UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





Form 10-K/A
 (Amendment
No. 2)




x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934For
      the fiscal year ended December 31, 2009o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934For
      the transition period from __________ to
  __________





Commission
File Number: 000-52634





FLORHAM
CONSULTING CORP.


(Exact
name of registrant as specified in its charter)





Delaware
            20-2329345(State
      or other jurisdiction of
            (I.R.S.
      Employerincorporation
      or organization)
            Identification
      No.)





845
Third Avenue, 6th Floor,
New York, New York 10022


(Address
of principal executive offices, including zip code)





Registrant’s
telephone number, including area code:


(646)
290-5290





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


None





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


Common
Stock, par value $.0001 per share


________________




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





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





Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes  x     No 
 ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes   ̈    No 
x





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. 
Yes   ̈    No 
x





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer”
and  “smaller reporting company” in Rule 12b-2 of the Exchange
Act.




Large accelerated
filer   ̈                                                                                    Accelerated
filer   ̈





Non-accelerated filer (Do not check if
a smaller reporting company)   ̈         
Smaller reporting company  x





Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).  Yes   ̈    No 
x





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant was approximately $39,585 as of June 30,
2009.





As of
March 30, 2010, 6,705,622 shares of the registrant’s common stock, par value
$.0001 per share, were issued and outstanding, of which 179,741 shares are held
in escrow subject to future earnings attainment.





Documents
Incorporated by Reference: None.







EXPLANATORY NOTE
 Florham Consulting Corp. (the
“Company”) is filing this Amendment No. 2 to its Annual Report on Form 10-K/A
for the fiscal year ended December 31, 2009, which was originally filed
with the Securities and Exchange Commission (“SEC”) on March 31, 2010 (the
“Original Form 10-K”) and amended on April 5, 2010 (“Amendment No. 1”), to
incorporate the Company’s revisions and responses to a letter of comment from
the staff of the SEC dated as of June 17, 2010, which include, without
limitation, restating the financial statements to eliminate the results of the
accounting acquiree pursuant to the reverse merger.
 
 This Form
10-K/A includes new certifications as exhibits 31.1, 31.2, 32.1 and 32.2 by our
principal executive officer and principal financial officer as required by
Rules 12b-15 and 13a-14 promulgated under the Securities Exchange Act of
1934, as amended (the “Exchange Act”). Except for the amended disclosures set
forth in this explanatory note, the information in this Form 10-K/A has not
been updated to reflect events that occurred after March 31, 2010, the filing
date of our Original Form 10-K. Accordingly, this Form 10-K/A should be
read in conjunction with our filings made with the SEC subsequent to the filing
of the Original Form 10-K, including any amendments to those filings. The
following sections have been amended, without limitation:
  Part II –
Item 6. Management’s Discussion and Analysis of Financial Condition and Results
of Operations.
 Part II –
Item 8. Financial Statements and Supplementary Data.
 
 Except as set forth above, all other
information in the Company’s Original Form 10-K and Amendment No. 1 remain
unchanged. The Company has re-filed the entire Form 10-K in order to provide
more convenient access to the amended information in context.









FLORHAM
CONSULTING CORP.





2009
FORM 10-K/A ANNUAL REPORT





TABLE
OF CONTENTS





PagePART
      I
                  
                  
                  3Item 1.
                  
                  Business.
                  4Item 1A.
                  
                  Risk
      Factors.
                  16Item 1B.
                  
                  Unresolved
      Staff Comments.
                  22Item 2.
                  
                  Properties.
                  22Item 3.
                  
                  Legal
      Proceedings.
                  22Item 4.
                  
                  Submission
      of Matters to a Vote of Security Holders.
                  22PART II
                  
                  
                  22Item 5.
                  
                  Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities.
                  22Item 6.
                  
                  Selected
      Financial Data.
                  27Item 7.
                  
                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                  27Item
      7A.
                  
                  Quantitative
      and Qualitative Disclosures About Market Risk.
                  31Item 8.
                  
                  Financial
      Statements and Supplementary Data.
                  32Item 9.
                  
                  Changes
      and Disagreements With Accountants on Accounting and Financial
      Disclosure.
                  33Item 9A.
                  
                  Controls
      and Procedures.
                  33Item 9B.
                  
                  Other
      Information.
                  34PART III
                  
                  
                  35Item 10.
                  
                  Directors,
      Executive Officers and Corporate Governance.
                  35Item 11.
                  
                  Executive
      Compensation.
                  38Item
      12.
                  
                  Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.
                  44Item
      13.
                  
                  Certain
      Relationships and Related Transactions, and Director
      Independence.
                  45Item
      14.
                  
                  Principal
      Accounting Fees and Services.
                  50PART IV
                  
                  
                  50Item
      15.
                  
                  Exhibits,
      Financial Statement Schedules.
                  50Signatures
                  52




2





PART I





Cautionary
Statement Concerning Forward-Looking Statements





Our representatives and we may from
time to time make written or oral statements that are "forward-looking,"
including statements contained in this Annual Report on Form 10-K and other
filings with the Securities and Exchange Commission, reports to our stockholders
and news releases. All statements that express expectations, estimates,
forecasts or projections are forward-looking statements within the meaning of
the Act. In addition, other written or oral statements which constitute
forward-looking statements may be made by us or on our behalf. Words such as
"expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates,"
"projects," "forecasts," "may," "should," variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and involve risks,
uncertainties and assumptions which are difficult to predict. These risks may relate to,
without limitation:





·
            if
      we are not able to continue to successfully recruit and retain our
      students, we will not be able to sustain our revenue growth rate;


·
            we
      are subject to risks relating to tuition pricing, which could have a
      material adverse affect on our financial results;


·
            our
      financial performance depends, in part, on our ability to keep pace with
      changing market needs and technology; if we fail to keep pace or fail in
      implementing or adapting to new technologies, our business may be
      adversely affected;


·
            we
      are subject to risks relating to our information technology, system
      applications and security systems, which could have a material adverse
      affect on our financial results;


·
            future
      acquisitions may have an adverse effect on our ability to manage our
      business;


·
            if
      regulators do not approve our domestic acquisitions, the acquired schools’
      state licenses, accreditation, and ability to participate in Title IV
      programs (if applicable) may be
impaired;


·
            if
      regulators do not approve or delay their approval of transactions
      involving a change of control of our company, our state licenses and
      accreditation may be impaired;


·
            if
      any regulatory audit, investigation or other proceeding finds us not in
      compliance with the numerous laws and regulations applicable to the
      postsecondary education industry, we may not be able to successfully
      challenge such finding and our business could
  suffer;


·
            if
      we fail to maintain any of our state authorizations, we would lose our
      ability to operate in that state;


·
            government
      regulations relating to the Internet could increase our cost of doing
      business, affect our ability to grow or otherwise have a material adverse
      effect on our business, financial condition, results of operations and
      cash flows;


·
            our
      success depends on attracting and retaining qualified
      personnel;


·
            we
      may not be able to adequately protect our intellectual property, and we
      may be exposed to infringement claims by third
  parties;


·
            we
      may be subject to infringement and misappropriation claims in the future,
      which may cause us to incur significant expenses, pay substantial damages
      and be prevented from providing our
services;


·
            our
      limited operating history and the unproven long-term potential of our
      business model make evaluating our business and prospects
      difficult;


·
            we
      may need additional capital and may not be able to obtain such capital on
      acceptable terms;


·
            our
      business may be adversely affected by a further economic slowdown in the
      U.S. or abroad or by an economic recovery in the
  U.S.;


·
            we
      may not be able to sustain our recent growth rate or profitability, and we
      may not be able to manage future growth
  effectively;


·
            insiders
      have substantial control over us, and they could delay or prevent a change
      in our corporate control even if our other stockholders wanted it to
      occur;


·
            there
      may not be sufficient liquidity in the market for our securities in order
      for investors to sell their
securities;


·
            the
      market price of our common stock may be
  volatile;


·
            the
      outstanding convertible securities may adversely affect us in the future
      and cause dilution to existing
shareholders;


·
            our
      common stock may be considered a “penny stock” and may be difficult to
      sell; and


·
            we
      have not paid dividends in the past and do not expect to pay dividends in
      the future, and any return on investment may be limited to the value of
      our stock.





Therefore,
actual outcomes and results may differ materially from what is expressed or
forecasted in or suggested by such forward-looking statements. We undertake no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances that arise after the date hereof. Readers should carefully
review the factors described herein and in other documents we file from time to
time with the Securities and Exchange Commission, including our Quarterly
Reports on Form 10-Q, Annual Reports on Form 10-K, and any Current Reports on
Form 8-K filed by us.




3


Item 1. Business.





In this
report, the “Company,” "we", "us" and "our", refer to Florham Consulting Corp.,
Educational Investors, Inc., a Delaware corporation (“EII”), Valley Anesthesia,
Inc., a Delaware corporation and Valley Anesthesia Educational Programs, Inc.,
an Iowa corporation (collectively, “Valley”), and Training Direct, LLC, a
Connecticut limited liability company (“Training Direct”, and together with EII
and Valley, the “EII Group”), unless the context otherwise
requires.





Introduction





Prior to the reverse merger, we were a
publicly reporting Delaware corporation offering Internet professional services,
including providing our clients with an integrated set of strategic creative and
technology services that enable such clients to effect and maximize their
Internet business.  These services helped our clients create and
enhance relationships with their customers, staff, business partners and
suppliers.





Prior
to the reverse merger, our strategic services included advising clients on
developing business models for their Internet activities, identifying
opportunities to improve operational efficiencies through online opportunities
and planning for the operations and organization necessary to support an online
business. Our creative services included developing graphic designs and Web
sites for our clients. Our technology services included recommending and
installing appropriate hardware and software networks to enable online sales,
support and communication. We also managed the hosting of clients' websites in
certain cases.





As a
result of the reverse merger, we will carry out the business and operations of
the EII Group.





EII





EII was incorporated in the State of
Delaware on July 20, 2009 for the purpose of acquiring vocational, training and
technical schools, with an initial emphasis on the health care and medical
industries. EII’s wholly-owned subsidiary, Valley Anesthesia, Inc., was
incorporated on July 15, 2009 in the State of Delaware and has its corporate
offices located in New York, New York. Effective August 20, 2009, Valley
Anesthesia, Inc. purchased certain assets and assumed certain liabilities and
operations of Valley Anesthesia Educational Programs, Inc. for an aggregate
purchase price of $3,838,215, plus certain contingent payments which are subject
to the achievement of predetermined operating milestones. EII’s wholly-owned
subsidiary, Training Direct, LLC, was organized as a limited liability company
in the State of Connecticut on January 7, 2004.





Valley





Through Valley, EII provides
comprehensive review and update courses and study materials that aid Student
Registered Nurse Anesthetists (“SRNA”) and Graduate Registered Nurse
Anesthetists (“GRNA”) in preparation for the National Certifying Exam (“NCE”)
throughout the continental United States.





Valley’s principal service is a
three-day comprehensive review and update course designed to prepare SRNAs for
the NCE. Valley also offers a 600-page basic manual. Additionally, Valley offers
MemoryMasterTM, which
is a collection of approximately 4,000 questions and answers designed to further
assist its students in preparation for the NCE. Valley presented 10 courses in
2007, 11 courses in 2008 and 12 courses in 2009. In addition, Valley has 13
courses scheduled for 2010.





Valley’s revenue is currently generated
from three sources: (i) seminars, (ii) manuals, and (iii) MemoryMasterTM.  In
addition, Valley anticipates that there will be a fourth revenue source
beginning in 2010, which is from on-line practice examinations that management
expects to launch in the second quarter of 2010.





Training
Direct





Through
its Training Direct subsidiary, EII provides “distance learning” and
“residential training” educational programs for students to become eligible for
entry-level employment in a variety of fields and industries. Training Direct
strives to assist those who may not have realized their full potential in the
workplace by finding such individuals a new career direction and assisting in
progressing their learning skills necessary to reach their earning and personal
development possibilities and goals. Training Direct maintains licenses from the
Connecticut Commissioner of Higher Education, the Connecticut Department of
Health Services and the National Health Career Association, and is an Eligible
Training Provider under the Workforce Investment Act. Such licenses require that
Training Direct have a competent faculty, offer educationally sound and
up-to-date courses and course materials, and be subject to inspections and
approvals by outside examining committees.


4





The following diagrams set forth our
corporate structure, both before and after giving effect to consummation of the
transactions contemplated by the Merger Agreement and the Purchase Agreement
described below.











(1)  Corporate
name will be changed to “Educational Investors Corp.” pursuant to the Merger
Agreement.





(2)  Effective
August 20, 2009, Valley Anesthesia, Inc. purchased certain assets and assumed
certain liabilities and operations of Valley Anesthesia Educational Programs,
Inc. for an aggregate purchase price of $3,838,215, plus certain contingent
payments which are subject to the achievement of predetermined operating
milestones.





Corporate
Information





Agreement
and Plan of Merger





On December 16, 2009, we executed an
agreement and plan of merger with EII Acquisition Corp. (a newly formed
acquisition subsidiary of Florham) (“Mergerco”), EII and its security holders,
Sanjo Squared, LLC, Kinder Investments, LP, Joseph Bianco and Anil Narang
(collectively, the “EII Securityholders”) pursuant to which Mergerco was merged
with and into EII, with EII as the surviving corporation of the merger, as a
result of which EII became a wholly-owned subsidiary of our company. Under the
terms of the merger agreement, the EII Securityholders received (i) an aggregate
of 6,000,000 shares of our common stock, (ii) options to acquire 2,558,968
additional shares of our common stock, 50% of which have an initial exercise
price of $0.41 per share and 50% of which have an initial exercise price of
$0.228 per share, subject to certain performance targets set forth in the merger
agreement, and (iii) 250,000 shares of our Series A Preferred Stock, with each
share of  Series A Preferred Stock automatically convertible into
49.11333 shares of common stock upon the filing by us of an amendment to our
certificate of incorporation which increases the authorized shares of our common
stock to at least 50,000,000.




Pursuant to the terms of the reverse
merger, we agreed to cause (i) the shares of common stock issued and outstanding
prior to the effective time of the reverse merger; and (ii) up to 930,000 shares
of common stock issuable upon exercise of warrants expiring on June 30, 2016 at
an exercise price of $0.05 per share, to be registered for resale under the
Securities Act of 1933, as amended, as soon as practicable following the
effective time of the reverse merger.





