----

| 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) |

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

| Large      Accelerated Filer   o |   | Accelerated      Filer   ý |   | Non-accelerated      Filer   o |   | Smaller      Reporting Company  o |
|-------------------------------------------------|--------|------------------------------------------------|--------|-----------------------------------------------|--------|---------------------------------------------|

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

----

|           |                                   |                                                                                                      | Page No. |
|----------------|----------------------------------------|-----------------------------------------------------------------------------------------------------------|----------|
| PART I -       | Financial      Information (unaudited) |                                                                                                      |
|           |                                   |                                                                                                      |     |
|           | ITEM      1 -                          | Financial      Statements                                                                                 |     |
|           |                                   |                                                                                                      |     |
|           |                                   | Consolidated      Balance Sheets as of June 30, 2008 and December 31, 2007                                | 1        |
|           |                                   |                                                                                                      |     |
|           |                                   | Consolidated      Statements of Operations for the Three and Six Months Ended June 30, 2008      and 2007 | 2        |
|           |                                   |                                                                                                      |     |
|           |                                   | Consolidated      Statements of Cash Flows for the Six Months Ended June 30, 2008 and      2007           | 3        |
|           |                                   |                                                                                                      |     |
|           |                                   | Notes      to Unaudited Consolidated Financial Statements                                                 | 4-15     |
|           |                                   |                                                                                                      |     |
|           | ITEM      2 -                          | Management's      Discussion and Analysis of Financial Condition and Results of      Operations           | 16-29    |
|           |                                   |                                                                                                      |     |
|           | ITEM      3 –                    | Quantitative      and Qualitative Disclosures About Market Risk                                           | 29       |
|           |                                   |                                                                                                      |     |
|           | ITEM      4 –                    | Controls      and Procedures                                                                              | 329      |
|           |                                   |                                                                                                      |     |
| PART II– | Other      Information                 |                                                                                                      |
|           |                                   |                                                                                                      |
|           | ITEM      1 –                    | Legal      Proceedings                                                                                    | 30       |
|           |                                   |                                                                                                      |     |
|           | ITEM      1A –                   | Risk      Factors                                                                                         | 31       |
|           |                                   |                                                                                                      |     |
|           | ITEM      2 –                    | Unregistered      Sales of Equity Securities and Use of Proceeds                                          | 31       |
|           |                                   |                                                                                                      |     |
|           | ITEM      3 -                          | Defaults      upon Senior Securities                                                                      | 31       |
|           |                                   |                                                                                                      |     |
|           | ITEM      4 –                    | Submission      of Matters to a Vote of Security Holders                                                  | 32       |
|           |                                   |                                                                                                      |     |
|           | ITEM      5 –                    | Other      Information                                                                                    | 32       |
|           |                                   |                                                                                                      |     |
|           | ITEM      6 –                    | Exhibits                                                                                                  | 32       |
|           |                                   |                                                                                                      |     |
|           |                                   | Signatures                                                                                                | 33       |

