose exercise price was less than the
        market
        value of our common stock at the measurement date.
 
 The
        Company adopted the fair value recognition provisions of SFAS No. 123R, using
        the modified prospective transition method. Under the modified prospective
        method, (i) compensation expense for share-based awards granted prior to
        January
        1, 2006 are recognized over the remaining service period using the compensation
        cost calculated for pro forma disclosure purposes under SFAS No. 123 and
        (ii)
        compensation expense for all share-based awards granted subsequent to December
        31, 2005 are based on the grant date fair value estimated in accordance with
        the
        provisions of SFAS No. 123R. Results for periods prior to January 1, 2006
        have
        not been restated. As a result of adopting SFAS No. 123R, the Company recorded
        a
        pre-tax expense of approximately $266,000 and $141,000 for stock-based
        compensation for the nine months ended September 30, 2007 and 2006,
        respectively.
 
 37
 The
        determination of fair value of share-based payment awards to employees and
        directors on the date of grant using the Black-Scholes model is affected
        by the
        Company's stock price as well as assumptions regarding a number of highly
        complex and subjective variables. These variables include, but are not limited
        to the expected stock price volatility over the term of the awards, and actual
        and projected employee stock option exercise behaviors.
 
  **Item
        3.** **Quantitative
        and Qualitative Disclosure About Market Risk.**
 
 **Market
        Risk Disclosure**
 
 The
        Company does not hold market risk-sensitive trading instruments, nor does
        it use
        financial instruments for trading purposes. Except as disclosed below in
        this
        item, all sales, operating items and balance sheet data are denominated in
        U.S.
        dollars; therefore, the Company has no significant foreign currency exchange
        rate risk.
 
 In
        the
        ordinary course of its business the Company enters into commitments to purchase
        raw materials and finished goods over a period of time, generally nine months
        to
        one year in advance of utilization, at contracted prices. At September 30,
        2007
        these future commitments were not at prices in excess of current market,
        or in
        quantities in excess of normal requirements. The Company does not utilize
        derivative contracts either to hedge existing risks or for speculative
        purposes.
 
 **Interest
        Rate Risk**
 
 We
        are
        exposed to market risk from changes in interest rates primarily through our
        financing activities. Interest on our outstanding balances on our term loan
        and
        revolving credit line under our credit facility accrues at a rate of LIBOR
        plus
        1.75% and LIBOR plus 1.50%, respectively. Our ability to carry out our business
        plan to finance future working capital requirements and acquisitions of TBCS
        businesses may be impacted if the cost of carrying debt fluctuates to the
        point
        where it becomes a burden on our resources.
 
 38
 **Item
        4.** **Controls
        and Procedures** **.**
  As
        of the
        end of the period covered by this report, the Company carried out an evaluation,
        under the supervision and with the participation of its Chief Executive Officer
        and President and its Chief Financial Officer, of the effectiveness of the
        design and operation of our disclosure controls and procedures. Based on
        this
        evaluation, the Chief Executive Officer and President and the Chief Financial
        Officer concluded that the Company's controls and procedures are effective
        to ensure that information required to be disclosed by the Company in the
        reports filed by it under the Securities and Exchange Act of 1934, as amended,
        is recorded, processed, summarized and reported within the time periods
        specified in the SEC's rules and forms, and include controls and procedures
        designed to ensure that information required to be disclosed by the Company
        in
        such reports is accumulated and communicated to the Company's management,
        including the Chief Executive Officer and President and Chief Financial Officer
        of the Company, as appropriate to allow timely decisions regarding required
        disclosure.
 
 There
        were no changes in the Company’s internal control over financial reporting that
        occurred during the quarter ended September 30, 2007 that have materially
        affected, or are reasonably likely to affect, the Company’s internal control
        over financial reporting.
  **PART
        II - OTHER INFORMATION**
 
 **Item
        1.**  **** **Legal
        Proceedings** **.**
 
 The
        Company was notified that one of the bidders for the contract it was awarded
        with HRA, New York Merchants Protective Co. Inc. (“Merchants”), filed an
        Article 78 proceeding on or about August 13, 2007. Merchants is moving to
        annul
        the HRA’s disqualification of Merchants as a bidder to provide PERS and to
        therefore annul the HRA’s contract with the Company. The Article 78 proceeding
        was filed in the Supreme Court of the State of New York, County of New York.
        HRA
        and AMAC are defending the proceeding. AMAC management believes the claim
        to be
        without merit.
  The
        Company is aware of various threatened or pending litigation claims against
        the
        Company relating to its products and services and other claims arising in
        the
        ordinary course of its business. The Company has given its insurance carrier
        notice of such claims and it believes there is sufficient insurance coverage
        to
        cover any such claims. Currently, there are no litigation claims for which
        an
        estimate of loss, if any, can be reasonably made as they are in the preliminary
        stages and therefore, no liability or corresponding insurance receivable
        has
        been recorded. In any event, the Company believes the dispostion of these
        matters will not have a material adverse effect on the results of operations
        and
        financial condition of the Company.
 
 39
 **Item
        6.** **Exhibits.**
 
 
 No.
              Description15.1
              Letter
                  from Margolin, Winer & Evens LLP,
                  the independent accountant of the Company,acknowledgingawareness
                  ofthe
                  usein
                  a registration statement of areport on the unaudited interim financialinformation
                  in this quarterly report31.1
              Certification
                  of President and CEO Pursuant to Section 302 of the Sarbanes Oxley
                  Act of
                  200231.2
              Certification
                  of CFO Pursuant to Section 302 of the Sarbanes Oxley Act of
                  200232.1
              Certification
                  of President and CEO Pursuant to Section 906 of the Sarbanes Oxley
                  Act of
                  200232.2
              Certification
                  of CFO Pursuant to Section 906 of the Sarbanes Oxley Act of
                  2002
  
 **SIGNATURES**
  Pursuant
        to the requirements of the Securities Exchange Act of 1934, as amended, the
        Company has duly caused this report to be signed on its behalf by the
        undersigned thereunto duly authorized.
  **AMERICAN
                MEDICAL ALERT CORP.**Date: November
                14, 2007
              By:
              /s/ 
Jack
                RhianName:
                  Jack Rhian
                Title:
                  Chief Executive Officer and President
  By:
              /s/ 
Richard
                RalloName:
                    Richard Rallo
                  Title:
                    Chief Financial Officer
 40