The closing of the transactions
contemplated by the merger agreement were subject to a number of conditions
including, without limitation, completion of due diligence, approval of the
merger agreement by the Boards of Directors of EII and our company and the prior
or simultaneous closing of the interest purchase agreement (as discussed below).
On December 31, 2009, the parties to the merger agreement deemed all closing
conditions to be satisfied and accordingly, the reverse merger was consummated.
As a result of the reverse merger, we believe we are no longer a shell
corporation as that term is defined in Rule 405 of the Securities Act of 1933,
as amended, and Rule 12b-2 of the Securities Exchange Act of 1934, as
amended.


5





At the closing of the reverse merger,
all of our officers resigned and Joseph Bianco was appointed as our Chief
Executive Officer, Anil Narang was appointed as our President and Chief
Operating Officer, and Kellis Veach was appointed as our Chief Financial Officer
and Secretary. In addition, our sole director resigned and Joseph Bianco, Anil
Narang, Dov Perlysky, Howard Spindel and David Cohen were appointed as our
directors, with such resignation and appointments effective on January 22, 2010,
representing the tenth day after mailing our Schedule 14f-1 Information
Statement to our shareholders of record.





We have filed an Information Statement
on Schedule 14C under the Exchange Act, and upon the effectiveness of such
Information Statement and the expiration of the requisite 20 day period
following mailing of such Information Statement to our shareholders, we will
amend and restate our certificate of incorporation to, among other
things:




·
            increase
      our authorized common stock to 50,000,000 shares; and·
            change
      our corporate name to “Educational Investors
  Corp.”.




On December 23, 2009, holders of a
majority of our issued and outstanding shares of common stock have consented in
writing to approve (i) the merger agreement and the transactions contemplated
therein, (ii) our corporate name change; (iii) the increase in our authorized
shares of common stock; and (iv) our 2009 Stock Incentive Plan for key
employees, directors, consultants and others providing services to us, pursuant
to which up to 1,500,000 shares of common stock shall be authorized for issuance
thereunder.  Although the Company elected to obtain consents to the
merger from holders of a majority of the then outstanding Company shares, the
Company believes that under Delaware law, neither such consents nor any other
Company shareholder approvals were required as a pre-condition to the valid
consummation of the reverse merger, which was structured as a reverse triangular
merger.  Subject to approval from the SEC, Kinder Investments, L.P.
and Sanjo Squared, LLC, each affiliates of the Company, propose to enter into a
new written shareholder consent authorizing each of the name change, the share
capital increase and the 2009 Stock Incentive Plan.





Interest
Purchase Agreement





In addition to the merger agreement, on
December 16, 2009, EII entered into an interest  purchase agreement
with the members of Training Direct, and our company, pursuant to which EII
acquired all outstanding membership interests, on a fully diluted basis, of
Training Direct in exchange for (a) $200,000 cash, (b) shares of our common
stock having a deemed value of  $600,000 (the “Acquisition Shares”),
with such number of Acquisition Shares to be determined by dividing $600,000 by
the “Discounted VWAP” (as defined below) for the 20 “Trading Days” (as defined
below) immediately following the consummation of the reverse merger, and (c)
shares of our  common stock having a deemed value of $300,000 (the
“Escrow Shares”), with such number of Escrow Shares to be determined by dividing
$300,000 by the Discounted VWAP for the 20 Trading Days immediately following
the consummation of the reverse merger. The Escrow Shares will be held in escrow
and released therefrom as provided in the purchase agreement. “Discounted VWAP”
is defined in the purchase agreement as 70% of the “VWAP” of our common stock,
but in no event less than $0.40 per share. “VWAP” is defined in the purchase
agreement as a fraction, the numerator of which is the sum of the product of (i)
the closing trading price for our common stock on the applicable national
securities exchange on each Trading Day of the 20 Trading Days following the
consummation of the reverse merger, and (ii) the volume of our common stock on
the applicable national securities exchange for each such day and the
denominator of which is the total volume of our common stock on the applicable
national securities exchange during such twenty day period, each as reported by
Bloomberg Reporting Service or other recognized market price reporting service.
“Trading Day” is defined in the purchase agreement as any day on which the New
York Stock Exchange or other national securities exchange on which our common
stock trades is open for trading.  The Discounted VWAP for the twenty
Trading Days after the effective date of the reverse merger was
$1.67.  Accordingly, on March 3, 2010 we issued an aggregate of
359,281 Acquisition Shares and 179,641 Escrow Shares.




The
closing of the purchase agreement was subject to a number of conditions
including, without limitation, approval of the change of ownership of Training
Direct by the Connecticut Department of Higher Education, the execution by us,
EII and the EII Securityholders of all documents  necessary to affect
the reverse merger, approval of the purchase agreement by the Board of Directors
of EII and the board of managers of Training Direct and execution of a certain
employment agreement and consulting agreement. On December 31, 2009, the parties
to the purchase agreement deemed all closing conditions to be satisfied and
accordingly, the purchase and sale of the Training Direct membership interests
was consummated.





Valley’s
Program Offerings





Seminars





Each review and update course includes
26 hours over a three-day time period. The courses are located throughout the
United States in areas with high concentrations of nursing programs. Seminars
are typically held in hotel conference rooms located close to airports to
minimize logistical issues for traveling students.


6




Registration for the seminars can be
completed online, by mail or by telephone. Registration for courses for the
following year occurs at the end of August. Once the registration period has
commenced, there is significant enrollment in the seminars within a couple days.
Seminars in Cleveland and Philadelphia have traditionally had the highest
student enrollments with two courses in Cleveland that included 217 and 216
students, respectively, and 215 students in Philadelphia in 2007. In 2008, the
seminars had enrollments for two courses in Philadelphia of 224 and 220
students, respectively, and in Cleveland for two courses of 219 and 216
students, respectively. In 2009, the seminars had enrollments for two courses in
Cleveland of 211 and 209 students, respectively, a course in Philadelphia with
enrollment of 218 students and a course in Dallas with enrollment of 217
students.





Manuals





Valley publishes a course manual which
is purchased by students enrolled in the seminars and others. The course manual
consists of over 600 pages and is printed by a third party. While the volume is
fairly substantial, the complexity of the printing is not excessive and the
manuals are not bound. Production costs were approximately $175,000 in 2007,
$186,000 in 2008 and $182,000 in 2009.The manuals are ordered
from the printers each fall after registration has begun for the following
year’s courses and correspondingly, the majority of the printing costs are
incurred in the fourth quarter.  Since the per unit cost to print 100
manuals is the same as the cost to print one, Valley only orders enough books to
meet its known demand. As Valley receives additional orders, it places orders
with its vendor to print the required quantity to meet the additional
demand.





MemoryMasterTM





Valley offers its MemoryMasterTM study
guide collection of approximately 4,000 questions and answers to aid its
students in preparation for the NCE by facilitating the memorization and
understanding of a large body of anesthesia-related facts, concepts and issues.
MemoryMasterTMcontent
is categorized according to the outline provided by the Council on Certification
of Nurse Anesthesia, which includes:





·
            basic
      and related clinical sciences;·
            equipment,
      instrumentation and technology;


·
            basic
      principles of anesthesia;·
            advanced
      principles of anesthesia; and


·
            professional
      issues.





MemoryMasterTM is
offered in two forms: (i) a bound, soft covered book, and (ii) flash
cards.  The book provides the entire MemoryMasterTM content
in a side-by-side format, with questions appearing on the left side of each page
and the corresponding answers on the right side.





MemoryMasterTM is
printed by the same third party source as the course manuals. MemoryMasterTM can
also be ordered from the printers on an as needed basis. Management estimates
that MemoryMasterTM
accounted for approximately $340,000 of revenue in 2009. Historically, the
fourth quarter includes the greatest amount of MemoryMasterTM
shipments and related revenue.





On-Line
Practice Examinations





Valley anticipates that there will be a
fourth revenue source beginning in 2010, which is from on-line practice
examinations that management expects to launch in the second quarter
of 2010. Valley’s on-line practice examinations will be a test assessment
program where students can visit a mock testing center (the “Center”) on-line.
Practice examinations and subject-specific quizzes will be available for student
practice purposes. Valley believes that this will be a popular addition to its
offerings, and that most students who take its courses, and others who do not,
will avail themselves of the new test assessment Center. As of the date hereof,
pricing for this program has not been finalized but it is expected that the
Center will be fully functional during the second quarter of
2010.





Training
Direct’s Program Offerings





Distance
Learning Programs





Distance
learning programs provide an additional opportunity to individuals who may not
have acquired all of the education they need and are unable to take advantage of
residential training educational opportunities. Distance learning is
defined as enrollment and study with an educational institution that provides
lesson materials prepared in a sequential and logical order for study by
students on their own, allowing students to acquire new professional skills
while studying at home at their own pace. In order to help each student in their
field of study, Training Direct provides counseling and lesson assistance by
telephone and through mail.


7




Training Direct’s distance learning
offerings include educational programs in the following fields and
industries:





·
            medical
      office assistance;·
            medical
      billing and coding;


·
            hotel-motel
      front office;·
            veterinary
      assistant;


·
            paralegal;
      and·
            pharmacy
      technician.





All of
Training Direct’s courses are priced at $1,295 to $1,600 per
program. Students may pay via cash, credit card, money order or
check.





When each
lesson is completed, the student mails the assigned work to the school for
correcting, grading, comment and subject matter guidance by qualified
instructors. Corrected assignments are rapidly returned to the student,
providing a personalized student-teacher relationship.





Medical
Office Assistant Program





Training Direct’s medical office
assistant curriculum prepares the student for a wide range of entry-level office
positions in different areas of the health industry. The curriculum prepares a
student for potential employment in medical offices, clinics, public health
departments and hospitals. The student acquires a basic understanding of medical
terminology, records management, financial administration and administrative
procedures which relate to the functioning of a medical office. An outline of
the medical office assistant curriculum includes the following, without
limitation:





·
            introduction
      to medical office assistance;·
            introduction
      to medical terminology;


·
            advanced
      medical terminology and pharmacology;·
            administrative
      medical assistance;


·
            medical,
      legal and ethical responsibilities;·
            computers
      and information processing;


·
            patients'
      medical records;·
            drug
      and prescription records;


·
            office
      maintenance and management;·
            fees,
      credit and collection;


·
            health
      insurance systems;·
            bookkeeping;


·
            payroll
      procedures; and·
            job
      search techniques.





A high school diploma or general
education degree is required for applicants to become eligible for the program.
Upon successful completion of the program, the student receives a
diploma.





Medical
Billing and Coding Program





Training Direct’s medical insurance
billing and coding curriculum prepares the student for entry-level employment to
process insurance claims for a medical office. There are multiple roles that the
student can fulfill with this curriculum, such as patient and administration
contact, working with computers, and accounting tasks. Specific potential career
duties consist of: (i) data collection from patients, hospitals, laboratories
and physicians; (ii) diagnostic and procedure coding; (iii) timely generation of
claims to maximize cash flow for the medical practice; (iv) keeping up to date
on insurance plans, rules and regulations; (v) bookkeeping transactions; and
(vi) follow-up on claims.





An outline of the medical billing and
coding curriculum includes the following, without limitation:





·
            introduction
      to medical terminology;·
            advanced
      medical terminology and pharmacology;·
            fundamentals
      of health insurance coverage;




8





·
            source
      documents and the insurance claim cycle;·
            coding
      diagnosis;


·
            coding
      procedures;·
            the
      health insurance claim form;


·
            fees:
      private insurance and managed care, the Medicaid
  program;·
            the
      Medicare program;


·
            workers’
      compensation coverage and other disability programs;
and·
            patient
      billing: credit and collection
practices.





In this program, the student acquires
an understanding of basic medical terminology, anatomy and physiology,
procedural and diagnostic coding, types of medical insurance programs, insurance
claims completion and submission, payment and follow-up procedures, relevant
office skills and the role of computers in the medical office. Upon successful
completion of the program, the student receives a diploma. In addition, this
course offers students an optional opportunity to become nationally certified by
the National Healthcare Association.





Hotel-Motel
Program





Training Direct’s hotel-motel career
training curriculum prepares the student for entry-level employment in the
Hospitality industry. The student learns about the typical organizational
structure of the industry, how each department functions, what the staffing
requirements are for each department, as well as the character traits necessary
for successful employment for each part of the organization. At the completion
of the curriculum, the student is ready to apply for employment in any number of
hospitality functions such as front desk operations, catering, housekeeping,
sales and promotions, maintenance, purchasing and convention organization.
Considerable attention is also given to personnel selection, organization and
management. This is an employee intensive industry where human relations are an
important component to successful career advancement.





An outline of the hotel-motel
curriculum includes the following, without limitation:





·
            the
      Hospitality industry;·
            personnel
      requirements;


·
            the
      General Manager and Assistant Manager;·
            front
      desk operations;


·
            the
      desk clerk;·
            uniformed
      services;


·
            guest
      relations;·
            the
      sales department;


·
            conventions
      and meetings;·
            accounting
      procedures;


·
            cleaning
      and maintenance personnel;·
            food
      and beverage management team;


·
            inventories
      and control; and·
            career
      guidance.





Upon successful completion of the
program, the student receives a diploma.





Veterinary
Assistant Program





Training Direct’s veterinary assistant
curriculum prepares the student for entry-level employment under the supervision
of veterinarians to diagnose and treat animals for injuries, illness and routine
veterinary needs such as standard inoculations and periodic check ups.
Veterinary assistants perform many tasks ranging from soothing and quieting
animals under treatment to drawing blood, inserting catheters and conducting
laboratory tests.





An outline of the veterinary assistant
curriculum includes the following, without limitation:





·
            introduction
      to medical terminology;·
            advanced
      medical terminology and
pharmacology;


·
            introduction
      to small animal care;·
            animal
      rights and welfare;


·
            nutrition
      and digestive system;




9





·
            animal
      studies, including dogs, cats, rabbits, hamsters, amphibians, reptiles,
      birds, fish and others;


·
            introduction
      to veterinary practice;·
            care
      and maintenance of a veterinary
facility;


·
            administrative
      duties;·
            ethics;
      and


·
            fee
      collection procedures, billing and
payroll.





In this program, the student acquires
an understanding of basic medical terminology, the history, breeds and types of
animal groups, feeding, handling, care, housing and diseases of animals, key
terms, organizational structure and functions of the veterinary clinic, and
interacting with professional aspects of veterinary practices. Upon successful
completion of the program, the student receives a diploma.





