**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**Washington,        D.C. 20549**

**FORM        10-Q**

**ý               Quarterly Report Under Section 13 or 15(d)**

**of        the Securities Exchange Act of 1934**

**for        the quarterly period ended June 30, 2007**

**or**

**o               Transition Report pursuant to Section 13 or 15(d)**

**of        the Securities Exchange Act of 1934**

**for        the transition period from         to        **

**Commission        File Number 0-9972**

**HOOPER        HOLMES, INC.**

| **New                  York**                                                   |   | **22-1659359**                                        |
|---------------------------------------------------------------------------------|--------|-------------------------------------------------------|
| (State                  or other jurisdiction of incorporation or organization) |   | (I.R.S.                  Employer Identification No.) |

| **170                  Mt. Airy Road, Basking Ridge, NJ** |   | **                   07920** |
|-----------------------------------------------------------|--------|-----------------------------------|
| (Address                  of principal executive offices) |   | (Zip                  code)       |

** (908)        766-5000**

|   | Yes   ý |   | No   o |   |
|--------|-----------------------------|--------|-----------------------|--------|

| Large                  Accelerated Filer   o |   | Accelerated                  Filer   ý |   | Non-accelerated                  Filer   o |
|-------------------------------------------------------------|--------|------------------------------------------------------------|--------|-----------------------------------------------------------|

|   | Yes   o |   | No   ý |   |
|--------|------------------------|--------|----------------------------|--------|

----

**HOOPER        HOLMES, INC. AND SUBSIDIARIES**

**INDEX**

|                                |                                               |                                                                                                                                               | Page                  No. |
|-------------------------------------|----------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|
| **PART                  I** -       | Financial                  Information (unaudited) |                                                                                                                                               |
|                                |                                               |                                                                                                                                               |                      |
|                                | ITEM                  1 -                          | Financial                  Statements                                                                                                              |                      |
|                                |                                               |                                                                                                                                               |                      |
|                                |                                               | Consolidated                  Balance Sheets as of June 30, 2007 and December 31, 2006                                                             | 1                         |
|                                |                                               |                                                                                                                                               |                      |
|                                |                                               | Consolidated                  Statements of Operations for the Three and Six Months Ended June                  30, 2007                  and 2006 | 2                         |
|                                |                                               |                                                                                                                                               |                      |
|                                |                                               | Consolidated                  Statements of Cash Flows for the Six Months Ended June 30, 2007                  and                  2006           | 3-4                       |
|                                |                                               |                                                                                                                                               |                      |
|                                |                                               | Notes                  to Unaudited Consolidated Financial Statements                                                                              | 5-17                      |
|                                |                                               |                                                                                                                                               |                      |
|                                | ITEM                  2 -                          | Management's                  Discussion and Analysis of Financial Condition and Results of                  Operations                            | 18-32                     |
|                                |                                               |                                                                                                                                               |                      |
|                                | ITEM                  3 –                    | Quantitative                  and Qualitative Disclosures About Market Risk                                                                        | 33                        |
|                                |                                               |                                                                                                                                               |                      |
|                                | ITEM                  4 –                    | Controls                  and Procedures                                                                                                           | 34                        |
|                                |                                               |                                                                                                                                               |                      |
| **PART                  II**– | Other                  Information                 |                                                                                                                                               |
|                                |                                               |                                                                                                                                               |
|                                | ITEM                  1 –                    | Legal                  Proceedings                                                                                                                 | 35                        |
|                                |                                               |                                                                                                                                               |                      |
|                                | ITEM                  1A –                   | Risk                  Factors                                                                                                                      | 36                        |
|                                |                                               |                                                                                                                                               |                      |
|                                | ITEM                  2 –                    | Unregistered                  Sales of Equity Securities and Use of Proceeds                                                                       | 36                        |
|                                |                                               |                                                                                                                                               |                      |
|                                | ITEM                  3 -                          | Defaults                  upon Senior Securities                                                                                                   | 36                        |
|                                |                                               |                                                                                                                                               |                      |
|                                | ITEM                  4 –                    | Submission                  of Matters to a Vote of Security Holders                                                                               | 36                        |
|                                |                                               |                                                                                                                                               |                      |
|                                | ITEM                  5 –                    | Other                  Information                                                                                                                 | 36                        |
|                                |                                               |                                                                                                                                               |                      |
|                                | ITEM                  6 –                    | Exhibits                                                                                                                                           | 37                        |
|                                |                                               |                                                                                                                                               |                      |
|                                |                                               | Signatures                                                                                                                                         | 38                        |

----

**Consolidated        Balance Sheets**

|                                                                                                                                                                                                                                                         |   |                                  |    |   |                                      |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------|-------------------------------------------|--------|
|                                                                                                                                                                                                                                                         |   | **June                  30,****2007** |    |   | **December                  31,****2006** |   |
| **ASSETS                  (Note 11)**                                                                                                                                                                                                                        |   |                                  |    |   |                                      |   |
| Current                  assets:                                                                                                                                                                                                                             |   |                                  |    |   |                                      |   |
| Cash                  and cash equivalents                                                                                                                                                                                                                   |   | $                                     | 638     |   |                                      | $      | 6,667 |   |
| Accounts                  receivable, net                                                                                                                                                                                                                    |   |                                  | 35,524  |   |                                      |   | 30,425 |   |
| Income                  tax receivable                                                                                                                                                                                                                       |   |                                  | 2,924   |   |                                      |   | 2,968 |   |
| Other                  current assets                                                                                                                                                                                                                        |   |                                  | 4,617   |   |                                      |   | 4,353 |   |
| Assets                  of subsidiary held for sale                                                                                                                                                                                                          |   |                                  | 11,507  |   |                                      |   | 13,337 |   |
| Total                  current assets                                                                                                                                                                                                                        |   |                                  | 55,210  |   |                                      |   | 57,750 |   |
| Property,                  plant and equipment at cost                                                                                                                                                                                                       |   |                                  | 43,123  |   |                                      |   | 41,574 |   |
| Less:                  Accumulated depreciation and amortization                                                                                                                                                                                             |   |                                  | 28,060  |   |                                      |   | 26,871 |   |
| Property,                  plant and equipment, net                                                                                                                                                                                                          |   |                                  | 15,063  |   |                                      |   | 14,703 |   |
|                                                                                                                                                                                                                                                         |   |                                  |    |   |                                      |   |   |   |
| Goodwill                                                                                                                                                                                                                                                     |   |                                  | 5,702   |   |                                      |   | 5,702 |   |
| Intangible                  assets, net                                                                                                                                                                                                                      |   |                                  | 5,637   |   |                                      |   | 6,485 |   |
| Other                  assets                                                                                                                                                                                                                                |   |                                  | 757     |   |                                      |   | 570 |   |
| Total                  assets                                                                                                                                                                                                                                |   | $                                     | 82,369  |   |                                      | $      | 85,210 |   |
|                                                                                                                                                                                                                                                         |   |                                  |    |   |                                      |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                    |   |                                  |    |   |                                      |   |   |   |
| Current                  liabilities:                                                                                                                                                                                                                        |   |                                  |    |   |                                      |   |   |   |
| Revolving                  credit facility                                                                                                                                                                                                                   |   | $                                     | 3,000   |   |                                      |   | - |   |
| Accounts                  payable                                                                                                                                                                                                                            |   |                                  | 9,767   |   |                                      | $      | 10,457 |   |
| Accrued                  expenses                                                                                                                                                                                                                            |   |                                  | 15,842  |   |                                      |   | 16,730 |   |
| Liabilities                  of subsidiary held for sale                                                                                                                                                                                                     |   |                                  | 6,564   |   |                                      |   | 8,321 |   |
| Total                  current liabilities                                                                                                                                                                                                                   |   |                                  | 35,173  |   |                                      |   | 35,508 |   |
| Other                  long-term liabilities                                                                                                                                                                                                                 |   |                                  | 577     |   |                                      |   | 1,733 |   |
| Commitments                  and Contingencies (Note 12)                                                                                                                                                                                                     |   |                                  |    |   |                                      |   |   |   |
|                                                                                                                                                                                                                                                         |   |                                  |    |   |                                      |   |   |   |
| Stockholders’                  Equity:                                                                                                                                                                                                                 |   |                                  |    |   |                                      |   |   |   |
| Common                  stock, par value $.04 per share; authorized 240,000,000 shares,                  issued                  68,643,982 and 67,933,274 shares as of June 30, 2007 and December                  31,                  2006, respectively. |   |                                  | 2,746   |   |                                      |   | 2,717 |   |
| Additional                  paid-in capital                                                                                                                                                                                                                  |   |                                  | 117,603 |   |                                      |   | 115,465 |   |
| Accumulated                  other comprehensive income                                                                                                                                                                                                      |   |                                  | 1,578   |   |                                      |   | 1,553 |   |
| Accumulated                  deficit                                                                                                                                                                                                                         |   |                                  | (75,237 | )      |                                      |   | (71,695 | ) |
|                                                                                                                                                                                                                                                         |   |                                  | 46,690  |   |                                      |   | 48,040 |   |
| Less:                  Treasury stock, at cost; 9,395 shares as of June 30, 2007 and December                  31,                  2006                                                                                                                     |   |                                  | 71      |   |                                      |   | 71 |   |
| Total                  stockholders' equity                                                                                                                                                                                                                  |   |                                  | 46,619  |   |                                      |   | 47,969 |   |
| Total                  liabilities and stockholders' equity                                                                                                                                                                                                  |   | $                                     | 82,369  |   |                                      | $      | 85,210 |   |
|                                                                                                                                                                                                                                                         |   |
| *See                  accompanying notes to consolidated financial                  statements*.                                                                                                                                                             |   |