----

|                                                                                                                                                                                             |   |              |     |   |                  |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|----------|--------|-----------------------|--------|
|                                                                                                                                                                                             |   | June      30,2008 |     |   | December      31,2007 |   |
| ASSETS      (Note 9)                                                                                                                                                                             |   |              |     |   |                  |   |
| Current      assets:                                                                                                                                                                             |   |              |     |   |                  |   |
| Cash      and cash equivalents                                                                                                                                                                   |   | $                 | 10,251   |   |                  | $      | 10,580 |   |
| Accounts      receivable, net                                                                                                                                                                    |   |              | 29,929   |   |                  |   | 26,386 |   |
| Inventories                                                                                                                                                                                      |   |              | 2,599    |   |                  |   | 2,548 |   |
| Income      tax receivable                                                                                                                                                                       |   |              | 531      |   |                  |   | 518 |   |
| Other      current assets                                                                                                                                                                        |   |              | 2,279    |   |                  |   | 2,083 |   |
| Assets      of subsidiary held for sale                                                                                                                                                          |   |              | -        |   |                  |   | 6,326 |   |
| Total      current assets                                                                                                                                                                   |   |              | 45,589   |   |                  |   | 48,441 |   |
| Property,      plant and equipment at cost                                                                                                                                                       |   |              | 44,116   |   |                  |   | 42,190 |   |
| Less:      Accumulated depreciation and amortization                                                                                                                                             |   |              | 29,080   |   |                  |   | 28,107 |   |
| Property,      plant and equipment, net                                                                                                                                                          |   |              | 15,036   |   |                  |   | 14,083 |   |
|                                                                                                                                                                                             |   |              |     |   |                  |   |   |   |
| Intangible      assets, net                                                                                                                                                                      |   |              | 1,821    |   |                  |   | 2,361 |   |
| Other      assets                                                                                                                                                                                |   |              | 997      |   |                  |   | 1,053 |   |
| Total      assets                                                                                                                                                                      |   | $                 | 63,443   |   |                  | $      | 65,938 |   |
|                                                                                                                                                                                             |   |              |     |   |                  |   |   |   |
| LIABILITIES      AND STOCKHOLDERS’      EQUITY                                                                                                                                             |   |              |     |   |                  |   |   |   |
| Current      liabilities:                                                                                                                                                                        |   |              |     |   |                  |   |   |   |
| Accounts      payable                                                                                                                                                                            |   | $                 | 8,489    |   |                  | $      | 6,976 |   |
| Accrued      expenses                                                                                                                                                                            |   |              | 13,149   |   |                  |   | 14,879 |   |
| Liabilities      of subsidiary held for sale                                                                                                                                                     |   |              | -        |   |                  |   | 1,736 |   |
| Total      current liabilities                                                                                                                                                              |   |              | 21,638   |   |                  |   | 23,591 |   |
| Other      long-term liabilities                                                                                                                                                                 |   |              | 288      |   |                  |   | 438 |   |
| Commitments      and Contingencies (Note 10)                                                                                                                                                     |   |              |     |   |                  |   |   |   |
|                                                                                                                                                                                             |   |              |     |   |                  |   |   |   |
| Stockholders’      Equity:                                                                                                                                                                 |   |              |     |   |                  |   |   |   |
| Common      stock, par value $.04 per share; authorized 240,000,000 shares,      issued  68,683,982 and 68,643,982 shares as of June 30, 2008 and      December 31, 2007, respectively |   |              | 2,747    |   |                  |   | 2,746 |   |
| Additional      paid-in capital                                                                                                                                                                  |   |              | 146,162  |   |                  |   | 146,103 |   |
| Accumulated      deficit                                                                                                                                                                    |   |              | (107,321 | )      |                  |   | (106,869 | ) |
|                                                                                                                                                                                             |   |              |     |   |                  |   |   |   |
| Less:      Treasury stock, at cost; 9,395 shares as of June 30, 2008 and December 31,      2007                                                                                                  |   |              | (71      | )      |                  |   | (71 | ) |
| Total      stockholders’      equity                                                                                                                                                       |   |              | 41,517   |   |                  |   | 41,909 |   |
| Total      liabilities and stockholders' equity                                                                                                                                                  |   | $                 | 63,443   |   |                  | $      | 65,938 |   |
|                                                                                                                                                                                             |   |              |     |   |                  |   |   |   |
| See      accompanying notes to consolidated financial statements.                                                                                                                                |   |              |     |   |                  |