Paralegal
Program





Training Direct’s paralegal course
prepares students for entry-level employment positions to assist lawyers.
The student gains an understanding of the scope of law that is practiced in law
offices, corporations and government agencies.





This is an intensive course requiring
extensive reading including cases in many areas of the law. In addition to
understanding the breadth of the paralegal profession, students begin by
learning legal terminology and then study the judicial system, civil and
criminal law, the anatomy of a trial as well as pretrial procedures and
research. Students also study different areas of law including Bankruptcy,
Estate Planning, Family Law, Real Estate, Contracts, Torts, Immigration and
Naturalization and Collections.





An outline of the paralegal curriculum
includes the following, without limitation:





·
            the
      paralegal profession;·
            law
      seminars covering roots of American law, organization of the American
      legal system, sources of law, the trial, and legal
      terminology;


·
            legal
      research tools;·
            cause
      of action in a civil case, pre-trial discovery, admissibility and use of
      evidence, and trial preparation;


·
            contracts;·
            Federal
      bankruptcy;


·
            criminal
      law;·
            estate
      planning;


·
            family
      law;·
            real
      estate;


·
            torts;·
            immigration
      and naturalization; and


·
            collections.





The duration of this course is six
months on a part-time basis. Upon successful completion of the program, the
student receives a diploma.





Pharmacy
Technician Program





Training Direct’s pharmacy technician
curriculum prepares the student for entry-level employment positions to work
under the supervision of pharmacists, to help prepare medications for dispensing
to patients, label of medications, perform inventories and order supplies,
prepare intravenous solutions, help maintain records, and perform other duties
as directed by pharmacists.





An outline of the pharmacy technician
curriculum includes the following, without limitation:





·
            introduction
      to pharmacy technicians;·
            introduction
      to medical terminology;


·
            advanced
      medical terminology and pharmacology;·
            home
      and long term health care;


·
            regulatory
      standards in pharmacy practice;·
            computer
      applications;


·
            medication
      errors;·
            pharmaceutical
      dosage forms;




10





·
            pharmaceutical
      calculations;·
            drug
      distribution systems; and


·
            customer
      care.





In this course, the student acquires a
basic understanding of medical terminology, pharmacological terms,
organizational structure and function of the pharmacy, regulatory standards in
the practice of pharmacy, drug-use control and information services,
administrative aspects of pharmacy technology and professional aspects of
pharmacy technology. The duration of this course is six months on a part-time
basis. The completion of this program provides the student with the knowledge
necessary to pass the national Pharmacy Technician Certification Board exam. A
high school diploma or general education degree is required for applicants to
become eligible for this program. Upon successful completion of the program, the
student receives a diploma.





Residential
Training Program





Training Direct offers a comprehensive
Certified Nurse's Aide Program to assist its students with developing the skills
and knowledge necessary to obtain an entry-level position as a Nurse's Aide in a
health care facility. The training program provides the student with both basic
knowledge and practical experience in the terminology, procedures, and
techniques required of a Nurse's Aide. This training program meets the
Connecticut Department of Health Services guidelines for eligibility to take the
State certification exam for Nurse's Aides.





Student
Services





Students may write or call Training
Direct’s academic advisors for course assistance. For each course there is an
advisor specialized in that study area who is available to answer questions and
discuss subject matter.





Every program at the school includes
career preparation lessons to review hiring procedures, to help students write
resumes and to improve employment interview skills. Student Services matches
students with potential employers who contact Training Direct throughout the
year to fill openings.





Our
Industry





General





The
domestic non-traditional education sector is a significant and growing component
of the postsecondary degree-granting education industry, which was estimated to
be a $386 billion industry in 2007, according to the Digest of Education
Statistics published in 2009 by the U.S. Department of Education’s National
Center for Education Statistics. According to the same study, in 2007, over
6.9 million, or 38%, of all students enrolled in higher education programs
were over the age of 24, and enrollment in degree-granting institutions between
2008 and 2017 is expected to increase 19% for students over age 25. These
students would not be classified as traditional (i.e., 18 to 24 years of
age, living on campus, supported by parents, and not working full-time). The
non-traditional students typically are looking to improve their skills and
enhance their earnings potential within the context of their careers. We believe
that the demand for non-traditional education will continue to increase,
reflecting the knowledge-based economy in the U.S.





Many
working learners seek accredited degree programs that provide flexibility to
accommodate the fixed schedules and time commitments associated with their
professional and personal obligations. The education formats offered by our
institutions enable working learners to attend classes and complete coursework
on a more convenient schedule than traditional universities offer. Although more
colleges and universities are beginning to address some of the needs of working
learners, many universities and institutions do not effectively address the
needs of working learners for the following reasons:




·
            Traditional
      universities and colleges were designed to fulfill the educational needs
      of conventional, full-time students ages 18 to 24, and that industry
      sector remains the primary focus of these universities and institutions.
      This focus has resulted in a capital-intensive teaching/learning model
      that may be characterized by: (i) a high percentage of full-time, tenured
      faculty; (ii) physical classrooms, library facilities and related
      full-time staff; (iii) dormitories, student unions, and other significant
      physical assets to support the needs of younger students; and (iv) an
      emphasis on research and related laboratories, staff, and other
      facilities.·
            The
      majority of accredited colleges and universities continue to provide the
      bulk of their educational programming on an agrarian calendar with time
      off for traditional breaks. The traditional academic year runs from
      September to mid-December and from mid-January to May. As a result, most
      full-time faculty members only teach during that limited period of time.
      While this structure may serve the needs of the full-time, resident, 18 to
      24-year-old student, it limits the educational opportunities for working
      learners who must delay their education for up to four months during these
      traditional breaks.


·
            Traditional
      universities and colleges may also be limited in their ability to provide
      the necessary customer service for working learners because they lack the
      necessary administrative and enrollment
  infrastructure.




11





·
            Diminishing
      financial support for public colleges and universities has required them
      to focus more tightly on their existing student populations and missions,
      which has reduced access to
education.





Valley





According to the American Association
of Nurse Anesthetists (“AANA”), in the United States there were 118 accredited
nurse anesthesia programs in 2010. This number grew from 108 programs in 2006,
2007, 2008 and 2009, and from 95 programs in 2005.Most SRNAs are
registered with the AANA.  As set forth in the table below, the number
of SRNAs registered with the AANA has increased substantially over the past ten
years. Valley has developed strategic relationships with accredited nurse
anesthesia programs and with the AANA. Many of the programs have requested that
Valley provide courses specifically for their programs, however, Valley
currently provides courses for only one school located in
Tennessee.





SRNAs Registered with AANAYear
                        
                        Registered SRNAs1999
                        
                        
                        2,3722005
                        
                        
                        4,3002006
                        
                        
                        4,8002007
                        
                        
                        5,0422008
                        
                        
                        5,3172009
                        
                        
                        5,610





Source:
AANA





As indicated above, the number of
registered SRNAs more than doubled from 1999 to 2009. This growth in SRNAs in
the United States has expanded Valley’s potential customer base to whom Valley
markets its services.  The following table sets forth a comparison of
registered SRNAs with the number of students enrolled in Valley’s courses each
year:




Valley’s Market ShareYear
                        
                        Registered SRNAs
                        
                        
                        Students Enrolled in
                          Valley’s Courses
                        
                        
                        % Registered SRNAs
                          Enrolled1999
                        
                        
                        2,372
                        
                        
                        
                        986
                        
                        
                        
                        41.6
                        %2005
                        
                        
                        4,300
                        
                        
                        
                        1,522
                        
                        
                        
                        35.4
                        %2006
                        
                        
                        4,800
                        
                        
                        
                        1,901
                        
                        
                        
                        39.6
                        %2007
                        
                        
                        5,042
                        
                        
                        
                        1,976
                        
                        
                        
                        39.1
                        %2008
                        
                        
                        5,317
                        
                        
                        
                        2,085
                        
                        
                        
                        39.2
                        %2009
                        
                        
                        5,610
                        
                        
                        
                        2,147
                        
                        
                        
                        38.3
                        %





Source:
AANA





Training
Direct





Training Direct is one of the largest
schools operating in the state of Connecticut within the Higher Educational
Community that offers short term training programs, which lead to numerous
employment opportunities within the Health Care Profession.  Our Certified
Nurse’s Aide training program as well as Medical Billing and Coding Specialist
course are both under four weeks in length and have been very popular among our
student population.





Training Direct is also one of the only
private schools offering distance learning education programs in the State of
Connecticut.  Our distance education programs offer our students the
ability to take courses from home without having to attend a classroom setting
due to such things as family or transportation constraints.  Training
Direct enrollments in our programs have increased 25% from 2008 to
2009.




12


Our
Strategy and Key Corporate Objectives





Our goal is to strengthen and
capitalize on our position as a provider of high quality, accessible education
for individuals throughout the United States. Our principal focus is to provide
high quality educational products and services to our students in order for them
to maximize the benefit of their educational experience.





Generally, we intend to use our
expertise to enhance the quality, delivery and student outcomes associated with
the respective curricula across our entire group of subsidiaries. We believe we
can leverage our organizational capabilities to offer innovative products,
optimize our cost structure and create new growth opportunities. Finally, we
intend to continue to invest in our people, systems and organization,
as they are the foundation for our future success. In our opinion, these
efforts are the basis for enabling us to meet and exceed our customer’s
expectations and further differentiate us from our competition.





Specifically, EII’s key business
development objectives over the next three to five years are to seek and
consummate potential acquisitions with companies engaged in the business of
providing vocational training and test preparation products and services. In
addition, management intends to launch and further develop on-line test
assessment programs and web-based course offerings.





Management has identified a number of
such potential acquisitions within the broad context of vocational training and
test preparation, although we have not signed any definitive agreement with
respect to any additional acquisitions. Management believes that in addition to
the usual advantages of “rolling up” similar companies, such as reduced
administrative overhead, vocational schools in particular lend themselves to
significant enhancement through synergy among the schools. For example, Training
Direct’s licensure in the State of Connecticut can be used to sanction related
course offerings currently in place in an acquisition target. Thus by
acquisition, Training Direct may be able to significantly expand its course
offerings and subject areas, without commensurate increases in overhead.
Similarly, Valley, which management believes has a valuable brand name among
anesthetists, can acquire a program that actually trains (rather than
test-prepares) anesthetists, making profitable use of its reputation that has
been established over the course of a decade.





Moreover, management believes that the
vocational training space is highly fragmented and offers many opportunities for
the acquisition and enhancement of small-niche schools, and we plan to
aggressively pursue an acquisition strategy over the course of the next three to
five years.





Generally, we believe that because of
the small, development-stage nature of many potential acquisition targets that
opportunities for synergy, such as those described above for Valley and Training
Direct, will provide significant opportunities for revenue-expansion and
increased profitability, without significant operational cost
increases.





Valley and Training Direct, as well as
many potential acquisition targets, have limited or nascent on-line utilities.
As with the new Valley test assessment center, we believe that both Valley and
Training Direct can expand revenue by offering distance learning and distance
practice products related to their existing in-classroom programs. Training
Direct believes that its existing distance learning program described above,
which involves mailing student work papers back and forth, can be substantially
enhanced by use of the Internet, both in terms of enlarging the number of
students who can take such courses and by significantly reducing
costs.





Valley intends to eventually develop an
online course, so that students who cannot travel to a specific classroom
seminar can still enroll for a Valley course. Such an online program would also
be a useful addition for refresher training for students who have actually
attended a seminar. Development of this program has just begun and it is not
expected to be available for at least two years.





Our
Research and Development





Valley and Training Direct have been
developing on-line educational programs, including Valley’s on-line testing
examination center. In addition, Valley’s and Training Direct’s programs are
continually updated to ensure that students are always current with the most
updated practices and procedures.Any major revisions to
Training Direct’s curriculum are always reviewed by the Connecticut Department
of Higher Education for final approval.  All programs lead to certification
from the National Health Career Association or Connecticut State Licensure. To
date, the costs of such research and development activities have been immaterial
and are not borne by our customers.





Our
Customers and Marketing





Valley





Customers


13





Valley’s customer base consists almost
exclusively of SRNAs preparing to take the NCE. It takes considerable commitment
by individuals to become a Certified Registered Nurse Anesthetist (“CRNA”). The
education and experience requirements to become a CRNA include the
following:





·
            a
      Bachelor’s of Science in Nursing or other appropriate baccalaureate
      degree;·
            a
      current license as a registered
nurse;


·
            at
      least one year’s experience in an acute care nursing
    setting;·
            graduation
      from an accredited graduate school of nurse
  anesthesia;


·
            clinical
      training in university-based or large community hospitals;
    and·
            passing
      a national certification examination following
  graduation.





Because there are extensive steps and
financial resources required for eligibility to sit for the NCE, SRNAs are
highly incented to pass the exam and are typically willing to enroll in courses
to obtain any advantage for passing the NCE.  According to the AANA,
in 2005 the reported average annual salary for a CRNA was $160,000. The high
salaries paid to CRNAs provide further incentive to SRNAs to pass the
certification exam on the first or second attempt. Moreover, due to what
management believes is a high demand for CRNAs in the industry, students that
pass the certifying exam are employed almost immediately.





As a result of the strong demand for
CRNAs and the benefits associated with passing the exam, annual enrollment in
Valley’s courses has increased since 1998:





Student Enrollments in Valley’s CoursesYear
                          
                          No. of Students Enrolled
                          
                          
                          Growth Rate1998
                          
                          
                          935
                          
                          
                          
                          N/A1999
                          
                          
                          986
                          
                          
                          
                          5.5
                          %2000
                          
                          
                          1,113
                          
                          
                          
                          12.9
                          %2001
                          
                          
                          1,211
                          
                          
                          
                          8.8
                          %2002
                          
                          
                          1,354
                          
                          
                          
                          11.8
                          %2003
                          
                          
                          1,488
                          
                          
                          
                          9.9
                          %2004
                          
                          
                          1,510
                          
                          
                          
                          1.5
                          %2005
                          
                          
                          1,522
                          
                          
                          
                          0.8
                          %2006
                          
                          
                          1,901
                          
                          
                          
                          24.9
                          %2007
                          
                          
                          1,976
                          
                          
                          
                          4.0
                          %2008
                          
                          
                          2,085
                          
                          
                          
                          5.5
                          %2009
                          
                          
                          2,147
                          
                          
                          
                          3.0
                          %





Marketing





Once a year, Valley undertakes a
mailing of approximately 5,000 brochures to students and program directors for
schools that teach SRNAs. Such brochures include information regarding Valley’s
review and update course, course schedules, course pricing, and other related
data. In addition, Valley relies on word of mouth amongst SRNAs, program
directors and schools with respect to its review and update
courses.