----

**Consolidated        Statements of Operations**

|                                                                                            |   | Three                  Months ended June 30, |       |   | Six                  Months ended June 30, |   |
|-------------------------------------------------------------------------------------------------|--------|----------------------------------------------|------------|--------|--------------------------------------------|--------|
|                                                                                            |   | 2007                                         |       |   | 2006                                       |   |   | 2007 |   |   | 2006 |   |
| *Revenues*                                                                                      |   | $                                            | 60,774     |   |                                       | $      | 66,094 |   |   | $ | 123,148 |   |   | $ | 133,368 |   |
| Cost                  of operations                                                             |   |                                         | 46,115     |   |                                       |   | 50,099 |   |   |   | 92,709 |   |   |   | 101,604 |   |
|  Gross                  profit                                                             |   |                                         | 14,659     |   |                                       |   | 15,995 |   |   |   | 30,439 |   |   |   | 31,764 |   |
| Selling,                  general and administrative expenses                                   |   |                                         | 15,628     |   |                                       |   | 16,665 |   |   |   | 32,298 |   |   |   | 33,514 |   |
| Restructuring                  and other charges                                           |   |                                         | 732        |   |                                       |   | 464 |   |   |   | 1,245 |   |   |   | 1,732 |   |
|  Operating                  loss                                                           |   |                                         | (1,701     | )      |                                       |   | (1,134 | ) |   |   | (3,104 | ) |   |   | (3,482 | ) |
| Other                  income (expense)                                                         |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense                                                               |   |                                         | (63        | )      |                                       |   | (28 | ) |   |   | (84 | ) |   |   | (73 | ) |
| Interest                  income                                                                |   |                                         | 2          |   |                                       |   | 47 |   |   |   | 23 |   |   |   | 85 |   |
| Other                  expense, net                                                             |   |                                         | (63        | )      |                                       |   | (96 | ) |   |   | (174 | ) |   |   | (199 | ) |
|                                                                                            |   |                                         | (124       | )      |                                       |   | (77 | ) |   |   | (235 | ) |   |   | (187 | ) |
| Loss                  from continuing operations before income taxes                            |   |                                         | (1,825     | )      |                                       |   | (1,211 | ) |   |   | (3,339 | ) |   |   | (3,669 | ) |
|                                                                                            |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Income                  tax provision (benefit)                                                 |   |                                         | 40         |   |                                       |   | (604 | ) |   |   | 135 |   |   |   | (1,604 | ) |
|                                                                                            |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Loss                  from continuing operations                                                |   |                                         | (1,865     | )      |                                       |   | (607 | ) |   |   | (3,474 | ) |   |   | (2,065 | ) |
|                                                                                            |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued                  operations:                                                       |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) from discontinued operations, net of income taxes                |   |                                         | -          |   |                                       |   | 82 |   |   |   | (68 | ) |   |   | 116 |   |
|                                                                                            |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
|  Net                  loss                                                                 |   | $                                            | (1,865     | )      |                                       | $      | (525 | ) |   | $ | (3,542 | ) |   | $ | (1,949 | ) |
| Loss                  per share:                                                                |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Continuing                  operations:                                                         |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                           |   | $                                            | (0.03      | )      |                                       | $      | (0.01 | ) |   | $ | (0.05 | ) |   | $ | (0.03 | ) |
| Diluted                                                                                         |   |                                         | (0.03      | )      |                                       |   | (0.01 | ) |   |   | (0.05 | ) |   |   | (0.03 | ) |
| Discontinued                  operations:                                                       |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                           |   | $                                            | 0.00       |   |                                       | $      | 0.00 |   |   | $ | 0.00 |   |   | $ | 0.00 |   |
| Diluted                                                                                         |   |                                         | 0.00       |   |                                       |   | 0.00 |   |   |   | 0.00 |   |   |   | 0.00 |   |
| Net                  loss:                                                                      |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                           |   | $                                            | (0.03      | )      |                                       | $      | (0.01 | ) |   | $ | (0.05 | ) |   | $ | (0.03 | ) |
| Diluted                                                                                         |   |                                         | (0.03      | )      |                                       |   | (0.01 | ) |   |   | (0.05 | ) |   |   | (0.03 | ) |
| Weighted                  average number of shares:                                             |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                           |   |                                         | 68,565,935 |   |                                       |   | 66,288,345 |   |   |   | 68,315,176 |   |   |   | 66,242,798 |   |
| Diluted                                                                                         |   |                                         | 68,565,935 |   |                                       |   | 66,288,345 |   |   |   | 68,315,176 |   |   |   | 66,242,798 |   |
|                                                                                            |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| *See                  accompanying notes to consolidated financial                  statements* |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |

----

**Consolidated        Statements of Cash Flows**

|                                                                                                                      |   | Six                  Months ended June 30, |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|
|                                                                                                                      |   | 2007                                       |   |   | 2006 |   |
| **Cash                  flows from operating activities:**                                                                |   |                                       |   |   |   |   |
| Net                  loss                                                                                                 |   | $                                          | (3,542 | ) |   | $ | (1,949 | ) |
| (Loss)                  income from discontinued operations, net of income taxes                                          |   |                                       | (68    | ) |   |   | 116 |   |
| Loss                  from continuing operations                                                                          |   |                                       | (3,474 | ) |   |   | (2,065 | ) |
| Adjustments                  to reconcile loss from continuing operations to net cash                                     |   |                                       |   |   |   |   |   |   |
| used                  in operating activities of continuing operations:                                                   |   |                                       |   |   |   |   |   |   |
| Depreciation                                                                                                              |   |                                       | 1,694  |   |   |   | 1,445 |   |
| Amortization                                                                                                              |   |                                       | 848    |   |   |   | 1,328 |   |
| Share-based                  compensation expense                                                                         |   |                                       | 542    |   |   |   | 40 |   |
| Deferred                  income taxes                                                                                    |   |                                       | -      |   |   |   | 1,691 |   |
| Loss                  on disposal of fixed assets                                                                         |   |                                       | 83     |   |   |   | 55 |   |
| Changes                  in assets and liabilities, net of effect                                                         |   |                                       |   |   |   |   |   |   |
| from                  acquisitions of businesses:                                                                         |   |                                       |   |   |   |   |   |   |
| Accounts                  receivable                                                                                      |   |                                       | (5,099 | ) |   |   | (940 | ) |
| Other                  assets                                                                                             |   |                                       | (451   | ) |   |   | 3643 |   |
| Income                  tax receivable                                                                                    |   |                                       | 44     |   |   |   | (3,194 | ) |
| Accounts                  payable, accrued expenses and other long-term liabilities                                       |   |                                       | (2,986 | ) |   |   | (1,171 | ) |
| **Net                  cash used in operating activities of continuing                  operations**                      |   |                                       | (8,799 | ) |   |   | (2,448 | ) |
| **Net                  cash provided by operating activities of discontinued                  operations**                |   |                                       | 391    |   |   |   | 1,416 |   |
| **Net                  cash used in operating activities**                                                                |   |                                       | (8,408 | ) |   |   | (1,032 | ) |
|                                                                                                                      |   |                                       |   |   |   |   |   |   |
| **Cash                  flows from investing activities:**                                                                |   |                                       |   |   |   |   |   |   |
| Redemptions                  of marketable securities                                                                     |   |                                       | -      |   |   |   | 192 |   |
| Business                  acquisitions, net of cash acquired                                                              |   |                                       | -      |   |   |   | (856 | ) |
| Capital                  expenditures                                                                                     |   |                                       | (1,886 | ) |   |   | (2,273 | ) |
| **Net                  cash used in investing activities of continuing                  operations**                      |   |                                       | (1,886 | ) |   |   | (3,360 | ) |
| **Net                  cash used in investing activities of discontinued                  operations**                    |   |                                       | (298   | ) |   |   | (1,734 | ) |
| **Net                  cash used in investing activities**                                                                |   |                                       | (2,184 | ) |   |   | (5,094 | ) |
|                                                                                                                      |   |                                       |   |   |   |   |   |   |
| **Cash                  flows from financing activities:**                                                                |   |                                       |   |   |   |   |   |   |
| Borrowings                  under revolving credit facility                                                               |   |                                       | 5,000  |   |   |   | - |   |
| Payments                  under revolving credit facility                                                                 |   |                                       | (2,000 | ) |   |   | - |   |
| Principal                  payments on long-term debt                                                                     |   |                                       | -      |   |   |   | (1,000 | ) |
| Seller                  financed debt                                                                                     |   |                                       | -      |   |   |   | (100 | ) |
| Excess                  tax benefits from stock option exercises                                                          |   |                                       | -      |   |   |   | 67 |   |
| Proceeds                  related to the exercise of stock options                                                        |   |                                       | 1,625  |   |   |   | 301 |   |
| **Net                  cash provided by (used in) financing activities of continuing                  operations**        |   |                                       | 4,625  |   |   |   | (732 | ) |
| **Net                  cash provided by (used in) financing activities of discontinued                  operations**      |   |                                       | -      |   |   |   | - |   |
| **Net                  cash provided by (used in) financing activities**                                                  |   |                                       | 4,625  |   |   |   | (732 | ) |
|                                                                                                                      |   |                                       |   |   |   |   |   |   |
| Effect                  of exchange rate changes on cash and cash equivalents in discontinued                  operations |   |                                       | (62    | ) |   |   | (105 | ) |
|                                                                                                                      |   |                                       |   |   |   |   |   |   |
| **Net                  decrease in cash and cash equivalents**                                                            |   |                                       | (6,029 | ) |   |   | (6,963 | ) |
| **Cash                  and cash equivalents at beginning of period**                                                     |   |                                       | 6,667  |   |   |   | 11,683 |   |
| **Cash                  and cash equivalents at end of period**                                                           |   | $                                          | 638    |   |   | $ | 4,720 |   |
|                                                                                                                      |   |                                       |   |   |   |   |   |   |

----

|                                                                     |   |   |   |   |   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Supplemental                  disclosure of non-cash investing activity: |   |   |   |   |   |   |
| Change                  in net unrealized gain on marketable securities  |   |   | -      |   |   |   | 1 |   |
| Fixed                  assets vouchered but not paid                     |   |   | 619    |   |   |   | 472 |   |
| Supplemental                  disclosure of cash flow information:       |   |   |   |   |   |   |   |   |
| Cash                  paid during the period for:                        |   |   |   |   |   |   |   |   |
| Interest                                                                 |   |   | 61     |   |   |   | 5 |   |
| Income                  taxes                                            |   |   | 94     |   |   |   | 84 |   |

*See        accompanying notes to consolidated financial statements.*

----

**HOOPER        HOLMES, INC.**

**Notes        to Unaudited Consolidated Financial Statements**

**Note        1: Basis of Presentation**

----

| **Note                  2:** | **Liquidity** |
|------------------------------|---------------|

| ·   | restructuring                  payments related to employee severance and branch office closure                  costs                  totaling $1.5 million; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | capital                  expenditures of $1.9 million; |
|--------------------|--------------------------------------------------------|

| ·   | an                  increase in accounts receivable of $5.1 million;                  and |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | payment                  of a contract cancellation fee and fees to outside consultants                  related to                  cost saving opportunities identified in the Company’s 2006 strategic                  review, totaling approximately $1.1                  million. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Note                  3:** | **Earnings                  Per Share** |
|------------------------------|-----------------------------------------|

----

**Note        4: Share-Based        Compensation**

*Stock        Option Plans*

*Stock        Purchase Plan*

*Stock        Awards*

----

|                                                                              |   | For                  the three months ended June 30, |   |   | For                  the six months ended June 30, |   |
|-----------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|--------|----------------------------------------------------|--------|
|                                                                              |   | 2007                                                 |   |   | 2006                                               |   |   | 2007 |   |   | 2006 |   |
| Expected                  life (years)                                            |   |                                                 | 5.92   |   |                                               |   | 6.32 |   |   |   | 5.92 |   |   |   | 6.54 |   |
| Expected                  volatility                                              |   |                                                 | 46.72  | %      |                                               |   | 46.74 | % |   |   | 46.72 | % |   |   | 46.30 | % |
| Expected                  dividend yield                                          |   |                                                 | 0      | %      |                                               |   | 0 | % |   |   | 0 | % |   |   | 0 | % |
| Risk-free                  interest rate                                          |   |                                                 | 4.56   | %      |                                               |   | 5.03 | % |   |   | 4.56 | % |   |   | 4.71 | % |
| Weighted                  average fair value of options granted during the period |   | $                                                    | 2.20   |   |                                               | $      | 1.64 |   |   | $ | 2.20 |   |   | $ | 1.72 |   |

|  * (in                  thousands, except share and per share amounts)*   |   | Shares |      |   | Weighted                  Average Exercise Price Per Share |   |   | Weighted                  Average Remaining Contractual Life (years) |   |   | Aggregate                  Intrinsic Value |   |
|-----------------------------------------------------------------------------------------------|--------|--------|-----------|--------|------------------------------------------------------------|--------|--------|----------------------------------------------------------------------|--------|--------|--------------------------------------------|--------|
|                                                                                          |   |   |      |   |                                                       |   |   |                                                                 |   |   |                                       |   |
| Outstanding                  Balance, December 31, 2006                                       |   |   | 6,052,700 |   |                                                       | $      | 5.58   |                                                                 |   |   |                                       |   |   |   |
| Granted                                                                                       |   |   | 75,000    |   |                                                       |   | 4.34   |                                                                 |   |   |                                       |   |   |   |
| Exercised                                                                                     |   |   | (584,200  | )      |                                                       |   | 2.41   |                                                                 |   |   |                                       |   |   |   |
| Expired                                                                                       |   |   | (530,600  | )      |                                                       |   | 6.45   |                                                                 |   |   |                                       |   |   |   |
| Forfeitures                                                                                   |   |   | (30,000   | )      |                                                       |   | 2.86   |                                                                 |   |   |                                       |   |   |   |
| Outstanding                  Balance, June 30, 2007                                           |   |   | 4,982,900 |   |                                                       | $      | 5.85   |                                                                 |   |   | 4.5                                        |   |   | $ | 487 |   |
|                                                                                          |   |   |      |   |                                                       |   |   |                                                                 |   |   |                                       |   |   |   |   |   |
| Options                  exercisable – June 30, 2007                                    |   |   | 3,696,650 |   |                                                       | $      | 6.91   |                                                                 |   |   | 4.5                                        |   |   | $ | 13 |   |