----

|                                                              |   | Three      Months ended June 30, |       |   | Six      Months ended June 30, |   |
|-------------------------------------------------------------------|--------|----------------------------------|------------|--------|--------------------------------|--------|
|                                                              |   | 2008                             |       |   | 2007                           |   |   | 2008 |   |   | 2007 |   |
| Revenues                                                          |   | $                                | 51,217     |   |                           | $      | 53,357 |   |   | $ | 103,596 |   |   | $ | 107,826 |   |
| Cost      of operations                                           |   |                             | 38,150     |   |                           |   | 41,105 |   |   |   | 76,218 |   |   |   | 82,570 |   |
|  Gross      profit                                           |   |                             | 13,067     |   |                           |   | 12,252 |   |   |   | 27,378 |   |   |   | 25,256 |   |
| Selling,      general and administrative expenses                 |   |                             | 13,476     |   |                           |   | 13,574 |   |   |   | 27,102 |   |   |   | 28,016 |   |
| Restructuring      and other charges                         |   |                             | -          |   |                           |   | 732 |   |   |   | 1,653 |   |   |   | 1,245 |   |
|  Operating      loss from continuing operations              |   |                             | (409       | )      |                           |   | (2,054 | ) |   |   | (1,377 | ) |   |   | (4,005 | ) |
| Other      income (expense):                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                             |   |                             | -          |   |                           |   | (56 | ) |   |   | - |   |   |   | (76 | ) |
| Interest      income                                              |   |                             | 42         |   |                           |   | - |   |   |   | 116 |   |   |   | 20 |   |
| Other      expense, net                                           |   |                             | (88        | )      |                           |   | (72 | ) |   |   | (184 | ) |   |   | (197 | ) |
|                                                              |   |                             | (46        | )      |                           |   | (128 | ) |   |   | (68 | ) |   |   | (253 | ) |
| Loss      from continuing operations before income taxes          |   |                             | (455       | )      |                           |   | (2,182 | ) |   |   | (1,445 | ) |   |   | (4,258 | ) |
|                                                              |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Income      tax provision (benefit)                               |   |                             | -          |   |                           |   | 9 |   |   |   | (40 | ) |   |   | 56 |   |
|                                                              |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                              |   |                             | (455       | )      |                           |   | (2,191 | ) |   |   | (1,405 | ) |   |   | (4,314 | ) |
|                                                              |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued      operations:                                     |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Income      from discontinued operations, net of income taxes     |   |                             | 321        |   |                           |   | 326 |   |   |   | 673 |   |   |   | 772 |   |
| Gain      on sale of subsidiaries                                 |   |                             | 280        |   |                           |   | - |   |   |   | 280 |   |   |   | - |   |
|                                                              |   |                             | 601        |   |                           |   | 326 |   |   |   | 953 |   |   |   | 772 |   |
| Net      income (loss)                                            |   | $                                | 146        |   |                           | $      | (1,865 | ) |   | $ | (452 | ) |   | $ | (3,542 | ) |
| Earnings      (loss) per share:                                   |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Continuing      operations                                        |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                             |   | $                                | (0.01      | )      |                           | $      | (0.03 | ) |   | $ | (0.02 | ) |   | $ | (0.06 | ) |
| Diluted                                                           |   |                             | (0.01      | )      |                           |   | (0.03 | ) |   |   | (0.02 | ) |   |   | (0.06 | ) |
| Discontinued      operations                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                             |   | $                                | 0.01       |   |                           |   | - |   |   | $ | 0.01 |   |   | $ | 0.01 |   |
| Diluted                                                           |   |                             | 0.01       |   |                           |   | - |   |   |   | 0.01 |   |   |   | 0.01 |   |
| Net      income (loss) per share                                  |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                             |   |                             | -          |   |                           | $      | (0.03 | ) |   | $ | (0.01 | ) |   | $ | (0.05 | ) |
| Diluted                                                           |   |                             | -          |   |                           |   | (0.03 | ) |   |   | (0.01 | ) |   |   | (0.05 | ) |
|                                                              |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of shares:                           |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                             |   |                             | 68,647,774 |   |                           |   | 68,565,935 |   |   |   | 68,641,180 |   |   |   | 68,315,176 |   |
| Diluted                                                           |   |                             | 68,647,774 |   |                           |   | 68,565,935 |   |   |   | 68,641,180 |   |   |   | 68,315,176 |   |
|                                                              |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| See      accompanying notes to consolidated financial statements. |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                  |   | Six      months ended June 30, |   |
|-------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                                                  |   | 2008                                |   |   | 2007 |   |
| Cash      flows from operating activities:                                                            |   |                                |   |   |   |   |
| Net      loss                                                                                         |   | $                                   | (452   | ) |   | $ | (3,542 | ) |
| Income      from discontinued operations, net of taxes                                                |   |                                | 953    |   |   |   | 772 |   |
| Loss      from continuing operations                                                                  |   |                                | (1,405 | ) |   |   | (4,314 | ) |
| Adjustments      to reconcile loss from continuing operations to net cash                             |   |                                |   |   |   |   |   |   |
| used      in operating activities of continuing operations:                                           |   |                                |   |   |   |   |   |   |
| Depreciation                                                                                          |   |                                | 1,619  |   |   |   | 1,496 |   |
| Amortization                                                                                          |   |                                | 540    |   |   |   | 607 |   |
| Provision      for bad debt expense                                                                   |   |                                | 77     |   |   |   | 34 |   |
| Share-based      compensation expense & employee stock purchase program                           |   |                                | 60     |   |   |   | 541 |   |
| Loss      on disposal of fixed assets                                                                 |   |                                | 46     |   |   |   | 50 |   |
| Change      in assets and liabilities, net of effect                                                  |   |                                |   |   |   |   |   |   |
|  from      dispositions of businesses:                                                           |   |                                |   |   |   |   |   |   |
| Accounts      receivable                                                                              |   |                                | (3,620 | ) |   |   | (5,731 | ) |
| Inventories                                                                                           |   |                                | (51    | ) |   |   | (132 | ) |
| Other      assets                                                                                     |   |                                | 360    |   |   |   | (268 | ) |
| Income      tax receivable                                                                            |   |                                | (13    | ) |   |   | 45 |   |
| Accounts      payable, accrued expenses and other long-term liabilities                               |   |                                | (1,633 | ) |   |   | (2,668 | ) |
| N  N      et cash used in operating activities of continuing    operations                  |   |                                | (4,020 | ) |   |   | (10,340 | ) |
|  Net      cash  provided by operating activities of discontinued      operations       |   |                                | 1,458  |   |   |   | 1,936 |   |
|  Net      cash used in operating activities                                                      |   |                                | (2,562 | ) |   |   | (8,404 | ) |
|                                                                                                  |   |                                |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                            |   |                                |   |   |   |   |   |   |
| Capital      expenditures                                                                             |   |                                | (2,812 | ) |   |   | (1,826 | ) |
| N  Net      cash used in investing activities of continuing operations                      |   |                                | (2,812 | ) |   |   | (1,826 | ) |
| N  Net      cash provided by (used in) investing activities of discontinued      operations |   |                                | 5,045  |   |   |   | (362 | ) |
|  Net      cash provided by (used in) investing activities                                        |   |                                | 2,233  |   |   |   | (2,188 | ) |
|                                                                                                  |   |                                |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                            |   |                                |   |   |   |   |   |   |
| Borrowings      under revolving credit facility                                                       |   |                                | -      |   |   |   | 5,000 |   |
| Payments      under revolving credit facility                                                         |   |                                | -      |   |   |   | (2,000 | ) |
| Proceeds      related to the exercise of stock options                                                |   |                                | -      |   |   |   | 1,625 |   |
|  Net      cash provided by financing activities of continuing    operations                      |   |                                | -      |   |   |   | 4,625 |   |
|  Net      cash provided by financing activities of discontinued      operations                  |   |                                | -      |   |   |   | - |   |
|  Net      cash provided by financing activities                                                  |   |                                | -      |   |   |   | 4,625 |   |
| Effect      of exchange rate changes on cash from discontinued    operations                          |   |                                | -      |   |   |   | (62 | ) |
|                                                                                                  |   |                                |   |   |   |   |   |   |
|  Net      decrease in cash and cash equivalents                                                  |   |                                | (329   | ) |   |   | (6,029 | ) |
| Cash      and cash equivalents at beginning of period                                                 |   |                                | 10,580 |   |   |   | 6,667 |   |
| Cash      and cash equivalents at end of period                                                       |   | $                                   | 10,251 |   |   | $ | 638 |   |
|                                                                                                  |   |                                |   |   |   |   |   |   |
| Supplemental      disclosure of non-cash investing activities:                                        |   |                                |   |   |   |   |   |   |
| Fixed      assets vouchered but not paid                                                              |   | $                                   | 458    |   |   | $ | 619 |   |
| Receipt      of note on sale of subsidiary                                                            |   |                                | 500    |   |   |   | - |   |
| Supplemental      disclosure of cash flow information:                                                |   |                                |   |   |   |   |   |   |
| Cash      paid during the period for:                                                                 |   |                                |   |   |   |   |   |   |
| Interest                                                                                              |   |                                | -      |   |   |   | 54 |   |
| Income      taxes                                                                                     |   | $                                   | 21     |   |   | $ | 4 |   |
|                                                                                                  |   |                                |   |   |   |   |   |   |
| See      accompanying notes to consolidated financial statements.                                     |   |                                |   |   |   |   |   |   |

