**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**





Washington,
      D.C. 20549





**FORM
      10-K**





**x**
            **ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**





For
      the
      fiscal year ended December 31, 2007





**o**
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**




Commission
      File No. 0-16530





**BRANDPARTNERS
      GROUP, INC.**


(Exact
      Name of Registrant as Specified in its Charter)




**Delaware**
              
              **13-3236325**(State
                  or Other Jurisdiction of
              
              (I.R.S.
                  EmployerIncorporation
                  or Organization)
              
              Identification
                  No.)


**10
        Main Street**


**Rochester,
      New Hampshire 03839**


(Address
      of Principal Executive Offices, Including Zip Code)





**(603)
      335-1400**


(Issuer’s
      Telephone Number, Including Area Code)





Securities
      Registered Pursuant to Section 12(b) of the Act:


None





Securities
      Registered Under Section 12(g) of the Act:


**Common
      Stock, par value $0.01 per share**









Indicate
      by check mark if the registrant is a well-know seasoned issuer as defined in
      Rule 405 of the Securities Act  o
      Yes x  No





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





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or Section 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.


x Yes o  No





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





Indicate
      by check mark whether the registrant is a large accelerated file, an accelerated
      filer, or a non-accelerated filer as defined 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-1 of the Act.)  o
      Yes x No





The
      aggregate market value of common stock held by non-affiliates of the registrant
      as of June 30, 2007 was $2,558,000.





As
      of
      March 27, 2008, there were issued and outstanding 39,173,359 shares of the
      registrant’s common stock.




2




BRANDPARTNERS
      GROUP, INC.


TABLE
      OF
      CONTENTS




PagePART
                IItem
                1
            Business
            4Item
                1A
            Risk
                Factors
            8Item
                1B
            Unresolved
                Staff Comments
            15Item
                2
            Properties
            15Item
                3
            Legal
                Proceedings
            16Item
                4
            Submission
                of Matters to a Vote of Security Holders
            16PART
                IIItem
                5
            Market
                for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                Purchases of Equity Securities
            16Item
                6
            Selected
                Financial Data
            17Item
                7
            Management’s
                Discussion and Analysis of Financial Condition And Results of
                Operations
            18Item
                7A
            Quantitative
                and Qualitative Disclosures about Market Risk
            23Item
                8
            Financial
                Statements and Supplementary Data
            25Item
                9
            Changes
                in and Disagreements with Accountants on Accounting
                and Financial Disclosure
            25Item
                9A
            Controls
                and Procedures
            25Item
                9B
            Other
                Information
            26PART
                IIIItem
                10
            Directors,
                Executive Officers and Corporate Governance
            26Item
                11
            Executive
                Compensation
            30Item
                12
            Security
                Ownership of Certain Beneficial Owners and Management And Related
                Stockholder Matters
            34Item
                13
            Certain
                Relationships and Related Transactions and Director
                Independence
            36Item
                14
            Principal
                Accounting Fees and Services
            36PART
                IVItem
                15
            Exhibits,
                Financial Statement Schedules
            37Signatures
            
            46




3




**PART
      I**





**Item
      1. Description of Business**





BrandPartners
      Group, Inc. (“BrandPartners Group” or “BrandPartners”), was originally
      incorporated in 1984 under the name “Performance Services Group, Inc.” in the
      state of New York. We changed our name to “Financial Performance Corporation” in
      1986, and in 2001 we were reincorporated in the state of Delaware and changed
      our name to BrandPartners Group, Inc. to more accurately reflect the products
      and services we offer. Today we operate through our wholly owned subsidiaries
      BrandPartners Retail, Inc. (“Brand Retail”), Grafico Incorporated (“Grafico”),
      Building Partners, Inc. (“Build Partners”), and BrandPartners Europe, Ltd.
      (“Brand Europe”), to offer to our customers the next generation retail
      environments for financial service companies and retail
      organizations.




·
            Brand
                Retail





On
      January 16, 2001, we purchased 100% of the common stock of Brand Retail, a
      New
      Hampshire corporation (formerly known as Willey Brothers). Brand Retail is
      a
      provider of integrated products and services dedicated to providing clients
      with
      turn-key interior, exterior, and design/build solutions and programs for
      financial and non-financial retailers. Brand Retail has been providing products
      and services to the financial and non-financial services industry throughout
      the
      United States and Canada since 1983.





·
            Grafico





We
      formed
      Grafico, a Delaware corporation in 2005, to provide similar services as those
      offered by Brand Retail with a focus on the non-standard market segment of
      the
      financial services industry. On June 30, 2007 certain assets of Grafico of
      nominal value were sold to its former general manager for $15,000. Grafico
      business operations were minimal for the period July 1, 2007 to December 31,
      2007.





·
            Building
                Partners





Build
      Partners was incorporated in Delaware in January 2006 and provides general
      contracting services.





·
            Brand
                Europe





Brand
      Europe was formed in 2005 and has been located in London, England. Brand Europe
      focuses on providing similar products and services as Brand Retail to the
      European market. Brand Europe business operations were inactive in
      2007.





*BrandPartners
      Products and Services*





BrandPartners
      serves an evolving industry, helping companies transform transactional
      environments into three-dimensional retail experiences. This customer experience
      is intended to retain clients, sell products and services, and builds a
      consistent brand identity. Our integrated solutions are designed to build the
      client’s brand, enhance the customer experience, and optimize retail network
      profitability.





BrandPartners
      believes that a retail space must deliver tangibly and consistently on the
      brand
      promise. We call this “Making Brands Real.” BrandPartners works with financial
      and other retail organizations to positively influence consumer buying behavior
      through brand translation, creative services, retail merchandising, retail
      digital networking, design/build, and strategic market intelligence.




4




BrandPartners’
      unique offering of branded customer experiences and integrated design services,
      including architectural, product and creative merchandising, encompasses a
      large
      spectrum of branch design services. Architectural design services, including
      conceptual design, design development, construction, documentation, contract
      administration, and project management, have allowed BrandPartners to offer
      a
      menu of products and services to both large and small institution clients.





Working
      with our proven system of vendors or those of the client’s choice, our
      comprehensive products and services include:





·
            Strategic
                market intelligence and branch network
                analysis





·
            Environmental
                design, construction, and project management
                services





·
            Traditional
                and digital merchandising systems, logistics, distribution, and inventory
                management





·
            Point-of-sale
                communications, brand strategy, sales training and marketing
                programs





·
            Contract
                furniture




*BrandPartners
      Business Platform*





BrandPartners
      is a project-oriented company. We assemble internal and external resources
      to
      service our clients’ needs. Internal resources are directed by individual
      program managers and are shared throughout the Company. Collaboration is the
      key
      in providing seamless and efficient service to our clients.





Because
      of BrandPartners’ position in the retail financial services marketplace, we are
      able to service the needs of clients ranging from the non-standard lending
      market, credit unions and community banks, to the largest financial
      institutions. Our sales force markets our products and services to targeted
      companies through trade shows, direct marketing, speaking engagements, and
      company-sponsored events. Our collaborative teams include brand strategists,
      architects, designers, account managers, analysts, construction and logistical
      planners. Our project management skills ensure that the client’s vision becomes
      a physical reality. Our program management team works in conjunction with the
      Information Technology (IT) department via client specific web sites to
      communicate daily with the client from the design and planning stages through
      the implementation of the project.





BrandPartners
      offers the following services independently or as a package, dependent upon
      the
      needs of the client and of the project:





·
            Corporate
                Reconnaissance.
                Through interviews and discussions with the client and with market
                research, we work with the client to understand its history of retail
                development, current corporate culture, customer demographics, product
                strategy, overall image, and future brand
                objectives.





·
            Network
                Analysis/Site Analysis/Branch Typing*.*We
                analyze the client’s current retail network. This analysis covers on-site
                audits of locations for overall interior fitness, traffic flow, selling
                zones, fixture placements and design, point-of-sales messages and
                placements, and local demographic analysis. Branch typing helps to
                determine what type of products should be recommended for the network.
                The
                “Brand Blueprint” is a deliberate methodology for developing a successful
                brand identity and is crucial to maximizing brand equity. It is a
                disciplined plan that creates, designs, and communicates the intended
                brand perception.




5




·
            Point-of-Sale
                Communications*.*We
                translate the client’s branding strategy into a well-coordinated written,
                verbal, and physical message, which is refined and promoted to the
                target
                market through in-store communication vehicles,
                including:





o
            Point-of-sale
                communications


o
            Digital
                merchandising


o
            Marketing
                materials


o
            Advertising
                campaigns





·
            Site
                Analysis/Market Intelligence*.*Site selection is about weighing options and making the right choice
                to
                protect the significant investment in a new branch. A comprehensive
                assessment of the potential of a proposed expansion or current operating
                area, focusing on market characteristics most important to success,
                is
                used to develop a three to five year program by identifying and
                prioritizing the most attractive growth markets.





·
            Environmental
                Design*.*BrandPartners’ industry award-winning, architectural design team creates a
                design template that translates the attributes of the “model branch” into
                a master store design. Retail locations are designed to support the
                brand,
                maximize the impact of point-of-sale communications, and communicate
                with
                the customer through the appropriate brand experience.





·
            Project
                Management*.*We
                manage the implementation process, including the overall pricing
                of all
                components of the branch, hiring the subcontractors, and ensuring
                that the
                project is finished on time and on budget.





·
            Furniture*.*We
                supplement our projects with office furniture systems and case goods,
                which are often integrated in innovative ways into our programs.





·
            Logistics,
                Distribution and Inventory Management*.*In
                conjunction with our various products and services, we provide logistics,
                distribution, warehousing, and inventory management to our clients.
                In
                many cases, we warehouse client-owned inventory for future acquisitions
                or
                renovated branches.





*Target
      Markets*





BrandPartners’
      revenues have historically been derived primarily from clients in the financial
      services markets. Target markets and a representative sample of clients
      include:





·
            Tier
                One Banks*.*Retail banking organizations, bank holding companies, and thrifts
                with
                more than 250 branch locations.





·
            Regional
                and Community Banks*.*Banking organizations and bank holding companies with between 25
                and 250
                branches.





·
            Credit
                Unions*.*Banking organizations with between 1 to 25
                branches.





·
            Non-Bank
                Financial Services Companies*.*Companies providing financial service products to consumers and businesses
                that are not licensed as banks. These organizations include brokerage
                houses, mutual fund companies, asset management companies, insurance
                and
                mortgage companies, and tax services
                companies.





6





·
            Other*.*Other retail industries and service organizations that can use our
                capabilities and expertise in the retail environment, focusing on
                industries that have synergies and parallels to our core
                industry.





*Suppliers/Working
      Capital*





BrandPartners
      outsources most of its manufacturing and fabrication services from a variety
      of
      suppliers in many locations. We do some light production work (i.e. engraving,
      painting, screen printing, etc.) but do not own or operate manufacturing
      facilities. Most outsourcing is project specific, based upon branch locations,
      and the nature of the products and services provided. Since the majority of
      the
      product produced for customers is project specific, with the typical turnaround
      from the suppliers being timely, BrandPartners is not required to maintain
      a
      large inventory.





*Backlog*





The
      backlog consists of signed orders to be delivered in future periods and does
      not
      include any revenue recognized in the current fiscal year. For the years ended
      December 31, 2007, 2006 and 2005, the backlog was approximately $11 million,
      $19
      million and $22 million, respectively.





*Significant
      Customers*





As
      BrandPartners is a contract/project driven company, those clients designated
      as
“significant” (greater than 10% of consolidated revenues) varies from period to
      period. For the year ended December 31, 2007, one customer accounted for 16%
      of
      our revenues. For the year ended December 31, 2006, one customer accounted
      for
      10% of our revenues, respectively. For the year ended December 31, 2005, three
      customers accounted for 19%, 15% and 13% of our revenues,
      respectively.





*Employees*





As
      of
      March 23, 2008, we have 123 full-time employees and no part time employees.
      Our
      employees are not represented by a union or collective bargaining unit. We
      believe our relations with our employees are good.





*Competition*





Due
      to
      the nature of BrandPartners’ business, we compete with design houses,
      architectural firms, consulting firms, fixture companies, and advertising
      agencies of varying sizes. Our product and service offerings are fragmented
      across many sectors, which results in a highly competitive environment. We
      believe that our competitive advantage is our approach and expertise across
      a
      range of products and services, touching numerous aspects of the retail system.
      Many of our primary competitors focus on only one type of product or
      service.





*Where
      to Get More Information*





Our
      corporate website address is http://www.bptr.com .
      We file
      annual, quarterly, and special reports; proxy statements and other information
      with the Securities and Exchange Commission (“SEC”). These reports are available
      on our website free of charge as soon as reasonably practicable after such
      material is electronically filed with, or furnished to, the SEC.




7




**Item
      1A. Risk Factors**





You
      should carefully consider the following risk factors in addition to the other
      information included in this report. If any of these risks or uncertainties
      actually occurs, our business, financial condition, and results of operations
      could be materially adversely affected. Additional risks not presently known
      to
      us, or which we consider immaterial based on information currently available
      to
      us, may also materially adversely affect us. In this section, the terms “Brand,”
“we,” “us,” and “our” refer to BrandPartners and its subsidiaries, unless the
      context clearly indicates otherwise.





**The
      business of providing merchandising, design/build, creative/point of sale,
      furniture, and branding/marketing services to financial services institutions
      and traditional retailers is highly competitive. If we are not able to compete
      effectively, our revenues and profit margins will be adversely
      affected** **.**





The
      consulting design services, merchandising markets, and the store build-out
      industry in which we operate, although fragmented, includes a large number
      of
      service providers, making our business highly competitive. Many of our
      competitors have greater financial, technical, and marketing resources; larger
      customer bases; greater name recognition; and more established relationships
      with their customers and suppliers than we have. Larger and better-capitalized
      competitors may be better able to respond to the need for technical changes,
      to
      price their services more aggressively, to compete for skilled professionals,
      to
      finance acquisitions, to fund internal growth, and to compete for market share
      generally.





Our
      current and potential competitors have established or may establish cooperative
      relationships among themselves or with third parties to increase their abilities
      to address client needs. New competitors or alliances among competitors could
      emerge and gain significant market share. Some of our competitors may have
      or
      may develop a lower cost structure, adopt more aggressive pricing policies,
      or
      provide superior services that gain greater market acceptance than the services
      that we offer or develop. Furthermore, our clients may establish either
      strategic sourcing or centralized purchasing departments, which may aggressively
      pursue low cost producers at the expense of value-add firms. In order to respond
      to increased competition and pricing pressure, we may have to lower our prices,
      which would have an adverse effect on our revenues, gross margins and net
      profits. In addition, financial institutions may not choose to outsource their
      design and merchandising needs, which would have an adverse effect on our
      revenue growth. .





**There
      can be no assurances that we will be successful in our efforts to expand and
      diversify our revenue base or enter into new partnerships to further expand
      our
      business.**





Because
      our business and revenues are contract driven, we are not able to maintain
      a
      steady revenue stream. As such, we continue to seek acquisitions/partnerships,
      expand and diversify our customer base in our core industry, and pursue new
      growth opportunities in other vertical markets. We may fund such acquisitions
      or
      other transactions through the issuance of equity or debt securities, with
      indebtedness or cash, through other forms of compensation and incentives, or
      any
      combination thereof. If we identify an appropriate acquisitions candidate or
      other business transaction, we may need to seek additional financing, although
      no assurances can be given that we will be able to expand our business to other
      vertical markets, find suitable acquisition/partners, or obtain additional
      financing if necessary, on favorable terms or at all.





**A
      significant or prolonged economic downturn could have a materially adverse
      effect on our revenues and profit margin.**





Our
      results of operations are affected directly by the level of business activity
      of
      our clients, which in turn, is affected by economic activity in general. If
      there were a continued economic downturn, we might experience a reduction in
      the
      growth of new business, as well as a reduction in existing business, which
      may
      have an adverse effect on our business, financial condition, and the results
      of
      operations. We may also experience decreased demand for our services as a result
      of postponed or terminated outsourcing, budget reductions, reductions in the
      size of our clients’ design/build and retail merchandising needs, or mergers
      and/or consolidations in the financial services industry. Reduced demand for
      the
      services that we offer could also increase price competition within our industry
      by our competitors, which could further diminish our revenues.




8




**We
      derive a large portion of our revenues from the financial services industry,
      which has consolidated in recent years, and if it continues to consolidate,
      we
      may be adversely affected by a reduction in available market
      share.**





The
      financial services industry, which we serve, has experienced a number of mergers
      and acquisitions in recent years. While we may experience a short-term gain
      in
      the demand for our products and services as a result of mergers and
      consolidations, long term, we may lose existing clients by way of the merger
      activity as a result of a reduction in available market share, which could
      adversely affect our revenues.





**The
      profitability of our engagements with clients may not meet our
      expectations.**





There
      are
      a number of variables, some of which are beyond our control that go into
      determining the profitability of a particular project we undertake. Unexpected
      costs from suppliers or delays encountered in our projects could make our
      outsourcing contracts or consulting engagements less profitable than
      anticipated. When making proposals for outsourcing or consulting contracts,
      we
      estimate the costs associated with such engagements. Any increased or unexpected
      costs of unanticipated delays in connection with the performance of these
      engagements, including delays caused by factors outside our control, could
      have
      an adverse effect on our profit margin. In the event we are unable to meet
      completion schedules, we may experience payment penalties with our clients
      reducing the profitability of an engagement.





Additionally,
      we may also be subject to cost overruns as a result of delays beyond our
      control. Cost overruns or early contract terminations could cause our business
      to be less profitable than anticipated.





In
      connection with some of our design/build construction projects, we may
      experience delays in receiving final certificates of occupancy, which might
      result in payment delays by our clients. From time to time, we may also
      encounter changes in construction and building codes that might increase the
      costs of a long-term build-out project, which we may be unable to pass along
      to
      a client.





Our
      clients typically retain us on a contract engagement by contract engagement
      basis, rather than under exclusive long-term contracts. Large client projects
      may involve multiple engagements, and locations, and there is a risk that a
      client may not choose to retain us or may cancel or delay additional stages
      of a
      project. These terminations, cancellations, or delays could result from factors
      unrelated to our work product or to the progress of the project, such as the
      business or financial condition of the client, or general economic conditions.
      When engagements are terminated, we lose the associated revenues, and we may
      not
      be able to eliminate all of the associated costs or redeploy the affected
      employees in a timely manner to minimize the negative impact on
      profitability.





**The
      loss of a significantly large client or several clients could have a materially
      adverse effect on our revenues.**





Although
      our client relationships are often on a project-by-project basis, the loss
      of a
      significantly large client or several clients could adversely impact our
      revenues and profitability. Over the past three (3) completed fiscal years,
      we
      have derived at least ten (10%) percent of our revenues from at least one or
      more significant clients. Given the amount of time needed to develop new
      clients, there is no assurance that we would be able to promptly replace the
      revenues lost if a significantly large client, or several clients terminated
      our
      services.




9




**In
      order to grow our business, we may need to do so in part by acquisitions, which
      may be difficult to integrate or manage with our existing businesses, which
      may
      harm our financial results or reputation in the
      marketplace.**





Because
      of the nature of our business and the market we serve, our expansion and growth
      may be dependent in part on our ability to make acquisitions of similar
      companies, or companies that provide synergy with our business. The risks we
      face related to acquisitions include:





·
            Overpaying
                for acquired businesses


·
            Facing
                integration challenges


·
            Having
                difficulty in finding appropriate acquisition
                candidates





We
      may
      pursue acquisitions in the future, which may subject us to a number of risks,
      including:





·
            Diversion
                of management attention;





·
            Amortization
                and potential impairment of intangible assets, which could adversely
                affect our reporting results;





·
            Inability
                to establish uniform standards, controls, procedures, and
                policies;





·
            Inability
                to retain the acquired company’s
                clients;





·
            Exposure
                to legal claims for activities of the acquired business prior to
                acquisition; and





·
            Inability
                to effectively integrate the acquired company and its employees into
                our
                organization.





We
      may
      not be successful in identifying appropriate acquisition candidates or in
      consummating acquisitions on terms acceptable or favorable to us. We may not
      succeed in integrating or managing acquired businesses, or in managing the
      larger company that could result from these acquisitions. Client dissatisfaction
      or performance problems, as a result of integration or management difficulties
      or otherwise, could have an adverse impact on our reputation. In addition,
      any
      acquired business could significantly underperform relative to our
      expectations.





**Our
      business will be negatively affected if we are not able to keep pace with
      marketing changes and the needs of our clients.**





Our
      industry continues to evolve, and traditional revenue streams continue to be
      modified. Our future success depends, in part, on our ability to develop and
      implement design and marketing plans that anticipate and keep pace with rapid
      and continuing changes in industry standards and client preferences. We may
      not
      be successful in anticipating or responding to these developments on a timely
      and cost-effective basis, and our ideas may not be accepted in the marketplace.
      Also, marketing plans developed by our competitors may make our service
      non-competitive or obsolete. Any one of these circumstances could have a
      materially adverse effect on our ability to obtain and complete important client
      engagements.





Our
      business is also dependent, in part, upon continued growth in business by our
      clients and prospective clients, and our ability to deliver innovative design
      and marketing concepts to our clients. The effort to gain new clients may
      require us to incur significant expenses. If we cannot offer innovative,
      cost-effective approaches as compared to our competitors, we could lose market
      share.




10


**If
      our clients or third parties are not satisfied with our services, we may face
      damage to our professional reputation, or legal liability and payment
      delays.**





We
      depend
      to a large extent on our relationships with our clients and our reputation
      for
      high-quality outsourcing and consulting services. As a result, if a client
      is
      not satisfied with our services or products, it may be more damaging to our
      business than in other businesses. Moreover, if we fail to meet our contractual
      obligations, we could be subject to legal liability, or the loss of client
      relationships.





Clients
      and third parties, who are dissatisfied with our services, or who claim to
      suffer damages caused by our services, may bring lawsuits against us. Defending
      lawsuits arising out of any of our services could require substantial amounts
      of
      management attention, which could adversely affect our financial performance.
      In
      addition to the risks of liability exposure and increased costs of defense
      and
      insurance premiums, claims may produce publicity that might hurt our reputation
      and business.





**The
      nature of our design/build work involves the use of a large number of
      subcontractors, which in turn, could have an adverse impact on the profitability
      of any given project.**





In
      the
      event that the implementation or design or a project is delayed as a result
      of a
      dispute with a subcontractor or client, payment may be delayed and cause a
      cash
      flow deficit in our business. Additionally, subcontractors and vendors could
      file liens for materials and services that could create client problems that
      could delay payment.





Our
      ability to schedule and rely upon these subcontractors for the timely and proper
      completion of a project is essential. The failure of a subcontractor to timely
      or properly perform a job on a project could have a ripple effect that might
      adversely affect our revenue stream.





**The
      loss of key employees could damage or result in the loss of client relationships
      and adversely affect our business.**





Our
      success largely depends upon the business generation capabilities and project
      execution skills of our employees. In particular, our employees’ personal
      relationships with our clients are an important element of obtaining and
      maintaining client engagements. Losing employees who manage substantial client
      relationships, or who possess substantial experience or expertise could
      adversely affect our ability to secure and complete engagements, which could
      adversely affect our results of operations. We have non-compete agreements
      with
      certain employees. However, the enforceability of these agreements may be
      limited because of the limitations that have restricted their enforceability
      due
      to court decisions in various states.





In
      addition, if any of our key employees were to join an existing competitor or
      form a competing company, some of our clients could choose to use the services
      of that competitor instead of our services. Clients or other companies seeking
      to develop in-house services similar to ours also could hire our key employees.
      Such hiring would not only result in our loss of key employees, but might also
      result in the loss of a client relationship or a new business
      opportunity.