----

**Note        5:  Discontinued Operations**

|                                   |   | Three                  Months Ended June 30, |   |   | Six                  Months Ended June 30, |   |
|----------------------------------------|--------|----------------------------------------------|--------|--------|--------------------------------------------|--------|
| (In                  thousands)        |   | 2007                                         |   |   | 2006                                       |   |   | 2007 |   |   | 2006 |   |
|                                   |   |                                         |   |   |                                       |   |   |   |   |   |   |   |
| Revenues                               |   | $                                            | 9,614  |   |                                       | $      | 9,456 |   |   | $ | 19,318 |   |   | $ | 18,879 |   |
|                                   |   |                                         |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Pre-tax                  income (loss) |   | $                                            | (3     | )      |                                       | $      | 104 |   |   | $ | (94 | ) |   | $ | 163 |   |
|                                   |   |                                         |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |

| (In                  thousands)                           |   | June                  30, 2007 |   |   | December                  31, 2006 |   |
|-----------------------------------------------------------|--------|--------------------------------|--------|--------|------------------------------------|--------|
| Assets                  of subsidiary held for sale:      |   |                           |   |   |                               |   |
| Accounts                  receivable, net                 |   | $                              | 6,551  |   |                               | $      | 7,159 |   |
| Other                  current assets                     |   |                           | 1,410  |   |                               |   | 2,495 |   |
| Property,                  plant, and equipment, net      |   |                           | 1,133  |   |                               |   | 1,137 |   |
| Intangible                  assets                        |   |                           | 2,095  |   |                               |   | 2,236 |   |
| Other                  assets                             |   |                           | 318    |   |                               |   | 310 |   |
| Total                                                     |   | $                              | 11,507 |   |                               | $      | 13,337 |   |
|                                                      |   |                           |   |   |                               |   |   |   |
| Liabilities                  of subsidiary held for sale: |   |                           |   |   |                               |   |   |   |
| Accounts                  payable                         |   | $                              | 1,524  |   |                               | $      | 2,339 |   |
| Accrued                  expenses                         |   |                           | 4,468  |   |                               |   | 5,381 |   |
| Other                  long-term liabilities              |   |                           | 572    |   |                               |   | 601 |   |
| Total                                                     |   | $                              | 6,564  |   |                               | $      | 8,321 |   |

**Note        6:  Goodwill and Intangibles**

***Goodwill***

----

***Intangibles***

|                                        |   | Weighted                     |   |   |     |   |   |         |   |   |    |   |
|---------------------------------------------|--------|------------------------------|--------|--------|----------|--------|--------|--------------|--------|--------|---------|--------|
|                                        |   | Average                      |   |   | Gross    |   |   |         |   |   |    |   |
|                                        |   | Useful                  Life |   |   | Carrying |   |   | Accumulated  |   |   | Net     |   |
| *(in                  thousands)*           |   | (years)                      |   |   | Amount   |   |   | Amortization |   |   | Balance |   |
| At                  June 30, 2007           |   |                         |   |   |     |   |   |         |   |   |    |   |
| Non-Competition                  agreements |   |                         | 4.6    |   |     | $      | 8,939  |         |   | $      | 8,715   |   |   | $ | 224 |   |
| Customer                  relationships     |   |                         | 9.6    |   |     |   | 13,351 |         |   |   | 10,122  |   |   |   | 3,228 |   |
| Contractor                  network         |   |                         | 7.0    |   |     |   | 5,700  |         |   |   | 5,700   |   |   |   | - |   |
| Trademarks                  and tradenames  |   |                         | 10.9   |   |     |   | 2,862  |         |   |   | 678     |   |   |   | 2,185 |   |
|                                        |   |                         |   |   |     | $      | 30,852 |         |   | $      | 25,215  |   |   | $ | 5,637 |   |
| At                  December 31, 2006       |   |                         |   |   |     |   |   |         |   |   |    |   |   |   |   |   |
| Non-Competition                  agreements |   |                         | 4.6    |   |     | $      | 8,939  |         |   | $      | 8,525   |   |   | $ | 414 |   |
| Customer                  relationships     |   |                         | 9.6    |   |     |   | 13,351 |         |   |   | 9,597   |   |   |   | 3,754 |   |
| Contractor                  network         |   |                         | 7.0    |   |     |   | 5,700  |         |   |   | 5,700   |   |   |   | - |   |
| Trademarks                  and tradenames  |   |                         | 10.9   |   |     |   | 2,862  |         |   |   | 545     |   |   |   | 2,317 |   |
|                                        |   |                         |   |   |     |   |   |         |   |   |    |   |   |   |   |   |
|                                        |   |                         |   |   |     | $      | 30,852 |         |   | $      | 24,367  |   |   | $ | 6,485 |   |

**Note        7: Acquisitions**

|                                                                     |   |   |   | Weighted                  Average |
|--------------------------------------------------------------------------|--------|--------|--------|-----------------------------------|
|                                                                     |   | Amount |   | Useful                  Life      |
| Current                  assets                                          |   | $      | 301    |                              |   |
| Intangible                  assets (customer relationship and tradename) |   |   | 882    |                              | 9.2                  years |
| Goodwill                                                                 |   |   | 598    |                              |   |
| Current                  liabilities                                     |   |   | (674   | )                                 |   |
| Total                                                                    |   | $      | 1,107  |                              |   |

----

|                                             |   | 2006   |   |
|--------------------------------------------------|--------|--------|--------|
| Michigan                  Evaluation Group, Inc. |   |   | 500    | (a) |
|                                             |   |   | 100    | (d) |
|                                             |   |   | 50     | (c) |
| Allegiance                  Health, Inc.         |   |   | 56     | (b) |
| Medimax,                  Inc.                   |   |   | 250    | (c) |
| Total                                            |   | $      | 956    |   |

|   | (a)                  –  Represents additional consideration that was recorded as                  additional purchase price during the three months ended June 30,                  2006 upon                  the achievement of certain performance                  criteria. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b)                  – Represents additional purchase price recorded in 2005 to reimburse                  the                  seller for certain tax consequences of the                  acquisition. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c)                  –  Represents additional consideration that was recorded as                  additional purchase price in 2004 upon the achievement of certain                  performance criteria. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  (d)                  –  Represents the payment of seller financed debt which was                  recorded as additional purchase price in 2004 upon                  acquisition. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Note        8: Operating Segments**

----

|                                           |   | Three                  Months Ended |   |   | Three                  Months Ended |   |
|------------------------------------------------|--------|-------------------------------------|--------|--------|-------------------------------------|--------|
| *(In                  thousands)*              |   | June                  30, 2007      |   |   | June                  30, 2006      |   |
|                                           |   | HID                                 |   |   | CED                                 |   |   | Total |   |   | HID |   |   | CED |   |   | Total |   |
| Revenues                                       |   | $                                   | 53,357 |   |                                | $      | 7,417 |   |   | $ | 60,774 |   |   | $ | 57,931 |   |   | $ | 8,163 |   |   | $ | 66,094 |   |
| Depreciation                  and amortization |   |                                | 1,088  |   |                                |   | 170 |   |   |   | 1,258 |   |   |   | 1,208 |   |   |   | 185 |   |   |   | 1,393 |   |
| Operating                  income (loss)       |   |                                | (2,054 | )      |                                |   | 353 |   |   |   | (1,701 | ) |   |   | (1,678 | ) |   |   | 544 |   |   |   | (1,134 | ) |
| Capital                  expenditures          |   |                                | 682    |   |                                |   | 50 |   |   |   | 732 |   |   |   | 1,060 |   |   |   | 10 |   |   |   | 1,070 |   |
| Total                  assets                  |   |                                | 66,086 |   |                                |   | 4,776 |   |   |   | 70,862 |   |   |   | 66,727 |   |   |   | 5,146 |   |   |   | 71,873 |   |