Training
Direct





Customers





Training Direct enrolls a wide variety
of students in its programs; from working executives in our distance education
courses, to the unemployed who have been referred to us by a variety of state
agencies for our residential programs. Training Direct targets people
looking to enhance their current careers or seeking to enter the Health Care
Industry.





Marketing





Training Direct does a variety of
community outreach as well as print media, which covers over half of the State
of Connecticut. Because of its reputation in the community, Training Direct’s
referral business has been consistently strong. Training Direct expects
advertising and promotional costs to remain consistent with our growth and
revenue.




14


Our
Competition and Competitive Advantages




Valley





Valley recognizes few if any direct
competitors. There are a limited number of companies publishing manuals designed
to help students prepare for the NCE, including, without limitation, Concepts
Anesthesia Review, and Board Stiff Live. However, these competitors are not
providing an exam review course. Management believes that this enables Valley to
take advantage of potential growth opportunities within its market with limited
price or other competition.  Within the past 30 to 60 days,
Dannemiller, a company engaged in the continuing medical education business,
announced that it will be offering a review course for the NCE.





Training
Direct





Training Direct has very limited
competition in Connecticut. Both the Nurse’s Aide Training and Medical
Billing and Coding courses are very much in demand because Training Direct is
located in an area which has a very high concentration of hospitals and medical
facilities.





Our
Regulatory Environment





Our operations are subject to
significant regulations. New or revised interpretations of regulatory
requirements could have a material adverse effect on us. In addition, changes in
existing or new interpretations of applicable laws, rules, or regulations could
have a material adverse effect on our accreditation, authorization to operate in
various states, permissible activities, and operating costs. The failure to
maintain or renew any required regulatory approvals, accreditation, or state
authorizations could have a material adverse effect on us.





Training Direct’s operations are
regulated by the Department of Higher Education of the State of Connecticut (the
“DHE”) from which Training Direct received its initial approval and license in
2004. The DHE seeks to promote a postsecondary system of distinctive strengths
which, through overall coordination and focused investment, assures state
citizens access to high quality educational opportunities, responsiveness to
individual and State needs, and efficiency and effectiveness in the use of
resources. The Board of Governors for Higher Education is the statewide
coordinating and planning authority for Connecticut's public and independent
colleges and universities.  The Board makes higher education policy,
reviews public college and university missions and budgets, recommends
system-wide budgets to the Governor and State General Assembly, licenses and
accredits academic programs and institutions (both public and independent),
evaluates institutional effectiveness and coordinates programs and services
between the public and independent sectors. Under the Board’s supervision,
the DHE carries out Board policy, administers statewide student financial
aid programs, oversees private occupational schools and conducts research and
analysis on issues important to legislators and the public.





The DHE maintains and ensures that the
approved occupational schools offer programs and courses that have proper
organization and structure that meet their stated objectives.  Also, the
DHE maintains and ensures that approved occupational schools under their
licensure follow all state statutes and regulations.




Our
Intellectual Property




We own and use the trademark
MemoryMasterTM, which
is registered with the United States Patent and Trademark Office in the name of
Valley. In addition, all of Valley’s other course materials are the subject of
copyright registrations with the United States Patent and Trademark Office in
the name of Valley. Copyright registrations expire over various periods of time.
We vigorously defend against infringements of our trademarks, service marks, and
copyrights.




Seasonality




Our cash receipts fluctuate primarily
as a result of the pattern of student enrollments.  Generally, the
schools’ highest enrollment and cash receipts typically occur in the fall, which
corresponds to the third and fourth quarters our fiscal year. Enrollment is
slightly lower in the spring, and the lowest enrollment generally occurs during
the summer months.  Our operating costs are relatively fixed and do
not fluctuate as significantly on a quarterly basis.  Our variable
expenses fluctuate in accordance with course offerings and include course
materials, salaries and (for Valley) facility costs.





Employees





After the reverse merger and the
acquisition of Training Direct, we have 3 executive officers. Valley has a total
of 4 full-time employees. Training Direct has a total of 6 full-time
employees and 10 part-time employees. Over the next 12 months, we do not
expect to add significant personnel. None of our employees are covered by
collective bargaining agreements. We believe that our relations with our
employees are good.


15




Item 1A. Risk Factors.





You should carefully consider the
risks described below in conjunction with our forwardlooking statement related risks as
set forth in the beginning of this report, as well as the other information in
this report, when evaluating our business and future prospects. Should any of the
following risks actually occur, our business, financial condition and results of
operations could be seriously harmed. In that event, the market price of our
common stock could decline and investors could lose all or a portion of the value of
their investment in our common stock.





Risks
Related to Our Business and Industry in Which We Operate





We
are subject to risks relating to enrollment of students.  If we are
not able to continue to successfully recruit and retain our students, we will
not be able to sustain our revenue growth rate.





Building
awareness of our schools and the programs we offer is critical to our ability to
attract prospective students. If our schools are unable to successfully market
and advertise their educational programs, our schools’ ability to attract and
enroll prospective students in such programs could be adversely affected, and,
consequently, our ability to increase revenue or maintain profitability could be
impaired. It is also critical to our success that we convert these prospective
students to enrolled students in a cost-effective manner and that these enrolled
students remain active in our programs. Some of the factors that could prevent
us from successfully enrolling and retaining students in our programs
include:





·
            the
      emergence of more attractive competitors;·
            factors
      related to our marketing, including the cost and effectiveness of Internet
      advertising and broad-based branding
campaigns;


·
            inability
      to expand program content and develop new programs in a timely and
      cost-effective manner;·
            performance
      problems with, or capacity constraints of, our online education delivery
      systems;


·
            failure
      to maintain accreditation;·
            inability
      to continue to recruit, train and retain quality
  faculty;


·
            student
      or employer dissatisfaction with the quality of our services and
      programs;·
            student
      financial, personal or family
constraints;


·
            adverse
      publicity regarding us, our competitors or online or for-profit education
      generally;·
            tuition
      rate reductions by competitors that we are unwilling or unable to
      match;


·
            a
      decline in the acceptance of online education;·
            increased
      regulation of online education, including in states in which we do not
      have a physical presence;


·
            a
      decrease in the perceived or actual economic benefits that students derive
      from our programs or education in general; and·
            litigation
      or regulatory investigations that may damage our
    reputation.




In
addition, our educational programs are concentrated in selected areas of
healthcare, law and business. If applicant career interests shift away from
these fields, and we do not anticipate or adequately respond to that trend,
future enrollment and revenue may decline.  If employment
opportunities for our graduates in fields related to their educational programs
decline, future enrollment and revenue may decline as potential applicants
choose to enroll at other educational institutions offering different courses of
study.





We
are subject to risks relating to tuition pricing, which could have a material
adverse affect on our financial results.





If other educational institutions
reduce their price of tuition, our educational programs could become less
attractive to prospective students. In addition, we may be unable, for
competitive reasons, to maintain and increase tuition rates in the future,
thereby adversely affecting future revenues and earnings.





Our
financial performance depends, in part, on our ability to keep pace with
changing market needs and technology; if we fail to keep pace or fail in
implementing or adapting to new technologies, our business may be adversely
affected.




Increasingly,
prospective employers of students who graduate from our schools demand that
their new employees possess appropriate technological skills and also
appropriate “soft” skills, such as communication, critical thinking and teamwork
skills. These skills can evolve rapidly in a changing economic and technological
environment. Accordingly, it is important for our schools’ educational programs
to evolve in response to these economic and technological changes. The expansion
of existing programs and the development of new programs may not be accepted by
current or prospective students or the employers of our graduates. Even if our
schools are able to develop acceptable new programs, our schools may not be able
to begin offering those new programs as quickly as required by prospective
employers or as quickly as our competitors offer similar programs. In addition,
we may be unable to obtain specialized accreditations or licensures that may
make certain programs desirable to students. To offer a new academic program, we
may be required to obtain federal, state and accrediting agency approvals, which
may be conditioned or delayed in a manner that could significantly affect our
growth plans. If we are unable to adequately respond to changes in market
requirements due to regulatory or financial constraints, unusually rapid
technological changes, or other factors, our ability to attract and retain
students could be impaired, the rates at which our graduates obtain jobs
involving their fields of study could suffer, and our business, financial
condition, results of operations and cash flows could be adversely
affected.


16




Establishing
new academic programs or modifying existing programs requires us to make
investments in management and capital expenditures, incur marketing expenses and
reallocate other resources. We may have limited experience with the courses in
new areas and may need to modify our systems and strategy or enter into
arrangements with other educational institutions to provide new programs
effectively and profitably. If we are unable to increase the number of students
or offer new programs in a cost-effective manner, or are otherwise unable to
manage effectively the operations of newly established academic programs, our
business, financial condition, results of operations and cash flows could be
adversely affected.




We have
invested and continue to invest significant resources in information technology,
which is a key element of our business strategy. Our information technology
systems and tools could become impaired or obsolete due to our action or failure
to act. For instance, we could install new information technology without
accurately assessing its costs or benefits, or we could experience delayed or
ineffective implementation of new information technology. Similarly, we could
fail to respond in a timely or sufficiently competitive way to future
technological developments in our industry. Should our action or failure to act
impair or otherwise render our information technology less effective, this could
have a material adverse effect on our business, financial condition, results of
operations and cash flows.





We
are subject to risks relating to our information technology, system applications
and security systems, which could have a material adverse affect on our
financial results.





The performance and reliability of our
computer networks and system applications, especially our online educational
platforms and student operational and financial packaging applications, are
critical to our reputation and ability to attract and retain
students.  System errors and/or failures could adversely impact our
delivery of educational content to our online students.  In addition,
system errors could result in delays and/or errors in processing student
financial payment and related disbursements. Major risks involved in such
network infrastructure include any break-downs or system failures resulting in a
sustained shutdown of all or a material portion of our servers, including
failures which may be attributable to sustained power shutdowns, or efforts to
gain unauthorized access to our systems causing loss or corruption of data or
malfunctions of software or hardware.  Security breaches of our
information systems can also create unauthorized disclosure of confidential
information, such as the personal information of our students or credit card
information.  If we are unable to prevent such security breaches, our
operations could be disrupted, our students could suffer financial loss or
become the victims of identity theft, or we may suffer reputational damage
and/or financial loss because of lost or misappropriated
information.





Our network systems are also vulnerable
to damage from fire, flood, power loss, telecommunications failures, computer
viruses, hacking and similar events. Any network interruption, virus or other
inadequacy that causes interruptions in the availability of the online
educational programs or deterioration in the quality of access to the online
educational platforms could reduce our student’s satisfaction and ultimately
harm our business, financial condition and results of operations. In addition,
any security breach caused by hackings, which involve efforts to gain
unauthorized access to information or systems, or to cause intentional
malfunctions or loss or corruption of data, software, hardware or other computer
equipment, and the inadvertent transmission of computer viruses could have a
material adverse effect on our business, financial condition and results of
operations. We do not maintain insurance policies covering losses relating to
our network systems and we do not have business interruption
insurance.





Future
acquisitions may have an adverse effect on our ability to manage our
business.





Selective acquisitions form part of our
strategy to expand our business. We have limited prior experience integrating
any new companies into ours, and we believe that integration of a new company’s
operation and personnel will require significant management attention. The
diversion of our management’s attention from our business and any difficulties
encountered in the integration process could have an adverse effect on our
ability to manage our business.





We may pursue acquisitions of
companies, technologies and personnel that are complementary to our existing
business. However, our ability to grow through future acquisitions or
investments or hiring will depend on the availability of suitable acquisition
and investment candidates at an acceptable cost, our ability to compete
effectively to attract these candidates, and the availability of financing to
complete larger acquisitions. We may face significant competition in executing
our growth strategy. Future acquisitions or investments could result in
potential dilutive issuances of equity securities or incurrence of debt,
contingent liabilities or impairment of goodwill and other intangible assets,
any of which could adversely affect our financial condition and results of
operations. The benefits of an acquisition or investment may also take
considerable time to develop and any particular acquisition or investment may
not produce the intended benefits.


17





Future acquisitions would also expose
us to potential risks, including risks associated with the assimilation of new
operations, technologies and personnel, unforeseen or hidden liabilities, the
diversion of resources from our existing businesses, educational programs and
technologies, the inability to generate sufficient revenue to offset the costs
and expenses of acquisitions, and potential loss of, or harm to, our
relationships with employees and students as a result of the integration of new
businesses.





If
regulators do not approve our domestic acquisitions, the acquired schools’ state
licenses, accreditation, and ability to participate in Title IV programs
(if applicable) may be impaired.




When we
acquire an institution, we must seek approval from the U.S. Department of
Education if the acquired institution participates in Title IV programs,
and from most applicable state agencies and accrediting agencies because an
acquisition is considered a change of ownership or control of the acquired
institution under applicable regulatory standards. A change of ownership or
control of an institution under the U.S. Department of Education standards
can result in the temporary suspension of the institution’s participation in the
Title IV programs unless a timely and materially complete application for
recertification is filed with the U.S. Department of Education and it
issues a temporary provisional certification. If we are unable to obtain
approvals from the state agencies, accrediting agencies or U.S. Department
of Education for any institution we may acquire in the future, depending on the
size of that acquisition, such a failure to obtain approval could have a
material adverse effect on our business.




If
regulators do not approve or delay their approval of transactions involving a
change of control of our company, our state licenses and accreditation may be
impaired.




A change
of ownership or control of EII, depending on the type of change, may have
significant regulatory consequences for Training Direct. State licensing
agencies, including the Connecticut Department of Higher Education (“DHE”), have
adopted the change of ownership and control standards. Such a change of
ownership or control could require recertification and reauthorization by state
licensing agencies, including the DHE. There can be no assurances that such
recertification would be obtained on a timely basis. In addition, some states
where Training Direct is presently licensed have requirements governing change
of ownership or control that require approval of the change to remain authorized
to operate in those states. If regulators do not approve or delay their approval
of transactions involving a change of control of our company, our state licenses
and accreditation may be impaired.