**If
      we fail to establish and maintain alliances for developing, marketing, and
      delivering our services, our ability to increase our revenues and profitability
      may suffer.**





Our
      business depends, in part, on our ability to develop and maintain alliances
      with
      businesses, such as banks and financial services firms and companies, in order
      to develop, market, and deliver our services. If our strategic alliances were
      to
      be discontinued, or if we have difficulty developing new alliances, our ability
      to increase or maintain our client base may be substantially
      diminished.





11




**Increases
      in labor and material costs could result in a decline in
      profitability.**





We
      are
      subject to cost increases for both labor and materials, and while we have a
      good
      relationship with our employees, we cannot be certain that we will not face
      an
      increase in our labor costs, or an increase in the labor costs of our vendors
      and subcontractors that perform services on our projects. Additionally, we
      are
      subject to material price increases that can be imposed on us during or after
      we
      have submitted a bid price for a project, and while we attempt to pass along
      cost increases for labor and materials, there is no assurance that we will
      be
      able to do so.





**An
      increase in borrowing costs may have an adverse impact on our core
      business.**





In
      the
      event of any increase in the prime and federal funds lending rates, our clients
      may postpone or eliminate new projects, as well as related consulting services,
      which could have an adverse effect on our resources and profit.





**The
      price of our shares may be adversely affected by the public sale of a
      significant number of the shares eligible for future
      sale.**





In
      the
      past, we have raised money through the sale of shares of our common stock or
      derivative securities that may convert into shares of our common stock at a
      discount to the current market price. Such arrangements have included the
      private sale of shares to investors on the condition that we register such
      shares for resale by the investors to the public. These arrangements have taken
      various forms, including private investments in public equities or “PIPE”
transactions, and other transactions.





We
      will
      continue to seek financing on an as-needed basis on terms that are negotiated
      in
      arms-length transactions. Moreover, the perceived risk of dilution may cause
      our
      existing shareholders and other holders to sell their shares of stock, which
      would contribute to a decrease in our stock price. In this regard, significant
      downward pressure on the trading price of our stock may also cause investors
      to
      engage in “short” sales, which would further contribute to significant downward
      pressure on the trading price of our stock.





**We
      may be required to repurchase certain warrants or underlying warrant
      shares.**





Our
      subordinated lender, Corporate Mezzanine II, L.P., as part of our financings,
      was issued 405,000 warrants to purchase 405,000 shares of our common stock
      at
      $0.01 per share, an additional 10,000 warrants to purchase 10,000 shares at
      $0.24 per share, and an additional 250,000 warrants to purchase 250,000 shares
      at $0.26 per share. The warrants, which expire on October 22, 2011, contain
      both
      anti-dilution price and share equivalent protection, which is triggered by
      our
      issuing shares or warrants below the market value price of our stock on the
      date
      of issuance. The holder of the warrants and/or underlying warrant shares has
      the
      right to “put” the warrant or underlying shares to us and we are required to
      repurchase the warrants and/or warrant shares.





In
      the
      event we do not have sufficient available funds to repurchase the warrants,
      we
      may be required to issue a three-year promissory note with interest at 18%
      per
      annum as payment for the warrants or shares.





**We
      have incurred losses in the past, and we may incur losses in the
      future.**





We
      have
      incurred losses in a majority of our fiscal years since our inception. This
      past
      fiscal year, we had a loss of approximately $12,269,000 prompted primarily
      by an
      impairment charge to Goodwill of $12,000,000. Depending upon business cycles
      and
      other factors beyond our control, we may experience losses in the future, or
      in
      the event of a quarterly profit, profits may not be sustainable.





12




**We
      may require additional financing to sustain our business operations or implement
      business initiatives in the future.**





Although
      we believe that we currently have sufficient funding in place to sustain our
      present business operations for the foreseeable future, we may continue to
      seek
      additional financing through the issuance of equity or debt. Additionally,
      if we
      experience any changes in the revenues we derive from our products and services,
      we may require additional funding to maintain our current business operations.
      Unless we are able to generate additional revenue from our current business,
      we
      will require additional funds to implement any business initiatives we may
      seek
      to realize in the future.





**We
      are dependent upon our current credit facility to maintain our
      operations.**





We
      are
      party to a commercial loan agreement with a lender through which we have a
      credit facility comprised of a term loan, whose balance at December 31, 2007
      was
      approximately $278,000, and a revolving line of credit of up to $5,000,000.
      All
      of the assets of our wholly owned subsidiaries are pledged to secure the credit
      facility, which requires us to make principal and interest payments over the
      life of the facility. The credit facility imposes certain loan covenants on
      us.
      We have in the past been unable to satisfy these covenants. In the event we
      fail
      to satisfy the covenants or if we do not receive a waiver from our lender or
      a
      modification of same, we would be in default under our commercial loan
      agreement, and our lender could call the full outstanding facility due, which
      would have a materially adverse effect on our ability to maintain our business
      operations.





**We
      are subject to a subordinate financing arrangement that requires quarterly
      interest payments and matures in October 2009, at which time we will be required
      to make a payment of approximately $6.8 million to the
      lender.**





We
      are
      party to a subordinate loan agreement with Corporate Mezzanine II, L.P., secured
      by a pledge of all our assets. As of March 28, 2008, the balance of the note
      was
      approximately $6.4 million. The facility requires quarterly interest payments
      and matures in October 2009, at which time a balloon payment of approximately
      $6.8 million will be due. If we are unable to make payment on this facility
      at
      any time or at the maturity date of same, of if we are unable to abide by the
      financial covenants of the facility, we may be deemed in default of the
      subordinate loan agreement. There is no assurance that we will have adequate
      funds or will be able to make arrangements for financing to satisfy this
      facility when it matures in 2009. Failing to have adequate funds to satisfy
      the
      facility will result in a default.





**Shareholders
      of our common stock may face dilution of their
      holdings.**





The
      exercise of some or all of our outstanding warrants and stock options would
      dilute the then existing stockholders’ ownership of common stock, and any sales
      in the public market of the common stock issuable upon such exercise could
      adversely affect prevailing market prices for our common stock. In addition,
      the
      existence of a significant number of outstanding options and warrants could
      depress the price of our common stock. Moreover, the terms upon which we would
      be able to obtain additional equity capital could be adversely affected because
      the holders of such securities can be expected to exercise them at a time when
      we would, in all likelihood, be able to obtain any needed capital on terms
      more
      favorable than those provided by such securities.


13


**Our
      common stock is subject to the “penny stock’ rules of the SEC, and the trading
      marketing in our securities is limited, which makes transactions in our stock
      cumbersome and may reduce the value of an investment in our
      stock.**





Shares
      of
      our common stock are “penny stocks” as defined in the Exchange Act, which are
      traded in the Over-the-Counter Market on the OTC Bulletin Board. As a result,
      investors may find it more difficult to dispose of or obtain accurate quotations
      as to the price of the shares of the common stock being registered hereby.
      In
      addition, the “penny stock” rules adopted by the Commission under the Exchange
      Act subject the sale of shares of our common stock to certain regulations which
      impose sales practice requirements on brokers/dealers. For example,
      brokers/dealers selling securities must, prior to effecting the transaction,
      provide their customers with a document that discloses the risks of investing
      in
      such securities. Included in this document are the following:





·
            The
                bid and offer price quotes in and for the “penny stock” and the number of
                shares to which the quoted prices
                apply.





·
            The
                brokerage firm’s compensation for the
                trade.





·
            The
                compensation received by the brokerage firm’s salesperson for the
                trade.





In
      addition, the brokerage firm must send the investor:





·
            A
                monthly account statement that gives an estimate of the value of
                each
                “penny stock” in the investor’s
                account.





·
            A
                written statement of the investor’s financial situation and investment
                goals.





Legal
      remedies, which may be available to you as an investor in “penny stocks” are as
      follows:





·
            If
                a “penny stock” is sold to an individual in violation of the rights listed
                above, or other federal or states securities laws, the person may
                be able
                to cancel the purchase and receive a
                refund





·
            If
                the stocks are sold in a fraudulent manner, the individual may be
                able to
                sue the persons and firms that caused the fraud for
                damages.





·
            If
                an arbitration agreement was signed, however, the claim may have
                to be
                pursued through arbitration.





If
      the
      person purchasing the securities is someone other than an accredited investor
      or
      an established customer of the broker/dealer, the broker/dealer must also
      approve the potential customer’s account by obtaining information concerning the
      customer’s financial situation, investment experience, and investment
      objectives. The broker/dealer must also make a determination as to whether
      the
      transaction is suitable for the customer, and whether the customer has
      sufficient knowledge and experience in financial matters to be reasonably
      expected to be capable of evaluating the risk of transactions in such
      securities. Accordingly, the Commission’s rules may limit the number of
      potential purchases of the shares of our common stock.


14


**Our
      certificate of incorporation places limitations on the liability of our
      directors.**





Our
      certificate of incorporation includes a provision to eliminate, to the fullest
      extent permitted by the Delaware General Corporation Law as in effect from
      time
      to time (the “DGCL”), the personal liability of our directors for monetary
      damages arising from a break in their fiduciary duties as directors. In
      addition, our certificate of incorporation and by-laws include provisions
      requiring us to indemnify to the fullest extent permitted by the DGCL any
      persons made party to or threatened to be made a party to any action, suit
      or
      proceeding by reason of the fact that such person is or was a director or
      officer of the Company, or is or was serving at our request as a director or
      officer of another corporation or entity, against all expense, liability or
      loss
      incurred in connection therewith. Such provisions also permit us, to the extent
      authorized by our Board of Directors, to indemnify and grant rights to
      indemnification to our employees and agents to the fullest extent such
      indemnification is available to officers and directors.





**Certain
      provisions in our certificate of incorporation and by-laws may make it more
      difficult to effectuate change in the composition of our
      Board.**





Certain
      provisions in our certificate of incorporation and by-laws may make it more
      difficult for holders of a majority of the outstanding shares of common stock
      to
      change the composition of the Board of Directors and to remove existing
      management where a majority of the stockholders may be dissatisfied with the
      performance of the incumbent directors or otherwise desire to make
      changes.





**Item
      1B. Unresolved Staff Comments**





Not
      applicable.





**Item
      2. Description of Property**





BrandPartners’
      executive offices, as well as the offices for Brand Retail and Building
      Partners, are located in Rochester, New Hampshire, where we lease a facility
      of
      approximately 82,000 square feet. The annual rent for this location is
      approximately $315,000. The lease for this location expires in August of 2011.
      We also lease a warehouse, which houses our production facilities and our
      inventory, in Rochester, New Hampshire of approximately 72,000 square feet
      at an
      approximate annual rent of $290,000. This lease expires also in August
      2011.





We
      anticipate that we will be able to extend these leases on terms satisfactory
      to
      us, or, if necessary, locate substitute facilities on acceptable terms. Our
      present facilities are deemed adequate for our business for the foreseeable
      future.


Location
                
                Approximate
                  Annual
                    Rent
                
                Square
                  Footage
                
                Lease
                  ExpirationAdministrative/sales
                    office
                
                $
                315,000
                
                
                82,000
                
                
                August
                    2011Warehouse
                
                
                290,000
                
                
                72,000
                
                
                August
                    2011
  15





**Item
      3. Legal Proceedings**





None





**Item
      4. Submission of Matters to a Vote of Securities Holders**





None





**PART
      II**





**Item
      5. Market for Common Equity and Related Stockholder
      Matters**





The
      Company’s common stock is currently quoted on the Over-the-Counter Bulletin
      Board under the symbol “BPTR.OB.” The following table shows for the periods
      indicated, the high and low reported sales prices per share for the common
      stock
      of the Company as reported by the Over-the-Counter Bulletin
      Board.


**High**
              
              **Low****Calendar
                  Year 2006**First
                  Quarter Ended March 31, 2006
              
              $
              0.50
              
              $
              0.38Second
                  Quarter Ended June 30, 2006
              
              
              0.48
              
              
              0.19Third
                  Quarter Ended September 30, 2006
              
              
              0.24
              
              
              0.11Fourth
                  Quarter Ended December 31, 2006
              
              
              0.15
              
              
              0.09**Calendar
                  Year 2007**First
                  Quarter Ended March 31, 2007
              
              $
              0.15
              
              $
              0.09Second
                  Quarter Ended June 30, 2007
              
              
              0.14
              
              
              0.06Third
                  Quarter Ended September 30, 2007
              
              
              0.11
              
              
              0.08Fourth
                  Quarter Ended December 31, 2007
              
              
              0.11
              
              
              0.03**Calendar
                  Year 2008**First
                  Quarter Ended March 31, 2008
              
              $
              0.07
              
              $
              0.04





As
      of
      March 12, 2008, we had approximately 2,100 holders of record of our common
      stock.





To
      date,
      we have not paid any dividends on our common stock, nor do we anticipate paying
      dividends on our common stock for the foreseeable future. Any payment of future
      cash dividends and the amount thereof will be dependent upon our earnings,
      financial requirements, and other factors deemed relevant by our Board of
      Directors.


16


The
      following table sets forth information as of March 27, 2008, related to Company
      compensation plans as approved by the shareholders.


Plan Category
              
              Number of
                securities to be
                  issued upon
                exercise of
                  outstanding
                options, warrants
                & rights
                (a)
              
              Weighted-average
                  exercise price of outstanding options (b)
              
              Number of
                securities remaining
                  available for future issuance under equity
                compensation plans
                  [excluding
                securities reflected
                incolumn (a)]
                (c)BrandPartners
                  2004 Stock Incentive Plan
              
              
              6,017,500
              
              $
              0.52
              
              
              1,982,500Financial
                  Performance Corporation 2001 Stock Incentive Plan
              
              
              48,192
              
              $
              1.00
              
              
              4,951,808Total
              
              
              6,065,692
              
              
              
              
              
              6,934,308





**Item
      6. Selected Financial Data**


2007
              
              2006
              
              2005
              
              2004
              
              2003*For
                  the Year*Revenues
              
              $
              43,809
              
              $
              52,476
              
              $
              52,036
              
              $
              50,613
              
              $
              33,667Income
                  (Loss) from Continuing Operations
              
              $
              (10,870
              )
              $
              (823
              )
              $
              3,586
              
              $
              5,134
              
              $
              (10,964
              )Income
                  (Loss) Per Share from Continuing Operations*
              
              $
              (0.31
              )
              $
              (0.07
              )
              $
              0.11
              
              $
              0.17
              
              $
              (0.59
              )*At
                  Year End*Total
                  Assets
              
              $
              21,027
              
              $
              36,506
              
              $
              36,376
              
              $
              37,306
              
              $
              35,834Long
                  Term Debt
              
              $
              6,404
              
              $
              6,452
              
              $
              6,740
              
              $
              5,784
              
              
              12,953Dividends
                  Declared Per Share
              
              
              None
              
              
              None
              
              
              None
              
              
              None
              
              
              None




**
        Income (loss) per share from continuing operations is based on basic number
        of
        shares and does not include dilution.*
 *The
        financial information for 2004 does not include the gain on forgiveness of
        debt.*




17


**Item
      7. Management’s Discussion and Analysis of Results of Operations and Financial
      Condition**





OVERVIEW





The
      following Management’s Discussion and Analysis (“MD&A”) is intended to help
      the reader understand BrandPartners Group, Inc. The MD&A is provided as a
      supplement to, and should be read in conjunction with, our financial statements
      and the accompanying notes (“Notes”). Management’s discussion and analysis of
      the Company’s financial condition and results of operations are based upon the
      Company’s consolidated financial statements, which have been prepared in
      accordance with accounting principles generally accepted in the United States
      of
      America. Some of the information contained in this discussion and analysis
      or
      set forth elsewhere in this annual report, including information with respect
      to
      our plans and strategy for our business and expected financial results, includes
      forward-looking statements that involve risks and uncertainties. You should
      review the “Risk Factors” under Item 1A for a discussion of important
      factors that could cause actual results to differ materially from the results
      described in or implied by the forward-looking statements contained in the
      following discussion and analysis.





We
      assist
      our clients in providing a positive and dynamic retail experience to their
      customers and sell related products and services to the retail services
      marketplace, primarily to financial services companies in the United States.
      We
      operate wholly owned subsidiaries [BrandPartners Retail, Inc. (“Brand Retail”);
      Building Partners, Inc. (“Build Partners”); Grafico Incorporated (“Grafico”);
      and BrandPartners Europe, Ltd. (“Brand Europe”)], although only Brand
      Retail, Build Partners and Grafico are currently active. BrandPartners
      is a service company challenged with meeting the needs of its clients to produce
      an environment, which creates an experience maximizing the client’s branded
      identity, and which provides the client’s customers with the messages and
      services so that the customer is fully aware of and can utilize the client’s
      product offerings.





As
      part
      of the initial contact with the client, an analysis of the client’s current
      locations may be required. This analysis may include the effectiveness of the
      client’s current brand, the placement of current marketing materials, overall
      interior fitness, traffic flow, and selling zones. The client may wish to create
      an entirely new environment, which may involve changing the branding identity,
      and updating the architectural and interior design. Marketing materials may
      also
      be assessed as to their effectiveness and the alignment with the branding
      message.





Due
      to
      the acquisition and merger activity in the financial services sector, the lack
      of warehouse facilities for many of our clients, and to quantity/cost ratios
      of
      merchandising fixtures and collateral, BrandPartners also provides
      after-the-sale services to many of our clients. Clients frequently purchase
      additional inventory to provide for future needs, with BrandPartners providing
      warehousing and fulfillment services to bring the client’s inventory to its
      locations as requested.





Our
      revenue has fluctuated historically due to the project nature of BrandPartners’
larger contracts. We have sought to expand our market focus to include firms
      outside the financial services marketplace to provide more consistent revenue.
      To take advantage of new market opportunities, we continue to invest in research
      and development for new products and in existing products that we believe can
      contribute significantly to our long-term growth.





SIGNIFICANT
      ACCOUNTING POLICIES





Our
      financial statements and accompanying notes are prepared in accordance with
      United States Generally Accepted Accounting Principles (“GAAP”). Preparing
      financial statements requires management to make estimates and assumptions
      that
      affect the reported amounts of assets, liabilities, revenue, and expenses.
      These
      estimates and assumptions are affected by management’s application of accounting
      policies. Actual results may differ from these estimates.


18


Our
      critical accounting estimates include:





1.
            Collectibility
                of accounts receivable


2.
            Valuation
                of goodwill and long-lived assets


3.
            Costs
                and billings on uncompleted
                contracts


4.
            Income
                taxes





*Revenue
      Recognition*





BrandPartners
      records revenue using the accounting method appropriate to the product and/or
      service being delivered. Management primarily uses the percentage-of-completion
      method, based upon actual costs incurred to date on such contracts. Contract
      costs include all direct materials, labor, and subcontractor costs. Anticipated
      losses are provided for in their entirety without reference to
      percentage-of-completion. Revenue on those products and services, which are
      not
      delivered as part of a larger project, are recognized as they are shipped or
      delivered, depending upon the nature of the product and/or service. General
      and
      administrative expenses are accounted for as current period charges, and
      therefore, are not included in the calculation of the estimates to
      complete.





*Accounts
      Receivable*





Periodically,
      we review accounts receivable to assess its estimates of collectibility.
      BrandPartners provides valuation reserves for bad debts based on specific
      identification of likely and probable losses. In addition, BrandPartners
      provides valuation reserves for estimates of aged receivables that may be
      written off, based upon historical evidence. These valuation reserves are
      periodically re-evaluated and adjusted as more information about the ultimate
      collectibility of accounts receivable becomes available.





*Goodwill
      and Long-Lived Assets*





On
      at
      least an annual basis we evaluate our goodwill and long-lived assets for
      impairment or whenever events or changes in circumstances indicate that the
      carrying value of such assets may not be recoverable. In assessing
      recoverability, management must make certain assumptions regarding estimated
      future cash flows and other factors to determine the estimated fair value of
      these assets.





During
      the fourth quarter of 2007, using the estimated fair value of its business
      operations, management recorded a non-cash impairment charge to the carrying
      value of its goodwill of $12 million within the statement of operations. We
      did
      not record an impairment charge for its goodwill and long-lived assets during
      each of the years ended December 31, 2006 and 2005.





*Income
      Taxes*





SFAS
      No.
      109, *Accounting
      for Income Taxes* ,
      establishes financial accounting and reporting standards for the effect of
      income taxes. The objectives of accounting for income taxes are:





·
            Recognition
                of the amount of taxes payable or refundable for the current
                year





·
            Recognition
                of deferred tax liabilities and assets for future tax consequences
                of
                events that have been recognized in an entity’s financial statements or
                tax returns





Judgment
      is required in assessing the future tax consequences of events that have been
      recognized in our financial statements or tax returns. Variations in the actual
      outcome of these future tax consequences could materially impact our financial
      position, results of operations, or cash flows.





19




**Results
      of Operations**





**Year
      Ended December 31, 2007 Compared to Year Ended December 31,
      2006**





*Revenues.* Revenues
      from operations decreased approximately $8.7 million or 17% for the twelve
      months ended December 31, 2007. The decrease was due to various projects that
      were anticipated to close with prospective clients in the community banking
      market were either put on hold or lost.





*Cost
      of Revenues.* Cost of
      revenues decreased 21% or approximately $9 million primarily due to lower
      revenues in 2007 versus 2006. In addition, due to the change in the product
      and
      services mix, our cost of revenues as a percentage of revenue was 76% in 2007as
      compared to 81% for the year ended December 31, 2006.





*Selling,
      General and Administrative Expenses.* SG&A
      expense amounted to approximately $9.4 million in 2007 versus $11.0 million
      in
      2006, a decrease of approximately $1.6 million or 15%. The reduced SG&A
      expense was principally due to the implementation in 2007 by management of
      a
      cost savings initiative program. This program resulted in reduced costs
      including compensation (approximately $600,000), professional fees
      (approximately $300,000) and other general overhead costs.





*Goodwill
      impairment.* In
      2007
      we recognized a $12 million non-cash impairment charge related to
      Goodwill.




*Interest
      Expense.* Interest
      expense decreased approximately $165,000 or 11% for the twelve months ended
      December 31, 2007 due to a lower level of average outstanding borrowings in
      2007
      versus 2006.





*Income
      Taxes.* We
      incurred a loss for the years ended December 31, 2007 and 2006, we did not
      accrue Federal income taxes. The expense in 2007 related to state taxes, whose
      amount is not based upon net income.





*Loss.* The net
      loss for the year ended December 31, 2007 of approximately $12,269,000 compares
      to a loss of $2.3 million in 2006, a negative change of approximately $9.9
      million.





The
      net
      loss for 2007 was the result of the following:





·
            $12
                million non-cash Goodwill impairment
                charge


·
            Decrease
                in sales to community banks and credit
                unions


·
            Offset
                by a decrease in interest expense


·
            Offset
                by decrease in selling, general and administrative
                expenses





**Year
      Ended December 31, 2006 Compared to Year Ended December 31,
      2005**





*Revenues.* Revenues
      from operations increased approximately $440,000 or 1% for the twelve months
      ended December 31, 2006. The increase was due to:





·
            Increase
                in sales to community banks and credit
                unions


·
            Offset
                by lower sales to larger financial
                institutions





*Cost
      of Revenues.* Cost of
      revenues increased 13% or approximately $5.0 million, which due to the product
      and services mix, resulted in a cost of revenues as a percentage of revenue
      of
      81% in 2006 versus 72% in 2005.




20





*Selling,
      General and Administrative Expenses.* SG&A
      expense amounted to approximately $11.0 million in 2006 versus $11.2 million
      in
      2005, a decrease of approximately $200,000 for 2006. This decrease was due
      to
      the following:





·
            Decrease
                in sales and marketing expenses of approximately
                $750,000


·
            Decrease
                in insurance expense of approximately $100,000


·
            Offset
                by an increase in salaries and benefits of approximately $230,000


·
            Offset
                by an increase in outside services expense to of approximately
                $230,000


·
            Offset
                by an increase in depreciation expense of approximately
                $100,000





*Interest
      Expense.* Interest
      expense increased approximately $437,000 or 41% in 2006 versus 2005, primarily
      due to to higher average levels of debt in 2006 and to an increase in the
      average interest rates.