|                                           |   | Six                  Months Ended |    |   | Six                  Months Ended |   |
|------------------------------------------------|--------|-----------------------------------|---------|--------|-----------------------------------|--------|
| *(In                  thousands)*              |   | June                  30, 2007    |    |   | June                  30, 2006    |   |
|                                           |   | HID                               |    |   | CED                               |   |   | Total |   |   | HID |   |   | CED |   |   | Total |   |
| Revenues                                       |   | $                                 | 107,825 |   |                              | $      | 15,323 |   |   | $ | 123,148 |   |   | $ | 116,961 |   |   | $ | 16,407 |   |   | $ | 133,368 |   |
| Depreciation                  and amortization |   |                              | 2,184   |   |                              |   | 358 |   |   |   | 2,542 |   |   |   | 2,420 |   |   |   | 353 |   |   |   | 2,773 |   |
| Operating                  income (loss)       |   |                              | (4,005  | )      |                              |   | 901 |   |   |   | (3,104 | ) |   |   | (4,217 | ) |   |   | 735 |   |   |   | (3,482 | ) |
| Capital                  expenditures          |   |                              | 1,822   |   |                              |   | 64 |   |   |   | 1,886 |   |   |   | 2,686 |   |   |   | 11 |   |   |   | 2,697 |   |
| Total                  assets                  |   |                              | 66,086  |   |                              |   | 4,776 |   |   |   | 70,862 |   |   |   | 66,727 |   |   |   | 5,146 |   |   |   | 71,873 |   |

**Note        9: Comprehensive Loss**

|                                                                        |   |                                                                      |   |   |                                                               |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|  *(In                  thousands)*                                     |   | For                  the three months endedJune                  30, |   |   | For                  the six months endedJune                  30, |   |
|                                                                        |   | 2007                                                                      |   |   | 2006                                                               |   |   | 2007   |   |   | 2006   |   |
| Net                  loss                                                   |   | $                                                                         | (1,865 | )      |                                                               | $      | (525   | )      |   | $      | (3,542 | )      |   | $ | (1,949 | ) |
| Other                  comprehensive income:                                |   |                                                                      |   |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized                  holding gains arising during period, net of tax |   |                                                                      | -      |   |                                                               |   | -      |   |   |   | -      |   |   |   | 1 |   |
| Foreign                  currency translation                               |   |                                                                      | 10     |   |                                                               |   | 468    |   |   |   | 25     |   |   |   | 629 |   |
| Total                  comprehensive loss                                   |   | $                                                                         | (1,855 | )      |                                                               | $      | (57    | )      |   | $      | (3,517 | )      |   | $ | (1,319 | ) |

----

**Note        10: Restructuring and Other Charges**

|                               |   | Three                  Months Ended |   |   |                        |   |   | Three                  Months Ended |   |   |                        |   |
|------------------------------------|--------|-------------------------------------|--------|--------|-----------------------------|--------|--------|-------------------------------------|--------|--------|-----------------------------|--------|
| *(In                  millions)*   |   | March                  31, 2007     |   |   | Balance                  at |   |   | June                  30, 2007      |   |   | Balance                  at |   |
|                               |   | Charges                             |   |   | Payments                    |   |   | March                  31, 2007     |   |   | Charges                     |   |   | Payments |   |   | June                  30, 2007 |   |
| Severance                          |   | $                                   | 0.4    |   |                        | $      | (0.1   | )                                   |   | $      | 0.3                         |   |   | $ | 0.5 |   |   | $ | (0.2 | ) |   | $ | 0.6 |   |
| Lease                  Obligations |   |                                | 0.1    |   |                        |   | (0.1   | )                                   |   |   | -                           |   |   |   | 0.2 |   |   |   | (0.1 | ) |   |   | 0.1 |   |
|     Total      |   | $                                   | 0.5    |   |                        | $      | (0.2   | )                                   |   | $      | 0.3                         |   |   | $ | 0.7 |   |   | $ | (0.3 | ) |   | $ | 0.7 |   |

| ·   | restructuring                  charges totaling $2.3 million; |
|--------------------|---------------------------------------------------------------|

| ·   | a                  contract cancellation fee related to early termination of a software                  resale agreement totaling $0.5                  million; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                  fee payable to outside consultants of $5.6 million based on the                  results of                  the cost saving opportunities identified in the Company’s 2006 strategic                  review; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                  litigation settlement charge of $1.2 million related to a lawsuit                  filed                  against the Company (See Note 12);                  and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | outside                  legal and audit fees of $0.9 million associated with the restatement                  of                  the Company’s 2004 and 2005 consolidated financial                  statements. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(In                  millions)*   |   | Balance                  at        |   |   |     |   |   | Balance                  at     |   |   |     |   |   | Balance                  at    |   |
|------------------------------------|--------|------------------------------------|--------|--------|----------|--------|--------|---------------------------------|--------|--------|----------|--------|--------|--------------------------------|--------|
|                               |   | December                  31, 2006 |   |   | Payments |   |   | March                  31, 2007 |   |   | Payments |   |   | June                  30, 2007 |   |
| Severance                          |   | $                                  | 0.3    |   |     | $      | (0.2   | )                               |   | $      | 0.1      |   |   | $                              | (0.1   | ) |   |   | - |   |
| Lease                  Obligations |   |                               | 0.5    |   |     |   | (0.3   | )                               |   |   | 0.2      |   |   |                           | (0.1   | ) |   |   | 0.1 |   |
|     Total      |   | $                                  | 0.8    |   |     | $      | (0.5   | )                               |   | $      | 0.3      |   |   | $                              | (0.2   | ) |   | $ | 0.1 |   |

|  *(In                  millions)*                   |   | Balance                  atDecember                  31, 2006 |   |   |  Payments |   |   | Balance                  atMarch                  31, 2007 |   |   |  Payments |   |   | Balance                  atJune                  30, 2007 |   |
|----------------------------------------------------------|--------|---------------------------------------------------------------|--------|--------|----------------|--------|--------|------------------------------------------------------------|--------|--------|----------------|--------|--------|-----------------------------------------------------------|--------|
| Severance\Lease                  Obligations – HID |   | $                                                             | 0.7    |   |           | $      | (0.2   | )                                                          |   | $      | 0.5            |   |   | $                                                         | (0.1   | ) |   | $ | 0.4 |   |
| Total                                                    |   | $                                                             | 0.7    |   |           | $      | (0.2   | )                                                          |   | $      | 0.5            |   |   | $                                                         | (0.1   | ) |   | $ | 0.4 |   |

----

**Note        11: Revolving Credit Facility**

|   | (i) | 90%                  of “Eligible Receivables” (as that term is defined in the Loan and                  Security Agreement) of the Company and the Company’s subsidiaries                  providing guarantees of the indebtedness under the                  facility;  plus |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | 65%                  of the fair market value of the Company’s corporate headquarters located                  in Basking Ridge, New Jersey – |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | pay                  any dividends or distributions on, or purchase, redeem or retire                  any                  shares of any class of its capital stock or other equity                  interests; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | incur                  additional indebtedness; |
|--------------------|-------------------------------------------------|

| ·   | sell                  or otherwise dispose of any of its assets, other than in the ordinary                  course of business; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| ·   | create                  liens on its assets; and |
|--------------------|--------------------------------------------------|

| ·   | enter                  into transactions with any of its affiliates on other than an arm’s-length                  or no less favorable basis. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

**Note        12: Commitments and Contingencies**

----

**Note        13: Income Taxes**

*Accounting for        Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109*
*Definition of Settlement in FASB        Interpretation 48*

|   | State                  income tax returns for the year 2002 and forward are subject to                  examination. |
|--------|----------------------------------------------------------------------------------------------------------------------|

----

**Note        14: Recently Issued Accounting Standards**

**Note        15 — Related Party Transactions (in dollars)**

----

| **ITEM                  2** | **Management’s                  Discussion and Analysis of Financial Condition and Results of                  Operations** |
|-----------------------------|-----------------------------------------------------------------------------------------------------------------------------------|