----

----

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

| ·   | restructuring      payments related to employee severance and branch office closure costs      totaling $1.2 million; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| ·   | payment      of legal settlement with an insurance client of $0.5    million; |
|--------------------|-------------------------------------------------------------------------------|

| ·   | unclaimed      property payment of $1.4 million; |
|--------------------|--------------------------------------------------|

| ·   | final      payment towards the California lawsuit settlement (See Note 11) of $0.5      million; |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | payment      of fees to an outside consultant related to cost saving opportunities      identified in the Company’s 2006 strategic review, totaling $1.0 million,      and a $1.3 million payment related to the early termination of an      agreement with this same outside consultant,and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | receipt of $5.1 million of cash      received in connection with the sale of the CED. |
|--------------------|---------------------------------------------------------------------------------------|

----

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

|                                        |   | 2008   |   |   | 2007   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|
| Expected      life (years)                  |   |   | 5.91   |   |   |   | 5.92 |   |
| Expected      volatility                    |   |   | 46.93  | %      |   |   | 46.72 | % |
| Expected      dividend yield                |   |   | 0      | %      |   |   | 0 | % |
| Risk-free      interest rate                |   |   | 4.62   | %      |   |   | 4.56 | % |
| Weighted      average fair value of options |   |   |   |   |   |   |   |   |
| granted      during the period              |   | $      | 0.37   |   |   | $      | 2.20 |   |

----

|                                        |   |   |      |   |                                       |   |   |                                                 |   |   |                    |   |
|---------------------------------------------|--------|--------|-----------|--------|--------------------------------------------|--------|--------|------------------------------------------------------|--------|--------|-------------------------|--------|
|                                        |   | Shares |      |   | WeightedAverageExercisePrice      PerShare |   |   | WeightedAverageRemainingContractualLife      (years) |   |   | AggregateIntrinsicValue |   |
| Outstanding      Balance, December 31, 2007 |   |   | 5,694,300 |   |                                       | $      | 5.34   |                                                 |   |   |                    |   |   |   |
| Granted                                     |   |   | 100,000   |   |                                       |   | 0.73   |                                                 |   |   |                    |   |   |   |
| Exercised                                   |   |   | -         |   |                                       |   | -      |                                                 |   |   |                    |   |   |   |
| Expired                                     |   |   | (323,900) |   |                                       |   | 4.06   |                                                 |   |   |                    |   |   |   |
| Forfeitures                                 |   |   | (190,000) |   |                                       |   | 3.19   |                                                 |   |   |                    |   |   |   |
| Outstanding      Balance, June 30, 2008     |   |   | 5,280,400 |   |                                       | $      | 5.41   |                                                 |   |   | 5.3                     |   |   |  $ | 27 |   |
| Options      exercisable, June 30, 2008     |   |   | 3,387,900 |   |                                       | $      | 6.90   |                                                 |   |   | 3.4                     |   |   |  $ | - |   |