*Income
      Taxes.* We
      incurred a net loss of approximately $2.3 million in 2006, we did not record
      an
      income tax provision. This resulted in a net change of approximately $600,000
      when compared to December 31, 2005.





*Net
      Income (Loss).* The net
      loss in 2006 of approximately $2.3 million versus net income in 2005 of
      approximately $1.9 million resulted in a negative change of approximately $4.2
      million or 221%.





**Liquidity
      and Capital Resources**





As
      of
      December 31, 2007, we had negative working capital (current assets less current
      liabilities) of approximately $2.2 million, and a working capital ratio (current
      assets to current liabilities) of approximately .77 to 1. At December 31, 2006,
      we had negative working capital of approximately $2.4 million and a working
      capital ratio of .81 to 1. This change in working capital arises primarily
      from
      the decrease in accounts payable and accrued expenses.





Cash
      flows provided by (used in) operating activities were approximately
      ($1,036,000), $761,000 and $372,000 for the years ended December 31, 2007,
      2006
      and 2005, respectively. In 2007, cash flows were provided by cash received
      for
      the payment of accounts receivable and the reduction in costs and estimated
      earnings in excess of billings. This was offset by a reduction in accounts
      payable and accrued expenses. In 2006, cash flows were provided by cash received
      for the payment of accounts receivable and the increase in accounts payable
      and
      job costing. In 2005, cash flows were provided by a reduction in inventory
      and
      an increase in accounts payable offset by a reduction in accounts receivable.
      The aggregated changes in the Cost in Excess of Billings and Billings in Excess
      of Cost accounts increased cash by approximately $731,000 in 2007, increased
      cash by $1.8 million in 2006 and decreased cash by $3.0 million in 2005. These
      accounts are used to track the timing differences between revenue recognition
      and invoicing, and are discussed in more detail in Note E in the attached notes
      to the financial statements.





We
      used
      cash flows to principally fund the acquisition of property and equipment
      amounting to approximately $194,000, $548,000 and $693,000 during the years
      ended December 31, 2007, 2006 and 2005, respectively.





In
      2007
      our cash flows from financing activities were principally provided from
      additional net short-term borrowings of $1,348,000 and additional long-term
      borrowings of $251,000, partially offset by payments on long-term debt of
      $688,000. In 2006 long-term debt payments of $675,000 were partially offset
      by
      additional long-term borrowings of $386,000 and additional short-term borrowings
      of $63,000, resulting in a net decrease in cash of approximately $225,000.
      Repayment of the prior credit facility offset by new long-term debt borrowings
      resulted in net cash usage of approximately $2.1 million for financing
      activities in 2005.




21




While
      we
      believe that our cash balances with the funds available under our existing
      credit facilities will be sufficient to meet our operating and recurring cash
      needs for the calendar year 2008, funds for retirement of debt, acquisitions,
      or
      other strategic initiatives may require the raising of additional funds.





We
      have
      not paid dividends on our common stock. In addition, due to servicing our debt
      obligations, we have no intention to pay any dividends in the foreseeable
      future.





Our
      material commitments as regards capital resources consist primarily of leases
      for office facilities under operating lease agreements. Future minimum payments
      under these leases are included in Note N of the accompanying consolidated
      financial statements.





**Recently
      Passed Legislation**





**Sarbanes-Oxley.** On
      July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of
      2002, referred to herein as the Act, which immediately impacts Securities and
      Exchange Commission registrants, public accounting firms, lawyers and securities
      analysts.  This legislation is the most comprehensive securities
      legislation since the passage of the Securities Acts of 1933 and 1934.  It
      has far reaching effects on the standards of integrity for corporate management,
      board of directors, and executive management.  We do not expect any
      material adverse effect on our business as a result of the passage of this
      legislation. We were in compliance with the Act as of December 31, 2007.





Refer
      to
      management’s certifications contained elsewhere in this report regarding our
      compliance with Sections 302 and 906 of the Act.





**Recently
      Issued Accounting Standards**





In
      February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
      Financial Assets and Financial Liabilities – Including an amendment of FASB
      Statement No. 115," which is effective for fiscal years beginning after
      November 15, 2007. This statement permits entities to choose to measure
      many financial instruments and certain other items at fair value. This statement
      also establishes presentation and disclosure requirements designed to facilitate
      comparisons between entities that choose different measurement attributes for
      similar types of assets and liabilities. Unrealized gains and losses on items
      for which the fair value option is elected would be reported in earnings. We
      have evaluated the new statement and have determined that it will not have
      a
      significant impact on the determination or reporting of our financial results.





In
      December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
      Combinations" (SFAS 141(R)), which replaces SFAS No. 141, "Business
      Combinations." SFAS 141(R) retains the underlying concepts of SFAS 141 in that
      all business combinations are still required to be accounted for at fair value
      under the acquisition method of accounting but SFAS 141(R) changed the method
      of
      applying the acquisition method in a number of significant aspects. Acquisition
      costs will generally be expensed as incurred; noncontrolling interests will
      be
      valued at fair value at the acquisition date; in-process research and
      development will be recorded at fair value as an indefinite-lived intangible
      asset at the acquisition date; restructuring costs associated with a business
      combination will generally be expensed subsequent to the acquisition date;
      and
      changes in deferred tax asset valuation allowances and income tax uncertainties
      after the acquisition date generally will affect income tax expense. SFAS 141(R)
      is effective on a prospective basis for all business combinations for which
      the
      acquisition date is on or after the beginning of the first annual period
      subsequent to December 15, 2008, with the exception of the accounting for
      valuation allowances on deferred taxes and acquired tax contingencies. SFAS
      141(R) amends SFAS 109 such that adjustments made to valuation allowances on
      deferred taxes and acquired tax contingencies associated with acquisitions
      that
      closed prior to the effective date of SFAS 141(R) would also apply the
      provisions of SFAS 141(R). Early adoption is not permitted. We are currently
      evaluating the effects, if any, that SFAS 141(R) may have on our financial
      statements and believe it could have a significant impact if business
      combinations are consummated. However, the effect of which is indeterminable
      as
      of December 31, 2007.




22


In
      December 2007, the FASB issued Financial Accounting Standards No. 160,
      "Noncontrolling Interests in Consolidated Financial Statements—an amendment of
      ARB No. 51." This statement is effective for fiscal years, and interim
      periods within those fiscal years, beginning on or after December 15, 2008,
      with earlier adoption prohibited. This statement requires the recognition of
      a
      noncontrolling interest (minority interest) as equity in the consolidated
      financial statements and separate from the parent's equity. The amount of net
      income attributable to the noncontrolling interest will be included in
      consolidated net income on the face of the income statement. It also amends
      certain of ARB No. 51's consolidation procedures for consistency with the
      requirements of SFAS 141(R) *.* This
      statement also includes expanded disclosure requirements regarding the interests
      of the parent and its noncontrolling interest. We are currently evaluating
      this
      new statement and anticipate that the statement will not have a significant
      impact on the reporting of our results of operations.





In
      March
      2008, the Financial Accounting Standards Board (FASB) issued FASB Statement
      No.
      161, *Disclosures
      about Derivative Instruments and Hedging Activities.* The new
      standard is intended to improve financial reporting about derivative instruments
      and hedging activities by requiring enhanced disclosures to enable investors
      to
      better understand their effects on an entity’s financial position, financial
      performance, and cash flows. It is effective for financial statements issued
      for
      fiscal years and interim periods beginning after November 15, 2008, with early
      application encouraged. The company is currently evaluating the impact of
      adopting SFAS. No. 161 on its financial statements.





**Item
      7A.**  **Qualitative
      and Quantitative Disclosures about Market Risk**





The
      Company’s Debt Facility with the $2,000,000 term note and revolving line of
      credit expose the Company to the risk of earnings or cash flow loss due to
      changes in market interest rates. The Facility accrues interest at the Prime
      Rate or at LIBOR plus an applicable margin.





The
      table
      below provides information on the Company’s market sensitive financial
      instruments as of December 31, 2007:


Principal Balance
              
              Weighted Average
                Interest Rate at
                December 31, 2007Term
                  Loan
              
              $
              277,778
              
              
              8.07
              %Revolving
                  Credit Facility
              
              $
              1,364,722
              
              
              8.23
              %





**Holding
      Company and Operating Subsidiaries**





We
      conduct our business through our wholly owned subsidiaries (Brand Retail,
      Grafico, Build Partners). Grafico was inactive for the last 6 months of 2007.
      We
      have relied and continue to rely on cash payments from our operating
      subsidiaries to, among other things, pay creditors, maintain capital, and meet
      our operating requirements. Regulations, legal restrictions, and contractual
      agreements could restrict any needed payments from our present subsidiaries
      and
      any other operating subsidiaries we may subsequently acquire. If we were unable
      to receive cash funds from any of our operating subsidiaries, our operations
      and
      financial condition would be materially and adversely affected.




23


**Stock
      Price Fluctuations**





The
      market price of our common stock has fluctuated significantly and may be
      affected by our operating results, changes in our business and management,
      changes in the industries in which we conduct our business, and general and
      market conditions. In addition, the stock markets commonly experience price
      and
      volume fluctuations. These fluctuations have affected stock prices of many
      companies without regard to their specific operating performance. The price
      of
      our common stock may fluctuate significantly in the future.





**Inflation**





We
      do not
      believe that inflation has had a material effect on the Company’s results of
      operations.





**Forward-Looking
      Statements**





This
      Annual Report on Form 10-K contains forward-looking statements within the
      meaning of section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended, that are not historical
      facts, but rather reflect the Company’s current expectations concerning future
      results and events. The words “believes,” “anticipates,” “expects,” and similar
      expressions, which identify forward-looking statements, are subject to certain
      risks, uncertainties and factors, including those which are economic,
      competitive, and technological, that could cause actual results to differ
      materially from those forecast or anticipated. Such factors include, among
      others:





·
            The
                continued services of James Brooks as Chairman of the Board and Chief
                Executive Officer of BrandPartners Group and other key senior management
                members.





·
            Our
                ability to identify appropriate acquisition candidates, finance and
                complete such acquisitions and successfully integrate the acquired
                businesses





·
            Changes
                in our business strategies or development
                plans





·
            Competition





·
            Our
                ability to grow within the financial services
                industry





·
            Our
                ability to successfully penetrate other
                markets





·
            General
                economic and business conditions, both nationally and in the regions
                in
                which we operate





·
            Our
                ability to pass vendor cost increases on to our
                customers





Readers
      are cautioned not to place undue reliance on those forward-looking statements,
      which speak only as of the date hereof. The Company undertakes no obligation
      to
      republish revised forward-looking statements to reflect events or circumstances
      after the date hereof or to reflect the occurrence of the unanticipated events.
      Readers are also urged to carefully review and consider the various disclosures
      made by the Company in this report, as well as the Company’s periodic reports on
      Form 10-K, Form 10-Q, and other filings with the Securities and Exchange
      Commission.




24




**Item
      8. Financial Statements**





The
      audited, consolidated financial statements of the Company for the years ended
      December 31, 2007, 2006 and 2005 are included within this Annual Report on
      Form
      10-K.





**Item
      9. Changes in and Disagreements with Accountants on Accounting and Financial
      Disclosure**





None





**Item
      9A. Controls and Procedures.**





*Evaluation
      of Disclosure Controls and Procedures*





We
      have
      established and maintain disclosure controls and procedures that are
      designed to ensure that material information relating to us and
      our subsidiaries required to be disclosed by us in the reports that we file
      or submit under the Securities Exchange Act of 1934 is recorded,
      processed, summarized and reported within the time periods specified in the
      Securities and Exchange Commission's (“SEC”) rules and forms, and that such
      information is accumulated and communicated to our management, including
      our chief executive officer and chief accounting  officer, as
      appropriate to allow timely decisions regarding required disclosure.
      In designing and evaluating the disclosure controls and procedures,
      management recognized that any controls and procedures, no matter how well
      designed and operated, can only provide reasonable assurance of achieving
      the desired control objectives, and in reaching a reasonable level of
      assurance, management necessarily was required to apply its judgment in
      evaluating the cost-benefit relationship of possible controls and
      procedures.





We
      carried out an evaluation, under the supervision and with the participation
      of our management, including our chief executive officer and
      chief accounting officer, of the effectiveness of the design and operation
      of our disclosure controls and procedures as of the end of the period
      covered by this report. Based on that evaluation, the chief executive
      officer and chief accounting officer concluded that our disclosure controls
      and procedures were effective as of the date of such evaluation to provide
      reasonable assurance that information required to be disclosed by the
      Company in the reports that it files or submits under the Exchange Act is
      recorded, processed, summarized and reported within the time periods
      specified by the SEC's rules and forms.





*Management's
      Report on Internal Control over Financial Reporting*





Our
      management is responsible for establishing and maintaining
      adequate internal control over financial reporting. Internal control over
      financial reporting is a process designed by, or under the supervision of,
      our chief executive and chief financial officers and effected by our board
      of directors, management and other personnel to provide reasonable
      assurance regarding the reliability of financial reporting and the
      preparation of financial statements for external purposes in accordance
      with U.S. generally accepted accounting principles and includes those
      policies and procedures that:





§
            pertain
                to the maintenance of records that in reasonable detail accurately
                and
                fairly reflect the transactions and dispositions of our
                assets;


§
            provide
                reasonable assurance that transactions are recorded as necessary to
                permit preparation of financial statements in accordance
                with generally accepted accounting principles, and that our receipts
                and expenditures are being made only in accordance with the
                authorizations of our management and directors;
                and.


§
            provide
                reasonable assurance regarding prevention or timely detection
                of unauthorized acquisition, use or disposition of our assets that
                could have a material effect on our financial
                statements




25


Because
      of inherent limitations, internal control over financial reporting may not
      prevent or detect misstatements. Projections of any evaluation
      of effectiveness to future periods are subject to the risks that controls
      may become inadequate because of changes in conditions, or that the degree
      of compliance with policies or procedures may deteriorate. However, these
      inherent limitations are known features of the financial reporting process.
      It is possible to design into the process safeguards to reduce, thought not
      eliminate, the risk that misstatements are not prevented or detected on a
      timely basis. Management is responsible for establishing and maintaining
      adequate internal control over financial reporting for the
      company.





Management
      assessed the effectiveness of the Company’s internal control over financial
      reporting as of December 31, 2007. In making this assessment, management used
      the criteria set forth by the Committee of Sponsoring Organizations of the
      Treadway Commission in Internal Control-Integrated Framework. Based on this
      assessment, our management concluded that, as of December 31, 2007, our internal
      control over financial reporting was effective to provide reasonable assurance
      regarding the reliability of financial reporting and the preparation and
      presentation of financial statements for external purposes in accordance with
      generally accepted accounting principles.




*Change
      in Internal Control Over Financial Reporting*





There
      were no changes in the our internal control over financial reporting that
      occurred during our last fiscal quarter that have materially affected,
      or are reasonably likely to materially affect, our internal control over
      financial reporting.





**Item
      9B. Other Information**





In
      March
      2008 the Company negotiated an extension of the credit facility with a
      commercial lender for the Revolving Line of Credit to April 30,
      2009.





In
      March
      2008 the Company negotiated an extension of the maturity date of the
      subordinated promissory note to October 22, 2009. In addition, the Company
      received an adjustment to certain of the financial covenants.





**Part
      III**





**Item
      10. Directors, Executive Officers of the Registrant and Corporate
      Governance**





Name
            
            Age
            
            Position
            
            Term
              ExpirationChairman
                of the Board,James
                F. Brooks
            
            45
            
            Chief
                Executive Officer and interim
            
            2009Chief
                Financial OfficerRichard
                Levy
            
            73
            
            Director
            
            2008J.
                Weldon Chitwood
            
            43
            
            Director
            
            2008Clifford
                D. Brune
            
            54
            
            Director
            
            2009





26





Set
      forth
      below is information relating to the business experience of each of the
      directors and executive officers of the Company





**James
      F. Brooks** joined
      the Company’s operating subsidiary, BrandPartners Retail, Inc., as Chief
      Operating Officer in June 2002. Mr. Brooks was elected Interim President of
      the
      Company in September 2003 and was appointed Chief Executive Officer in October
      2003, and President and Secretary of the Company in August 2004. He was
      appointed Chairman of the Board in August 2006. Mr. Brooks has held senior
      management positions with subsidiaries of major international corporations
      and
      start-up companies. Prior to June 2002, Mr. Brooks was a consultant with Getzler
      & Co., a national management and financial consulting firm specializing in
      corporate turnaround and restructuring. From 2000 through March 2001, he was
      Senior Vice President of Cityspree, Inc., an offline and online start-up company
      that offered local businesses an innovative, barter-based marketing model via
      gift certificate auctions on e-Bay and other auction oriented web sites. From
      1998 to 1999, Mr. Brooks served as the Vice President, North and South America,
      of acquisitions and development for Swissotel, a subsidiary of Swissair. From
      1996-1997, Mr. Brooks was a co-founder of Sorbak, Inc., a wholesale and retail
      franchisee of a national chain focused on ergonomic and back care products.
      From
      1989 to 1995, Mr. Brooks served as Vice President, North America, of
      acquisitions, development, and asset management for Meridien Hotels, a
      subsidiary of Air France. Mr. Brooks graduated with a B.A. *cum
      laude* in 1984
      from Connecticut College, and has an M.B.A. from the Harvard Business School,
      awarded in 1989.





**Clifford
      D. Brune, C.P.A.** was
      appointed a Director of the Company in December 2005. At that time, Mr. Brune
      was also appointed to the Company’s Compensation and Audit Committees and serves
      as the Chairman of both committees. He was elected as a Class II Director of
      the
      Company in June 2006. Mr. Brune was previously employed by the Company from
      September 2004 through January 2005, and currently serves as a consultant to
      the
      Company. He has acted in such capacity from time to time since October of 2003.
      Mr. Brune has been a consultant to various public and private companies with
      respect to organizing growth and restructuring since 1999. Mr. Brune, formerly
      with Coopers & Lybrand, is a Certified Public Accountant, and is a member of
      the AICPA with over 25 years of experience in working with public companies.
      He
      received a BS degree in Accounting and Finance from the University of South
      Carolina.





**J.
      Weldon Chitwood** has been
      a Director of the Company since October 2003 and served as corporate secretary
      of the Company from November 2003 through April 2004. He was formerly a managing
      partner of Redwood Grove Capital Management, an institutional investor based
      in
      San Francisco and New York, and served as managing partner. Prior to his service
      with Redwood Grove Capital Management, Mr. Chitwood spent sixteen years with
      Shaw Industries, preceding its acquisition by Berkshire Hathaway in January
      2001. While with Shaw Industries, Mr. Chitwood was responsible for the
      turnaround of five different businesses in wholesale, international, and
      commercial contracting. Mr. Chitwood attended the University of Georgia and
      obtained a degree in economics.





**Richard
      Levy** has
      been
      a director of the Company since April 1994 and was Secretary of the Company
      from
      1994 through August 2001. Since February 2007, Mr. Levy has been with
      Silverstein Properties, Inc., owners of property in Manhattan, including the
      World Trade Center properties. From October 2000 Mr. Levy was a Senior Managing
      Director of Insignia/ESG, a real estate management and brokerage firm, until
      the
      company merged with CB Richard Ellis, where Mr. Levy was employed as a Senior
      Vice President. From March 1998 to October 2000, Mr. Levy was a Senior Vice
      President of Tishman Real Estate Services, a real estate consulting and
      brokerage firm, and was employed in various positions with the firm for almost
      40 years.





27




**MEETINGS
      AND COMMITTEES OF THE BOARD OF DIRECTORS**





During
      the fiscal year ended December 31, 2007, the Board of Directors met four (4)
      times with all incumbent Directors attending in excess of 75% of the meetings.
      Additionally, during the fiscal year ended December 31, 2007, the Company’s
      Audit Committee met four (4) times and its Compensation Committee met three
      (3)
      times.





**Audit
      Committee**





The
      Audit
      Committee is currently comprised of Clifford D. Brune, a licensed Certified
      Public Accountant, who serves as Chairman. Additionally, current members of
      the
      committee include J. Weldon Chitwood and Richard Levy. The role of the Audit
      Committee (the “Committee”) is to assist the Board in its oversight of the
      Company’s financial reporting process. The Committee operates pursuant to a
      Charter that was last amended and restated by the Board in 2004. A copy of
      the
      Committee’s charter is available on the Company’s website at www.bptr.com .





The
      management of the Company is responsible for the preparation, presentation,
      and
      integrity of the Company’s financial statements, the Company’s accounting and
      financial reporting principles, and the internal controls and procedures
      designed to assure compliance with accounting standards and applicable laws
      and
      regulations. The independent auditors are responsible for auditing the Company’s
      financial statements, and for expressing an opinion as to their conformity
      with
      generally accepted accounting principles.





In
      the
      performance of its oversight function, the Committee reviewed the Company’s
      quarterly financial reports and regulatory issues facing the Company. Members
      of
      the Audit Committee as presently constituted met and held discussions with
      Moore
      Stephens, P.C., who served as the Company’s independent auditors. Management
      represented to the Committee that the Company’s consolidated financial
      statements were prepared in accordance with accounting principles generally
      accepted in the United States, and the Committee reviewed and discussed the
      consolidated financial statements with management and with the Company’s
      independent auditors. The Committee also discussed with the Company’s
      independent auditors the matters required to be discussed by Statement on
      Auditing Standards No. 61 (Codification of Statements on Auditing Standards,
      AU
      308), as amended.





In
      addition, the Committee discussed with its auditors their independence from
      the
      Company and its management, and the auditors provided the Company the written
      disclosures and letter required from an independent auditor by the Independence
      Standards Board Standard No. 1 (Independence Discussions with Audit
      Committees).





The
      Committee discussed with the independent auditors the overall scope and plans
      for the audit. The Committee met with the Company’s auditors, with and without
      management present, to discuss the results of their examination, their
      evaluations of the Company’s internal controls, and the overall quality of the
      Company’s financial reporting.





Mr.
      Clifford D. Brune, C.P.A., serves as the “audit committee financial expert” for
      purposes of the Securities and Exchange Commission’s rules. Members of the
      Committee rely, without independent verification, on the information provided
      to
      them and on the presentations made by management and the independent auditors.
      Accordingly, the Audit Committee’s oversight does not provide an independent
      basis to determine that management has maintained appropriate accounting and
      financial reporting principles or appropriate internal control and procedures
      designed to assure compliance with accounting standards and applicable laws
      and
      regulations. Further, the Audit Committee’s reviews and discussions referred to
      above do not assure that the audit of the Company’s financial statements has
      been carried out in accordance with generally accepted accounting standards,
      that the financial statements are presented in accordance with generally
      accepted accounting principles, or that the Company’s auditors are in fact
“independent.”





28




**Compensation
      Committee**





The
      Compensation Committee is currently comprised of Clifford D. Brune, a licensed
      Certified Public Accountant, who serves as Chairman, and J. Weldon Chitwood
      and
      Richard Levy. The Committee is responsible for approving the nature and amount
      of compensation to be paid to, and the employment agreements with,
      BrandPartners’ executive officers and senior management, establishing and
      evaluating performance-based criteria and goals related to compensation,
      administering BrandPartners’ cash bonus and equity-based plans, determining the
      balance of short- and long-term compensation to be awarded under these plans
      with respect to any particular year, and determining and overseeing
      BrandPartners’ compensation and benefits policies generally. The Compensation
      Committee currently does not have a charter.





*Compensation
      Policy* .