If
any regulatory audit, investigation or other proceeding finds us not in
compliance with the numerous laws and regulations applicable to the
postsecondary education industry, we may not be able to successfully challenge
such finding and our business could suffer.




Due to
the highly regulated nature of the postsecondary education industry, we are
subject to audits, compliance reviews, inquiries, complaints, investigations,
claims of non-compliance and lawsuits by state governmental agencies, regulatory
agencies, accrediting agencies, present and former students and employees,
shareholders and other third parties, any of whom may allege violations of any
of the regulatory requirements applicable to us. If the results of any such
claims or actions are unfavorable to us, we may be required to pay monetary
fines or penalties, be required to repay funds received under state financial
aid programs, have restrictions placed on or terminate our schools’ or programs’
eligibility to participate in state or federal financial aid programs, have
limitations placed on or terminate our schools’ operations or ability to grant
degrees and certificates, have our schools’ accreditations restricted or
revoked, or be subject to civil or criminal penalties. Any one of these
sanctions could materially adversely affect our business, financial condition,
results of operations and cash flows and result in the imposition of significant
restrictions on us and our ability to operate.




If
we fail to maintain any of our state authorizations, we would lose our ability
to operate in that state.




Training
Direct is authorized to operate and to grant certificates by the applicable
state agency of each state where such authorization is required and where we
maintain a campus. The loss of such authorization in one or more states could
have a material adverse effect on our business, financial condition, results of
operations and cash flows. Loss of authorization in one or more states could
increase the likelihood of additional scrutiny and potential loss of operating
and/or degree granting authority in other states in which we operate, which
would further impact our business.





Government
regulations relating to the Internet could increase our cost of doing business,
affect our ability to grow or otherwise have a material adverse effect on our
business, financial condition, results of operations and cash
flows.




The
increasing popularity and use of the Internet and other online services has led
and may lead to further adoption of new laws and regulatory practices in the
U.S. or foreign countries and to new interpretations of existing laws and
regulations. These new laws and interpretations may relate to issues such as
online privacy, copyrights, trademarks and service marks, sales taxes,
value-added taxes, withholding taxes, allocation and apportionment of income
amongst various state, local and foreign jurisdictions, fair business practices
and the requirement that online education institutions qualify to do business as
foreign corporations or be licensed in one or more jurisdictions where they have
no physical location or other presence. New laws, regulations or interpretations
related to doing business over the Internet could increase our costs and
materially and adversely affect our enrollments, which could have a material
adverse affect on our business, financial condition, results of operations and
cash flows.


18




Our
success depends on attracting and retaining qualified personnel.




We depend on a core management and key
executives.  In particular, we rely on the expertise and experience of our
senior officers and key employees in our business operations and their
personal relationships with our other significant shareholders, employees, the
regulatory authorities, and our students. If any of them become unable or
unwilling to continue in their present positions, or if they join a competitor
or form a competing company in contravention of their employment agreements, we
may not be able to identify a replacement easily, our business may be
significantly disrupted and our financial condition and results of operations
may be materially adversely affected. We currently maintain key-man life
insurance in the amount of $2.5 million for Anil Narang, our President and Chief
Operating Officer.  We do not currently maintain key-man life
insurance for any of our other key personnel.




We
may not be able to adequately protect our intellectual property, and we may be
exposed to infringement claims by third parties.





We believe the copyrights, service
marks, trademarks, trade secrets and other intellectual property we use are
important to our business, and any unauthorized use of such intellectual
property by third parties may adversely affect our business and reputation. We
rely on the intellectual property laws and contractual arrangements with our
employees, clients, business partners and others to protect such intellectual
property rights. Third parties may be able to obtain and use such intellectual
property without authorization. Moreover, litigation may be necessary in the
future to enforce our intellectual property rights, which could result in
substantial costs and diversion of our resources, and have a material adverse
effect on our business, financial condition and results of
operations.





We
may be subject to infringement and misappropriation claims in the future, which
may cause us to incur significant expenses, pay substantial damages and be
prevented from providing our services.





Our success depends, in part, on our
ability to carry out our business without infringing the intellectual property
rights of third parties. We may be subject to litigation involving claims of
patent, copyright or trademark infringement, or other violations of intellectual
property rights of third parties. Future litigation may cause us to incur
significant expenses, and third-party claims, if successfully asserted against
us, may cause us to pay substantial damages, seek licenses from third parties,
pay ongoing royalties, redesign our services or technologies, or prevent us from
providing services or technologies subject to these claims. Even if we were to
prevail, any litigation would likely be costly and time-consuming and divert the
attention of our management and key personnel from our business
operations.





Risks
Related to Our Financial Condition and Results of Operations





Our
limited operating history and the unproven long-term potential of our business
model make evaluating our business and prospects difficult.





We were incorporated on February 9,
2005 in the State of Delaware, EII was incorporated on July 20, 2009 in the
State of Delaware, Training Direct was formed on January 7, 2004 in the
State of Connecticut and Valley Anesthesia Educational Programs, Inc., from
which we purchased certain assets and assumed certain liabilities in August
2009, was incorporated on March 10, 1993 in the State of Iowa. As our operating
history is limited, the revenue and income potential of our business and markets
are yet to be fully proven. In addition, we are exposed to risks, uncertainties,
expenses and difficulties frequently encountered by companies at an early stage
of development. Some of these risks and uncertainties relate to our ability
to:





·
            increase
      our student enrollment by expanding the type, scope and technical
      sophistication of the educational services we offer;·
            respond
      effectively to competitive pressures;·
            respond
      in a timely manner to technological changes or resolve unexpected network
      interruptions;·
            comply
      with changes to regulatory requirements;·
            maintain
      adequate control of our costs and expenses;·
            increase
      awareness of our educational programs; and·
            attract
      and retain qualified management and
employees.





We cannot predict whether we will meet
internal or external expectations of our future performance. If we are not
successful in addressing these risks and uncertainties, our business, financial
condition and results of operations may be materially adversely
affected.




19


We
may need additional capital and may not be able to obtain such capital on
acceptable terms.




Capital requirements are difficult to
plan in our industry. We currently expect that we will need capital to fund our
future acquisitions, educational program development, technological
infrastructure and sales and marketing activities.





Our ability to obtain additional
capital on acceptable terms is subject to a variety of uncertainties,
including:





·
            investors’
      perceptions of, and demand for, securities of vocational, training and
      technical schools;·
            conditions
      of the United States and other capital markets in which we may seek
      to raise funds;·
            our
      future results of operations, financial condition and cash
      flows;·
            governmental
      regulation of educational program providers; and·
            economic,
      political and other conditions in United
States.





Any failure by us to raise additional
funds on terms favorable to us, or at all, may have a material adverse effect on
our business, financial condition and results of operations. For example, we may
not be able to carry out parts of our growth strategy to acquire vocational,
training and/or technical schools that are complementary to our existing
business or necessary to maintain our growth and competitiveness.





Our
business may be adversely affected by a further economic slowdown in the U.S. or
abroad or by an economic recovery in the U.S.




The U.S
and much of the world economy are in the midst of an economic downturn. We
believe the current economic downturn has contributed to a portion of our recent
enrollment growth as an increased number of working learners seek to advance
their education to improve job security or reemployment prospects. This effect
cannot be quantified. However, to the extent that the economic downturn has
increased demand for our programs, a subsequent economic recovery may eliminate
this effect and reduce such demand as fewer potential students seek to advance
their education. This reduction could have a material adverse effect on our
business, financial condition, results of operations and cash flows. A worsening
of the economic downturn may reduce the demand for our programs among students
and the willingness of employers to sponsor educational opportunities for their
employees, either of which could materially and adversely affect our business,
financial condition, results of operations and cash flows.




We
may not be able to sustain our recent growth rate or profitability, and we may
not be able to manage future growth effectively.




Our
ability to sustain our current rate of growth or profitability depends on a
number of factors, including our ability to obtain and maintain regulatory
approvals, our ability to attract and retain students, our ability to maintain
operating margins, our ability to recruit and retain high quality academic and
administrative personnel and competitive factors. In addition, growth may place
a significant strain on our resources and increase demands on our management
information and reporting systems, financial management controls, and personnel.
Although we have made a substantial investment in augmenting our financial and
management information systems and other resources to support future growth, we
cannot assure you that we will have adequate capacity to accommodate substantial
growth or that we will be able to manage further growth effectively. Failure to
do so could adversely affect our business, financial condition, results of
operations and cash flows.





Risks
Relating to Our Securities





Insiders
have substantial control over us, and they could delay or prevent a change in
our corporate control even if our other stockholders wanted it to
occur.




Our
executive officers and directors hold approximately 320% (see Item 12 herein) of
our outstanding common stock, which includes (i) shares owned by our officers
and/or directors, (ii) shares attributable to certain entities in which our
officers and directors share beneficial ownership, (iii) shares underlying our
Series A Preferred Stock that will be converted into shares of Florham Common
Stock upon the filing of our amended and restated certificate of incorporation
for purposes of increasing our authorized shares to 50,000,000, and (iv) shares
issuable upon exercise of stock options which have vested as of the date of this
report.  Accordingly, these stockholders are able to control all
matters requiring stockholder approval, including the election of directors and
approval of significant corporate transactions.  This could delay or
prevent an outside party from acquiring or merging with us even if our other
stockholders wanted it to occur.





There
may not be sufficient liquidity in the market for our securities in order for
investors to sell their securities.





Our common stock is quoted on the OTC
Bulletin Board under the current symbol "FHMS". There is a limited trading
market for our common stock. Accordingly, there can be no assurance as to the
liquidity of any markets that may develop for our common stock, the ability of
holders of our common stock to sell our common stock, or the prices at which
holders may be able to sell our common stock.


20





The market price of our common stock
may be volatile.





The
market price of our common stock has been and will likely continue to be highly
volatile, as is the stock market in general, and the market for OTC Bulletin
Board quoted stocks in particular. Some of the factors that may materially
affect the market price of our common stock are beyond our control, such as
changes in financial estimates by industry and securities analysts, conditions
or trends in the industry in which we operate or sales of our common
stock.  These factors may materially adversely affect the market price
of our common stock, regardless of our performance.  In addition, the
public stock markets have experienced extreme price and trading volume
volatility.  This volatility has significantly affected the market
prices of securities of many companies for reasons frequently unrelated to the
operating performance of the specific companies.  These broad market
fluctuations may adversely affect the market price of our common
stock.





The
outstanding convertible securities may adversely affect us in the future and
cause dilution to existing shareholders.





As of March 30, 2010, we had 6,705,622
shares of Common Stock outstanding, of which 179,741 are held in escrow and are
subject to earnout provisions, and 250,000 shares of Series A Preferred Stock
outstanding, each of which shares of Series A Preferred Stock shall be
converted, on the basis of 49.11333 shares of Florham Common Stock for each
share of Series A Preferred Stock (an aggregate of 12,278,333 shares of Florham
Common Stock) automatically upon the filing by the Company of an amendment to
its certificate of incorporation increasing its authorized shares of Florham
Common Stock to not less than 50,000,000 shares. In addition, there are
outstanding 5-year options to purchase an aggregate of 3,436,328 shares of
Common Stock and outstanding warrants to purchase 930,000 shares of Common Stock
expiring on June 30, 2016 at an exercise price of $0.05 per share. The
conversion of the Series A Preferred Stock and the exercise of options and
warrants will cause dilution in the interests of other shareholders as a result
of the additional common stock that would be issued upon conversion and/or
exercise. Moreover, subject to any applicable lock-up restrictions, sales of the
shares of our outstanding common stock, shares issuable upon conversion of the
Series A Preferred Stock, and shares issuable upon exercise of the options and
warrants could have a depressive effect on the price of our stock, particularly
if there is not a coinciding increase in demand by purchasers of our common
stock.  Further, the terms on which we may obtain additional financing
during the period any of such securities remain outstanding may be adversely
affected by the existence of these securities as well.





Our
common stock may be considered a “penny stock” and may be difficult to
sell.





The
SEC has adopted regulations which generally define a “penny stock” to be an
equity security that has a market price of less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to specific exemptions. The
market price of our common stock is less than $5.00 per share and, therefore, it
may be designated as a “penny stock” according to SEC
rules.  This designation requires any broker or dealer selling these
securities to disclose certain information concerning the transaction, obtain a
written agreement from the purchaser and determine that the purchaser is
reasonably suitable to purchase the securities.  These rules may
restrict the ability of brokers or dealers to sell our common stock and may
affect the ability of investors to sell their shares.





The
market for penny stocks has experienced numerous frauds and abuses which could
adversely impact investors in our stock.





OTCBB
securities are frequent targets of fraud or market manipulation, both because of
their generally low prices and because OTCBB reporting requirements are less
stringent than those of the stock exchanges.





Patterns
of fraud and abuse include:





(a)
            Control
      of the market for the security by one or a few broker-dealers that are
      often related to the promoter or issuer;(b)
            Manipulation
      of prices through prearranged matching of purchases and sales and false
      and misleading press releases;(c)
            “Boiler
      room" practices involving high pressure sales tactics and unrealistic
      price projections by inexperienced sales persons;(d)
            Excessive
      and undisclosed bid-ask differentials and markups by selling
      broker-dealers; and(e)
            Wholesale
      dumping of the same securities by promoters and broker-dealers after
      prices have been manipulated to a desired level, along with the inevitable
      collapse of those prices with consequent investor
  losses.




Our management is aware of the abuses
that have occurred historically in the penny stock market.





We
have not paid dividends in the past and do not expect to pay dividends in the
future, and any return on investment may be limited to the value of our
stock.





We have
never paid any cash dividends on our common stock and do not anticipate paying
any cash dividends on our common stock in the foreseeable future and any return
on investment may be limited to the value of our stock.  We plan to
retain any future earnings to finance growth.


21




Item
1B. Unresolved Staff Comments.





Not applicable.





Item
2. Properties.





EII’s and Valley’s principal executive
offices are located at 845 Third Avenue, 6th Floor,
New York, New York 10022. Valley rents office space from one of its officers
under a lease expiring August 20, 2010 and pays $725 per month. EII also
reimburses another officer $2,992 per month for rent of office space on a
month-to-month basis. Valley’s principal operating office is located at 1995
Country Club Blvd, Clive, Iowa 50325. Training Direct’s principal executive
offices are located at 3885 Main Street, 2nd Floor,
Bridgeport, Connecticut 06606, which also houses the company’s classrooms, and
offices for administration, admissions, and student services, in approximately
6,000 square feet. Such premises are leased with a rental payment of $5,850 per
month, plus annual increases of 3% or the CPI annual increase, if greater, and
expires in October 2019.