----

|                              |   | Three      Months Ended June 30, |   |   | Six      Months Ended June 30, |   |
|-----------------------------------|--------|----------------------------------|--------|--------|--------------------------------|--------|
| (in      thousands)               |   | 2008                             |   |   | 2007                           |   |   | 2008 |   |   | 2007 |   |
| Revenues                          |   | $                                | 6,362  |   |                           | $      | 7,417 |   |   | $ | 13,079 |   |   | $ | 15,323 |   |
| Pre-tax      income               |   | $                                | 321    |   |                           | $      | 357 |   |   | $ | 672 |   |   | $ | 919 |   |
| Income      tax expense (benefit) |   | $                                | -      |   |                           | $      | 31 |   |   | $ | (1 | ) |   | $ | 79 |   |

| (in      thousands)                           |   | December      31, 2007 |   |
|-----------------------------------------------|--------|------------------------|--------|
| Assets      of subsidiary held for sale:      |   |                   |   |
| Accounts      receivable, net                 |   | $                      | 3,348  |   |
| Other      current assets                     |   |                   | 263    |   |
| Property,      plant, and equipment, net      |   |                   | 809    |   |
| Intangible      assets, net                   |   |                   | 1,892  |   |
| Other      assets                             |   |                   | 14     |   |
| Total                                         |   | $                      | 6,326  |   |
|                                          |   |                   |   |   |
| Liabilities      of subsidiary held for sale: |   |                   |   |   |
| Accounts      payable                         |   | $                      | 1,481  |   |
| Accrued      expenses                         |   |                   | 255    |   |
| Total                                         |   | $                      | 1,736  |   |

----

|                    |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
|-------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
| (in      thousands)     |   | 2007                        |   |   | 2007                      |   |
| Revenues                |   | $                           | 9,614  |   |                      | $      | 19,318 |   |
| Pre-tax      loss       |   | $                           | (4     | )      |                      | $      | (94 | ) |
| Income      tax benefit |   | $                           | 4      |   |                      | $      | 26 |   |

|                            |   | Weighted         |   |   |     |   |   |         |   |   |    |   |
|---------------------------------|--------|------------------|--------|--------|----------|--------|--------|--------------|--------|--------|---------|--------|
|                            |   | Average          |   |   | Gross    |   |   |         |   |   |    |   |
|                            |   | Useful      Life |   |   | Carrying |   |   | Accumulated  |   |   | Net     |   |
| (in      thousands)             |   | (years)          |   |   | Amount   |   |   | Amortization |   |   | Balance |   |
| At      June 30, 2008           |   |             |   |   |     |   |   |         |   |   |    |   |
| Non-Competition      agreements |   |             | 4.7    |   |     | $      | 8,738  |         |   | $      | 8,725   |   |   | $ | 13 |   |
| Customer      relationships     |   |             | 9.7    |   |     |   | 12,502 |         |   |   | 10,838  |   |   |   | 1,664 |   |
| Trademarks      and tradenames  |   |             | 15.7   |   |     |   | 487    |         |   |   | 343     |   |   |   | 144 |   |
|                            |   |             |   |   |     | $      | 21,727 |         |   | $      | 19,906  |   |   | $ | 1,821 |   |
| At      December 31, 2007       |   |             |   |   |     |   |   |         |   |   |    |   |   |   |   |   |
| Non-Competition      agreements |   |             | 4.7    |   |     | $      | 8,738  |         |   | $      | 8,652   |   |   | $ | 86 |   |
| Customer      relationships     |   |             | 9.7    |   |     |   | 12,502 |         |   |   | 10,384  |   |   |   | 2,118 |   |
| Trademarks      and tradenames  |   |             | 15.7   |   |     |   | 487    |         |   |   | 330     |   |   |   | 157 |   |
|                            |   |             |   |   |     |   |   |         |   |   |    |   |   |   |   |   |
|                            |   |             |   |   |     | $      | 21,727 |         |   | $      | 19,366  |   |   | $ | 2,361 |   |