We
      seek
      to offer those types of compensation that will serve to attract, motivate,
      and
      retain highly qualified executive officers and key employees in an effort to
      enhance BrandPartners’ success and shareholder value. In addition, our
      compensation policies are designed to align the interests of management with
      BrandPartners’ shareholders. In order to do so, we consider a range of short-and
      long-term cash, and non-cash compensation elements. We believe this serves
      the
      goals of compensating BrandPartners’ executive officers competitively on a
      current basis, tying a significant portion of the executives’ compensation to
      company performance, and allowing the executive officers and key employees
      to
      gain an ownership stake in BrandPartners commensurate with their relative levels
      of seniority and responsibility. Each year, we perform a review of the executive
      compensation programs, compensation philosophy, and committee mission and
      performance. In addition, each year we review the nature and amounts of all
      elements of the executive officers’ compensation, both separately and in the
      aggregate, to ensure that the total amount of compensation is competitive with
      respect to BrandPartners’ peer companies, and that there is an appropriate
      balance for compensation that is tied to the short- and long-term performance
      of
      the Company.





**Nominating
      Committee**





The
      Nominating Committee currently does not have a charter. The Committee is
      intended to assist in the oversight of the Company’s corporate governance
      matters, including the determination of the independent of current and
      prospective Board members, periodic evaluation of the Board of Directors, its
      committees and individual directors, and the identification and selection of
      director nominees.





**Code
      of Ethics**





The
      Company has adopted a Code of Ethics effective as of December 8, 2004. The
      Code
      is posted on the Company’s corporate website at www.bptr.com .





29


**Item
      11. Executive Compensation**





The
      following chart displays the compensation for the officers of the
      Company.


Name and Principal Position
              
              Year
              
              Salary
                ($)
              
              Bonus
                ($)
              
              Stock
                Awards
                ($)
              
              Option
                Awards
                ($)
              
              Non-equity
                incentive plan
                compensation
                ($)
              
              Change in
                pension value
                and non-
                qualified
                deferred
                compensation
                earnings
                ($)
              
              All other
                compensation
                ($)
              
              Total
                ($)(a)
              
              (b)
              
              (c)
              
              (d)
              
              (e)
              
              (f)
              
              (g)
              
              (h)
              
              (i)
              
              (j)James
                  F. Brooks (1)
              
              
              2007
              
              $
              360,000
              
              $
              70,000
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              49,202
              
              $
              479,202Chairman/Chief
                  Exec. Officer
              
              
              2006
              
              
              360,000
              
              
              70,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              61,672
              
              
              491,6722005
              
              
              344,077
              
              
              -
              
              
              -
              
              
              250,000
              
              
              -
              
              
              -
              
              
              51,577
              
              
              645,654Suzanne
                  M. Verrill (2)
              
              
              2007
              
              
              32,439
              
              
              -
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              133,089
              
              
              165,528Chief
                  Financial Officer
              
              
              2006
              
              
              145,000
              
              
              20,000
              
              
              -
              
              
              
              
              
              -
              
              
              -
              
              
              12,924
              
              
              177,9242005
              
              
              129,620
              
              
              -
              
              
              -
              
              
              
              
              
              -
              
              
              -
              
              
              8,399
              
              
              138,019




30


(1)
            Mr.
                Brooks was appointed Chairman in August 2006. He entered into an
                employment agreement as of October 2003 to serve as Chief Executive
                Officer. The term of the employment agreement was through March 15,
                2008.
                Mr. Brooks also serves as Chief Executive Officer and President of
                the
                Company’s wholly owned subsidiaries. The exercisable prices of the options
                exceed the closing price of the company’s closing stock price as of
                December 31, 2007. Pursuant to the 2004 Stock Incentive Plan, Mr.
                Brook’s
                options were cancelled and replaced by 1,250,000 shares of restricted
                common stock on February 8, 2008. These shares vest 50% on the first
                anniversary of date of grant and 100% on the second anniversary of
                date of
                grant.





Column
      (f) Option Awards consists of the following options:





No.
                Shares
            
            Exercise
                Price
            
            Value
            
            Vesting
                Date
            
            Expiration
                Date500,000
            
            $
            0.50
            
            $
            250,000
            
            
            January
                5, 2005
            
            
            January
                5, 2010





Column
      (i) All Other Compensation consists of - health insurance, 401K expense,
      housing, meal and car (monthly payment, insurance fuel, and maintenance
      expenses) allowance in accordance with the terms of Mr. Brooks amended
      employment contract entered into March 16, 2005.





(2)
            Ms.
                Verrill was appointed Chief Financial Officer in April 2004 and served
                in
                that capacity pursuant to the terms of an employment agreement through
                March 1, 2007. She also served as Chief Financial Officer of the
                Company’s
                wholly owned subsidiaries.





Column
      (c) 2007 Salary represents partial year as Ms. Verrill left the Company on
      March
      1, 2007.





Column
      (i) Other Compensation consists of the Company’s contribution to health
      insurance, 401K expense, consulting services and severance.


31





The
      following table set forth information with respect to the Company’s executives
      listed in the Summary Compensation Table above concerning the number of
      unexercised options and the value of unexercised options held by such executives
      as of the end of 2007. No options were granted nor exercised by such executives
      during 2007.




Option
                    Awards
                
                
                
                
                
                
                
                Stock
                    AwardsName
                
                Number
                    of
                  securities
                  underlying
                  unexercised
                  options
                    (#)
                
                Number
                    of
                  securities
                  underlying
                  unexercised
                  options
                    (#)
                
                Equity
                  incentive plan
                  awards:
                  Number
                    of
                  securities
                  underlying
                  unexercised
                  unearned
                  options
                    (#)
                
                Option
                  Exercise
                  Price
                  ($)
                
                Option
                  Expiration
                  Date
                
                Number
                    of
                  shares
                    or
                  units
                    of
                  stock
                    that
                  have
                    not
                  vested
                  (#)
                
                Market value
                  of
                    shares or
                  unitsÌof stock
                  that
                    have not
                  vested
                  ($)
                
                Equity
                    incentive plan
                  awards;
                  Number
                    of
                  unearned
                  shares,
                    units
                  or other rights
                  that
                    have not
                  vested
                  (#)
                
                Equity
                    incentive plan
                  awards:
                  Market
                    or
                  payout
                    value
                  of
                    unearned
                  shares,
                    units
                  or other rights
                  that
                    have not
                  vested
                  ($)Exercisable
                
                UnexercisableJames
                    F. Brooks
                
                
                0
                
                
                0
                
                
                0
                
                
                
                
                
                
                
                
                1,250,000
                
                $
                50,000
                    0
                
                $
                0
                
                $
                0




Stock
      Awards - Pursuant to the 2004 Stock Incentive Plan, Mr. Brook’s options were
      cancelled and replaced by 1,250,000 shares of restricted common stock on
      February 8, 2008. These shares vest 50% on the first anniversary of date of
      grant and 100% on the second anniversary of date of grant.


32


**Other
      Benefits**





The
      Company provides life insurance of one time annual salary, and short and
      long-term disability insurance to all employees at no cost to the
      employees.





**Employment
      Contracts**





On
      August
      13, 2004, the Company entered into an amended employment agreement with James
      F.
      Brooks, pursuant to which Mr. Brooks agreed to serve as President, Chief
      Executive Officer, and Corporate Secretary of the Company for a term of three
      years, ending August 15, 2007. Pursuant to the employment agreement, the Company
      is currently paying Mr. Brooks a salary of $360,000 per annum, subject to annual
      review by the Compensation Committee. The agreement also contains a change
      of
      control provision, which, if invoked, entitles Mr. Brooks to receive all
      payments due to him under the agreement at said time with a minimum of six
      months salary. The non-compete portion of the agreement is in effect for a
      period of one year after Mr. Brooks’ departure from the Company. On March 16,
      2005, the agreement was amended to extend the term through March 15, 2008 and
      to
      permit Mr. Brooks to engage in outside consulting, provided that the Company’s
      Board of Directors determined that said services would not conflict or interfere
      with Mr. Brooks’ responsibilities and obligations to the Company. Mr. Brooks was
      named Chairman of the Board of Directors in August of 2006.





On
      July
      24, 2004, the Company entered into an employment agreement with Suzanne M.
      Verrill. The initial term of the employment agreement was through December
      31,
      2005 and renewed annually thereafter unless terminated by the Company upon
      a
      minimum of ninety (90) days notice prior to the renewal date. The Board of
      Directors amended Ms. Verrill’s agreement on August 2, 2005 pursuant to which
      Ms. Verrill served as the Chief Financial Officer of BrandPartners Group, Inc.
      Ms. Verrill entered into a separation agreement with the Company effective
      March
      1, 2007 terminating her employment agreement with the Company.


33





**Director
      Compensation**





The
      following table illustrates Director Compensation for fiscal year 2007:





**Name**
            
            **Fees earned**
              **or paid in**
              **cash**
              **($)**
            
            **Stock**
              **awards**
              **($)**
            
            **Option**
              **awards**
              **($)**
            
            **Non-equity**
              **incentive plan**
              **compensation**
              **($)**
            
            **Change in**
              **pension value**
              **and**
              **nonqualified**
              **deferred**
              **compensation**
              **earnings**
            
            **All other**
              **compensation**
              **($)**Clifford
                D. Brune (1)
            
            $
            20,000
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            214,000J.
                Weldon Chitwood (2)
            
            $
            10,000
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0Richard
                Levy (3)
            
            $
            10,000
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0





(1)
            Clifford
                D. Brune was appointed a director of the Company in December 2005
                and
                elected as a director in June 2006. He receives a stipend as a Director
                and for serving as the Chairman of the Audit Committee and the
                Compensation Committee. Mr. Brune also receives additional compensation
                for his consulting services to the Company.





(2)
            J.
                Weldon Chitwood has been a director of the Company since October
                2003 and
                receives a stipend as a Director.





(3)
            Richard
                Levy has been a director of the Company since April 1994 and receives
                a
                stipend as a Director.





**Item
      12. Securities Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters**





Section
      16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires the
      Company’s Directors and executive officers, and persons who own more than ten
      percent of any class of its equity securities registered pursuant to Section
      12
      of the Exchange Act to file reports of ownership, and changes in ownership
      with
      the Securities and Exchange Commission (the “Commission”). Officers, directors,
      and greater than ten percent stockholders are required by the Commission to
      furnish the Company with copies of all Section 16(a) forms they
      file.





The
      Company believes, based solely on its review of the copies of such forms
      received by it, or written representations from certain reporting persons,
      that
      all filing requirements applicable to its officers, directors, and greater
      than
      ten percent stockholders were complied with during 2007.


34


The
      following table sets forth certain information regarding ownership of the
      Company’s common stock as of March 26, 2008 by (a) each person who is known to
      us to be the beneficial owner of more than 5% of the common stock of the
      Company, (b) each of our directors, (c) each of our executive officers, and
      (d)
      all directors and executive officers of the Company as a group. The following
      information is based in part upon data furnished by the persons indicated
      below.





Name
                and Address of Beneficial Owner (1)
            
            Amount
              Beneficially Owned (2)
            
            Percent
                of
              ClassRobert
                S. Trump (3)
            
            
            4,455,422
            
            
            11.4
            %Stadium
                Capital Management, LLC (4)
            
            
            3,995,665
            
            
            10.2
            %Longview
                Fund, L.P. (5)
            
            
            3,185,517
            
            
            8.1
            %James
                F. Brooks (6)
            
            
            1,281,100
            
            
            3.3
            %Clifford
                D. Brune (7)
            
            
            1,000,000
            
            
            2.6
            %J.
                Weldon Chitwood (8)
            
            
            500,000
            
            
            1.3
            %Richard
                Levy (9)
            
            
            500,000
            
            
            1.3
            %All
                directors and executive officers as a group (4 persons)
            
            
            3,281,100
            
            
            8.4
            %Total
            
            
            14,917,704





(1)
            Unless
                otherwise indicated, the business address for each of such beneficial
                owners is in care of BrandPartners Group, Inc., 10 Main Street, Rochester,
                New Hampshire 03839.





(2)
            Directly
                and indirectly. The inclusion of securities owned by others as
                beneficially owned by the respective individuals does not constitute
                an
                admission that such individuals are the beneficial owners of such
                securities.





(3)
            Represents
                4,455,422 shares of common stock. The business address for Mr. Trump
                is in
                care of Trump Management, Inc., 2611 West Second Street, Brooklyn,
                NY
                11223





(4)
            Represents
                3,995,665 shares of common stock. The business address for Stadium
                Capital
                Management, LLC is 19785 Village Office Court, Suite 101, Bend, OR
                97702.





(5)
            Represents
                3,185,517 shares of common stock. The address for Longview Fund L.P.
                is
                600 Montgomery St., 44thFloor, San Francisco, CA 94111. Besides the shares of common stock
                reported on Form 13G, Longview Fund owns 196,667 warrants for common
                stock
                priced at $0.85 per share.





(6)
            Mr.
                Brooks is the Company’s Chairman of the Board of the Directors, President
                and Chief Executive Officer. This represents: 1,250,000 restricted
                shares
                issued February 8, 2008 vesting 50% on February 8, 2009 and 50% on
                February 8, 2010, and 31,100 common
                shares.





(7)
            Mr.
                Brune is a member of the Company’s Board of Directors. This represents:
                1,000,000 restricted shares issued February 8, 2008 vesting 50% on
                February 8, 2009 and 50% on February 8,
                2010.





(8)
            Mr.
                Chitwood is a member of the Company’s Board of Directors. This represents:
                500,000 restricted shares issued February 8, 2008 vesting 50% on
                February
                8, 2009 and 50% on February 8,
                2010.





(9)
            Mr.
                Levy is a member of the Company’s Board of Directors. This represents:
                500,000 restricted shares issued February 8, 2008 vesting 50% on
                February
                8, 2009 and 50% on February 8,
                2010.


35


**Item
      13. Certain Relationships and Related Transactions and Director
      Independence**





Mr.
      Chitwood and Mr. Levy are both independent members of the Board of Directors.
      The Company does not have any specific guidelines related to the independence
      of
      the members of its Board of Directors as it is not listed on any national
      securities exchange or with any national securities association and its stock
      is
      traded on the Over the Counter Bulletin Board.





On
      February 1, 2005, the Company signed an agreement for consulting services with
      Clifford D. Brune, who became a member of the Board of Directors on December
      29,
      2005. The agreement provided for twelve months of consulting services at a
      fee
      of $15,000 per month. On December 19, 2005, the agreement was amended to change
      the term of the agreement from a term of twelve months to “month-to-month.” The
      amended agreement provides for a minimum six-month written notice if either
      the
      Company or Mr. Brune elects to terminate the agreement.





**Item
      14. Principal Accountant Fees and Services**





**2007**
            
            **2006**Audit
                fees
            
            $
            140,844
            
            $
            125,100Audit
                related fees
            
            
            -
            
            
            12,000Tax
                fees
            
            
            23,636
            
            
            20,760All
                other fees
            
            
            -
            
            
            -Totals
            
            $
            164,480
            
            $
            157,860





The
      classification “audit fees” includes fees for the audits of the Company’s annual
      financial statements for 2007 and 2006 and the quarterly review of the
      statements. “Audit-related services” consists primarily of the review of
      registration statements and the issuance of related consents. “Tax fees” include
      tax planning and the preparation of the Company’s tax returns. Moore Stephens
      did not provide any tax or financial information systems design or
      implementation services to the Company for the year 2007.


36





**PART
      IV**


**Index
      to Exhibits**





2.1
            Agreement
                and Plan of Merger, dated as of August 1, 2001, between Financial
                Performance Corporation and the Company (incorporated by reference
                to
                Exhibit 2.2 to the Company’s Quarterly Report on Form 10-QSB for the
                quarter ended September 30, 2001).





3.1
            By-laws
                of the Company (incorporated by reference to Exhibit 3.1 to the Company’s
                Quarterly Report in Form 10-QSB for the quarter ended September 30,
                2001).





3.2
            Certificate
                of Incorporation dated August 7, 2001 (incorporated by reference
                to
                Exhibit 3.2 to the Company’s Quarterly Report on Form 10-QSB for the
                quarter ended September 30, 2001).





4.1
            Specimen
                Certificate of Common Stock (incorporated by reference to Exhibit
                4.1 to
                the Company’s Quarterly Report on Form 10-QSB for the quarter ended
                September 30, 2001).





4.2
            Certificate
                of Designation of Class A Convertible Preferred Stock of the Company
                (incorporated by reference to Exhibit 4.1 to the Company’s Current Report
                on Form 8-K filed on January 31,
                2001).





10.1
            Form
                of Indemnification Agreement between the Company and its Officers
                and
                Directors (incorporated by reference to Exhibit 10.35 to the Company’s
                Registration Statement on Form S-1, Registration No.
                33-20886).





10.2
            Restated
                and Amended Shareholders Agreement, dated as of October 18, 1994,
                by and
                among Michaelson Kelbick Partners Inc., Susan Michaelson, Hillary
                Kelbick
                and the Company, effective as of October 1, 1998 (incorporated by
                reference to Exhibit 10.80 to the Company’s Quarterly Report on Form
                10-QSB for the quarter ended September 30,
                1998).





10.3
            Form
                of Warrant, dated as of October 21, 1998, between the Company and
                Richard
                Levy (incorporated by reference to Exhibit 10.81 to the Company’s Annual
                Report on Form 10-KSB for the year ended December 31,
                1998).





10.4
            Form
                of Warrant Agreement, dated as of October 21, 1998, covering warrants
                issued to Richard Levy and others (incorporated by reference to Exhibit
                10.86 to the Company’s Annual Report on Form 10-KSB for the year ended
                December 31, 1998).





10.5
            Stock
                Purchase and Sale Agreement, dated as of November 17, 1999, by and
                among
                the Company, Robert S. Trump and Jeffrey Silverman (incorporated
                by
                reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
                filed November 30, 1999).





10.6
            Stock
                Purchase and Sale Agreement, dated as of November 17, 1999, by and
                among
                the Company, Robert S. Trump and Ronald Nash (incorporated by reference
                to
                Exhibit 10.2 to the Company’s Current Report on Form 8-K filed November
                30, 1999).





10.7
            Stockholders
                Agreement, dated as of November 17, 1999, by and among the Company,
                Robert
                S. Trump, Jeffrey Silverman, and Ronald Nash (incorporated by reference
                to
                Exhibit 10.3 to the Company’s Current Report on Form 8-K filed November
                30, 1999).





10.8
            Option
                Agreement, dated November 17, 1999, between Robert S. Trump and Jeffrey
                Silverman (incorporated by reference to Exhibit 10.4 to the Company’s
                Current Report on Form 8-K filed on November 30,
                1999.)





10.9
            Option
                Agreement, dated November 17, 1999, between Robert S. Trump and Jeffrey
                Silverman (incorporated by reference to Exhibit 10.5 to the Company’s
                Current Report on Form 8-K filed November 30,
                1999).





10.10
            Option
                Agreement, dated November 17, 1999, between Robert S. Trump and Jeffrey
                Silverman (incorporated by reference to Exhibit 10.6 to the Company’s
                Current Report on Form 8-K filed November 30,
                1999).


37





10.11
            Option
                Agreement, dated November 17, 1999, between Robert S. Trump and Ronald
                Nash (incorporated by reference to Exhibit 10.7 to the Company’s Current
                Report on Form 8-K filed November 30,
                1999).





10.12
            Option
                Agreement, dated November 17, 1999, between Robert S. Trump and Ronald
                Nash (incorporated by reference to Exhibit 10.8 to the Company’s Current
                Report on Form 8-K filed November 30,
                1999).





10.13
            Option
                Agreement, dated November 17, 1999, between Robert S. Trump and Ronald
                Nash (incorporated by reference to Exhibit 10.9 to the Company’s Current
                Report on Form 8-K filed November 30,
                1999).





10.14
            Stock
                Option Agreement, dated as of November 17, 1999, between the Company
                and
                Jeffrey Silverman (incorporated by reference to Exhibit 10.10 to
                the
                Company’s Current Report on Form 8-K filed November 30,
                1999).





10.15
            Stock
                Option Agreement, dated as of November 17, 1999, between the Company
                and
                Ronald Nash (incorporated by reference to Exhibit 10.11 to the Company’s
                Current Report on Form 8-K filed November 30,
                1999).





10.16
            Registration
                Rights Agreement, dated as of November 17, 1999 by and among the
                Company,
                Robert S. Trump, William F. Finley, Jeffrey Silverman and Ronald
                Nash
                (incorporated by reference to Exhibit 10.12 to the Company’s Current
                Report on Form 8-K filed November 30,
                1999).





10.17
            Stock
                Option Agreement, dated as of January 10, 2000, between the Company
                and
                Jeffrey Silverman (incorporated by reference to Exhibit 10.39 to
                the
                Company’s Annual Report on Form 10-KSB for the year ended December 31,
                1999).





10.18
            Stock
                Option Agreement, dated as of January 10, 2000, between the Company
                and
                Ronald Nash (incorporated by reference to Exhibit 10.40 to the Company’s
                Annual Report on Form 10-KSB for the year ended December 31,
                1999).





10.19
            Agreement
                and Plan of Merger dated February 23, 2000, between the Company,
                FPC
                Acquisition Corp., iMapData.com, Inc., William Lilley III and Laurence
                J.
                Defiance (incorporated by reference to Exhibit 10.17 to the Company’s
                Current Report on Form 8-K filed February 24,
                2000).





10.20
            Employment
                Agreement dated April 25, 2000, between the Company and Edward T.
                Stolarski (incorporated by reference to Exhibit 10.5 to the Company’s
                Current Report on Form 10-QSB for the quarter ended March 31,
                2000).





10.21
            Stock
                Option Agreement, dated as of April 26, 2000, between the Company
                and
                Edward T. Stolarski, covering 100,000 shares of common stock (incorporated
                by reference to Exhibit 10.5 to the Company’s Report on Form 10-QSB for
                the quarter ended March 31, 2000).





10.22
            Stock
                Option Agreement, dated as of April 26, 2000, between the Company
                and
                Edward T. Stolarski, covering 300,000 shares of common stock (incorporated
                by reference to Exhibit 10.5 to the Company’s Report on Form 10-QSB for
                the quarter ended March 31, 2000).





10.23
            Stock
                Option Agreement dated August 9, 2000, between the Company and Jonathan
                Foster (incorporated by reference to Exhibit 10.48 to the Company’s Annual
                Report on Form 10-KSB for the year ended December 31,
                2000).





10.24
            Stock
                Option Agreement dated August 9, 2000, between the Company Nathan
                Ganther
                (incorporated by reference to Exhibit 10.48 to the Company’s Annual Report
                on Form 10-KSB for the year ended December 31,
                2000).





10.25
            Stock
                Option Agreement dated August 9, 2000, between the Company J. William
                Grimes (incorporated by reference to Exhibit 10.48 to the Company’s Annual
                Report on Form 10-KSB for the year ended December 31,
                2000).


38





10.26
            Loan
                and Security Agreement, dated as of January 11, 2001, between Fleet
                Capital Corporation (“Fleet”) and Willey Brothers, Inc. (incorporated by
                reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
                filed on January 31, 2001).





10.27
            Secured
                Guaranty Agreement, dated as of January 11, 2001, executed by the
                Company
                in favor of Fleet (incorporated by reference to Exhibit 10.1 to the
                Company’s Current Report on Form 8-K filed January 31,
                2001).





10.28
            Agreement
                dated as of January 11, 2001, among the Company, Thomas P. Willey,
                as
                trustee of the Thomas P. Willey Revocable Trust of 1998, James M.
                Willey,
                as trustee of the James M. Willey Trust - 1995, Jeffrey S. Silverman,
                William Lilley III, Ronald Nash, Robert Trump, and Laurence DeFranco
                (incorporated by reference to Exhibit 10.2 to the Company’s Current Report
                on Form 8-K filed January 31,
                2001).