**Cautionary        Statement Regarding Forward-Looking Statements**

|   | · | our                  ability to implement the                  strategic plans in connection with management’s strategic review of all                  aspects of the Company’s operations completed                  in September                  2006; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our                  ability to effect several expense management initiatives, including                  (i)                  aligning our costs with existing, and possibly continued declining                  levels                  of revenues, (ii) making better use of our assets, particularly                  our branch                  offices and branch office personnel within our Portamedic paramedical                  examination business, and (iii) generating cost efficiencies through                  an                  enhanced information technology platform and realizing the anticipated                  cost savings from such initiatives; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our                  ability to complete the sale of                  MDG |
|--------|--------|--------------------------------------------------------------------------------|

|   | · | our                  ability to finance our operations: |
|--------|--------|---------------------------------------------------------|

|   | · | our                  ability to reverse the decline in revenues and profitability we                  are                  experiencing in each of our two                  divisions; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our                  success in generating additional operating income from new revenue                  initiatives; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | our                  meeting or exceeding our                  customers’ expectations with respect to the quality and timeliness of our                  services on a consistent                  basis; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our                  ability to enhance and expand our technology and network                  infrastructure; |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | our                  ability to leverage                  our core capabilities to                  generate revenues in the wellness and disease management markets;                  and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our                  ability to anticipate key trends and developments affecting our                  businesses, and proactively position ourselves to seize opportunities                  presented by these trends and                  developments. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Overview**

***Business        Description***

**Health Information Division (HID)**

|   | · | arranging                  paramedical and medical examinations of individual insurance policy                  applicants - mainly life insurance policy applicants - throughout                  the                  United States (under the Portamedic brand name) and conducting                  paramedical                  examinations for wellness and disease management                  companies; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | performing                  telephone interviews of applicants and collecting applicants’ medical                  records; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | · | testing                  the blood, urine and other specimens obtained in connection with                  a portion                  of the paramedical examinations we coordinate, as well as specimens                  provided by third-party health information service providers;                  and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | underwriting                  life insurance policies on an outsourced basis for life insurance                  and                  reinsurance companies. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Claims Evaluation Division (CED)**

----

***Financial        Results and Business Summary for the Second Quarter Ended June 30,        2007***

| ·   | Revenue                  declined in our Portamedic business by approximately 7% in the                  second                  quarter of 2007 compared to the corresponding prior year period,                  and the                  rate of decline was consistent with our first quarter 2007 revenue                  decline, but an improvement from the decline of approximately 10%                  experienced in the fourth quarter of 2006.  In addition,                  although our number of exams completed declined by 10% compared                  to the                  prior year period, our average revenue per exam improved by 4.8%                  compared                  to the prior year.  Slowing and ultimately reversing this unit                  volume decline is critical to the success of our turn-around                  program.  To address this decline in the number of exams, we                  took corrective action with our broker/agent sales force in January                  2007                  (new sales management, additional salespersons, new sales commission                  programs), and we expect improvements in exam volume in the second                  half of                  this year. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                  have launched a new service called Portamedic Platinum.  This                  new service provides a significantly faster delivery of our services                  and                  allows our customers to make faster underwriting decisions.  We                  will provide this service exclusively to Phoenix Life until November                  and                  subsequently expand to additional                  customers. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Heritage                  Labs revenues grew approximately 7% in the second quarter of 2007                  compared                  to the same period of the prior year, primarily attributable to                  increased                  lab testing from wellness customers and greater utilization of                  higher                  priced lab tests by our customers. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                  opportunities in the wellness market continued to expand in the                  three and                  six months ended June 30, 2007.  As recently announced, we have                  surpassed 25,000 health screenings in our Wellness business and                  expect                  significant expansion with our current wellness customers, such                  as                  Healthways, Inc. and new revenue sources with other healthcare                  providers.    We believe we are well-positioned to                  capture a significant portion of the wellness health screening                  market,                  given our ability to conduct a health screening anywhere in the                  United                  States and process the related blood tests at our subsidiary, Heritage                  Labs. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                  May 2007, we committed to a plan to sell our U.K. subsidiary, Medicals                  Direct Group (“MDG”).  Our decision to sell MDG was based on                  several factors, including MDG’s limited ability to significantly                  contribute to our long-term strategic goals.  We expect the sale                  of MDG to be completed by December 31, 2007, although at present                  we have                  not entered into a definitive agreement relating to a                  sale. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Underwriting                  Solutions’ revenues experienced a significant decline in revenues during                  the second quarter of 2007 in comparison to the prior year                  period.  This decline is primarily attributable to the                  previously disclosed reduction in revenue from one major customer,                  resulting from the customer’s decision to mitigate risk and move to a                  multi-vendor strategy (from the previous Underwriting Solutions                  exclusive                  arrangement).  However, as a result of new leadership and an                  aggressive sales effort, we have added new clients during the first                  half                  of 2007 and continue to aggressively pursue additional revenue                  opportunities to replace this loss in volume.  While it will                  take some time to replace this revenue, a more diversified client                  base                  will be of benefit to us and in time contribute to greater stability                  in                  Underwriting Solutions’ revenues. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                  Claims Evaluation Division has received approved vendor status                  at ten new                  clients during the first half of 2007.  We are optimistic that                  the additional revenue opportunitites  will  partially                  offset the decline of its core market                  share. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Status        of Our Strategic Review and        Turnaround Program*

*Expense        Management*

*Revenue        Enhancement*

|   | · | seeking                  opportunities to grow and expand our current services by delivering                  new                  and increased value to our customers.  Based on information                  reflecting an apparent reduction in individual life insurance application                  activity (see the discussion below under “Key Factors and Industry Trends                  Affecting Our Business – Health Information Division – Decline in Life                  Insurance Application Activity), we believe the life insurance                  market in                  the United States continues to decline.  In order to stabilize and                  ultimately grow our Portamedic market share in a declining market,                  we need                  to deliver higher levels of service, speed and quality, which we                  believe                  are critical metrics to our customers’success; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | increasing                  the number of local                  sales and marketing people calling upon local insurance agents                  in our                  Portamedic business.  While we have national contracts with a                  large number of leading insurance carriers, the majority of our                  Portamedic                  business has                  historically been                  generated locally through our branch offices and the local insurance                  agents and brokers they serve.  We are also increasing the sales                  force in our other businesses,                  including Heritage Labs,                  Underwriting                  Solutions and                  the Claims                  Evaluation Division.  In                  addition, sales                  incentive plans have been implemented in 2007 for all sales personnel                  of                  the Company; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | introducing                  new products and services which address the critical business needs                  of new                  and existing customers and, as a result, provide additional revenue                  opportunities for our Company; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | obtaining                  price increases from customers in response to improved service                  levels                  provided by the Company, along with charging for ancillary services                  not                  currently charged for, but in conformance with industry standards                  (e.g. cancellation fees,                  etc.). |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Growth        Investment*

**Key        Factors and Industry Trends Affecting Our Businesses**

***Health        Information Division***

*Decline        in Life Insurance Application Activity*

----

*Pricing        Pressure from Life Insurance Carriers*

***Claims        Evaluation Division***

*Contraction        of the Outsourced Claims Management Market in the United        States*

|   | · | the                  decrease in manufacturing employment levels in the United States                  and the                  associated decline in the rates of workplace injuries and, in turn,                  workers’ compensation claims; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                  reported decline in the number of people injured in automobile                  accidents                  in the United States; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes                  in state laws and regulations that, in general, encourage the use                  of                  managed care techniques in handling workers’ compensation and                  automobile-related personal injury insurance claims.  Managed                  care laws generally channel claimants into provider networks and                  suggest                  treatment protocols and other constraints on the activity of the                  physician                  practitioners in such networks. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Key        Financial and Other Metrics Monitored by Management**