We believe that our facilities are
adequate to meet our current needs. Our offices are in good condition and are
sufficient to conduct our operations. We do not intend to renovate, improve, or
develop properties. We are not subject to competitive conditions for property
and currently have no property to insure. We have no policy with respect to
investments in real estate or interests in real estate and no policy with
respect to investments in real estate mortgages. Further, we have no policy with
respect to investments in securities of or interests in persons primarily
engaged in real estate activities.





Item 3. Legal
Proceedings.





Neither we nor any of our direct or
indirect subsidiaries is a party to, nor is any of our property the subject of,
any legal proceedings other than ordinary routine litigation incidental to their
respective businesses.  There are no proceedings pending in which any
of our officers, directors or 5% shareholders are adverse to us or any of our
subsidiaries or in which they are taking a position or have a material interest
that is adverse to us or any of our subsidiaries.





Neither we nor any of our subsidiaries
is a party to any administrative or judicial proceeding arising under federal,
state or local environmental laws.





From time to time, we may be involved
in litigation relating to claims arising out of our operations in the normal
course of business.





Item 4. Submission of Matters to a Vote of
Security Holders.





On December 23, 2009, holders of a
majority of our issued and outstanding shares of common stock have consented in
writing to approve (i) the merger agreement and the transactions contemplated
therein, (ii) our corporate name change; (iii) the increase in our authorized
shares of common stock to 50,000,000 shares; and (iv) our 2009 Stock Incentive
Plan for key employees, directors, consultants and others providing services to
us, pursuant to which up to 1,500,000 shares of common stock shall be authorized
for issuance thereunder. Although the Company elected to obtain consents to the
merger from holders of a majority of the then outstanding Company shares, the
Company believes that under Delaware law, neither such consents nor any other
Company shareholder approvals were required as a pre-condition to the valid
consummation of the reverse merger, which was structured as a reverse triangular
merger.  Subject to approval from the SEC, Kinder Investments, L.P.
and Sanjo Squared, LLC, each affiliates of the Company, propose to enter into a
new written shareholder consent authorizing each of the name change, the share
capital increase and the 2009 Stock Incentive Plan.





PART II





Item 5. Market for Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.





The common stock was approved for
quotation on the Over–the-Counter Bulletin Board on April 28, 2008 under the
symbol “FHMS”.





The following table sets forth the
quarterly high and low bid prices for the common stock for the last two fiscal
years. The prices set forth below represent inter-dealer quotations, without
retail markup, markdown or commission and may not be reflective of actual
transactions.


22





Fiscal Quarter
                      
                      High
                      
                      
                      LowQuarter
      ended June 30, 2008*
                      
                      $
                      2.25
                      
                      
                      $
                      1.25Quarter
      ended September 30, 2008
                      
                      $
                      1.25
                      
                      
                      $
                      1.01Quarter
      ended December 31, 2008
                      
                      $
                      1.10
                      
                      
                      $
                      1.01Quarter
      ended March 31, 2009
                      
                      $
                      1.01
                      
                      
                      $
                      0.16Quarter
      ended June 30, 2009
                      
                      $
                      0.35
                      
                      
                      $
                      0.16Quarter
      ended September 30, 2009
                      
                      $
                      0.26
                      
                      
                      $
                      0.16Quarter
      ended December 31, 2009
                      
                      $
                      1.50
                      
                      
                      $
                      1.50Quarter
      ended March 31, 2010**
                      
                      $
                      3.50
                      
                      
                      $
                      1.50





*From
April 28, 2008 through the fiscal quarter ended June 30, 2008.


**
Through March 26, 2010.





The
shares quoted are subject to the provisions of Section 15(g) and Rule 15g-9 of
the Securities Exchange Act of 1934, as amended (the Exchange Act"), commonly
referred to as the "penny stock" rule. Section 15(g) sets forth certain
requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
the definition of penny stock as that used in Rule 3a51-1 of the Exchange
Act.




The
Commission generally defines penny stock to be any equity security that has a
market price less than $5.00 per share, subject to certain exceptions. Rule
3a51-1 provides that any equity security is considered to be a penny stock
unless that security is: registered and traded on a national securities exchange
meeting specified criteria set by the Commission; authorized for quotation on
The NASDAQ Stock Market; issued by a registered investment company; excluded
from the definition on the basis of price (at least $5.00 per share) or the
registrant's net tangible assets; or exempted from the definition by the
Commission. Trading in the shares is subject to additional sales practice
requirements on broker-dealers who sell penny stocks to persons other than
established customers and accredited investors, generally persons with assets in
excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together
with their spouse.




For
transactions covered by these rules, broker-dealers must make a special
suitability determination for the purchase of such securities and must have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the first transaction, of a
risk disclosure document relating to the penny stock market. A broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, and current quotations for the securities. Finally,
the monthly statements must be sent disclosing recent price information for the
penny stocks held in the account and information on the limited market in penny
stocks. Consequently, these rules may restrict the ability of broker dealers to
trade and/or maintain a market in the company’s common stock and may affect the
ability of shareholders to sell their shares.





Number
of Shareholders





As of March 30, 2010, there were
6,705,622 shares of our common stock issued and outstanding, of which 179,741
shares are held in escrow and are subject to earnout provisions, and
approximately 117 holders of record of our common stock. This number excludes
any estimate by us of the number of beneficial owners of shares held in street
name, the accuracy of which cannot be guaranteed.  The transfer agent
for our common stock is American Stock Transfer & Trust Co. LLC, 59 Maiden
Lane, New York, N.Y. 10038.





Dividends





We have
never declared or paid dividends on our common stock.  We intend to
retain earnings, if any, to support the development of our business and
therefore do not anticipate paying cash dividends for the foreseeable
future.  Payment of future dividends, if any, will be at the
discretion of our board of directors after taking into account various factors,
including current financial condition, operating results and current and
anticipated cash needs.





Equity Compensation Plan Information





The
following table presents information as of December 31, 2009 with respect to
compensation plans under which equity securities were authorized for
issuance.


23




Plan category
                    
                    Number of securities
                      to be issued upon
                      exercise of
                      outstanding options,
                      warrants and rights
                      (a)
                    
                    
                    Weighted average
                      exercise price of
                      outstanding options,
                      warrants and rights
                      (b)
                    
                    
                    Number of securities
                      remaining available for
                      future issuance under
                      equity compensation plans
                      (excluding securities
                      reflected in column
                      (a))
                      (c)Equity
      compensation plans approved by security holders2009
      Stock Incentive Plan (1)
                    
                    
                    877,360
                    
                    
                    $
                    0.50
                    
                    
                    
                    622,640Equity
      compensation plans not approved by security holders
                    
                    
                    -0-
                    
                    
                    $
                    -0-
                    
                    
                    
                    -0-Total
                    
                    
                    877,360
                    
                    
                    $
                    0.50
                    
                    
                    
                    622,640





(1)  On
December 23, 2009, our board of directors and holders of a majority of our
issued and outstanding shares of common stock have consented in writing to
approve our 2009 Stock Incentive Plan for key employees, directors, consultants
and others providing services to us, pursuant to which up to 1,500,000 shares of
common stock shall be authorized for issuance thereunder.  Subject to
approval from the SEC, Kinder Investments, L.P. and Sanjo Squared, LLC, each
affiliates of the Company, propose to enter into a new written shareholder
consent authorizing each of the name change, the share capital increase and the
2009 Stock Incentive Plan.





Other
than as set forth above, we do not have any stock option, bonus, profit sharing,
pension or similar plan.





The above table does not include the
following stock option grants which were made outside of the 2009 Stock
Incentive Plan:





On August 20, 2009, Joseph Bianco
purchased options to purchase 1,166,667 (the “Bianco EII Stock Options”) shares
of EII common stock at an exercise price equal to $0.25 per share with respect
to 583,334 options and $0.45 per share with respect to 583,333 options in
exchange for a $10,000 principal amount promissory note from Mr. Bianco, as
compensation for services performed on behalf of EII in his capacity as Chief
Executive Officer.





Under
the merger agreement, the Bianco EII Stock Options were converted into 5-year
options to purchase an aggregate of 1,279,484 shares of our common stock at an
exercise price equal to $0.228 per share with respect to 639,742 options (the
“Bianco Tier I Options”) and $0.41 per share with respect to 639,742 options
(the “Bianco Tier II Options”). The Bianco Tier I Options shall be exercisable
only if the EBTDA Per Share for the applicable Measuring Period exceeds the Base
Tier I EBTDA Per Share and the Bianco Tier II Options shall be exercisable only
if the EBTDA Per Share for the applicable Measuring Period exceeds the Base Tier
II EBTDA. The Bianco Tier I and Tier II Options shall be deemed vested as of the
date of grant.





Base Tier I EBTDA Per Share means: (1)
$0.036 for the Measuring Year ending December 31, 2010, (2) $0.055 for the
Measuring Year ending December 31, 2011, (3) $0.091 for the Measuring Year
ending December 31, 2012, (4) $0.109 for the Measuring Year ending December 31,
2013, and (5) $0.137 for the Measuring Year ending December 31, 2014. Base Tier
II EBTDA Per Share means: (1) $0.055 for the Measuring Year ending December 31,
2010, (2) $0.091 for the Measuring Year ending December 31, 2011, (3) $0.137 for
the Measuring Year ending December 31, 2012, (4) $0.164 for the Measuring Year
ending December 31, 2013, and (5) $0.191 for the Measuring Year ending December
31, 2014. EBTDA Per Share means (1) the net income after taxes (exclusive of any
non-recurring or extraordinary items paid or accrued) of the Company and its
consolidated subsidiaries (if any) in the applicable Measuring Year, plus (A) federal and state
income taxes paid or accrued in such Measuring Year, (B) amounts paid or accrued
in such Measuring Year in respect of depreciation of tangible assets, and (C)
amounts paid or accrued in such Measuring Year in respect of amortization of
intangible assets, including goodwill, all as set forth on the audited
consolidated statements of income or operations of the Company and its
consolidated subsidiaries (if any) in the applicable Measuring Year and as
determined in accordance with Generally Accepted Accounting Principles
("GAAP") by the Company’s independent accountants, divided by (2) the weighted
average of the outstanding common stock, measured on a fully diluted
basis.





On August 20, 2009, Anil Narang
purchased options to purchase 1,166,667 (the “Narang EII Stock Options”) shares
of EII common stock at an exercise price equal to $0.25 per share with respect
to 583,334 options and $0.45 per share with respect to 583,333 options in
exchange for a $10,000 principal amount promissory note from Mr. Narang, as
compensation for services performed on behalf of EII in his capacity as
President and Chief Operating Officer.





Under the merger agreement, the Narang
EII Stock Options were converted into 5-year options to purchase an aggregate of
1,279,484 shares of our common stock at an exercise price equal to $0.228 per
share with respect to 639,742 options (the “Narang Tier I Options”) and $0.41
per share with respect to 639,742 options (the “Narang Tier II Options”). The
Narang Tier I Options shall be exercisable only if the EBTDA Per Share for the
applicable Measuring Period exceeds the Base Tier I EBTDA Per Share and the
Narang Tier II Options shall be exercisable only if the EBTDA Per Share for the
applicable Measuring Period exceeds the Base Tier II EBTDA. The Narang Tier I
and Tier II Options shall be deemed vested as of the date of
grant.  Base Tier I EBTDA Per Share and EBTDA Per Share have the same
meanings set forth above.


24




Purchases
of Equity Securities by the Issuer and Affiliated Purchasers





There were no purchases or repurchases
of our equity securities by the Company or any affiliated
purchasers.





Unregistered
Sales of Equity Securities and Use of Proceeds





During the fourth quarter of 2009, we
issued (or contracting to issue) equity securities without registration under
the Securities Act of 1933, as amended, as follows:





On December 16, 2009, we executed an
agreement and plan of merger with EII Acquisition Corp. (a newly formed
acquisition subsidiary of Florham) (“Mergerco”), EII and its security holders,
Sanjo Squared, LLC, Kinder Investments, LP, Joseph Bianco and Anil Narang
(collectively, the “EII Securityholders”) pursuant to which Mergerco was merged
with and into EII, with EII as the surviving corporation of the merger, as a
result of which EII became a wholly-owned subsidiary of our company. Under the
terms of the merger agreement, the EII Securityholders received (i) an aggregate
of 6,000,000 shares of our common stock, (ii) options to acquire 2,558,968
additional shares of our common stock, 50% of which have an initial exercise
price of $0.41 per share and 50% of which have an initial exercise price of
$0.228 per share, subject to certain performance targets set forth in the merger
agreement, and (iii) 250,000 shares of our Series A Preferred Stock, with each
share of Series A Preferred Stock automatically convertible into 49.11333 shares
of common stock upon the filing by us of an amendment to our certificate of
incorporation which increases the authorized shares of our common stock to at
least 50,000,000.





In addition to the merger agreement, on
December 16, 2009, EII entered into an interest purchase agreement with the
members of Training Direct, and our company, pursuant to which EII acquired all
outstanding membership interests, on a fully diluted basis, of Training Direct
in exchange for (a) $200,000 cash, (b) shares of our common stock having a
deemed value of $600,000 (the “Acquisition Shares”), with such number of
Acquisition Shares to be determined by dividing $600,000 by the “Discounted
VWAP” (as defined below) for the 20 “Trading Days” (as defined below)
immediately following the consummation of the reverse merger, and (c) shares of
our common stock having a deemed value of $300,000 (the “Escrow Shares”), with
such number of Escrow Shares to be determined by dividing $300,000 by the
Discounted VWAP for the 20 Trading Days immediately following the consummation
of the reverse merger. The Escrow Shares will be held in escrow and released
therefrom as provided in the purchase agreement. “Discounted VWAP” is defined in
the purchase agreement as 70% of the “VWAP” of our common stock, but in no event
less than $0.40 per share. “VWAP” is defined in the purchase agreement as a
fraction, the numerator of which is the sum of the product of (i) the closing
trading price for our common stock on the applicable national securities
exchange on each Trading Day of the 20 Trading Days following the consummation
of the reverse merger, and (ii) the volume of our common stock on the applicable
national securities exchange for each such day and the denominator of which is
the total volume of our common stock on the applicable national securities
exchange during such twenty day period, each as reported by Bloomberg Reporting
Service or other recognized market price reporting service. “Trading Day” is
defined in the purchase agreement as any day on which the New York Stock
Exchange or other national securities exchange on which our common stock trades
is open for trading. The Discounted VWAP for the twenty Trading Days after the
effective date of the reverse merger was $1.67.  Accordingly, on March
3, 2010 we issued an aggregate of 359,281 Acquisition Shares and 179,641 Escrow
Shares.