10.29
            Subordinated
                Convertible Term Promissory Note, dated January 11, 2001, made by
                the
                Company in favor of the James M. Willey Trust - 1995, in the principal
                amount of $1,000,000 (incorporated by reference to Exhibit 2.1 to
                the
                Company’s Current Report on Form 8-K filed January 31, 2001).





10.30
            Subordinated
                Convertible Term Promissory Note, dated January 11, 2001, made by
                the
                Company in favor of the James M. Willey Trust - 1995, in the principal
                amount of $3,750,000 (incorporated by reference to Exhibit 2.1 to
                the
                Company’s Current Report on Form 8-K filed January 31,
                2001).





10.31
            Subordinated
                Convertible Term Promissory Note, dated January 11, 2001, made by
                the
                Company in favor of the Thomas P. Willey Revocable Trust of 1998,
                in the
                principal amount of $3,750,000 (incorporated by reference to Exhibit
                2.1
                to the Company’s Current Report on Form 8-K filed January 31,
                2001).





10.32
            Subordinated
                Convertible Term Promissory Note, dated January 11, 2001, made by
                the
                Company in favor of the Thomas P. Willey Revocable Trust of 1998,
                in the
                principal amount of $1,000,000 (incorporated by reference to Exhibit
                2.1
                to the Company’s Current Report on Form 8-K filed January 31,
                2001).





10.33
            Stock
                Purchase Agreement, dated as of January 11, 2001, by and among James
                M.
                Willey, individually and as trustee of the James M. Willey Trust
                - 1995,
                Thomas P. Willey, individually and as trustee of the Thomas P. Willey
                Revocable Trust of 1998, and the Company (incorporated by reference
                to
                Exhibit 2.1 to the Company’s current report on Form 8-K filed on January
                31, 2001).





10.34
            Promissory
                Note, dated February 12, 2001, made by iMapData in favor of Ronald
                Nash,
                in the principal amount of $50,000 (incorporated by reference to
                Exhibit
                10.46 to the Company’s Annual Report on Form 10-KSB for the year ended
                December 31, 2000).





10.35
            Promissory
                Note, dated February 12, 2001, made by iMapData in favor of Jeffrey
                Silverman, in the principal amount of $50,000 (incorporated by reference
                to Exhibit 10.46 to the Company’s Annual Report on Form 10-KSB for the
                year ended December 31, 2000).





10.36
            Promissory
                Note, dated February 12, 2001, made by iMapData in favor of William
                Lilley, in the principal amount of $100,000 (incorporated by reference
                to
                Exhibit 10.46 to the Company’s Annual Report on Form 10-KSB for the year
                ended December 31, 2000).





10.37
            Stockholders
                Agreement dated February 12, 2001, by and among iMapData.com, Inc.,
                financial Performance Corporation, 1404467 Ontario Limited, BP Media
                Intermediate Fund L.P., William Lilley, and Laurence DeFranco
                (incorporated by reference to Exhibit 10.49 to the Company’s Annual Report
                on Form 10-KSB for the year ended December 31,
                2000).





10.38
            Subordinated
                Convertible Promissory Note, dated March 1, 2001, made by the Company
                in
                favor of Jeffrey S. Silverman, in the principal amount of $245,000
                (incorporated by reference to Exhibit 10.47 to the Company’s Annual Report
                on Form 10-KSB for the year ended December 31,
                2000).





10.39
            Subordinated
                Convertible Promissory Note, dated March 1, 2001, made by the Company
                in
                favor of Ronald Nash, in the principal amount of $245,000 (incorporated
                by
                reference to Exhibit 10.47 to the Company’s Annual Report on Form 10-KSB
                for the year ended December 31,
                2000).


39





10.40
            Amendment,
                dated as of March 21, 2001, to Agreement, dated as of January 11,
                2001,
                among the Company, Thomas P. Willey, as trustee of the Thomas P.
                Willey
                Revocable Trust of 1998, James M. Willey, as trustee of the James
                M.
                Willey Trust - 1995, Jeffrey S. Silverman, William Lilley III, Ronald
                Nash, Robert Trump, and Laurence DeFranco (incorporated by reference to
                Exhibit 10.44 to the Company’s Annual Report on Form 10-KSB for the year
                ended December 31, 2000).





10.41
            Amendment
                and Waiver Agreement, dated as of May 21, 2001, between Fleet and
                Willey
                Brothers (incorporated by reference to Exhibit 10.25 to the Company’s
                Quarterly Report on Form 10-QSB for the quarter ended September 30,
                2001).





10.42
            Letter
                Agreement, dated October 16, 2001, amending the terms of i) Stock
                Purchase
                Agreement, dated as of January 11, 2001, by and among the Company,
                James
                M. Willey, individually and as trustee of the James M. Willey Trust
                - 1995
                and Thomas P. Willey, individually and as trustee of The Thomas P.
                Willey
                Revocable Trust of 1998, ii) Subordinated Convertible Term Promissory
                Notes, dated January 11, 2001, made by the Company in favor of each
                of the
                James M. Willey Trust - 1995 and the Thomas P. Willey Revocable Trust
                of
                1998, in the principal amount of $3,750,000, and iii) Subordinated
                Convertible Term Promissory Notes, dated January 11, 2001, made by
                the
                Company in favor of each of the James M. Willey Trust - 1995 and
                the
                Thomas P. Willey Revocable Trust of 1998, in the principal amount
                of
                $1,000,000 (incorporated by reference to Exhibit 10.65 to the Company’s
                Annual Report on Form 10-KSB filed on March 31,
                2003).





10.43
            Second
                Amendment and Waiver Agreement, dated as of October 22, 2001, between
                Fleet and Willey Brothers (incorporated by reference to Exhibit 10.25
                to
                the Company’s Quarterly Report on Form 10-QSB for the quarter ended
                September 30, 2001).





10.44
            Financial
                Performance Corporation Incentive Compensation Plan (incorporated
                by
                reference to Exhibit 10.32 to the Company’s Quarterly Report on Form
                10-QSB for the quarter ended September 30,
                2001).





10.45
            Financial
                Performance Corporation 2001 Stock Incentive Plan (incorporated by
                reference to Exhibit 10.33 to the Company’s Quarterly Report on Form
                10-QSB for the quarter ended September 30,
                2001).





10.46
            Subordinated
                Note and Warrant Purchase Agreement, dated as of October 22, 2001,
                by and
                among the Company, Willey Brothers, Inc. and Corporate Mezzanine
                II, L.P.
                (“CMII”) (incorporated by reference to Exhibit 10.34 to the Company’s
                Quarterly Report on Form 10-QSB for the quarter ended September 30,
                2001).





10.47
            Subordinated
                Promissory Note, in the Principal Amount of $5,000,000, made by Willey
                Brothers, Inc. in favor of CMII (incorporated by reference to Exhibit
                10.34 to the Company’s Quarterly Report on Form 10-QSB for the quarter
                ended September 30, 2001).





10.48
            Common
                Stock Purchase Warrant, dated October 22, 2001, between the Company
                and
                CMII (incorporated by reference to Exhibit 10.34 to the Company’s
                Quarterly Report on Form 10-QSB for the quarter ended September 30,
                2001).





10.49
            Registration
                Rights Agreement, dated as of October 22, 2001, between the Company
                and
                CMII (incorporated by reference to Exhibit 10.34 to the Company’s
                Quarterly Report on Form 10-QSB for the quarter ended September 30,
                2001).





10.50
            Subordination
                and Intercreditor Agreement, dated as of October 22, 2001, by and
                among
                Willey Brothers, Inc., CMII and Fleet Capital Corporation (incorporated
                by
                reference to Exhibit 10.34 to the Company’s Quarterly Report on Form
                10-QSB for the quarter ended September 30,
                2001).





10.51
            Amendment
                to the Option Agreement, dated as of November 15, 2001, between Jeffrey
                S.
                Silverman and Robert Trump (incorporated by reference to Exhibit
                10.8 to
                the Company’s Quarterly Report on Form 10-QSB for the quarter ended March
                31, 2002).





10.52
            Amendment
                to Option Agreement, dated as of November 15, 2001, between Ronald
                Nash
                and Robert Trump (incorporated by reference to Exhibit 10.11 to the
                Company’s Quarterly Report on Form 10-QSB for the quarter ended March 31,
                2002


40




10.53
            Form
                of Warrant Agreement, between the Company and the Warrantholders
                listed
                therein, together with Form of Warrant Certificate, executed by each
                purchaser in the private placement of common stock and warrants through
                Broadband Capital, LLC as placement agent (incorporated by reference
                to
                Exhibit 10.33 to the Company’s Annual Report on Form 10-KSB for the year
                ended December 31, 2001).





10.54
            Rights
                Agreement, between the Company and the Holders listed therein, executed
                by
                each purchaser in the private placement of common stock and warrants
                through Broadband Capital, LLC as placement agent (incorporated by
                reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-KSB
                for the year ended December 31,
                2001).





10.55
            Form
                of Stock Option Agreement, dated as of March 27, 2002, between the
                Company
                and each of Jonathan Foster, Nathan Ganther and J. William Grimes
                (incorporated by reference to Exhibit 10.66 to the Company’s Annual Report
                on Form 10-KSB filed on March 31,
                2003).





10.56
            Form
                of Stock Option Agreement, dated as of March 27, 2002, between the
                Company
                and each of Jeffrey S. Silverman and Edward T. Stolarski (incorporated
                by
                reference to Exhibit 10.33 to the Company’s Quarterly Report on Form
                10-QSB for the quarter ended March 31,
                2002).





10.57
            Third
                Amendment and Waiver Agreement, dated as of March 29, 2002, among
                Fleet,
                Willey Brothers and the Company (incorporated by reference to Exhibit
                10.23 to the Company’s Annual Report on Form 10-KSB for the year ended
                December 31, 2001).





10.58
            Letter
                Agreement, dated April 17, 2002, between and among Fleet, Willey
                Brothers
                and the Company (incorporated by reference to Exhibit 10.21 to the
                Company’s Quarterly Report on Form 10-QSB for the quarter ended June 30,
                2002).





10.59
            Letter
                Agreement, dated May 15, 2002, between and among Fleet, Willey Brothers
                and the Company (incorporated by reference to Exhibit 10.21 to the
                Company’s Quarterly Report on Form 10-QSB for the quarter ended June 30,
                2002).





10.60
            Amendment
                No. 1 and Waiver, dated as of May 14, 2002, by and among the Company,
                Willey Brothers, and CMII (incorporated by reference to Exhibit 10.30
                to
                the Company’s Quarterly Report on Form 10-QSB for the quarter ended June
                30, 2002).





10.61
            Letter
                Agreement, dated July 11, 2002, between and among Fleet, Willey Brothers
                and the Company (incorporated by reference to Exhibit 10.21 to the
                Company’s Quarterly Report on Form 10-QSB for the quarter ended June 30,
                2002).





10.62
            Amendment
                No. 2 and Waiver, dated as of August 9, 2002, by and among the Company,
                Willey Brothers, and CMII (incorporated by reference to Exhibit 10.30
                to
                the Company’s Quarterly Report on Form 10-QSB for the quarter ended June
                30, 2002).





10.63
            Fourth
                Amendment, dated as of September 25, 2002, among Fleet, Willey Brothers
                and the Company (incorporated by reference to Exhibit 10.21 to the
                Company’s Quarterly Report on Form 10-QSB for the quarter ended September
                30, 2002).





10.64
            Letter
                Agreement, dated October 9, 2002, between Willey Brothers and CMII
                (incorporated by reference to Exhibit 10.67 to the Company’s Annual Report
                on Form 10-KSB filed on March 31,
                2003).





10.65
            Stock
                Redemption Agreement, dated as of October 31, 2002, between the Company
                and iMapData (incorporated by reference to Exhibit 10.1 to the Company’s
                Current Report on Form 8-K filed on November 14,
                2002).




10.66
            Pledge
                and Escrow Agreement, dated as of October 31, 2002, among the Company,
                iMapData and LandAmerica Financial Group, Inc. (incorporated by reference
                to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on
                November 14, 2002).




41




10.67
            Promissory
                Note, dated October 31, 2002, made by iMapData in favor of the Company,
                in
                the principal amount of $1,550,000 (incorporated by reference to
                Exhibit
                10.3 to the Company’s Current Report on Form 8-K filed on November 14,
                2002).





10.68
            Letter
                Agreement, dated October 31, 2002, between the Company and iMapData
                (incorporated by reference to Exhibit 10.4 to the Company’s Current Report
                on Form 8-K filed on November 14,
                2002).





10.68
            Fifth
                Amendment, dated as of December 20, 2002, among Fleet, Willey Brothers
                and
                the Company (incorporated by reference to Exhibit 10.68 to the Company’s
                Annual Report on Form 10-KSB filed on March 31,
                2003).





10.69
            Letter
                Agreement, dated February 12, 2003 among Fleet, Willey Brothers and
                the
                Company (incorporated by reference to Exhibit 10.69 to the Company’s
                Annual Report on Form 10-KSB filed on March 31,
                2003).





10.70
            Sixth
                Amendment, dated as of March 18, 2003, among Fleet, Willey Brothers
                and
                the Company (incorporated by reference to Exhibit 10.70 to the Company’s
                Annual Report on Form 10-KSB filed on March 31,
                2003).





10.71
            Waiver
                dated March 31, 2003, by and among the Company, Willey Brothers and
                CMII
                (incorporated by reference to Exhibit 10.71 to the Company’s Annual Report
                on Form 10-KSB filed on March 31,
                2003).





10.72
            Form
                of Stock Option Agreement dated as of March 25, 2003 between the
                Company
                and each of Chet Borgida, Kenneth Csaplar, Richard Levy, Jeffrey
                Adam
                Lipsitz and Anthony van Daalen (incorporated by reference to Exhibit
                10.1
                to the Company’s Report on Form 10-Q filed May 15,
                2003).





10.73
            Employee
                Stock Option Agreement dated as of March 25, 2003 between the Company
                and
                Edward T. Stolarski (incorporated by reference to Exhibit 10.2 to
                the
                Company’s Report on Form 10-Q filed May 15,
                2003).





10.74
            Employee
                Stock Option Agreement dated as of March 25, 2003 between the Company
                and
                Sharon Burd (incorporated by reference to Exhibit 10.3 to the Company’s
                Report on Form 10-Q filed May 15,
                2003).





10.75
            Agreement
                dated as of May 15, 2003 by and among the Company, Willey Brothers,
                James
                M. Willey, individually and as trustee of the James M. Willey Trust
                - 1995
                and Thomas P. Willey, individually and as trustee of The Thomas P.
                Willey
                Revocable Trust of 1998 (incorporated by reference to Exhibit 10.4
                to the
                Company’s Report on Form 10-Q filed May 15,
                2003).





10.76
            Amended
                agreement dated June 16, 2003 by and among the Company, Willey Brothers,
                James M. Willey, individually and as trustee of the James M. Willey
                Trust
                - 1995 and Thomas P. Willey, individually and as trustee of The Thomas
                P.
                Willey Revocable Trust of 1998 and Nixon Peabody LLP as Escrow Agent,
                amending Agreement, dated as of May 15, 2003, by and among the parties
                (incorporated by reference to Exhibit 10.1 to the Company’s Report on Form
                10-Q filed August 26, 2003).





10.77
            Waiver
                dated as of June 30, 2003 by and among the Company, Willey Brothers
                and
                Corporate Mezzanine II, L.P. (incorporated by reference to Exhibit
                10.2 to
                the Company’s Report on Form 10-Q filed August 26,
                2003).





10.78
            Seventh
                Amendment, dated as of August 21, 2003, among Fleet Capital Corporation,
                Willey Brothers, Inc. and the Company (incorporated by reference
                to
                Exhibit 10.3 to the Company’s Report on Form 10-Q filed August 26,
                2003).





10.79
            Eighth
                Amendment, dated as of September 29, 2003, among Fleet Capital
                Corporation, Willey Brothers, Inc. and the Company (incorporated
                by
                reference to Exhibit 99.1 to the Company’s Report on Form 8-K filed
                October 2, 2003 and Exhibit 10.2 to the Company’s Report on Form 10-Q
                filed November 14, 2003).





10.80
            Second
                Amended Agreement dated as of September 15, 2003 by and among the
                Company,
                Willey Brothers, James M. Willey, individually and as trustee of
                the James
                M. Willey Trust - 1995 and Thomas P. Willey, individually and as
                trustee
                of The Thomas P. Willey Revocable Trust of 1998 and Nixon Peabody
                LLP as
                Escrow Agent, amending Agreement, dated as of May 15, 2003, by and
                among
                the parties (incorporated by reference to Exhibit 10.1 to the Company’s
                Report on Form 10-Q filed November 14,
                2003).




42




10.81
            Letter
                Agreement dated as of September 30, 2003, between and among the Company,
                Willey Brothers, Corporate Mezzanine II, L.P. and Fleet Capital
                Corporation, relating to Subordinated Notes and Warrant Purchase
                Agreement, dated October 22, 2001, between the Company, Willey Brothers
                and Corporate Mezzanine II, L.P. (incorporated by reference to Exhibit
                10.3 to the Company’s Report on Form 10-Q filed November 14,
                2003).





10.82
            Common
                Stock Purchase Warrant, dated October 2, 2003 between the Company
                and
                James F. Brooks (incorporated by reference to Exhibit 10.4 to the
                Company’s Report on Form 10-Q filed November 14,
                2003).





10.83
            Stock
                Option Agreement dated as of October 2, 2003 between the Company
                and James
                F. Brooks (incorporated by reference to Exhibit 10.5 to the Company’s
                Report on Form 10-Q filed November 14,
                2003).





10.84
            Agreement
                effective as of October 15, 2003, between the Company and Anthony
                J.
                Cataldo (incorporated by reference to Exhibit 10.6 to the Company’s Report
                on Form 10-Q filed November 14,
                2003).





10.85
            Termination
                Agreement dated as of January 13, 2003 (delivered October 28, 2003),
                by
                and among the Company, Robert S. Trump, Ronald Nash and the Estate
                of
                Jeffrey Silverman, relating to Stockholders Agreement, dated as of
                November 17, 1999, by and among the parties (incorporated by reference
                to
                Exhibit 10.7 to the Company’s Report on Form 10-Q filed November 14,
                2003).





10.86
            Waiver
                dated as of November 6, 2003, by and among the Company, Willey Brothers
                and Corporate Mezzanine II, L.P. (incorporated by reference to Exhibit
                10.8 to the Company’s Report on Form 10-Q filed November 14,
                2003).





10.87
            Promissory
                Note dated November 7, 2003 in the principal amount of $100,000 made
                by
                the Company in favor of Filter International (incorporated by reference
                to
                Exhibit 10.9 to the Company’s Report on Form 10-Q filed November 14,
                2003).





10.88
            Promissory
                Note dated November 7, 2003, in the principal amount $250,000, made
                by the
                Company in favor of Camden International Ltd. (incorporated by reference
                to Exhibit 10.10 to the Company’s Report on Form 10-Q filed November 14,
                2003).


10.89
            Employment
                Agreement dated as of November 10, 2003 between the Company and James
                F.
                Brooks (incorporated by reference to Exhibit 10.11 to the Company’s Report
                on Form 10-Q filed November 14,
                2003).





10.90
            Ninth
                Amendment, dated as of November 29, 2003, among Fleet Capital Corporation,
                Willey Brothers and the Company (incorporated by reference to Exhibit
                10.5
                to the Company’s Report on Form 8-K filed February 5,
                2004).





10.91
            Surrender
                Agreement for leasehold at 777 Third Avenue, New York NY, dated as
                of
                January 20, 2004 between the Company and Sage Realty Group as agent
                (incorporated by reference to Exhibit 10.1 to the Company’s Report on Form
                8-K filed February 5, 2004).





10.92
            Settlement
                Agreement dated January 20, 2004 by and among the Company, Willey
                Brothers, James M. Willey, individually and as trustee of the James
                M.
                Willey Trust - 1995 and Thomas P. Willey, individually and as trustee
                of
                The Thomas P. Willey Revocable Trust of 1998 and McLane, Graf, Raulerson
                & Middleton, PA as escrow agent, settling obligations under prior
                agreements dated as of May 15, 2003 (incorporated by reference to
                Exhibit
                10.2 to the Company’s Report on Form 8-K filed February 5,
                2004).





10.93
            Amendment
                No. 3 and Waiver to Subordinated Note and Warrant Purchase Agreement
                dated
                as of January 7, 2004 between Corporate Mezzanine II, L.P., Willey
                Brothers and the Company (incorporated by reference to Exhibit 10.3
                to the
                Company’s Report on Form 8-K filed February 5,
                2004).





10.94
            Amendment
                No. 1 to the Subordinated Note dated as of January 7, 2004 by Willey
                Brothers, Inc. as maker and Corporate Mezzanine II, L.P. as holder
                (incorporated by reference to Exhibit 10.4 to the Company’s Report on Form
                8-K filed February 5, 2004).





10.95
            Unsecured
                Subordinated Promissory Note between the Company and Longview Fund
                L.P.
                dated July 6, 2004 (incorporated by reference to Exhibit 10.1 to
                the
                Company’s Quarterly Report on Form 10-Q filed August 16,
                2004).




43





10.96
            Common
                Stock Purchase Warrant, dated as of July 6, 2004, between the Company
                and
                Longview Fund L.P. (incorporated by reference to Exhibit 10.2 to
                the
                Company’s Quarterly Report on Form 10-Q filed August 16,
                2004).





10.97
            Amendment
                to Employment Agreement dated as of August 13, 2004 between the Company
                and James F. Brooks (incorporated by reference to Exhibit 10.3 to
                the
                Company’s Quarterly Report on Form 10-Q filed August 16,
                2004).





10.98
            Amendment
                to Agreement dated August 13, 2004 between the Company and Anthony
                J.
                Cataldo (incorporated by reference to Exhibit 10.4 on the Company’s
                Quarterly Report on Form 10-Q filed August 16,
                2004).





10.99
            Agreement
                dated August 16, 2004 between the Company and James F. Brooks
                (incorporated by reference to Exhibit 10.3 on the Company’s Quarterly
                Report on Form 10-Q filed August 16, 2004 (incorporated by reference
                to
                Exhibit 10.22 to the Company’s Annual 10K Report filed on March 25,
                2005).





10.100
            Purchase
                and Joinder Agreement with BancRealty Advisors, LLC, dated September
                21,
                2004 (incorporated by reference to Exhibit 10.1 on the Company’s Quarterly
                Report on Form 10-Q filed November 16,
                2004).





10.101
            Modification
                Agreement dated September 29, 2004, between the Company and Longview
                Fund
                L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current
                Report Form 8-K, dated September 30,
                2004).





10.102
            Unsecured
                Subordinated $625,000 Promissory Note issued by the Company to Longview
                Fund L.P. dated September 29, 2004 (incorporated by reference to
                Exhibit
                10.2 to the Company’s Current Report filed on form 8-K filed September 30,
                2004).





10.103
            Registration
                Rights Agreement entered into September 20, 2004 between the Company
                and
                Longview Fund L.P. (incorporated by reference to Exhibit 10.3 to
                the
                Company’s Current Report filed on Form 8-K filed September 30,
                2004).





10.104
            Tenth
                Amendment dated December 28, 2004 between Bank of America Business
                Capital, Willey Brothers and the Company (incorporated by reference
                to
                Exhibit 10.14 to the Company’s Annual 10K Report filed on March 25,
                2005).





10.105
            Modification
                agreement to Unsecured Subordinated $625,000 Subordinated Promissory
                Note
                dated January 5, 2005 between Longview Fund, L.P. and the Company
                (incorporated by reference to Exhibit 10.15 to the Company’s Annual 10K
                Report filed on March 25, 2005).





10.106
            Form
                of Common Stock Purchase Warrant to be issued in accord with Modification
                Agreement to Unsecured $625,000 Subordinated Note (incorporated by
                reference to Exhibit 10.16 to the Company’s Annual 10K Report filed on
                March 25, 2005).