*Health Information Division*

|   | · | the                  number of paramedical examinations performed by                  Portamedic; |
|--------|--------|---------------------------------------------------------------------------------------------------|

|   | · | the                  average revenue per paramedical                  examination; |
|--------|--------|------------------------------------------------------------------------------------|

|   | · | time                  service performance, from examination order to                  completion; |
|--------|--------|---------------------------------------------------------------------------------------------------|

|   | · | the                  MIB Life Index data which represents an indicator of the level                  of life                  insurance application activity; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                  number of tele-interviewing/underwriting reports we                  generate; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | the                  number of specimens tested by our Heritage Labs                  subsidiary; |
|--------|--------|---------------------------------------------------------------------------------------------------|

|   | · | the                  average revenue per specimen                  tested; |
|--------|--------|----------------------------------------------------------------------------|

|   | · | budget                  to actual performance at the branch level as well as in the aggregate;                  and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | · | customer                  and product line profitability. |
|--------|--------|-----------------------------------------------------------|

* Claims Evaluation Division*

|   | · | the                  number of incoming cases by client and by insurance                  adjuster; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | time                  of service, which measures the time to complete a claim, from receipt                  to issuing a report; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | budget                  to actual financial performance, including customer and product                  line                  profitability. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

----

**Results        of Operations**

***Comparative        Discussion and Analysis of Results of Operations for the three and six months        ended June 30, 2007 and 2006, respectively***

*Revenues        by Component Businesses and Reporting Segments*

| *(in                    thousands)*       |   | For                    the Three Months Ended June 30, |   |   | For                    the Six Months Ended June 30, |   |
|-------------------------------------------|--------|--------------------------------------------------------|--------|--------|------------------------------------------------------|--------|
|                                      |   | 2007                                                   |   |   | 2006                                                 |   |   | %                    Change |   |   | 2007 |   |   | 2006 |   |   | %                    Change |   |
|                                      |   |                                                   |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| HID                                       |   |                                                   |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Portamedic                                |   | $                                                      | 37,642 |   |                                                 | $      | 40,622 |   |   |   | -7.3 | % |   | $ | 76,815 |   |   | $ | 83,236 |   |   |   | -7.7 | % |
| Infolink                                  |   |                                                   | 7,590  |   |                                                 |   | 8,796 |   |   |   | -13.7 | % |   |   | 14,499 |   |   |   | 16,835 |   |   |   | -13.9 | % |
| Heritage                  Labs            |   |                                                   | 4,818  |   |                                                 |   | 4,512 |   |   |   | 6.8 | % |   |   | 9,405 |   |   |   | 9,273 |   |   |   | 1.4 | % |
| Underwriting                    Solutions |   |                                                   | 3,307  |   |                                                 |   | 4,001 |   |   |   | -17.3 | % |   |   | 7,106 |   |   |   | 7,617 |   |   |   | -6.7 | % |
| Total                  HID                |   |                                                   | 53,357 |   |                                                 |   | 57,931 |   |   |   | -7.9 | % |   |   | 107,825 |   |   |   | 116,961 |   |   |   | -7.8 | % |
| CED                                       |   |                                                   | 7,417  |   |                                                 |   | 8,163 |   |   |   | -9.1 | % |   |   | 15,323 |   |   |   | 16,407 |   |   |   | -6.6 | % |
| Total                                     |   | $                                                      | 60,774 |   |                                                 | $      | 66,094 |   |   |   | -8.1 | % |   | $ | 123,148 |   |   | $ | 133,368 |   |   |   | -7.7 | % |

***Revenues***

*Health        Information        Division*

*Portamedic*

| ·   | fewer                  paramedical examinations performed in the second quarter (520,000                  in 2007                  vs.  580,000 in 2006) and in the six month period ended June                  30,  (1,064,000 in 2007 vs. 1,188,000 in 2006); and was                  partially offset by |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher                  average revenue per paramedical examination in the second quarter                  ($76.57                  in 2007 vs. $73.06 in 2006) and in the six month period ended June                  30,                   ($75.65 in 2007 vs. $72.65 in                  2006). |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | *Infolink* |
|--------|------------|

*Heritage        Labs*

*Underwriting        Solutions*

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*Claims        Evaluation        Division*

| ·   | In                  early 2007, CED was notified by a significant customer that in                  order to                  mitigate risk, one of the customer’s major branch offices will migrate to                  a multi-vendor supply chain.  The CED’s loss of the customer’s                  exclusive business negatively impacted revenues in the first six                  months of                  2007 and is estimated to potentially reduce 2007 CED annual revenues                  by                  $1.3 million (approximately 4% of the CED’s 2006                  revenues); |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                  reduction in peer reviews in New York State, which we believe reflects                  increased cost consciousness on the part of property and casualty                  insurance carriers, self-insureds and third-party administrators                  and the                  perception that such reviews have been of limited value in litigating                  claims; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                  decrease in the number of independent medical exams (IMEs) ordered                  by our                  customers when evaluating a claim;                  and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                  decrease in the number of claims referred to the division by its                  existing                  customer base.   The Company has recently hired additional                  salespersons to expand our customer base, while offering several                  new                  products/services. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Cost        of        Operations***

|                                                |   |                                         |   |   |                                       |   |   |   |   |   |                              |   |   |   |   |   |                                   |   |   |   |   |   |                                   |   |
|-----------------------------------------------------|--------|----------------------------------------------|--------|--------|--------------------------------------------|--------|--------|--------|--------|--------|-----------------------------------|--------|--------|--------|--------|--------|----------------------------------------|--------|--------|--------|--------|--------|----------------------------------------|--------|
|                                                |   | Three                  months ended June 30, |   |   | Six                  months ended June 30, |   |
| *(in                  thousands)*                   |   | 2007                                         |   |   | As                  % of Revenues          |   |   | 2006   |   |   | As                  % of Revenues |   |   | 2007   |   |   | As                  % of Revenues |   |   | 2006   |   |   | As                  % of Revenues |   |
|                                                |   |                                         |   |   |                                       |   |   |   |   |   |                              |   |   |   |   |   |                                   |   |   |   |   |   |                                   |   |
| HID                                                 |   |                                         |   |   |                                       |   |   |   |   |   |                              |   |   |   |   |   |                                   |   |   |   |   |   |                                   |   |
|    Portamedic/Infolink               |   | $                                            | 35,397 |   |                                       |   | 78.3   | %      |   | $      | 39,071                            |   |   |   | 79.1   | %      |                                   | $      | 70,991 |   |   |   | 77.7                                   | %      |   | $ | 79,362 |   |   |   | 79.3 | % |
|   Heritage                  Labs          |   |                                         | 2,601  |   |                                       |   | 54.0   | %      |   |   | 2,615                             |   |   |   | 58.0   | %      |                                   |   | 5,179  |   |   |   | 55.1                                   | %      |   |   | 5,286 |   |   |   | 57.0 | % |
|   Underwriting                  Solutions |   |                                         | 2,650  |   |                                       |   | 80.1   | %      |   |   | 2,716                             |   |   |   | 67.9   | %      |                                   |   | 5,409  |   |   |   | 76.1                                   | %      |   |   | 5,220 |   |   |   | 68.5 | % |
|    Total                  HID        |   |                                         | 40,648 |   |                                       |   | 76.2   | %      |   |   | 44,402                            |   |   |   | 76.7   | %      |                                   |   | 81,579 |   |   |   | 75.7                                   | %      |   |   | 89,868 |   |   |   | 76.8 | % |
| CED                                                 |   |                                         | 5,467  |   |                                       |   | 73.7   | %      |   |   | 5,697                             |   |   |   | 69.8   | %      |                                   |   | 11,130 |   |   |   | 72.6                                   | %      |   |   | 11,736 |   |   |   | 71.5 | % |
| Total                                               |   | $                                            | 46,115 |   |                                       |   | 75.9   | %      |   | $      | 50,099                            |   |   |   | 75.8   | %      |                                   | $      | 92,709 |   |   |   | 75.3                                   | %      |   | $ | 101,604 |   |   |   | 76.2 | % |
|                                                |   |                                         |   |   |                                       |   |   |   |   |   |                              |   |   |   |   |   |                                   |   |   |   |   |   |                                   |   |   |   |   |   |   |   |   |   |

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*    Health        Information Division*

|   | · | reduced                  branch operating expenses and fewer branch offices resulting from                  the                  Company’s continued restructuring of the Portamedic                  organization; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                  higher average revenue per Portamedic                  examination. |
|--------|--------|------------------------------------------------------------------------------------------|