On August 20, 2009, Joseph Bianco
purchased options to purchase 1,166,667 (the “Bianco EII Stock Options”) shares
of EII common stock at an exercise price equal to $0.25 per share with respect
to 583,334 options and $0.45 per share with respect to 583,333 options in
exchange for a $10,000 principal amount promissory note from Mr. Bianco, as
compensation for services performed on behalf of EII in his capacity as Chief
Executive Officer.





Under
the merger agreement, the Bianco EII Stock Options were converted into 5-year
options to purchase an aggregate of 1,279,484 shares of our common stock at an
exercise price equal to $0.228 per share with respect to 639,742 options (the
“Bianco Tier I Options”) and $0.41 per share with respect to 639,742 options
(the “Bianco Tier II Options”). The Bianco Tier I Options shall be exercisable
only if the EBTDA Per Share for the applicable Measuring Period exceeds the Base
Tier I EBTDA Per Share and the Bianco Tier II Options shall be exercisable only
if the EBTDA Per Share for the applicable Measuring Period exceeds the Base Tier
II EBTDA. The Bianco Tier I and Tier II Options shall be deemed vested as of the
date of grant.




25


Base Tier I EBTDA Per Share means: (1)
$0.036 for the Measuring Year ending December 31, 2010, (2) $0.055 for the
Measuring Year ending December 31, 2011, (3) $0.091 for the Measuring Year
ending December 31, 2012, (4) $0.109 for the Measuring Year ending December 31,
2013, and (5) $0.137 for the Measuring Year ending December 31, 2014. Base Tier
II EBTDA Per Share means: (1) $0.055 for the Measuring Year ending December 31,
2010, (2) $0.091 for the Measuring Year ending December 31, 2011, (3) $0.137 for
the Measuring Year ending December 31, 2012, (4) $0.164 for the Measuring Year
ending December 31, 2013, and (5) $0.191 for the Measuring Year ending December
31, 2014. EBTDA Per Share means (1) the net income after taxes (exclusive of any
non-recurring or extraordinary items paid or accrued) of the Company and its
consolidated subsidiaries (if any) in the applicable Measuring Year, plus (A) federal and state
income taxes paid or accrued in such Measuring Year, (B) amounts paid or accrued
in such Measuring Year in respect of depreciation of tangible assets, and (C)
amounts paid or accrued in such Measuring Year in respect of amortization of
intangible assets, including goodwill, all as set forth on the audited
consolidated statements of income or operations of the Company and its
consolidated subsidiaries (if any) in the applicable Measuring Year and as
determined in accordance with GAAP by the Company’s independent accountants,
divided by (2) the
weighted average of the outstanding common stock, measured on a fully diluted
basis.





On August 20, 2009, Anil Narang
purchased options to purchase 1,166,667 (the “Narang EII Stock Options”) shares
of EII common stock at an exercise price equal to $0.25 per share with respect
to 583,334 options and $0.45 per share with respect to 583,333 options in
exchange for a $10,000 principal amount promissory note from Mr. Narang, as
compensation for services performed on behalf of EII in his capacity as
President and Chief Operating Officer.





Under the merger agreement, the Narang
EII Stock Options were converted into 5-year options to purchase an aggregate of
1,279,484 shares of our common stock at an exercise price equal to $0.228 per
share with respect to 639,742 options (the “Narang Tier I Options”) and $0.41
per share with respect to 639,742 options (the “Narang Tier II Options”). The
Narang Tier I Options shall be exercisable only if the EBTDA Per Share for the
applicable Measuring Period exceeds the Base Tier I EBTDA Per Share and the
Narang Tier II Options shall be exercisable only if the EBTDA Per Share for the
applicable Measuring Period exceeds the Base Tier II EBTDA. The Narang Tier I
and Tier II Options shall be deemed vested as of the date of
grant.  Base Tier I EBTDA Per Share and EBTDA Per Share have the same
meanings set forth above.





On December 31, 2009, the board of
directors of EII granted Kellis Veach 5-year options to purchase 150,000 (the
“Veach EII Stock Options”) shares of EII common stock at an exercise price equal
to $0.50 per share, as compensation for services performed on behalf of EII in
his capacity as Chief Financial Officer. The Veach EII Stock Options shall be
exercisable as to 75,000 shares on December 31, 2010 and as to 75,000 shares on
December 31, 2011.





On December 31, 2009, the board of
directors of EII granted Ashok Narang 5-year options to purchase 150,000 (the
“Ashok Narang EII Stock Options”) shares of EII common stock at an exercise
price equal to $0.50 per share, as compensation for services performed on behalf
of EII in his capacity as Vice President of Training Direct. The Ashok Narang
EII Stock Options shall be exercisable as to 75,000 shares on December 31, 2010
and as to 75,000 shares on December 31, 2011.





Under the merger agreement, the Veach
and Ashok Narang Stock Options were each converted into 5-year options to
purchase an aggregate of 164,505 shares of Florham Common Stock with respect to
Mr. Veach and 164,505 shares of Florham Common Stock with respect to Mr. Narang,
each at an exercise price of $0.50. These options are exercisable as to 82,252
shares on December 31, 2010 and as to 82,253 shares on December 31,
2011.





On December 31, 2009, the board of
directors of EII granted Howard Spindel 5-year options to purchase 100,000 (the
“Spindel EII Stock Options”) shares of EII common stock at an exercise price
equal to $0.50 per share, as compensation for services performed on behalf of
EII in his capacity as a director. The Spindel EII Stock Options vest in full on
the date of grant.





On December 31, 2009, the board of
directors of EII granted Dov Perlysky 5-year options to purchase 100,000 (the
“Perlysky EII Stock Options”) shares of EII common stock at an exercise price
equal to $0.50 per share, as compensation for services performed on behalf of
EII in his capacity as a director. The Perlysky EII Stock Options vest in full
on the date of grant.





On December 31, 2009, the board of
directors of EII granted David Cohen 5-year options to purchase 100,000 (the
“Cohen EII Stock Options”) shares of EII common stock at an exercise price equal
to $0.50 per share, as compensation for services performed on behalf of EII in
his capacity as a director. The Cohen EII Stock Options vest in full on the date
of grant.





On December 31, 2009, the board of
directors of EII granted Jonathan Turkel 5-year options to purchase 100,000 (the
“Turkel EII Stock Options”) shares of EII common stock at an exercise price
equal to $0.50 per share, as compensation for services performed on behalf of
EII in his capacity as a consultant. The Turkel EII Stock Options vest in full
on the date of grant.




Under the Merger Agreement, the
Spindel, Perlysky, Cohen and Turkel EII Stock Options were each converted into
5-year options to purchase an aggregate of (i) 109,670 shares of Florham Common
Stock with respect to Mr. Spindel, (ii) 109,670 shares of Florham Common Stock
with respect to Mr. Perlysky, (iii) 109,670 shares of Florham Common Stock with
respect to Dr. Cohen, and (iv) 109,670 shares of Florham Common Stock with
respect to Mr. Turkel, each at an exercise price of $0.50. Each of these options
vest in full on the date of grant.


26




On December 31, 2009, the board of
directors of Florham granted Leonard Katz a 5-year option to purchase an
aggregate of 109,670 shares of Florham Common Stock at an exercise price of
$0.50 in his capacity as a consultant. This option vests in full on the date of
grant.





We
believe that all of the offerings and sales were deemed to be exempt under Rule
506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended.
No advertising or general solicitation was employed in offering the securities.
The offerings and sales were made to a limited number of persons, all of whom
were accredited investors, business associates of the Company or executive
officers of the Company, and transfer was restricted by the Company in
accordance with the requirements of the Securities Act of 1933. In addition to
representations by the above-referenced persons, we have made independent
determinations that all of the above-referenced persons were accredited or
sophisticated investors, and that they were capable of analyzing the merits and
risks of their investment, and that they understood the speculative nature of
their investment. Furthermore, all of the above-referenced persons were provided
with access to our Securities and Exchange Commission filings.





Item 6. Selected Financial
Data.





Not applicable.





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





WE URGE YOU TO READ THE FOLLOWING
DISCUSSION IN CONJUNCTION WITH OUR CONSOLIDATED FINANCIAL STATEMENTS AND THE
NOTES THERETO BEGINNING ON PAGE F-1. THIS DISCUSSION MAY CONTAIN
FORWARD-LOOKING STATEMENTS THAT INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS,
PERFORMANCE OR ACHIEVEMENTS COULD DIFFER MATERIALLY FROM THOSE EXPRESSED OR
IMPLIED BY THE FORWARD-LOOKING STATEMENTS AS A RESULT OF A NUMBER OF FACTORS,
INCLUDING BUT NOT LIMITED TO THE RISKS AND UNCERTAINTIES DISCUSSED UNDER THE
HEADING “RISK FACTORS” IN THIS FORM 10-K AND IN OUR OTHER
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. IN ADDITION, SEE
“CAUTIONARY   STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS” SET FORTH
IN THIS REPORT.





Overview





Florham Consulting Corp. ("Florham
Consulting" or the "Company" or "we") was formed on February 9, 2005 as a
Delaware corporation.  We have included elsewhere herein the financial
statements of Florham Consulting Corp. and Subsidiaries as of December 31, 2009
and for the period July 20, 2009 (Inception) through December 31, 2009. On
December 31, 2009, Florham Consulting completed a reverse merger with
Educational Investors, Inc.  (“EII”). Under accounting principles
generally accepted in the United States, the share exchange is considered to be
an in substance capital transaction, as opposed to a business
combination.  Accordingly, the share exchange is equivalent to the
issuance of stock by Florham for the net monetary assets of EII, accompanied by
a recapitalization, and is accounted for as a change in capital
structure.  Accordingly, the accounting for the share exchange is
identical to that resulting from a reverse acquisition, with no goodwill being
recorded.  Under reverse takeover accounting, the post-reverse
acquisition fiscal 2009 historical financial statements of the legal acquirer,
Florham, are those of the legal acquiree which is considered to be the
accounting acquirer, EII.  Shares and per share amounts reported have
been adjusted to reflect the recapitalization resulting from the reverse
merger.




EII was incorporated on July 20,
2009. EII through
its wholly-owned subsidiary, Valley Anesthesia, Inc. (“Valley”), purchased
certain assets and assumed certain liabilities of Valley Anesthesia Educational
Programs, Inc. (“VAEP”) effective August 20, 2009. EII acquired the Membership
Interest in Training Direct LLC (“Training Direct”) effective December 31,
2009.





The
following discussion and analysis of financial condition and results of
operations relates to the operations and financial condition reported in the
financial statements of Florham Consulting Corp. and Subsidiaries as of December
31, 2009 and 2008 and should be read in conjunction with such financial
statements and related notes included herein.





EII was
incorporated for the purpose of acquiring vocational, training and technical
schools, with an initial emphasis on the health care and medical
industries.  Through its Valley Anesthesia, Inc. subsidiary, EII
provides comprehensive review and update courses and study materials that aid
Student Registered Nurse Anesthetists (“SRNA”) and Graduate Registered Nurse
Anesthetists (“GRNA”) in preparation for the National Certifying Exam (“NCE”)
throughout the continental United States.  Through its Training Direct
subsidiary, EII provides “distance learning” and “residential training”
educational programs for students to become eligible for entry-level employment
in a variety of fields and industries. The company strives to assist those who
may not have realized their full potential in the workplace in finding a new
career direction and progressing in learning skills necessary to reach their
earning and personal development possibilities and goals. Training Direct
maintains approvals from the Connecticut Commissioner of Higher Education, the
Connecticut Department of Health Services and the National Health Career
Association, and is an Eligible Training Provider under the Workforce Investment
Act. Such approvals require that the company have a competent faculty, offer
educationally sound and up to date courses and course materials, and be subject
to inspections and approvals by outside examining committees.


27




Acquisitions





Effective
August 20, 2009, Valley purchased certain assets and assumed certain liabilities
of Valley Anesthesia Educational Programs, Inc. for $3,838,215.  The
purchase price included $2,000,000 cash, a promissory note at fair value of
$1,702,883, the present value of an earnout of $79,990 and net liabilities
assumed of $55,342. The purchase method of accounting was used for this
transaction and the purchase price was allocated to the fair value of financial
assets, liabilities, tradename/trademark/content, group and non-group
registrations, website, review manuals and covenant not-to compete aggregating
$3,654,658, and the excess of the purchase price over the fair value of the
identifiable assets was realized as goodwill.





On December 16, 2009, EII entered into
an Interest  Purchase Agreement ("TDI Agreement") with Training Direct
LLC ("TDI") and its members and the Company pursuant to which EII acquired all
outstanding membership interests, on a fully diluted basis, of TDI in exchange
for (a) $200,000 cash, (b) shares of the Company's Common Stock having a deemed
value of $600,000 (the "Acquisition Shares"), with such number of Acquisition
Shares to be determined by dividing $600,000 by the "Discounted VWAP" (as
defined below) for the twenty (20) "Trading Days" (as defined below) immediately
following the consummation of the Reverse Merger and (c) shares of the Company's
Common Stock having a deemed value of $300,000 (the "Escrow Shares"), with such
number of Escrow Shares to be determined by dividing $300,000 by the Discounted
VWAP for the twenty (20) Trading Days immediately following the consummation of
the Reverse Merger. The Escrow Shares will be held in escrow and released
therefrom as provided in the TDI Agreement. The closing of the TDI Agreement
occurred on December 31, 2009. "Discounted VWAP" is defined in the TDI Agreement
as seventy percent (70%) of the "VWAP" of the Company's Common Stock, but is in
no event less than $0.40 per share. "VWAP" is defined in the TDI Agreement as a
fraction, the numerator of which is the sum of the product of (i) the closing
trading price for the Company's Common Stock on the applicable national
securities exchange on each Trading Day of the twenty (20) Trading Days
following the consummation of the Reverse Merger and (ii) the volume of the
Company's  Common Stock on the applicable national securities exchange
for each such day and the denominator of which is the total volume of the
Company's Common Stock on the applicable national securities exchange during
such twenty day period, each as reported by Bloomberg Reporting Service or other
recognized market price reporting service. "Trading Day" is defined in the TDI
Agreement as any day on which the New York Stock Exchange or other national
securities exchange on which the Company's Common Stock trades is open for
trading. The Discounted VWAP for the twenty Trading Days after the effective
date of the Reverse Merger was $1.67.  Accordingly, an aggregate of
359,281 Acquisition Shares and 179,641 Escrow Shares have been
issued.