10.107
            Letter
                of Engagement for marketing, financial public relations and investor
                relations services dated as of February 1, 2005 between Trilogy Capital
                Partners, Inc. and the Company (incorporated by reference to Exhibit
                10.17
                to the Company’s Annual 10K Report filed on March 25,
                2005).





10.108
            Common
                Stock Purchase Warrant, exercisable at $1.00 issued to Trilogy Capital
                Partners(incorporated by reference to Exhibit 10.18 to the Company’s
                Annual 10K Report filed on March 25,
                2005).





10.109
            Common
                Stock Purchase Warrant, exercisable at $1.50 issued to Trilogy Capital
                Partners (incorporated by reference to Exhibit 10.19 to the Company’s
                Annual 10K Report filed on March 25,
                2005).





10.110
            Common
                Stock Purchase Warrant, exercisable at $2.00 issued to Trilogy Capital
                Partners (incorporated by reference to Exhibit 10.20 to the Company’s
                Annual 10K Report filed on March 25,
                2005).





10.111
            Amendment
                to Employment Agreement dated March 16, 2005 between James F. Brooks
                and
                the Company (incorporated by reference to Exhibit 10.21 to the Company’s
                Annual 10K Report filed on March 25,
                2005).




44





10.112
            Amendment
                to Agreement dated March 16, 2005, between Anthony J. Cataldo and
                the
                Company (incorporated by reference to Exhibit 10.22 to the Company’s
                Annual 10K Report filed on March 25,
                2005).





10.113
            Investor
                Relations Consulting Agreement between the Company and Alliance Advisors,
                LLC, effective April 3, 2006 (incorporated by reference to Exhibit
                10.1 to
                the Company’s report on Form 10-Q filed on May 15,
                2006).





10.114
            Separation
                agreement and release dated August 10, 2006 between the Company and
                Anthony J. Cataldo (incorporated by reference to Exhibit 10.1 to
                the
                Company’s report on Form 8-K filed August 10,
                2006).





10.115
            Commitment
                letter to amend and extend existing revolving line of credit loan
                dated
                March 19, 2008 between the Company and TD Banknorth,
                N.A.





10.116
            Amendment
                No. 6 to subordinated note and warrant purchase agreement and amendment
                No. 2 to note between the Company and Corporate Mezzanine II, L.P.
                (“CMII”) dated March 27, 2008.





14.1
            Code
                of Ethics adopted December 8, 2004 by the Company’s Board of Directors
                (incorporated by reference to Exhibit 99.1 to the Company’s Current Report
                on Form 8-K, dated December 10, 2004).





14.2
            Letter
                from Grant Thornton LLP addressed to the Securities and Exchange
                Commission in accordance with Item 304(a)(3) of Regulation S-K
                (incorporated by reference to Exhibit 16.1 to the Company’s Report on Form
                8-K filed April 17, 2003).





16.1
            Letter
                from Goldstein Golub Kessler LLP addressed to the Securities and
                Exchange
                Commission in connection with Item 304(a)(3) of Regulation S-K
                (incorporated by reference to Exhibit 16.1 to the Company’s Report on Form
                8-K filed February 23, 2003).





16.2
            Letter
                from Goldstein Golub Kessler LLP dated February 20, 2004 addressed
                to the
                Securities and Exchange Commission in connection with Item 304(a)(3)
                of
                Regulation S-K (incorporated by reference to Exhibit 16.1 to the
                Company’s
                Current Report on Form 8-K filed February 23,
                2004).





16.3
            Resignation
                letter from Goldstein & Morris dated October 20, 2004 (incorporated by
                reference to Exhibit 16.1 to the Company’s Current Report filed on Form
                8-K filed October 22, 2004).





16.4
            Letter
                from Goldstein and Morris Certified Public Accountants P.C. addressed
                to
                the Securities and Exchange Commission dated November 23, 2004
                (incorporated by reference to Exhibit 16.1 to the Company’s Current Report
                filed on Form 8-K filed December 1,
                2004).





16.5
            Letter
                from Michael F. Albanese, CPA, addressed to Securities and Exchange
                Commission in connection with Item 304(a)(3) of Regulation S-K
                (incorporated by reference to Exhibit 16.1 to the Company’s Current Report
                on Form I-K filed April 22, 2005).





21.1
            List
                of Subsidiaries (incorporated by reference to Exhibit 21.1 to the
                Company’s Annual Report filed on Form 10-K Report filed March 25,
                2005).





23.1
            Consent
                of Goldstein and Morris Certified Public Accountants (incorporated
                by
                reference to Exhibit 23.1 to the Company’s Annual Report filed on Form
                10-K for the year ended December 31,
                2003).





31.1
            Certification
                of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002 (filed herewith)





31.2
            Certification
                of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002 (filed herewith)





32.1
            Certification
                of Chief Executive Officer and Chief Financial Officer Pursuant to
                18
                U.S.C. Section 1350, as adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002. (filed
                herewith)




45





SIGNATURES





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.


BRANDPARTNERS
                  GROUP, INC./s/
              JAMES
                  F. BROOKSJames
                F. BrooksChairman,
                Chief Executive Officer and
                President




March
      28,
      2008




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated.


/s/
                  James F. Brooks
              
              March
                  28, 2008James
                  F. Brooks, Chairman and Chief Executive Officer/s/
                  Clifford D. Brune
              
              March
                  28, 2008Clifford
                  D. Brune, Director/s/
                  J. Weldon Chitwood
              
              March
                  28, 2008J.
                  Weldon Chitwood, Director/s/
                  Richard Levy
              
              March
                  28, 2008Richard
                  Levy, Director/s/
                  Patrick H. Peyton
              
              March
                  28, 2008Patrick
                  H. Peyton, Director of Finance




46




**INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS**





PageReport
                of Independent Registered Public Accounting Firm
            48Financial
                StatementsConsolidated
                Balance Sheets
            49Consolidated
                Statements of Operations
            50Consolidated
                Statements of Stockholders’ Equity and Comprehensive
                Income
            51Consolidated
                Statements of Cash Flows
            52Notes
                to Consolidated Financial Statements
            53




47





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





To
      the
      Board of Directors and Stockholders


BrandPartners
      Group, Inc.


Rochester,
      New Hampshire





We
      have
      audited the accompanying consolidated balance sheets of BrandPartners Group,
      Inc. and subsidiaries as of December 31, 2007 and 2006 and the related
      consolidated statements of operations, stockholders equity and cash flows for
      each of the years in the three-year period ended December 31, 2007. These
      consolidated financial statements are the responsibility of the Company’s
      management. Our responsibility is to express an opinion on these consolidated
      financial statements based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform an audit to obtain reasonable assurance about whether the
      consolidated financial statements are free of material misstatement. An audit
      includes examining, on a test basis, evidence supporting the amounts and
      disclosures in the consolidated financial statements. An audit also includes
      assessing the accounting principles used and significant estimates made by
      management, as well as evaluating the overall financial statement presentation.
      We believe that our audits provide a reasonable basis for our
      opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the consolidated financial position of BrandPartners
      Group, Inc. and subsidiaries as of December 31, 2007 and 2006, and the
      consolidated results of their operations and their cash flows for each of the
      years in the three-year period ended December 31, 2007 in conformity with
      accounting principles generally accepted in the United States of
      America.





/s/  Moore
      Stephens, P.C.


Certified
      Public Accountants





Cranford,
      New Jersey


March
      27,
      2008





48




BrandPartners
      Group, Inc. and Subsidiaries


**CONSOLIDATED
      BALANCE SHEETS**








December
                31,
              2007
            
            December
                31,
              2006ASSETSCash
            
            $
            184,504
            
            $
            504,684Accounts
                receivable,net of allowance for doubtful accounts of $193,955 and
                $360,000
            
            
            4,967,674
            
            
            6,863,811Costs
                and estimated earnings in excess of billings
            
            
            1,271,043
            
            
            1,929,933Inventories,
                net
            
            
            758,944
            
            
            768,395Prepaid
                expenses and other current assets
            
            
            319,052
            
            
            353,171Total
                current assets
            
            
            7,501,217
            
            
            10,419,994Property
                and equipment, net
            
            
            933,430
            
            
            1,373,733Goodwill
            
            
            12,271,969
            
            
            24,271,969Deferred
                financing costs
            
            
            38,565
            
            
            115,358Other
                assets
            
            
            281,532
            
            
            325,441Total
                assets
            
            $
            21,026,713
            
            $
            36,506,495LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                liabilitiesAccounts
                payable and accrued expenses
            
            $
            3,582,895
            
            $
            7,775,189Billings
                in excess of cost and estimated earnings
            
            
            4,426,664
            
            
            4,354,739Short
                term debt
            
            
            1,688,325
            
            
            729,692Total
                current liabilities
            
            
            9,697,884
            
            
            12,859,620Long
                term debt, net of current maturities
            
            
            6,403,731
            
            
            6,451,766Stockholders'
                equityPreferred
                stock, $.01 par value; 20,000,000 shares authorized; none outstanding.
            
            
            -
            
            
            -Common
                stock, $.01 par value; 100,000,000 shares authorized; issued 34,923,359
            
            
            349,234
            
            
            349,234Additional
                paid in capital
            
            
            45,133,635
            
            
            45,133,635Accumulated
                deficit
            
            
            (40,294,603
            )
            
            (28,025,117
            )Other
                Comprehensive IncomeForeign
                currency adjustment
            
            
            49,332
            
            
            49,857Treasury
                stock, at cost
            
            $
            (312,500
            )
            
            (312,500
            )Total
                stockholders' equity
            
            
            4,925,098
            
            
            17,195,109Total
                liabilities and stockholders' equity
            
            $
            21,026,713
            
            $
            36,506,495





*The
      accompanying notes are an integral part of these financial
      statements.*





49




BrandPartners
      Group, Inc. and Subsidiaries


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**





December
                31,
              2007
            
            December
                31,
              2006
            
            December
                31,
              2005Revenues
            
            $
            43,809,283
            
            $
            52,476,383
            
            $
            52,036,057Costs
                and expensesCost
                of revenues
            
            
            33,281,529
            
            
            42,306,432
            
            
            37,298,018Selling,
                general and administrative
            
            
            9,397,388
            
            
            10,992,878
            
            
            11,152,475Goodwill
                impairment
            
            
            12,000,000
            
            
            -
            
            
            -Total
                expenses
            
            
            54,678,917
            
            
            53,299,310
            
            
            48,450,493Operating
                income (loss)
            
            
            (10,869,634
            )
            
            (822,927
            )
            
            3,585,564Interest,
                net
            
            
            (1,336,953
            )
            
            (1,501,464
            )
            
            (1,064,244
            )Income
                (loss)
            
            
            (12,206,587
            )
            
            (2,324,391
            )
            
            2,521,320Provision
                for income taxes
            
            
            62,899
            
            
            -
            
            
            606,511**NET
                INCOME (LOSS)**
            
            $
            (12,269,486
            )
            $
            (2,324,391
            )
            $
            1,914,809Basic
                and diluted earnings (loss) per shareBasic
            
            $
            (0.35
            )
            $
            (0.07
            )
            $
            0.06Diluted
            
            $
            (0.35
            )
            $
            (0.07
            )
            $
            0.05Weighted
                - average shares outstandingBasic
            
            
            34,923,359
            
            
            34,923,262
            
            
            34,660,397Diluted
            
            
            34,923,359
            
            
            34,923,262
            
            
            40,898,154





*The
      accompanying notes are an integral part of these statements.*





50




BrandPartners
      Group, Inc. and Subsidiaries


**CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE
      INCOME**


Common
                  Stock
              
              Additional
              
              Other
              
              
              
              Accum.
              
              Treasury
                  StockShares
              
              Par Value
              
              Paid
                              in Capital
              
              Comp.
                Income
              
              Accumulated
                Deficit
              
              Comp.
                Income
              
              Shares
              
              Cost
              
              TotalBalance
                  at December 31, 2004
              
              
              32,497,597
              
              $
              324,976
              
              $
              44,463,181
              
              $
              14,219,627
              
              $
              (27,615,535
              )
              
              
              
              
              (100,000
              )
              $
              (312,500
              )
              $
              16,860,122Options/warrants
                  exercised
              
              
              1,757,800
              
              $
              17,578
              
              $
              372,962
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              390,540Warrants
                  issued in connection with extension of debt maturity
              
              
              
              
              
              
              
              $
              163,667
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              163,667Comprehensive
                  incomeForeign
                  currency adjustment
              
              
              
              
              
              
              
              
              
              
              $
              57,951
              
              
              
              
              $
              57,951
              
              
              
              
              
              
              
              $
              57,951Net
                  income
              
              
              
              
              
              
              
              
              
              
              $
              1,914,809
              
              $
              1,914,809
              
              
              
              
              
              
              
              
              
              
              $
              1,914,809Balance
                  at December 31, 2005
              
              
              34,255,397
              
              $
              342,554
              
              $
              44,999,810
              
              $
              16,192,387
              
              $
              (25,700,726
              )
              $
              57,951
              
              
              (100,000
              )
              $
              (312,500
              )
              $
              19,387,089Shares
                  issued for legal services
              
              
              9,500
              
              $
              95
              
              $
              3,610
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              3,705Shares
                  issued for services
              
              
              120,000
              
              $
              1,200
              
              $
              45,600
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              46,800Shares
                  issued as part of severance agreement
              
              
              538,462
              
              $
              5,385
              
              $
              84,615
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              90,000Comprehensive
                  incomeForeign
                  currency adjustment
              
              
              
              
              
              
              
              
              
              
              $
              (8,094
              )
              
              
              
              $
              (8,094
              )
              
              
              
              
              
              
              $
              (8,094
              )Net
                  (loss)
              
              
              
              
              
              
              
              
              
              
              $
              (2,324,391
              )
              $
              (2,324,391
              )
              
              
              
              
              
              
              
              
              
              $
              (2,324,391
              )Balance
                  at December 31, 2006
              
              
              34,923,359
              
              $
              349,234
              
              $
              45,133,635
              
              $
              13,859,902
              
              $
              (28,025,117
              )
              $
              49,857
              
              
              (100,000
              )
              $
              (312,500
              )
              $
              17,195,109Comprehensive
                  incomeForeign
                  currency adjustment
              
              
              
              
              
              
              
              
              
              
              $
              (525
              )
              
              
              
              $
              (525
              )
              
              
              
              
              
              
              $
              (525
              )Net
                  (loss)
              
              
              
              
              
              
              
              
              
              
              $
              (12,269,486
              )
              $
              (12,269,486
              )
              
              
              
              
              
              
              
              
              
              $
              (12,269,486
              )Balance
                  at December 31, 2007
              
              
              34,923,359
              
              $
              349,234
              
              $
              45,133,635
              
              $
              1,589,891
              
              $
              (40,294,603
              )
              $
              49,332
              
              
              (100,000
              )
              $
              (312,500
              )
              $
              4,925,098




*The
      accompanying notes are an integral part of these statements.*





51




BrandPartners
      Group, Inc. and Subsidiaries


**CONSOLIDATED
      STATEMENT OF CASH FLOWS**





December
                31,
              2007
            
            December
                31,
              2006
            
            December
                31,
              2005Cash
                flows from operating activities
            
            $
            (12,269,486
            )
            $
            (2,324,391
            )
            $
            1,914,809Net
                income (loss)Adjustments
                to reconcile net income (loss) to net cash provided by (used in)
                operating
                activitiesDepreciation
                and amortization
            
            
            675,056
            
            
            854,080
            
            
            711,770Provision
                for doubtful accounts
            
            
            (166,045
            )
            
            (54,598
            )
            
            273,259Impairment
                of Goodwill
            
            
            12,000,000
            
            
            -
            
            
            -Non-cash
                compensation
            
            
            -
            
            
            140,505
            
            
            167,167Allowance
                for obsolete inventory
            
            
            (4,102
            )
            
            (19,588
            )
            
            (35,251
            )(Gain)
                loss on disposal of assets
            
            
            36,134
            
            
            (2,383
            )
            
            2,955Changes
                in operating assets and liabilitiesAccounts
                receivable
            
            
            2,062,182
            
            
            115,399
            
            
            (2,118,204
            )Costs
                and estimated earnings in excess of billings
            
            
            658,890
            
            
            (362,694
            )
            
            (487,724
            )Inventories
            
            
            13,553
            
            
            (97,664
            )
            
            711,050Prepaid
                expenses and other current assets
            
            
            34,119
            
            
            (16,778
            )
            
            354,765Other
                assets
            
            
            43,909
            
            
            (19,147
            )
            
            (12,476
            )Accounts
                payable and accrued expenses
            
            
            (4,192,294
            )
            
            430,430
            
            
            1,382,051Billings
                in excess of costs and estimated earnings
            
            
            71,925
            
            
            2,117,490
            
            
            (2,492,412
            )Net
                cash provided by (used in) operating activities
            
            
            (1,036,159
            )
            
            760,661
            
            
            371,759Cash
                flows (used in) investing activitiesAcquisition
                of equipment
            
            
            (192,394
            )
            
            (548,072
            )
            
            (692,668
            )Expenses
                from disposal of assets
            
            
            (1,700
            )
            
            -
            
            
            -Net
                cash (used in) investing activities
            
            
            (194,094
            )
            
            (548,072
            )
            
            (692,668
            )Cash
                flows provided by (used in) financing activitiesNet
                borrowings (payments) on short term debt
            
            
            1,347,522
            
            
            63,025
            
            
            (4,058,601
            )Proceeds
                from long term debt
            
            
            251,267
            
            
            386,061
            
            
            2,000,000Payments
                on long term debt
            
            
            (688,191
            )
            
            (674,562
            )
            
            (388,889
            )Proceeds
                from exercise of options
            
            
            -
            
            
            -
            
            
            390,540Net
                cash provided by (used in) financing activities
            
            
            910,598
            
            
            (225,476
            )
            
            (2,056,950
            )NET
                (DECREASE) IN CASH
            
            
            (319,655
            )
            
            (12,887
            )
            
            (2,377,859
            )Effect
                of exchange rates on cash and equivalents
            
            
            (525
            )
            
            (8,094
            )
            
            57,951Cash,
                beginning of years
            
            
            504,684
            
            
            525,665
            
            
            2,845,573Cash,
                end of years
            
            $
            184,504
            
            $
            504,684
            
            $
            525,665Supplemental
                disclosures of cash flow information:Cash
                paid during the period for interest *
            
            $
            1,061,985
            
            $
            709,331
            
            $
            620,209Cash
                paid during the period for taxes
            
            $
            53,603
            
            $
            236,179
            
            $
            363,101





*The
      accompanying notes are an integral part of the financial
      statements.*


* *Reclassified
      for comparative purposes*





52


**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005





**NOTE
      A - NATURE OF BUSINESS AND BASIS OF PRESENTATION**





BrandPartners
      Group, Inc. (“BrandPartners” “the Company” or “we”) operates through its
      wholly-owned subsidiaries:





BrandPartners
                Retail, Inc.
            “Brand
                Retail”Grafico,
                Incorporated
            “Grafico”Building
                Partners, Inc.
            “Build
                Partners”BrandPartners
                Europe, Ltd.
            “Brand
                Europe”





*BRAND
      RETAIL*


Brand
      Retail was formerly known as Willey Brothers, Inc. On January 16, 2001, the
      Company acquired the stock of Brand Retail for a combination of cash, common
      stock of the Company, options in the Company’s stock, and notes payable. The
      total purchase price was approximately $33.1 million.





*GRAFICO*


On
      April
      1, 2005 Grafico was formed as a Delaware corporation. In May of 2005 Grafico
      purchased the assets of a Connecticut design company. Grafico provides similar
      services to those of Brand Retail, targeting a specific segment of the financial
      services industry. On June 30, 2007 certain assets of Grafico were sold to
      its
      former General Manager. A loss of approximately $15,000 was recorded as a result
      of this transaction. Grafico was inactive for the last 6 months of
      2007.





*BUILD
      PARTNERS*


Build
      Partners was incorporated in Delaware in January of 2006 and provides general
      contracting services.





*BRAND
      EUROPE*


Brand
      Europe was incorporated in Great Britain in January 2005 and provides products
      and services to the European marketplace. Brand Europe was inactive in 2007.





Through
      its subsidiaries, the Company provides integrated products and services to
      the
      financial services industry and other retail markets. Those products and
      services include:





·
            Strategic
                retail positioning and branding


·
            Environmental
                design and constructions services


·
            Retail
                merchandising analysis, display systems and
                signage


·
            Point-of-sale
                communications and marketing
                programs





These
      products and services are offered as a complete turnkey package or as individual
      offerings, based upon the client’s needs.





*RISK*





We
      cannot
      determine at the present time when or if any of these subsidiaries will remain
      or be profitable in the future. We have relied and continue to rely upon cash
      payments from our operating subsidiaries to, among other things, pay creditors,
      maintain capital and meet our operating requirements. Regulations, legal
      restrictions, and contractual agreements could restrict any needed payments
      from
      our subsidiaries. If we were unable to receive cash from our subsidiaries,
      or
      from any operating subsidiaries that we may acquire in the future, our
      operations and financial condition would be materially and adversely
      affected.





53




**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005





**NOTE
      B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





1.
            *Principles
                of Consolidation*





The
      accompanying consolidated financial statements include the accounts of
      BrandPartners and its wholly owned subsidiaries (Brand Retail, Grafico, Build
      Partners and Brand Europe). All significant intercompany accounts and
      transactions have been eliminated in consolidation.





The
      Company records revenue based on the type of product and/or service delivered.
      For most contracts, percentage-of-completion is used, based upon the actual
      costs incurred to date. Contract costs include all direct materials, labor
      and
      subcontractor costs. General and administrative expenses are accounted for
      as
      period charges and are not included in the calculation of the estimates to
      complete. Anticipated losses are provided for in their entirety without
      reference to percentage-of-completion. Costs and estimated earnings in excess
      of
      billings represent unbilled charges on long-term contracts, namely revenue
      recognized but not invoiced at the end of the reporting period. Such billings
      are generally made and collected in the subsequent year. Billings in excess
      of
      cost and estimated earnings represent billed charges, such as deposits, on
      long-term contracts for which revenue has not yet been recognized as of the
      end
      of the reporting period.





Revenue
      from short-term agreements is recognized when the product is shipped and/or
      the
      service is rendered.





2.
            *Cash
                and Cash Equivalents*





The
      Company considers all highly liquid investments with maturity of three months
      or
      less when purchased to be cash equivalents.





3.
            *Inventories*





Inventories
      are priced at the lower of cost (determined by the weighted-average method,
      which approximates first-in, first-out) or market. Inventories consist of the
      following at December 31, 2007 and 2006.


2007
              
              2006Finished
                  Goods
              
              $
              482,674
              
              $
              497,188Raw
                  Material
              
              
              266,890
              
              
              274,747Work-in-Process
              
              
              20,277
              
              
              11,460$
              769,841
              
              $
              783,395Less
                  - Reserves
              
              
              (10,897
              )
              
              (15,000
              )Net
                Inventory
              
              $
              758,944
              
              $
              768,395




54





**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005




**NOTE
      B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (continued)**




4.
            *Property
                and Equipment*





Property
      and equipment are recorded at cost. Depreciation is computed generally by the
      straight-line method over the estimated useful lives of the applicable assets
      ranging from three to seven years.





Leasehold
      improvements are amortized over the term of the related lease, or the estimated
      useful life of the improvement, whichever is less. Significant improvements
      extending the useful lives of assets are capitalized. When assets are retired
      or
      otherwise disposed of, the cost and related accumulated depreciation are removed
      from the accounts, and any resulting gain or loss is reflected in current
      operating results. Maintenance and repairs are charged to expense when incurred,
      while significant repairs and improvements are capitalized.