----

|                          |   |    |   |   |            |   |
|-------------------------------|--------|---------|--------|--------|-----------------|--------|
| (In      millions)            |   | 2008    |   |   | Balance      at |   |
|                          |   | Charges |   |   | Payments        |   |   | June      30, 2008 |   |
| Severance                     |   | $       | 0.5    |   |            | $      | (0.3 | ) |   | $ | 0.2 |   |
| Lease      Obligations        |   |    | 0.3    |   |            |   | (0.2 | ) |   |   | 0.1 |   |
|     Total |   | $       | 0.8    |   |            | $      | (0.5 | ) |   | $ | 0.3 |   |

|                          |   |                   |   |   |     |   |
|-------------------------------|--------|------------------------|--------|--------|----------|--------|
| (In      millions)            |   | Balance      at        |   |   | 2008     |   |   | Balance      at |   |
|                          |   | December      31, 2007 |   |   | Payments |   |   | June      30, 2008 |   |
| Severance                     |   | $                      | 0.5    |   |     | $      | (0.2 | ) |   | $ | 0.3 |   |
| Lease      Obligations        |   |                   | 1.0    |   |     |   | (0.4 | ) |   |   | 0.6 |   |
|     Total |   | $                      | 1.5    |   |     | $      | (0.6 | ) |   | $ | 0.9 |   |

| (In      millions)               |   | Balance      atDecember      31, 2007 |   |   | 2008Payments |   |   | Balance      atJune      30, 2008 |   |
|----------------------------------|--------|---------------------------------------|--------|--------|--------------|--------|--------|-----------------------------------|--------|
| Severance\Lease      Obligations |   | $                                     | 0.3    |   |         | $      | (0.1   | )                                 |   | $ | 0.2 |   |

----

|   | (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; |
|--------------------|-------------------------------------|

| ·   | 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. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

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

| ·   | customer      concerns about our financial health stemming from the decline in our      operating results and stock price, which may result in the loss of certain      customers or a portion of theirbusiness; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | concerns      about our financial health prompting prospective customers not to engage      us, or make it far more challenging for us to compete for their      business; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our      anticipated negative cash flow from operations limiting our ability to      make the desired level of investment in our  businesses. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Portamedic – performs      paramedical and medical examinations of individuals seeking insurance      coverage, mainly life insurance; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Infolink      –  conducts telephone interviews of individuals seeking life      insurance coverage, and retrieves the medical records of such individuals,      to gather much of the medical information needed in connection with the      application process; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Health & Wellness –      established in 2007, conducts wellness screenings for health management      companies, including wellness companies, disease management organizations      and health plans; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Heritage Labs – performs      tests of blood, urine and/or oral fluid specimens, primarily generated in      connection with the paramedical exams and wellness screenings performed by      our Portamedic and Health & Wellness business units, and assembles and      sells specimen collection kits; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Underwriting      Solutions – is an      insurance services organization which provides underwriting services to      the insurance industry on an outsourced basis, without the mortality and      morbidity risks. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | We      have introduced our Mature Assessment service, which enables insurance      carriers to make better underwriting decisions on older      applicants. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      have begun to introduce a new quality/imaging platform for all paramedical      exam reports on a trial basis.  This platform will allow our      third-party vendor to review the accuracy and legibility of examination      reports.  This new imaging platform, which we plan to extend      throughout Portamedic, is expected to provide a higher quality of service      to our customers. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      January 2008, we introduced a revised fee payment system for our      examiners.  We now pay examiners’ fees according to a set      payment schedule for each service an examiner      provides.  Previously, examiners were paid a percentage of the      dollar amount of the fees we billed to insurance carriers.  As      this new payment system makes it easier for examiners to predict their      income (fixed vs. variable), we expect it to improve examiner retention      and productivity. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | We      expect to continue to expand managed scheduling across the Portamedic      business.  Currently, many of our examiners schedule their own      appointments with applicants, and it may take 6 to 7 days to schedule an      examination.  In those markets where we have introduced managed      scheduling on a pilot basis, we have reduced the time required to schedule      an examination to as little as 3 to 4days. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Heritage      is strengthening its sales force.  During the second quarter of      2008, Heritage hired an individual with significant experience in the life      insurance industry to a newly-created position of VP of Sales. In      addition, Heritage has hired a Medical Director to better serve our      clients with lab and mortality relatedissues. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      have added incentives for Portamedic sales representatives to sell      Heritage Labs’ services. |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | Heritage      continues to expand its kit assembly business.  Heritage is an      FDA-registered Class I and Class II medical device      assembler.  Of the three laboratories providing testing services      to the insurance industry –only Heritage is licensed to assemble      kits. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      early 2008, Heritage began to market a line of self-collected finger stick      test kits under the trade name “Appraise”.  These kits test      hemoglobin A1c.  The hemoglobin A1c test is particularly      important for diabetics, who must constantly monitor their hemoglobin A1c      levels.  Revenues for the six months ended June 30, 2008 were      less than $0.1 million, but are expected to increase in the second half of      2008.  We are currently in discussions with several discount      retailers and national drugstore chains to offer these test kits in their      stores. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

|   | · | the      average revenue per paramedicalexamination; |
|--------|--------|------------------------------------------------------|

|   | · | 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 specimentested; |
|--------|--------|----------------------------------------------|