*Claims        Evaluation Division*

***Selling,        General and Administrative        Expenses***

| *(in                  thousands)* |   | For                    the three months ended June 30, |   |   | (Decrease) |   |   | For                    the six months ended June 30, |   |   | (Decrease) |   |
|-----------------------------------|--------|--------------------------------------------------------|--------|--------|------------|--------|--------|------------------------------------------------------|--------|--------|------------|--------|
|                              |   | 2007                                                   |   |   | 2006       |   |   | 2007                    vs. 2006                     |   |   | 2007       |   |   | 2006 |   |   | 2007                    vs. 2006 |   |
| HID                               |   | $                                                      | 14,032 |   |       | $      | 14,743 |                                                 |   | $      | (711       | )      |   | $ | 29,007 |   |   | $ | 29,506 |   |   | $ | (499 | ) |
| CED                               |   |                                                   | 1,596  |   |       |   | 1,922  |                                                 |   |   | (326       | )      |   |   | 3,291 |   |   |   | 4,008 |   |   |   | (717 | ) |
| Total                             |   | $                                                      | 15,628 |   |       | $      | 16,665 |                                                 |   | $      | (1,037     | )      |   | $ | 32,298 |   |   | $ | 33,514 |   |   | $ | (1,216 | ) |

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*Health        Information        Division*

|   | · | decreased                  outside legal fees and general insurance resulting from less use                  of                  outside counsel and favorable insurance renewal rates, totaling                  $0.3                  million and $0.7 million,                  respectively; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | decreased                  amortization expense due to the impairment of certain intangible                  assets                  recorded in the fourth quarter of 2006, totaling $0.2 million and                  $0.5                  million; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | decreased                  recruiting fees, incentive expense and shareholder services fees                  totaling                  $0.3 million and $0.3 million; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | decreased                  regional administration personnel costs associated with the Company’s                  Portamedic business totaling $0.3 million and $0.2 million: partially                  offset by |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | increased                  IT depreciation costs and consulting costs resulting from our new                  branch                  and financial operating systems, and reduced branch data transmission                  expense totaling $0.2 million and $0.3                  million: |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | increased                  marketing and promotional materials expenses associated with the                  Company’s                  corporate marketing and product branding initiatives, totaling                  $0.2                  million and $0.4 million, respectively;                  and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | increased                  cost at Heritage Labs associated with the hiring of additional                  administration personnel, sales personnel and increased leased                  lab                  equipment costs totaling $0.2 million and $0.4                  million. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | *Claims                  Evaluation Division* |
|--------|-----------------------------------------------|

***Restructuring        and Other        Charges***

----

|   | ***Operating                  Income (Loss)*** |
|--------|------------------------------------------------|

*Health        Information        Division.*

*Claims        Evaluation Division*

***Income        Taxes***

***Loss        from continuing operations***

***Liquidity        and Financial Resources***

| ·   | restructuring                  payments related to employee severance and branch office closure                  costs                  totaling $1.5 million; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | capital                  expenditures of $1.9 million; |
|--------------------|--------------------------------------------------------|

| ·   | an                  increase in accounts receivable of $5.1 million;                  and |
|--------------------|-------------------------------------------------------------------------------------------|

----

| ·   | payment                  of a contract cancellation fee and fees to outside consultants                  related to                  cost saving opportunities identified in our 2006 strategic review,                  totaling approximately $1.1                  million. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Cash        Flows from Operating Activities***

|   | · | an increase                  in accounts receivable of $5.1 million, primarily due to a reduction                  in                  Portamedic cash collections resulting from slower than expected                  collections, partially attributable to increased documentation                  required by                  customers to process payments.  We continue to improve our                  internal processes/resources to address these customer requirements                  and                  expect our DSO’s to decline in the second half of 2007. Consolidated days                  sales outstanding (DSO), measured on a rolling 90-day basis was                  53 days at                  June 30, 2007, compared to 48 days at June 30, 2006 and 46 days                  at                  December 31, 2006, and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  decrease in accounts payable and accrued expenses of $3.0                  million, |
|--------|--------|--------------------------------------------------------------------------------------------------------|

***Cash        Flows used in Investing Activities***

***Cash        Flows used in Financing Activities***

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**Our        Credit Facility**

|   | (i) | 90%                  of “Eligible Receivables” (as that term is defined in the loan and                  security agreement) of the Company and the Company’s subsidiaries                  providing guarantees of the indebtedness under the                  facility;  plus |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | 65%                  of the fair market value of our corporate headquarters located                  in Basking                  Ridge, New Jersey – |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Off-Balance        Sheet Arrangements**

**Share        Repurchases**

**Dividends**

**Contractual        Obligations**

**Inflation**

**Critical        Accounting Policies**

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| **ITEM                  3** | **Quantitative                  and Qualitative Disclosures About Market                  Risk** |
|-----------------------------|--------------------------------------------------------------------------------------------------|

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| **ITEM                  4** | **Controls                  and Procedures** |
|-----------------------------|----------------------------------------------|

**(a)        Evaluation of Disclosure Controls and Procedures**

**(b)        Changes in Internal Control over Financial Reporting**

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** PART        II – Other Information**

| **ITEM                  1** | **Legal                  Proceedings** |
|-----------------------------|----------------------------------------|

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| **ITEM                  1A** | **Risk                  Factors** |
|------------------------------|-----------------------------------|

| **ITEM                  2** | **Unregistered                  Sales of Equity Securities and Use of                  Proceeds** |
|-----------------------------|---------------------------------------------------------------------------------------------------|

| **ITEM                  3** | **Defaults                  Upon Senior Securities** |
|-----------------------------|------------------------------------------------------|

| **ITEM                  4** | **Submission                  of Matters to a Vote of Security                  Holders** |
|-----------------------------|-------------------------------------------------------------------------------------------|

|  Nominee                       |  For  | Votes                  Cast Against |  Withheld | Broker Non-votes |  Abstained |
|-------------------------------------|------------|-------------------------------------|----------------|-----------------------|-----------------|
| Roy                  H. Bubbs       | 62,307,267 | -                                   | 2,145,805      | 0                     | 0               |
| James                  D. Calver    | 60,894,388 | -                                   | 3,558,684      | 0                     | 0               |
| Kenneth                  R. Rossano | 59,693,418 | -                                   | 4,759,654      | 0                     | 0               |

| **ITEM                  5** | **Other                  Information** |
|-----------------------------|----------------------------------------|

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| **ITEM                  6** | **Exhibits** |
|-----------------------------|--------------|

| Exhibit                  No. |   | Description                  of Exhibit                                                                                                                                                                       |
|------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         |   |                                                                                                                                                                                                          |
| 31.1                         |   | Certification                  of Chief Executive Officer pursuant to Rule 13a-14(a) under the                  Securities                  Exchange Act of 1934.                                             |
|                         |   |                                                                                                                                                                                                          |
| 31.2                         |   | Certification                  of Chief Financial Officer pursuant to Rule 13a-14(a) under                  the  Securities Exchange Act of 1934.                                                   |
|                         |   |                                                                                                                                                                                                          |
| 32.1                         |   | Certification                  of Chief Executive Officer pursuant to Rule 13a-14(b) under the                  Securities                  Exchange Act of 1934 and 18 U.S.C. Section 1350.                  |
|                         |   |                                                                                                                                                                                                          |
| 32.2                         |   | Certification                  of Chief Financial Officer pursuant to Rule 13a-14(b) under the                  Securities                  Exchange Act of 1934 and 18 U.S.C. Section                  1350. |

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**SIGNATURES**

|   |   | By:                  /s/ James D. Calver                           |   |
|--------|--------|--------------------------------------------------------------------|--------|
|   |   | James                  D. Calver                                   |   |
|   |   | Chief                  Executive Officer and President             |   |
|   |   |                                                               |   |
|   |   |                                                               |   |
|   |   |                                                               |   |
|   |   | By:                  /s/ Michael J. Shea                           |   |
|   |   | Michael                  J. Shea                                   |   |
|   |   | Senior                  Vice President and Chief Financial Officer |   |

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