Included
      in property and equipment is the capitalized cost of internal use software
      and
      website development, including software used to upgrade and enhance our websites
      and processes supporting our business. In accordance with SOP 98-1, *Accounting
      for Costs of Computer Software Developed or Obtained for Internal
      Use* ,
      we
      capitalize costs incurred during the application development stage related
      to
      the development of internal use software and will amortize these costs over
      the
      estimated useful life of three years. Costs incurred related to design or
      maintenance of internal use software are expensed as incurred.





5.
            *Goodwill
                and Deferred Financing Costs*





Goodwill
      represents the excess of the purchase price over the fair value of the net
      assets acquired. We evaluate the recoverability and measure the potential
      impairment of goodwill under the Financial Accounting Standards (“SFAS”) No. 142 *Goodwill
      and Other Intangible Assets* .
      SFAS
      No. 142 requires that the Company analyze goodwill for impairment on at least
      an
      annual basis. In assessing the recoverability of our goodwill, management must
      make certain assumptions regarding estimated future cash flows and other factors
      to determine its fair value. If the calculated fair value of the goodwill is
      less than its carrying value, an impairment loss is recognized in an amount
      equal to the difference. In the fourth quarter 2007 the Company evaluated
      Goodwill for impairment based upon the estimated fair value of our business
      operations and as a result, recorded an impairment charge of $12 million within
      the Statement of Operations. The Company did not record an impairment charge
      during the years ended December 31, 2006 and 2005.





Deferred
      financing costs are being amortized on a straight-line basis over three to
      seven
      years, the life of the related debt.




55




**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005




**NOTE
      B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (continued)**





6.
            *Long-Lived
                Assets*





The
      Company evaluates its long-lived assets for impairment whenever events or
      changes in circumstances indicate that the carrying amount of such assets may
      not be recoverable. Recoverability of assets to be held and used is measured
      by
      a comparison of the carrying amount of an asset to future discounted cash flows
      expected to be generated by the asset. If such an asset is considered to be
      impaired, the impairment to be recognized is measured by the amount by which
      the
      carrying amount of the asset exceeds the fair value of the assets. Assets to
      be
      disposed of are reported at the lower of the carrying amount or fair value
      less
      costs to sell.





7.
            *Warranty
                Costs*





Estimated
      future warranty costs are provided for in the period of sale for products under
      warranty based on historical experience. Accrued warranty costs at December
      31,
      2007, 2006 and 2005 were approximately $13,000, $171,000 and $142,000,
      respectively, and are included in cost of goods within the statement of
      operations.





8.
            *Income
                Taxes*





We
      account for income taxes in accordance with SFAS No. 109 *Accounting
      for Income Taxes* .
      Under
      SFAS No. 109, deferred tax assets and liabilities are determined based on
      differences between the financial statement and tax basis of assets and
      liabilities, net operating loss and credit carry-forwards using enacted tax
      rates in effect for the year in which the differences are expected to impact
      taxable income. A valuation allowance is established, when necessary, to reduce
      deferred tax assets to the amount that is more likely than not to be realized.
      If it becomes more likely than not that a deferred tax asset will be used,
      the
      related valuation allowance on such assets would be reversed. Management makes
      judgments as to the interpretation of the tax laws that might be challenged
      upon
      an audit and cause changes to previous estimates of tax liability. We operate
      within multiple taxing jurisdictions and are subject to audit in these
      jurisdictions. In management’s opinion, adequate provisions for income taxes
      have been made for all years.





On
      January 1 2007 we adopted the provisions of FIN 48, *Accounting
      for Uncertainty in Income Taxes – an Interpretation of FASB Statement No.
      109* which
      provides for a financial recognition threshold and measurement attribute for
      a
      tax position taken or expected to be taken in a tax return. Under FIN 48, we
      may
      recognize the tax benefit from an uncertain tax position only if it is more
      likely than not that the tax position will be sustained on examination by the
      taxing authorities, based on the technical merits of the position. The tax
      benefits recognized in the financial statements from such a position should
      be
      measured based on the largest benefits that has a greater than 50% likelihood
      of
      being realized upon ultimate settlement. FIN 48 also provides guidance on
      derecognition of income tax assets and liabilities, classification of current
      and deferred income tax assets and liabilities, accounting for interest and
      penalties associated with tax positions, and income tax disclosures. The
      adoption of FIN 48 did not have a material impact on our consolidated financial
      statements.





56




**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005




**NOTE
      B –** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (continued)**





9.
            *Fair
                Value of Financial Instruments*





Accounting
      principles generally accepted in the United States of America require disclosing
      the fair value of financial instruments to the extent practicable for financial
      instruments, which are recognized or unrecognized in the balance sheet. The
      fair
      value of the financial instruments disclosed herein is not necessarily
      representative of the amount that could be realized or settled, nor does the
      fair value amount consider the tax consequences of realization or settlement.
      In
      assessing the fair value of these financial instruments, we used a variety
      of
      methods and assumptions, which were based on estimates of market conditions
      and
      risks existing at that time.





The
      following methods and assumptions were used in estimating the indicated fair
      values of financial instruments:





Cash,
      cash equivalents and short-term debt: The carrying value approximates fair
      value
      due to the short maturity of these instruments.





Property
      and equipment: The fair value of our property and equipment is estimated to
      approximate their net book values.





Long-term
      debt: The carrying value approximates fair value based on current rates offered
      to the Company for similar debt.





Derivative
      financial instruments: The carrying value is re-measured at each balance sheet
      date based on the fair value of these instruments.





10.
            *Earnings
                (Loss) Per Share*





Basic
      and
      diluted earnings (loss) per share is computed using the weighted-average number
      of shares of common stock outstanding during the period. When applicable,
      diluted earnings per share is computed using the weighted-average number of
      shares of common stock adjusted for the dilutive effect of potential common
      shares issued or issuable pursuant to stock options, stock appreciation rights
      and warrants. Potential common shares issued are calculated using the treasury
      stock method, which recognizes the use of proceeds that could be obtained upon
      the exercise of options and warrants in computing diluted earnings per share.
      It
      assumes that any proceeds would be used to purchase common stock at the average
      market price of the common stock during the period.





Potential
      common shares of approximately 10,900,000 and 13,800,000 are antidilutive
      and therefore excluded from the computation of diluted loss per share, consist
      of stock options, warrants, and convertible debt for the years ended December
      31, 2007 and 2006, respectively. Such items may dilute earnings per share
      in the future.





57





**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005





**NOTE
      B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (continued)**





11.
            *Derivative
                Instruments and Hedging
                Activities*





In
      June
      1998, the Financial Accounting Standards Board (“FASB”) issued Statement of
      Financial Accounting Standards (“SFAS”) No. 133, *Accounting
      for Derivative Instruments and Hedging Activities* .
      SFAS
      No. 133 establishes accounting and reporting standards requiring that every
      derivative instrument (including certain derivative instruments embedded in
      other contracts) be recorded on the balance sheet as either an asset or a
      liability at its fair value. Changes in the fair value of those instruments
      are
      reported in earnings or other comprehensive income, depending on the use of
      the
      derivative and whether it qualifies for hedge accounting. The accounting for
      gains and losses associated with changes in fair value of a derivative and
      the
      effect on the consolidated financial statements will depend on its hedge
      designation and whether the hedge is highly effective in achieving offsetting
      changes in the fair value of cash flows of the instrument hedged.





12.
            *Concentration
                of Credit Risk*





Financial
      instruments that subject the Company to credit risk consist primarily of cash,
      accounts receivables, and costs and estimated earnings in excess of billings.
      BrandPartners’ customer base consists principally of U.S. financial
      institutions. Management does not believe that significant credit risk exists
      in
      connection with the Company’s concentration of credit at December 31, 2007 and
      2006, respectively.





13.
            *Stock-Based
                Compensation*





At
      December 31, 2007, the Company had two stock-based employee compensation plans,
      which are more fully described in Note K. The Company had previously accounted
      for these plans under the recognition and measurement provisions of APB Opinion
      No. 25, *Accounting
      for Stock Issued to Employees* (“APB
      25”), and related interpretations. The Company had no stock-based employee
      compensation cost reflected in earnings in the fiscal years prior to the
      adoption of SFAS No. 123(R), *Share-Based
      Payment* (“SFAS
      123(R)”), since the exercise price was equal to the market value of the
      underlying common stock at the date of grant. As of December 31, 2007, all
      options were fully vested.





On
      January 1, 2006, the Company adopted the provisions of SFAS 123(R) *.* Using
      the modified prospective adoption method of SFAS 123(R), the Company recognized
      the fair value of compensation cost for all share-based payments granted after
      January 1, 2006, plus any awards granted to employees prior to January 1, 2006
      that remained unvested at that time, over the service (vesting) period. Under
      this method of adoption, no restatement of prior periods was
      required.





Prior
      to
      January 1, 2006, the Company recognized the cost of employee services received
      in exchange for equity instruments in accordance with APB 25 *.* APB 25
      required the use of the intrinsic value method, which measures costs as the
      excess, if any, of the quoted market price of the stock over the amount the
      employee must pay for the stock. Compensation expense for substantially all
      of
      the Company’s equity based awards was measured under APB 25 on the date the
      shares were granted. Under APB 25, no compensation expense was
      recognized.





58




**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005




**NOTE
      B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (continued)**





There
      was
      no stock based compensation expense related to stock options during 2007,
      2006 or 2005 as no options were granted nor did any options vest during the
      period.





Non-employee
      stock-based compensation arrangements are accounted for in accordance with
      the
      provisions of SFAS 123(R) and Emerging Issues Task Force (“EITF”) No. 96-18, *Accounting
      for Equity Instruments That Are Issued to Other Than Employees for Acquiring
      or
      in Conjunction with Selling Goods or Services.* Under
      EITF No. 96-18, as amended by EITF No. 00-23, *Issues
      Related to the Accounting for Stock Compensation,* under
      APB
      25 and FASB Interpretation No. 44, where the fair value of the equity instrument
      is more reliably measurable than the fair value of services received, such
      services will be valued based on the fair value of the equity
      instrument.





14.
            *Use
                of Estimates*





In
      preparing financial statements in conformity with accounting principles
      generally accepted in the United States of America, management is required
      to
      make certain estimates and assumptions that affect:





·
            Reported
                amounts of assets and liabilities


·
            Disclosure
                of contingent assets and liabilities at the date of the financial
                statements


·
            Revenues
                and expenses during the reporting
                period





Significant
      estimates that we make include:





·
            Collectibility
                of accounts receivable


·
            Valuation
                of Goodwill and other intangible
                assets


·
            Costs
                and billings on uncompleted
                contracts


·
            Income
                taxes





Management
      has used reasonable assumptions in deriving these estimates. However, actual
      results could differ from these estimates. Consequently, an adverse change
      in
      conditions could affect the Company’s estimates.





15.
            *Long-Lived
                Assets*





The
      Company follows SFAS No. 144, *Accounting
      for the Impairment or Disposal of Long-Lived Assets.* This
      statement requires that long-lived assets be reviewed for impairment whenever
      events or changes in circumstances indicate that the assets’ carrying amounts
      may not be recoverable. In performing the review for recoverability, if future
      undiscounted cash flows (excluding interest charges) from the use and ultimate
      disposition of the assets are less than their carrying values, an impairment
      loss is recognized. Such losses are measured by the excess of the carrying
      amount over the fair value. No write-downs have been required for the years
      ended December 31, 2007, 2006 and 2005.




59




**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005




**NOTE
      B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (continued)**





*16.*
            *Comprehensive
                Income*





In
      accordance with SFAS No. 130, *Reporting
      Comprehensive Income* ,
      we are
      required to display comprehensive income (loss) and its components as part
      of
      our complete set of financial statements. Comprehensive income represents the
      change in stockholders’ equity resulting from transactions other than
      stockholder investments and distributions. Included in accumulated other
      comprehensive income are changes in stockholders’ equity that are excluded from
      our net earnings, specifically foreign currency gains (losses) and changes
      in
      fair value of marketable securities.





17.
            *Recently
                Issued Accounting Standards*





In
      February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
      Financial Assets and Financial Liabilities – Including an amendment of FASB
      Statement No. 115," which is effective for fiscal years beginning after
      November 15, 2007. This statement permits entities to choose to measure
      many financial instruments and certain other items at fair value. This statement
      also establishes presentation and disclosure requirements designed to facilitate
      comparisons between entities that choose different measurement attributes for
      similar types of assets and liabilities. Unrealized gains and losses on items
      for which the fair value option is elected would be reported in earnings. We
      have evaluated the new statement and have determined that it will not have
      a
      significant impact on the determination or reporting of our financial results.





In
      December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
      Combinations" (SFAS 141(R)), which replaces SFAS No. 141, "Business
      Combinations." SFAS 141(R) retains the underlying concepts of SFAS 141 in that
      all business combinations are still required to be accounted for at fair value
      under the acquisition method of accounting but SFAS 141(R) changed the method
      of
      applying the acquisition method in a number of significant aspects. Acquisition
      costs will generally be expensed as incurred; noncontrolling interests will
      be
      valued at fair value at the acquisition date; in-process research and
      development will be recorded at fair value as an indefinite-lived intangible
      asset at the acquisition date; restructuring costs associated with a business
      combination will generally be expensed subsequent to the acquisition date;
      and
      changes in deferred tax asset valuation allowances and income tax uncertainties
      after the acquisition date generally will affect income tax expense. SFAS 141(R)
      is effective on a prospective basis for all business combinations for which
      the
      acquisition date is on or after the beginning of the first annual period
      subsequent to December 15, 2008, with the exception of the accounting for
      valuation allowances on deferred taxes and acquired tax contingencies. SFAS
      141(R) amends SFAS 109 such that adjustments made to valuation allowances on
      deferred taxes and acquired tax contingencies associated with acquisitions
      that
      closed prior to the effective date of SFAS 141(R) would also apply the
      provisions of SFAS 141(R). Early adoption is not permitted. We are currently
      evaluating the effects, if any, that SFAS 141(R) may have on our financial
      statements and believe it could have a significant impact if business
      combinations are consummated. However, the effect of which is indeterminable
      as
      of December 31, 2007.




60





**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005




**NOTE
      B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (continued)**




In
        December 2007, the FASB issued Financial Accounting Standards No. 160,
        "Noncontrolling Interests in Consolidated Financial Statements—an amendment of
        ARB No. 51." This statement is effective for fiscal years, and interim
        periods within those fiscal years, beginning on or after December 15, 2008,
        with earlier adoption prohibited. This statement requires the recognition
        of a
        noncontrolling interest (minority interest) as equity in the consolidated
        financial statements and separate from the parent's equity. The amount of
        net
        income attributable to the noncontrolling interest will be included in
        consolidated net income on the face of the income statement. It also amends
        certain of ARB No. 51's consolidation procedures for consistency with the
        requirements of SFAS 141(R) *.* This
        statement also includes expanded disclosure requirements regarding the interests
        of the parent and its noncontrolling interest. We are currently evaluating
        this
        new statement and anticipate that the statement will not have a significant
        impact on the reporting of our results of operations.




In
      March
      2008, the Financial Accounting Standards Board (FASB) issued FASB Statement
      No.
      161, *Disclosures
      about Derivative Instruments and Hedging Activities.* The new
      standard is intended to improve financial reporting about derivative instruments
      and hedging activities by requiring enhanced disclosures to enable investors
      to
      better understand their effects on an entity’s financial position, financial
      performance, and cash flows. It is effective for financial statements issued
      for
      fiscal years and interim periods beginning after November 15, 2008, with early
      application encouraged. The company is currently evaluating the impact of
      adopting SFAS. No. 161 on its financial statements.




18.
            *Accounts
                Receivable*





The
      majority of the Company’s accounts receivable are due from companies in the
      financial services industry. Credit is extended based on evaluation of a
      customer’s financial condition. Accounts receivable are due within 30 days and
      are stated at amounts due from customers, net of an allowance for doubtful
      accounts. Periodically, the Company reviews accounts receivable to reassess
      its
      estimates of collectibility. The Company provides valuation reserves for bad
      debts based on specific identification of likely and probable losses. In
      addition, the Company provides valuation reserves for estimates of aged
      receivables, which may be written off, based upon historical evidence. These
      valuation reserves are periodically re-evaluated and adjusted as more
      information about the ultimate collectibility of accounts receivable becomes
      available.





The
      Company writes off accounts receivable when they become uncollectible, and
      payments subsequently received on such receivables are credited to the allowance
      for doubtful accounts. Interest income related to finance charges is recognized
      only to the extent that cash is received.





19.
            *Translation
                of Foreign Currency*





For
      the
      Company’s non-U.S. subsidiary whose accounts are in a functional currency other
      than U.S. dollars, assets and liabilities are translated into U.S. dollars
      using
      year-end exchange rates. Expenses are translated at the average exchange rates
      in effect during the year. Foreign currency translation gains and losses are
      included as a component of accumulated other comprehensive income (loss) within
      stockholders’ equity.




61




**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005





**NOTE
      C – INVESTMENT IN UNCONSOLIDATED AFFILIATE**





On
      September 21, 2004, the Company purchased a 15% membership interest in an
      unrelated third party for $250,000. In March 2007 the membership interest
      increased to 20.9%. As of December 31, 2007, no dividends or returns on equity
      were recorded on the investment. The Company does not have oversight over the
      investments, operations, internal controls, or financial reporting of the
      unrelated third party, and as such, this investment is being accounted for
      using
      the cost method. No additional funding has been provided nor has been committed
      to for the foreseeable future.




**NOTE
      D – PROPERTY AND EQUIPMENT**





Property
      and equipment and related accumulated depreciation are as follows:




2007
            
            2006Computer
                equipment and software
            
            $
            3,488,124
            
            $
            3,480,561Furniture,
                fixtures and other equipment
            
            
            1,720,498
            
            
            1,727,423Leasehold
                improvements
            
            
            866,709
            
            
            790,553Assets
                in progress
            
            
            4,000
            
            
            105,0156,079,331
            
            
            6,103,552Less
                accumulated depreciation
            
            
            (5,145,901
            )
            
            (4,729,819
            )$
            933,430
            
            $
            1,373,733




Depreciation
      expense was approximately $598,000, $776,000 and $605,000 for the years ended
      December 31, 2007, 2006, and 2005, respectively.





62




**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005





**NOTE
      E – COSTS AND BILLINGS ON UNCOMPLETED CONTRACTS**





Due
      to
      the nature of the project accounting used for large contracts, all vendor and
      labor costs are entered on the balance sheet until the associated revenue is
      recognized. Upon revenue recognition, the associated expenses and profit are
      transferred to the statement of operations. The Cost in Excess of Billings
      account reflects the costs which have been incurred by the Company with
      resultant revenue recognition in completing a contractual obligation, which
      according to the terms of the contract, cannot be invoiced as of the end of
      the
      fiscal period and is therefore an asset since those charges will be invoiced
      in
      the future. Its companion account, Billings in Excess of Cost, reflects the
      balance of those invoices to clients for which work to the level of the billing
      deposits has not yet occurred. Thus, a liability exists on the balance sheet
      for
      the obligation on the part of the Company to perform work to the level of the
      deposits invoiced to the client. Due to the size of the contracts, these
      accounts can fluctuate considerably as of the end of the fiscal period and
      during the interim periods.





The
      accompanying consolidated balance sheets include the following captions at
      December 31:





2007
            
            2006Costs
                and estimated earnings in excess of billings
            
            $
            1,271,043
            
            $
            1,929,933Billings
                in excess of costs and estimated earnings
            
            
            (4,426,664
            )
            
            (4,354,739
            )$
            (3,155,621
            )
            $
            (2,424,806
            )





**NOTE
      F – SHORT TERM DEBT**





Short-term
      debt consisted of the following:





2007
            
            2006Current
                portion long term debt (1)
            
            $
            277,778
            
            $
            666,667Line
                of credit (1)
            
            
            1,364,722
            
            
            -Capital
                lease, current portion
            
            
            21,525
            
            
            21,525Put
                warrant (2)
            
            
            24,300
            
            
            41,500$
            1,688,325
            
            $
            729,692





(1)
            On
                May 5, 2005, the Company negotiated a credit facility (the “Facility”)
                with a commercial lender. The Facility provides for the
                following:





·
            $2,000,000
                Term Loan, requiring 36 equal monthly
                payments





·
            $5,000,000
                Revolving Line of Credit





63





**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005





**NOTE
      F – SHORT TERM DEBT (continued)**





·
            Prime
                Interest Rate on Term Loan principal not subject to the LIBOR
                rate





·
            Prime
                Rate interest plus 25 basis points (0.25%) on Revolving Line of Credit
                Loan principal not subject to the LIBOR
                rate





·
            LIBOR
                rate equals LIBOR plus 275 basis points
                (2.75%)





Under
      the
      terms of the agreement, the Company is required to maintain certain financial
      covenants and ratios. The Facility expires on May 5, 2008. On December 31,
      2007,
      the LIBOR rate was 4.98%, and the adjusted Prime Rate was 8.07% for the term
      loan and 8.23% for the revolving line of credit. At December 31, 2007,
      approximately $2.9 million was available under the line of credit.





On
      March
      22, 2007, certain of the financial covenants were waived and adjusted. As part
      of the waiver agreement, the amount available under the Revolving Line of Credit
      was adjusted to be the lesser of (1) $5 million or (2) 70% of acceptable
      accounts receivable, plus 50% of the cost in excess of billings (capped at
      $1
      million), less an available reserve of $250,000. The Prime Rate interest premium
      was increased to 50 basis points (0.50%) for the Revolving Line of Credit and
      to
      25 basis (0.25%) points for the Term Loan principal.





On
      July
      13, 2007 the Company’s commercial lender consented to the Company exceeding the
      revolving line of credit limit on a temporary basis. Effective October 3, 2007
      the amount outstanding under the revolving line of credit was reduced and was
      within the limits provided by the March 28, 2007 amendment to the Company’s
      banking facility.





On
      November 12, 2007 the Company received a waiver and adjustment of certain
      financial covenants from its commercial lender and its subordinated promissory
      note holder.





On
      March
      19, 2008 the Company negotiated an extension of the Facility for the Revolving
      Line of Credit to April 30, 2009.





(2)
            The
                put warrant is related to the subordinated promissory note in the
                principal amount of$5,000,000,
                which is discussed further in Note H
                (2).




64




**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005





**NOTE
      G – CAPITAL LEASES**





The
      Company leases the telephone system for its main location and a piece of
      cleaning equipment under capital leases beginning in 2006. The leases expire
      in
      2009 and 2011, respectively. The economic substance of the leases is that the
      Company is financing the acquisition of assets through the leases, and
      accordingly, they are recorded in the Company’s assets and
      liabilities.





The
      following is an analysis of the leased assets included in Property and
      Equipment:





2007
            
            2006Machinery
                & Equipment
            
            $
            9,662
            
            $
            9,662Office
                equipment
            
            
            91,521
            
            
            91,521101,183
            
            
            101,183Less
                accumulated depreciation
            
            
            (29,420
            )
            
            (7,895
            )$
            71,763
            
            $
            93,288





The
      lease
      agreements contain a bargain purchase option at the end of the lease
      term.





The
      following is a schedule by years of future minimum payments required under
      the
      lease together with their present value as of December 31, 2007.





**Year
                Ending**
              **December
                31,**2008
            
            $
            25,8932009
            
            
            25,5912010
            
            
            22,2702011
            
            
            14,847Total
                future minimum lease payments
            
            
            88,601Less
                amount representing interest
            
            
            (16,838
            )Present
                value of minimum lease payments
            
            $
            71,763





Amortization
      of assets held under capital lease is included with depreciation
      expense.