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

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

----

| (in      thousands)         |   | For      the Three Months Ended June 30, |   |   | For      the Six Months Ended June 30, |   |
|-----------------------------|--------|------------------------------------------|--------|--------|----------------------------------------|--------|
|                        |   | 2008                                     |   |   | 2007                                   |   |   | %      Change |   |   | 2008 |   |   | 2007 |   |   | %      Change |   |
|                        |   |                                     |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Portamedic                  |   | $                                        | 35,657 |   |                                   | $      | 37,043 |   |   |   | -3.7 | % |   | $ | 72,149 |   |   | $ | 75,917 |   |   |   | -5.0 | % |
| Infolink                    |   |                                     | 6,863  |   |                                   |   | 7,590 |   |   |   | -9.6 | % |   |   | 13,483 |   |   |   | 14,499 |   |   |   | -7.0 | % |
| Heritage      Labs          |   |                                     | 4,163  |   |                                   |   | 4,471 |   |   |   | -6.9 | % |   |   | 8,619 |   |   |   | 8,963 |   |   |   | -3.8 | % |
| Health      and Wellness    |   |                                     | 1,337  |   |                                   |   | 945 |   |   |   | 41.4 | % |   |   | 3,223 |   |   |   | 1,341 |   |   |   | 140.4 | % |
| Underwriting      Solutions |   |                                     | 3,197  |   |                                   |   | 3,308 |   |   |   | -3.4 | % |   |   | 6,122 |   |   |   | 7,106 |   |   |   | -13.9 | % |
| Total                       |   | $                                        | 51,217 |   |                                   | $      | 53,357 |   |   |   | -4.0 | % |   | $ | 103,596 |   |   | $ | 107,826 |   |   |   | -3.9 | % |

|   | · | fewer      paramedical examinations performed in the second quarter (469,000 in 2008      vs. 520,000 in 2007) and in the six month period ended June 30, (952,000      in 2008 vs. 1,064,000 in 2007);  which was partially offset      by; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | higher      average revenue per paramedical examination in the second quarter ($79.79      in 2008 vs. $76.57 in 2007) and in the six month period ended June 30,      ($79.54 in 2008 vs. $75.65 in2007). |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Infolink |
|--------|----------|

----

|   | Cost      of Operations |
|--------|-------------------------|

| (in      thousands)                |   | For      the three months ended June 30, |   |   | For      the six months ended June 30, |   |
|------------------------------------|--------|------------------------------------------|--------|--------|----------------------------------------|--------|
|                               |   |                                     |   |   | As      a % of                         |   |   |   |   |   | As      a % of |   |   |   |   |   | As      a % of |   |   |   |   |   | As      a % of |   |
|                               |   | 2008                                     |   |   | Revenues                               |   |   | 2007 |   |   | Revenues |   |   | 2008 |   |   | Revenues |   |   | 2007 |   |   | Revenues |   |
| Portamedic/      Infolink/ H&W |   | $                                        | 33,389 |   |                                   |   | 76.1 | % |   | $ | 35,396 |   |   |   | 77.7 | % |   | $ | 66,583 |   |   |   | 74.9 | % |   | $ | 70,991 |   |   |   | 77.4 | % |
| Heritage                           |   |                                     | 2,682  |   |                                   |   | 64.4 | % |   |   | 2,894 |   |   |   | 64.7 | % |   |   | 5,413 |   |   |   | 62.8 | % |   |   | 5,845 |   |   |   | 65.2 | % |
| Underwriting      Solutions        |   |                                     | 2,079  |   |                                   |   | 65.0 | % |   |   | 2,815 |   |   |   | 85.1 | % |   |   | 4,222 |   |   |   | 69.0 | % |   |   | 5,734 |   |   |   | 80.7 | % |
| Total                              |   | $                                        | 38,150 |   |                                   |   | 74.5 | % |   | $ | 41,105 |   |   |   | 77.0 | % |   | $ | 76,218 |   |   |   | 73.5 | % |   | $ | 82,570 |   |   |   | 76.6 | % |

|   | · | reduced branch operating expenses      resulting from branch staff reductions and the consolidation of Portamedic      branch offices during 2007; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | staffing      reductions in our Underwriting Solutions business resulting from a decline      in revenues. |
|--------|--------|------------------------------------------------------------------------------------------------------------|

| (in      thousands)                               |   | For      the three months endedJune      30, |   |   | (Decrease) |   |   | For      the six months endedJune      30, |   |   | (Decrease) |   |
|---------------------------------------------------|--------|----------------------------------------------|--------|--------|------------|--------|--------|--------------------------------------------|--------|--------|------------|--------|
|                                              |   | 2008                                         |   |   | 2007       |   |   | 2008      vs.2007                          |   |   | 2008       |   |   | 2007 |   |   | 2008      vs.2007 |   |
| Selling,      general and administrative expenses |   | $                                            | 13,476 |   |       | $      | 13,574 |                                       |   | $      | (98        | )      |   | $ | 27,102 |   |   | $ | 28,016 |   |   | $ | (914 | ) |