65




**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005





**NOTE
      H – LONG TERM DEBT**





Long
      term
      debt consists of the following:





2007
            
            2006Note
                payable (1)
            
            $
            277,778
            
            $
            944,445Note
                payable (2)
            
            
            5,000,000
            
            
            5,000,000Interest
                payable (2)
            
            
            1,353,493
            
            
            1,102,226Put
                warrant liability (2)
            
            
            24,300
            
            
            41,500Capital
                lease (1)
            
            
            71,763
            
            
            93,2876,727,334
            
            
            7,181,458Less
                current maturities (1)
            
            
            (277,778
            )
            
            (666,667
            )Less
                put warrant liability (2)
            
            
            (24,300
            )
            
            (41,500
            )Capital
                lease current portion (1)
            
            
            (21,525
            )
            
            (21,525
            )$
            6,403,731
            
            $
            6,451,766





(1)
            See
                Note F.





(2)
            A
                subordinated promissory note (“the Note”) in the principal amount of
                $5,000,000 was issued on October 22, 2001 by an unrelated third party.
                The
                Note bears interest at 16% per annum, with 12% payable quarterly
                in cash
                and 4% being accreted to the unpaid principal (“PIK amount”). The Note
                matures on October 22, 2008, at which time the principal and all
                PIK
                amounts are due. Under the terms of the Note, the Company is required
                to
                maintain certain financial covenants and is in compliance as of December
                31, 2007.





Concurrently
      and in connection with the 2001 issuance of the Note, the Company issued 405,000
      warrants to purchase common stock of the Company at $0.01 per share. The
      warrants expire on October 11, 2011 and can be “put” to the Company under any of
      the following conditions:





(a)
            Following
                October 22, 2006, the fifth anniversary of the closing
                date;





(b)
            Repayment
                in full of the aggregate principal amount, together with interest,
                after
                the third anniversary of the closing
                date;





(c)
            Effective
                declaration by any holder of the Note that the Note has become due
                and
                payable;





(d)
            Change
                in control; or





(e)
            Sale
                of all or substantially all of the assets of the
                Company.





The
      warrant transaction has been treated as a debt discount and has been amortized
      to interest expense over prior periods. A liability for the “put warrant” has
      been recorded. Changes to the future fair value of the “put warrants” are
      recorded in accordance with FASB No. 133 and been charged to Sales/General
      and
      Administrative expense. For the year ended December 31, 2007, the liability
      of
      the put warrant has been disclosed under Short Term Debt (Note F).





66





**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005





**NOTE
      H – LONG TERM DEBT (continued)**





If
      the
      Company is unable to pay the Put Warrant repurchase price, the Put Note can
      be
      issued to the holder of the warrants. That Put Note would have the following
      characteristics:





a)
            Interest
                rate of 18% per annum


b)
            Due
                and payable on October 22, 2009


c)
            No
                financial covenants





On
      January 7, 2004, the Company amended and restructured the Note. In exchange
      for
      the waiver of certain covenants through December 31, 2003 and a reduction in
      the
      interest rate on the note, the Company issued to the note-holder a common stock
      purchase warrant to purchase 250,000 shares of the Company’s common stock at
      $0.26 per share. The interest rate reduction was for a period of two years,
      commencing January 1, 2004. The interest rate was reduced from 16% per annum
      to
      10% per annum – 8% payable in cash per quarter and 2% accreted to the PIK
      amount.





In
      March
      2008 the Company negotiated an extension of the maturity date of the Note to
      October 22, 2009. In addition the Company received an adjustment to certain
      of
      the financial covenants. As of December 31, 2007 the Note has been reflected
      as
      long-term debt in accordance with promulgated accounting
      principles.





At
      December 31, 2007 and 2006, the Company had a liability of $24,300 and $41,500
      related to the “put warrants,” respectively.





The
      five-year maturity schedule for the principal on the above notes payable is
      as
      follows:





2008
            
            2009Note
                payable (1)
            
            $
            277,777
            
            $
            -Note
                payable (2)
            
            
            -
            
            
            5,000,000Interest
                payable (2)
            
            
            -
            
            
            1,835,219Totals
            
            $
            277,777
            
            $
            6,835,219





**NOTE
      I – INCOME TAXES (BENEFIT)**





At
      December 31, 2007 and 2006, the Company had a taxable loss of approximately
      $646,000 and $1.3 million, respectively, for which no federal income tax
      provisions were made. For the year ended December 31, 2007 and 2006 the Company
      recorded approximately $60,000 and $0 state tax expense,
      respectively.




At
      December 31, 2005, the Company utilized net operating losses (“NOLS”) of
      approximately $2.5 million to eliminate the federal income tax. However, the
      Company was subject to Alternative Minimum Tax (“AMT”) in the amount of
      approximately $200,000, along with a state tax expense of approximately
      $400,000.




67




**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005





**NOTE
      I – INCOME TAXES (BENEFIT) (continued)**





The
      Company has NOLS of approximately $8.3 million available to offset future
      taxable income. These NOLS expire at various dates through 2027. At December
      31,
      2007, the Company has deferred tax assets of approximately $7.1 million. The
      deferred tax assts consist primarily of net operating loss carry-forwards and
      previously accrued reserves. Realization of deferred tax assets is dependent
      upon future earnings, if any, the timing and amount of which is uncertain.
      Accordingly, the deferred tax assets have been fully offset by a valuation
      allowance of the same amount. Pursuant to Section 382 of the Internal Revenue
      Code, NOL carry-forwards may be limited in use in any given year in the event
      of
      a significant change in ownership.





At
      December 31, 2007, the Company had federal net operating loss carry-forwards
      that expire as follows:





**Year
                Net Operating**
              **Loss
                Expires**2022
            
            $
            2,688,0222023
            
            
            3,646,8042026
            
            
            1,306,4332027
            
            
            646,223$
            8,287,482





There
      may
      be state tax expense in certain states where tax statutes do not recognize
      or do
      limit the use of NOLS.





**NOTE
      J – CONCENTRATIONS**





*Significant
      Customers*





For
      the
      year ended December 31, 2007, one customer accounted for approximately 16%
      of
      the Company’s revenues. For the year ended December 31, 2006, one customer
      accounted for approximately 10% of the Company’s revenues. For the year ended
      December 31, 2005, three customers accounted for approximately 19%, 15%, and
      13%
      each of the Company’s revenues.





*Concentration
      of Credit Risk*





The
      Company maintains its cash and cash equivalents with major financial
      institutions. The balances at December 31, 2007 did not exceed federally insured
      limits. The Company performs periodic evaluations of the relevant credit
      standings of these financial institutions in order to limit the amount of credit
      exposure.




68




**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005





**NOTE
      K – STOCKHOLDERS’ EQUITY**





The
      Company is authorized to issue a maximum of 20,000,000 shares of preferred
      stock, par value $0.01, and 100,000,000 shares of common stock, par value
      $0.01.





*Stock
      Options*





During
      2004, the shareholders approved the Company’s 2004 Stock Incentive Plan. The
      plan was amended at the annual meeting of the shareholders in May 2005 to
      increase the shares available for issuance under the plan from 5 million to
      8
      million shares. The plan provides for the reservation and issuance of up to
      8
      million options for shares of common stock, subject to future stock splits,
      stock dividends, reorganizations, and similar events. The exercise price of
      incentive stock options may not be less than the fair market value on the date
      of grant. The plan provides for options to be granted to officers, directors,
      and employees of the Company. On November 7, 2007 the board of directors amended
      the Company’s 2004 Stock Incentive Plan to permit the award of restricted stock
      to outside directors. During the years ended December 31, 2007 and 2006, the
      Company did not grant any options.





The
      Company’s 2001 Incentive Stock Plan was approved during 2001. The reservation
      and issuance of 5 million options for shares of common stock subject to similar
      conditions listed above was provided. During the years ended December 31, 2003,
      2002 and 2001, the Company granted 1,720,000; 2,017,815; and 50,000 stock
      options, respectively, to officers, directors and employees under the plan.
      On
      January 14, 2005, the former directors of the Company agreed to a reduction
      in
      the number of options issued from 1,400,000 options to 350,000 options, in
      consideration for receiving registration rights for the remaining underlying
      shares. Total active options in the 2001 Incentive Stock Plan as of March 27,
      2008 were 381,549. The Company has also issued stock options to certain
      individuals and companies under letter agreements. During the years ended
      December 31, 2004 and 2003, options to purchase 100,000 shares at $0.75 per
      share, price at time of issuance, and 6,425,000 shares, respectively, of the
      Company’s common stock were issued under such agreements. The options granted
      have an exercise price at least equal to the fair value of the Company’s stock
      (except for options issued to two directors and to a consultant which were
      below
      fair market value) and expire at various times through 2010. The options
      previously granted vested immediately prior to or on December 29,
      2005.





A
      summary
      of the activity at December 31 is as follows:





Exercise Price
              Range
            
            Outstanding as of
              December 31,
              2007
            
            Outstanding
              Weighted
              Average
              Remaining Life
              (years)
            
            Outstanding
              Weighted
              Average Exercise
              Price
            
            Exercisable as of
              December 31,
              2007$0.00
                to $0.50
            
            
            7,088,000
            
            
            1.33
            
            $
            0.33
            
            
            7,088,000$0.51
                to $0.99
            
            
            3,811,167
            
            
            1.14
            
            $
            0.55
            
            
            3,811,167$1.00
                to $1.99
            
            
            48,192
            
            
            2.10
            
            $
            1.00
            
            
            48,19210,947,359
            
            
            
            
            
            
            
            
            10,947,359




69




**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005





**NOTE
      K – STOCKHOLDERS’ EQUITY (continued)**





The
      fair
      value of each option grant is estimated on the date of grant using the
      Black-Scholes option pricing model with the following assumptions used for
      grants in 2005. As no options were granted in 2007 and 2006, the Black-Scholes
      model was not used.





(1)
            Average
                expected volatility of 191% and
                348%


(2)
            Average
                risk-free interest rate of 4.51% and
                3.70%


(3)
            Expected
                lives of five years





The
      following table summarizes information concerning outstanding and exercisable
      options and warrants for common stock at December 31, 2007:





Warrants/Options
            
            Weighted-Average
              Exercise PriceOutstanding
                at December 31, 2005
            
            
            19,243,120
            
            $
            1.69Granted
            
            
            -Exercised
            
            
            -Forfeited
            
            
            (5,402,904
            )
            $
            2.23Outstanding
                at December 31, 2006
            
            
            13,840,216
            
            $
            0.45Granted
            
            
            -Exercised
            
            
            -Forfeited
            
            
            (2,892,857
            )
            $
            0.60Outstanding
                at December 31, 2007
            
            
            10,947,359
            
            $
            0.41Weighted-average
                fair value of options and warrants granted during the
                year:December
                31, 2005
            
            
            
            
            $
            0.57December
                31, 2006
            
            
            
            
            
            N/ADecember
                31, 2007
            
            
            
            
            
            N/A





Common
      stock and options to purchase the common stock of the Company issued for
      services during the years ended December 31, 2007, 2006 and 2005 are as
      follows:





There
      were no transactions in 2007.





On
      August
      10, 2006, the Non-Executive Chairman of the Board resigned from the Board of
      Directors. As part of his separation agreement with the Company, he received
      $90,000 (approximate fair value) in the Company’s common stock or 538,462
      shares.




70




**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 For
        the
        Years Ended December 31, 2007, 2006 and 2005
  **NOTE
        K - STOCKHOLDERS’ EQUITY (continued)**
 
 In
        April
        2006, 120,000 shares of the Company’s common stock with a fair value of
        approximately $47,000, were issued for public relations services to be performed
        during the following twelve months.
 
 On
        January 30, 2006, using the Black-Scholes valuation model, legal expense
        of
        approximately $3,700 was recognized for 9,500 shares of the Company’s common
        stock that were issued to an unrelated party for services rendered.
 
 On
        January 5, 2005, the maturity date of an unsecured subordinated promissory
        note
        was extended to May 6, 2005. In consideration of the extension, an aggregate
        total of 196,667 warrants were issued to the note holder at an exercise price
        of
        $0.85. On February 7, March 7 and April 7, 2005, a total of 50,000 warrants
        was
        issued on each date with the balance of 46,667 warrants being issued on May
        5,
        2005. The warrants were valued using the Black-Scholes model at a fair value
        of
        approximately $105,000 and were charged to interest expense in 2005. The
        warrants will expire at various dates in 2008.
 
 **NOTE
        L - STOCK BASED COMPENSATION**
 
 At
        December 31, 2007, the Company had two stock-based employee compensation
        plans,
        which are more fully described in Note K. The Company had previously accounted
        for these plans under the recognition and measurement provisions of APB Opinion
        No. 25, *Accounting
        for Stock Issued to Employees,* and
        related interpretations. No stock-based employee compensation cost was reflected
        in net income for 2005 as all options granted under those plans had an exercise
        price equal to the market value of the underlying common stock at the date
        of
        grant. As of December 31, 2005, all options were fully vested.
 
 There
        was
        no stock-based compensation expense for the years ended December 31, 2007,
        2006
        and 2005 related to stock options as no options were granted, nor did any
        options vest during the period.
  71




**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005




**NOTE
      L – STOCK BASED COMPENSATION (continued)**





The
      fair
      value of the options awarded were estimated at the date of grant using the
      Black-Scholes option pricing model with the following weighted average
      assumptions. For a detailed analysis of the stock options, see Form 10-K for
      December 31, 2005.


Year
                  Ended December 31,2005Dividend
                  Yield
              
              
              0
              %Expected
                  Volatility
              
              
              191.00
              %Risk
                  Free Interest Rate
              
              
              4.51
              %Expected
                  life (years)
              
              
              5




During
      2005, had the cost of employee services received in exchange for equity
      instruments been recognized based on the grant date fair value of those
      instruments in accordance with the provisions of SFAS 123(R), the Company’s net
      income and earnings per share would have been impacted as shown in the following
      table:




**2005**Net
                  income (loss), as reported
              
              $
              1,914,809Total
                  stock-based employee compensation expense determined under fair value
                  based method for all awards, net of related tax effects
              
              
              (304,531
              )Pro
                  Forma net income (loss)
              
              $
              1,610,278Weighted
                  average shares outstandingBasic
              
              
              33,109,064Diluted
              
              
              46,266,873Net
                  income (loss) per shareAs
                  reportedBasic
              
              $
              0.06Diluted
              
              $
              0.04Pro
                  formaBasic
              
              $
              0.05Diluted
              
              $
              0.03


The
      historical *pro
      forma* impact
      of applying the fair value method prescribed by SFAS 123(R) is not
      representative of the impact that may be expected in the future due to changes
      resulting from additional grants and changes in assumptions, such as volatility,
      interest rates, and expected life used to estimate the fair value of the grants
      in future years.


72





**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005




**NOTE
      M – EMPLOYEE BENEFIT PLANS**





The
      Company maintains a 401(k) profit sharing plan for all eligible employees.
      Through a salary reduction program, the plan allows employee contributions
      on a
      pretax basis. There are no minimum corporate contributions required under the
      plan. The Company may make discretionary matching contributions based on the
      participants’ contributions. The Company may also make a discretionary
      profit-sharing contribution for the benefit of all eligible employees.
      Participants in the plan vest in Company contributions on a graduated scale
      over
      a five-year period. For the years ended December 31, 2007, 2006 and 2005, the
      Company paid or accrued matching contributions of approximately $89,000, $86,000
      and $56,000, respectively.





The
      Company has no other postretirement benefits.





**NOTE
      N – COMMITMENTS AND CONTINGENCIES**





*Backlog*





At
      December 31, 2007, the Company had a backlog, which consists of signed orders
      for which no revenue has been recognized, of approximately $11.4 million. The
      backlog at December 31, 2006 was approximately $19 million. The backlog at
      December 31, 2005 was approximately $22 million.





*Employment
      Agreements*





On
      March
      16, 2005, the Company amended its agreement with its Non-Executive Chairman.
      This agreement, which terminates on March 15, 2008, provides for monthly
      payments of $30,000 and severance payments, as defined in the agreement. On
      August 10, 2006, the Non-Executive Chairman of the Board resigned from the
      Board
      of Directors. The agreement provided for the transfer of $90,000 of the
      Company’s common stock and cash payments through May 2007, totaling $180,000.
      All severance expense was recognized in 2006.





In
      August
      2006, the Board of Directors named the Chief Executive Officer as the Chairman
      of the Board. The agreement between the Company and the Chairman/Chief Executive
      Officer was amended on March 16, 2005 and May 12, 2005. That agreement expires
      on March 15, 2008. The agreement provides for an annual salary of $360,000,
      subject to annual review by the Board of Directors, and severance payments,
      as
      defined in the agreement.


73


**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005




**NOTE
      N – COMMITMENTS AND CONTINGENCIES (continued)**





*Leases*





The
      Company is committed under non-cancelable operating leases for equipment, and
      office and warehouse space, expiring at various dates through August 2011.
      The
      leases include provisions requiring the Company pay a proportionate of increases
      in real estate taxes and operating expenses over base period
      amounts.





Future
      minimum rental commitments under all non-cancelable leases are as
      follows:





Rental
              CommitmentsYears
                Ending December 31,2008
            
            $
            614,8472009
            
            
            614,8472010
            
            
            614,8472011
            
            
            409,8982012
            
            
            -$
            2,254,440





Future
      commitments related to non-cancelable operating leases for equipment are as
      follows:





Operating Lease
              CommitmentsYears
                Ending December 31,2008
            
            $
            116,7012009
            
            
            80,0032010
            
            
            7,8542011
            
            
            6,4802012
            
            
            4,860$
            215,897





Rent
      and
      equipment operating lease expense for the years ended December 31, 2007, 2006
      and 2005 were approximately $738,000, $823,000 and $692,000,
      respectively.





The
      Company has provided various representations, warranties, and other standard
      indemnifications in the ordinary course of business, in agreements to acquire
      and sell business assets, and in financing arrangements. The Company is subject
      to various legal proceedings and claims, which arise in the ordinary course
      of
      business.





Management
      believes that the ultimate liability with respect to these contingent
      obligations will not have a material effect on the Company’s financial position,
      results of operations, or cash flow.




74


**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005




**NOTE
      O – RELATED PARTY TRANSACTIONS**





On
      February 1, 2005, the Company signed an agreement for consulting services with
      an individual who became a member of the Board of Directors in December 2005.
      This agreement was amended on December 19, 2005 to provide for a consulting
      service fee of $15,000 per month and is on a “month-to-month” basis with a
      minimum six-month written notice if either the Company or the consultant elects
      to terminate the agreement. For fiscal year 2007 and 2006, consulting fees
      of
      $214,000 and $215,000, respectively, were recognized.





On
      June
      30, 2007 certain assets of Grafico were sold to its former General Manager.
      A
      loss of approximately $14,000 was recorded as a result of this
      transaction.





**NOTE
      P – SUPPLEMENTAL CASH FLOW INFORMATION**





In
      January 2006, 9,500 shares of the Company’s common stock were issued for legal
      services to an unrelated party for services rendered.





In
      April
      2006, 120,000 shares of the Company’s common stock were issued for public
      relations services to be performed during the following twelve months. Expense
      of approximately $47,000 was recognized.




In
      August
      2006, the Non-Executive Chairman of the Board resigned from the Board of
      Directors. As part of his separation agreement, he received $90,000 in the
      Company’s common stock or 538,462 shares. The expense was recognized in
      2006.





During
      2005, the Company issued 196,667 warrants as consideration for the extension
      of
      the maturity date of an unsecured, subordinated promissory note.





**NOTE
      Q – SUBSEQUENT EVENTS**





In
      March
      2008 the Company negotiated an extension of the credit facility with a
      commercial lender for the Revolving Line of Credit to April 30,
      2009.





In
      March
      2008 the Company negotiated an extension of the maturity date of the
      subordinated promissory note to October 22, 2009. In addition, the Company
      received an adjustment to certain of the financial covenants.





**NOTE
      R – QUARTERLY RESULTS (unaudited)**





The
      following tables contain selected unaudited statement of operations information
      for each quarter of 2007 and 2006. The following information reflects all
      normal, recurring adjustments necessary for a fair presentation of the
      information for the periods presented. The operating results for any quarter
      are
      not necessarily indicative of results for any future period. Unaudited results
      were as follows:


75


**BrandPartners
      Group, Inc. and Subsidiaries**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007, 2006 and 2005





**NOTE
      R – QUARTERLY RESULTS (unaudited) (continued)**





December
                31, 2007March
                31
            
            June
                30
            
            September
                30
            
            December
                31Revenue
            
            $
            13,888,165
            
            $
            13,098,668
            
            $
            8,440,694
            
            $
            8,381,756Cost
                of Goods
            
            
            10,651,903
            
            
            10,004,437
            
            
            6,780,704
            
            
            5,844,485Selling,
                general & administrative expense
            
            
            2,474,567
            
            
            2,516,170
            
            
            2,254,750
            
            
            2,151,901Goodwill
                impairment
            
            
            -
            
            
            -
            
            
            -
            
            
            12,000,000Total
                expenses
            
            
            13,126,470
            
            
            12,520,607
            
            
            9,035,454
            
            
            19,996,386Operating
                income (loss)
            
            
            761,695
            
            
            578,061
            
            
            (594,760
            )
            
            (11,614,630
            )Other
                income (expense)
            
            
            (316,530
            )
            
            (345,217
            )
            
            (340,253
            )
            
            (334,953
            )Net
                Income (Loss) Before Income Taxes
            
            
            445,165
            
            
            232,844
            
            
            (935,013
            )
            
            (11,949,583
            )Provision
                for Income Taxes
            
            
            -
            
            
            -Net
                Income (Loss)
            
            $
            445,165
            
            $
            232,844
            
            $
            (935,013
            )
            $
            (11,949,583
            )Per
                share incomeBasic
            
            $
            0.01
            
            $
            0.01
            
            $
            (0.03
            )
            $
            (0.34
            )Diluted
            
            $
            0.01
            
            $
            0.01
            
            $
            (0.03
            )
            $
            (0.34
            )Shares
                usedBasic
            
            
            34,923,359
            
            
            34,923,359
            
            
            34,923,359
            
            
            34,923,359Diluted
            
            
            35,328,359
            
            
            35,328,359
            
            
            34,923,359
            
            
            34,923,359December
                31, 2006March
                31
            
            
            June
                30
            
            
            September
                30
            
            
            December
                31Revenue
            
            $
            11,092,862
            
            $
            12,908,402
            
            $
            13,528,194
            
            $
            14,946,925Cost
                of Goods
            
            
            9,521,434
            
            
            9,552,781
            
            
            10,459,009
            
            $
            12,742,563Selling,
                general & administrative expense
            
            
            2,554,975
            
            
            2,632,337
            
            
            2,650,193
            
            $
            3,185,840Total
                expenses
            
            
            12,076,409
            
            
            12,185,118
            
            
            13,109,202
            
            
            15,928,403Operating
                income (loss)
            
            
            (983,547
            )
            
            723,284
            
            
            418,992
            
            
            (981,478
            )Other
                income (expense)
            
            
            (341,568
            )
            
            (376,244
            )
            
            (411,664
            )
            $
            (371,988
            )Net
                Income (Loss) Before Income Taxes
            
            
            (1,325,115
            )
            
            347,040
            
            
            7,328
            
            
            (1,353,466
            )Provision
                for Income Taxes
            
            
            -
            
            
            -Net
                Income (Loss)
            
            $
            (1,325,115
            )
            $
            347,040
            
            $
            7,328
            
            $
            (1,353,466
            )Per share
              incomeBasic
            
            $
            (0.04
            )
            $
            0.01
            
            $
            0.00
            
            $
            (0.04
            )Diluted
            
            $
            (0.04
            )
            $
            0.01
            
            $
            0.00
            
            $
            (0.04
            )Shares
                usedBasic
            
            
            34,666,730
            
            
            34,766,161
            
            
            34,924,513
            
            
            35,286,479Diluted
            
            
            34,666,730
            
            
            35,324,827
            
            
            35,483,179
            
            
            35,286,479




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