----

|   | · | reduced      health insurance costs resulting from a reduction in headcount and fewer      employees participating in the Company’s health benefit plan totaling $1.0      million; and $1.7 million,respectively; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | reduced      audit and business tax fees totaling $0.3 million and $0.5 million,      respectively; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | reduced      intangible asset amortization expense of approximately $0.1 million and      $0.2 million, respectively, resulting from the Company’s intangible      impairment charge recorded in the third quarter of 2007;    and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | reduced      Regional and Area managerial salaries and related expenses totaling $0.1      million and $0.4 million,respectively. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | The      decreases listed above were partially offset by the    following: |
|--------|----------------------------------------------------------------------------|

|   |  · | increased      costs associated with the growth in Company’s Health and Wellness business      totaling $0.4 million and $0.7 million,  respectively; |
|--------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | increased      outside legal costs totaling $0.1 million and $0.2 million, respectively;      and |
|--------|--------|---------------------------------------------------------------------------------------------------|

|   | · | increased      field examiner recruiting costs related to the Company’s efforts to      attract more examiners and executive recruiting costs totaling $0.1      million and $0.4 million,respectively; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | first      quarter 2008 restructuring charges for employee severance and office      closures totaling $0.4 million; |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

| ·   | first      quarter 2008 charges related to the early termination of an agreement with      the outside consultant utilized in the Company’s 2006 strategic review      totaling $0.9 million, and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | first      quarter 2008 severance charges related to the resignation of the former      CEO of $0.4 million. |
|--------------------|--------------------------------------------------------------------------------------------------------------|

----

|   | Operating      Loss from Continuing Operations |
|--------|------------------------------------------------|

----

| ·   | restructuring      payments related to employee severance and branch office closure costs      totaling $1.2 million; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| ·   | payment      of legal settlement with an insurance client of $0.5    million; |
|--------------------|-------------------------------------------------------------------------------|

| ·   | unclaimed      property payment of $1.4 million; |
|--------------------|--------------------------------------------------|

| ·   | final      payment towards the California lawsuit settlement (See Note 11) of $0.5      million; |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | payment      of fees to an outside consultant related to cost saving opportunities      identified in the Company’s 2006 strategic review, totaling $1.0 million,      and a $1.3 million payment related to the early termination of an      agreement with this same outside consultant,and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | receipt      of $5.1 million of cash received in connection with the sale of      CED. |
|--------------------|----------------------------------------------------------------------------------------|

----

|   | · | an increase      in accounts receivable of $3.6 million, primarily due to a reduction in      Portamedic cash collections during the first six months of 2008, a trend      we historically experience. Consolidated days sales outstanding (DSO),      measured on a rolling 90-day basis was 53 days at June 30, 2008, compared      to 46 days at December 31, 2007;and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      decrease in accounts payable and accrued expenses of $1.6      million. |
|--------|--------|--------------------------------------------------------------------------------|

|   | · | an      increase in accounts receivable of $5.7 million, primarily due to a      reduction in Portamedic cash collections during the first six months of      2007. Consolidated days sales outstanding (DSO), measured on a rolling      90-day basis was 55 days at June 30, 2007 compared to 45 days at December      31, 2006, and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      decrease in accounts payable and accrued expenses of $2.7      million, |
|--------|--------|--------------------------------------------------------------------------------|

|   | (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 |
|--------|------|-----------------------------------------------------------------------------------------------------------|

----

| ITEM      3 | Quantitative      and Qualitative Disclosures About MarketRisk |
|-------------|----------------------------------------------------------------|

----

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

----

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

----

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

| ITEM      2 | Unregistered      Sales of Equity Securities and Use ofProceeds |
|-------------|-----------------------------------------------------------------|

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

----

| ITEM      4 | Submission      of Matters to a Vote of SecurityHolders |
|-------------|---------------------------------------------------------|

|  Nominee            |  For  | Votes      Cast Against |  Withheld | Broker Non-votes |  Abstained                                   |
|--------------------------|------------|-------------------------|----------------|-----------------------|---------------------------------------------------|
| Benjamin      A. Currier | 51,096,572 | -                       | 13,449,442     | -                     | -                                                 |
| John      W. Remshard    | 51,445,451 | -                       | 13,100,563     | -                     | -                                                 |
| Elaine      L. Rigolosi  | 51,101,153 | -                       | 13,444,861     | -                     | -         |

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

| 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. |
|        |   |                                                                                                                                                |
| 32.3        |   | Copies      of Asset Purchase Agreements with respect to the sale of the Claims      Evaluation Division.                                           |

----

|   |   | By:      /s/ Roy H. Bubbs                              |   |
|--------|--------|--------------------------------------------------------|--------|
|   |   | Roy      H. Bubbs                                      |   |
|   |   | Chief      Executive Officer and President             |   |
|   |   |                                                   |   |
|   |   |                                                   |   |
|   |   |                                                   |   |
|   |   | By:      /s/ Michael J. Shea                           |   |
|   |   | Michael      J. Shea                                   |   |
|   |   | Senior      Vice President and Chief Financial Officer |   |

----