Liquidity
and Capital Resources





As of
December 31, 2009, we had a deficit in working capital of approximately
$164,000.  Included in working capital is deferred revenue of
approximately $709,000, which will be earned during fiscal year
2010.




Net cash
provided by operating activities was approximately $317,000, which is for the
period from the inception (July 20, 2009) of EII through December 31,
2009.





Net cash
used in investing activities was for the period from the inception of EII (July
20, 2009) through December 31, 2009 and was approximately
$2,377,000.  This primarily related to the cash used
for  purchase of certain assets of Valley Anesthesia Educational
Programs, Inc. in the amount of $2,000,000, the acquisition of Training Direct
in the amount of $200,000 and the purchase of fixed assets, the website for
online testing and other assets in the approximate amount of approximately
$101,000.





Net cash
provided by financing activities was related for the period from inception of
EII (July 20, 2009) through December 31, 2009 was approximately
$2,450,000.  This amount was from the net proceeds from the sale of
common stock and options.





Although
we expect that our available funds and funds generated from our operations will
be sufficient to meet our anticipated needs for 12 months, we may need to obtain
additional capital to continue to grow our business. Our cash requirements may
vary materially from those currently anticipated due to changes in our
operations, including the timing of our receipt of revenues.  Our ability
to obtain additional financing in the future will depend in part upon the
prevailing capital market conditions, as well as our business performance.
 There can be no assurance that we will be successful in our efforts to
arrange additional financing on terms satisfactory to us or at all.




28


Critical
Accounting Policies and Estimates





Our
financial information has been prepared in accordance with generally accepted
accounting principles in the United States, which requires us to make judgments,
estimates and assumptions that affect (1) the reported amounts of our assets and
liabilities, (2) the disclosure of our contingent assets and liabilities at the
end of each fiscal period and (3) the reported amounts of revenues and expenses
during each fiscal period.  We continually evaluate these estimates
based on our own historical experience, knowledge and assessment of current
business and other conditions, our expectations regarding the future based on
available information and reasonable assumptions, which together form our basis
for making judgments about matters that are not readily apparent from other
sources.  Since the use of estimates is an integral component of the
financial reporting process, our actual results could differ from those
estimates.  Some of our accounting policies require a higher degree of
judgment than others in their application.





When
reviewing our financial statements, you should consider (1) our selection of
critical accounting policies, (2) the judgment and other uncertainties affecting
the application of those policies, and (3) the sensitivity of reported results
to changes in conditions and assumptions.  We believe the following
accounting policies involve the most significant judgment and estimates used in
the preparation of our financial statements.





Use
of estimates in the preparation of financial statements





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results may differ from those
estimates.  Estimates are used in accounting for, among other things,
useful lives for depreciation and amortization, estimates of fair value when
recording share based compensation, future cash flows associated with impairment
testing for long-lived assets, deferred tax assets and the related valuation
allowances and contingencies, including going concern assessments.





Cash





The
Company maintains cash and cash equivalents with financial institutions which
may at times exceed federally insured limits.





Property
and equipment




Property
and equipment are recorded at cost.  Depreciation is provided in
amounts sufficient to amortize the cost of the related assets over their useful
lives using the straight line method.




Maintenance,
repairs and minor renewals are charged to expense when
incurred.  Replacements and major renewals are
capitalized.




Impairment
of long-lived assets




In the
event that facts and circumstances indicate that the cost of an asset may be
impaired, an evaluation of recoverability would be performed.  If an
evaluation is required, the estimated future undiscounted cash flows associated
with the asset would be compared to the asset’s carrying amount to determine if
a write-down to market value is required.





Website
– Online Testing




Purchased
computer software is capitalized and amortized over its estimated useful life
starting when it is placed in service.





Income
taxes




The
Company utilizes the asset and liability method of accounting for income
taxes.  The asset and liability method requires that the current or
deferred tax consequences of all events recognized in the financial statements
are measured by applying the provisions of enacted tax laws to determine the
amount of taxes payable or refundable currently or in future
years.  An allowance against deferred tax assets is recognized when it
is more likely than not that such tax benefits will not be
realized.  Adjustment to the deferred tax assets and liabilities
balances are recognized in income as they occur.




29


Revenue
Recognition





The
Company derives its revenue substantially from fees and tuition charged for
courses and manuals.  The fees are recognized as revenue at the time
of the attendance at the course and when the manual is shipped to
customers.  The Company recognizes revenue from the sale of study
guides when the study guides are shipped to customers. Fees for courses and
study guides are paid in advance and the Company refunds only a portion of the
fee upon cancellation. Deferred revenue is recorded when course fees are
received in advance of the time of the attendance at the course and when the
manual and study guides are shipped. Deferred revenue is also recorded for
undelivered course hours in excess of tuition billed.  Tuition billed
to students is recognized as revenue, determined by the percentage of completion
method. The Company does not accept returns of manuals and study
guides.  Therefore, the principals of revenue recognition are
considered and applied in the Company’s recognition of revenue.





Off-Balance
Sheet Arrangements





The
Company, through its bank, issued an irrevocable letter of credit to the State
of Connecticut Department of Higher Education in the amount of $40,000, as
required.  This letter of credit may not be extended beyond December
31, 2021. As collateral for the letter of credit, the Company purchased a
Certificate of Deposit with the bank in the amount of $40,000 which is included
in Other Assets in the accompanying financial statements.





The
Company conducts its operations from leased facilities.





The
Company does not have any other off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to investors.




Results
of Operations




The
following table shows the results of our business.  All references to
the results include the results of operations of EII from July 20, 2009, the
date of inception, and results of operations of VAI from August 20, 2009, the
date of purchase of certain assets and operations of Valley Anesthesia
Educational Programs, Inc., thorough December 31, 2009.
  For
the Period from July 20, 2009 (Inception) through December 31,
2009





% ofRevenuePERIOD ENDED DECEMBER 31
                                                              
                                                              2009
                                                              
                                                              
                                                              2009NET
      REVENUE
                                                              
                                                              $
                                                              850,285
                                                              
                                                              
                                                              
                                                              100
                                                              %COST
      OF REVENUE
                                                              
                                                              
                                                              221,155
                                                              
                                                              
                                                              
                                                              26
                                                              %SELLING
      AND ADMINISTRATIVE EXPENSES
                                                              
                                                              
                                                              377,590
                                                              
                                                              
                                                              
                                                              44
                                                              %ACQUISITION
      COSTS
                                                              
                                                              
                                                              393,015
                                                              
                                                              
                                                              
                                                              46
                                                              %STOCK
      BASED COMPENSATION
                                                              
                                                              
                                                              754,417
                                                              
                                                              
                                                              
                                                              89
                                                              %DEPRECIATION
      AND AMORTIZATION
                                                              
                                                              
                                                              140,490
                                                              
                                                              
                                                              
                                                              17
                                                              %TOTAL
      OPERATING EXPENSES
                                                              
                                                              
                                                              1,886,667
                                                              
                                                              
                                                              
                                                              222
                                                              %(LOSS)
      FROM OPERATIONS
                                                              
                                                              
                                                              (1,036,382
                                                              )
                                                              
                                                              
                                                              -122
                                                              %INTEREST
      EXPENSE
                                                              
                                                              
                                                              (37,867
                                                              )
                                                              
                                                              
                                                              -4
                                                              %INTEREST
      AND DIVIDEND INCOME
                                                              
                                                              
                                                              293
                                                              
                                                              
                                                              
                                                              0
                                                              %TOTAL
      OTHER EXPENSE
                                                              
                                                              
                                                              (37,574
                                                              )
                                                              
                                                              
                                                              -4
                                                              %(LOSS)
      FROM  OPERATIONS BEFORE INCOME TAXES
                                                              
                                                              
                                                              (1,073,956
                                                              )
                                                              
                                                              
                                                              -126
                                                              %INCOME
      TAXES
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              0
                                                              %NET
      (LOSS)
                                                              
                                                              $
                                                              (1,073,956
                                                              )
                                                              
                                                              
                                                              -126
                                                              %


30




Revenue. Net revenue
for the period ended December 31, 2009 was approximately $850,000, which was the
revenue of VAI. The Company conducted 3 courses during the period and fees for
these courses accounted for approximately 41% of
revenue.  Beginning in September, the Company began shipping the 2010
manuals and Memory Master study guides, which accounted for approximately 59% of
revenue.




Cost of
Revenue.  Cost of revenue was approximately $221,000, which
included the cost of conference facilities at hotels (19%), the cost of
printing and shipping manuals and study guides (55%) and other costs
(26%).





Selling and Administrative Expenses.Selling and administrative expenses were approximately $378,000,
and include salaries, payroll taxes and benefits in the approximate amount of
$260,000, professional fees of approximately $110,000 primarily related to costs
of the Reverse Merger and other costs of approximately $8,000.





Acquisition
Costs.The Company incurred approximately $343,000 of costs
related to the purchase of certain assets and assumption of certain liabilities
of Valley Anesthesia Educational Programs, Inc. and approximately $50,000 of
costs related to the acquisition of Training Direct.





Stock Based
Compensation.The Company recorded stock based compensation in
the amount of approximately $755,000 primarily as the result of the Company
granting 548,350 options to directors and consultants, which were exercisable as
of December 31, 2009.  The fair value of the options was determined by
the Black-Scholes option pricing model.  At December 31, 2009, there
was approximately $460,000 of total unrecognized compensation cost related to
non-vested stock option awards which is expected to be recognized over a
weighted-average period of 2 years.





Depreciation and
Amortization.  Depreciation and amortization was approximately
$140,000.  This amount is substantially attributable to the amortization of
intangible assets allocated in the purchase of certain assets and assumption of
certain liabilities from Valley Anesthesia Educational Programs,
Inc.





Interest expense.Interest
expense in the amount of approximately $38,000 relates to the note issued to
sellers in connection with the purchase of certain assets and assumption of
certain liabilities from Valley Anesthesia Educational Programs,
Inc.





Income taxes. The Company’s
current income tax expense related to Federal and state income taxes was
approximately $19,000 and a deferred income tax benefit has been reflected in
the amount of $19,000.   Due to the uncertainty of the Company’s
ability to utilize net operating loss carryforwards in the future, the Company
has provided a valuation allowance in the amount of approximately $454,000 on
the deferred tax asset in the approximate amount of $473,000.
 
 Net loss.
The Company incurred a net loss of approximately $1,074,000 for the period ended
December 31, 2009.  The Company’s fiscal 2009 revenue less related
cost of revenue and selling and administrative expenses resulted in income of
approximately $252,000 prior to acquisition related costs of approximately
$393,000, stock based compensation costs of approximately $755,000, depreciation
and amortization attributable primarily to the amortization of intangible assets
allocated in the purchase of certain assets and assumption of certain
liabilities from Valley Anesthesia Educational Programs, Inc. in the approximate
amount of $140,000, and interest on notes issued to sellers in connection with
the purchase of certain assets and assumption of certain liabilities from Valley
Anesthesia Educational Programs, Inc. in the approximate amount of
$37,000.  This resulted in a loss of approximately
$1,074,000.




Item
7A. Quantitative and Qualitative Disclosures About Market Risk.





Not
applicable.


31




Item 8. Financial Statements and
Supplementary Data.




REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Board of Directors and Stockholders
 Florham
Consulting Corp. and Subsidiaries
 
 We have
audited the accompanying consolidated balance sheet of Florham Consulting Corp.
and Subsidiaries (the "Company"), as of December 31, 2009, and the related
consolidated statements of operations, change in shareholders' equity, and cash
flows for the period from inception (July 20, 2009) to December 31, 2009. The
Company's management is responsible for these consolidated financial
statements.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
 
 We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing auditing
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audit
provide a reasonable basis for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Florham
Consulting Corp. and Subsidiaries as of December 31, 2009 and the results
of its consolidated operations and its cash flows for the initial period then
ended, in conformity with accounting principles generally accepted in the United
States of America.
 
 As
discussed in Note 1, the accompanying 2009 consolidated financial statements
have been restated.
 
 /s/ Raich
Ende Malter & Co. LLP
 
 RAICH
ENDE MALTER & CO. LLP
 New York,
New York
 March 31,
2010 (July 28, 2010 as to the effects of the restatement discussed in Note
1)
  32
 
 FLORHAM
      CONSULTING CORP. AND SUBSIDIARIESConsolidated
      Balance SheetDecember
      31, 2009 (Restated)
 
 ASSETSCurrent
      AssetsCash
      and cash equivalents
                      
                      $
                      560,497Accounts
      receivable, net of allowance for uncollectable accounts of
      $12,688
                      
                      
                      177,237Inventory
                      
                      
                      43,836Other
      current assets
                      
                      
                      41,197822,767Fixed
      AssetsFurniture
      and equipment
                      
                      
                      96,797Leasehold
      improvements
                      
                      
                      73,575170,372Accumulated
      Depreciation
                      
                      
                      (5,394
                      )164,978Other
      AssetsTradename/Trademark/content/customer
      relationships/certification and other intangibles, net of $114,066 in
      accumulated amortization
                      
                      
                      3,994,935Non-compete
      agreements, net of $25,595 in accumulated amortization
                      
                      
                      231,405Deferred
      tax asset
                      
                      
                      19,245Goodwill
                      
                      
                      323,296Other
                      
                      
                      90,0134,658,894$
                      5,646,639LIABILITIES
      AND SHAREHOLDERS' EQUITYCurrent
      LiabilitiesCurrent
      maturities of long-term liabilities
                      
                      $
                      78,743Accounts
      payable
                      
                      
                      112,210Accrued
      liabilities
                      
                      
                      68,371Income
      taxes payable
                      
                      
                      19,245Deferred
      revenue
                      
                      
                      708,562987,131Long-term
      LiabilitiesNote
      payable, net of current portion
                      
                      
                      1,680,037Capital
      lease obligation, net of current portion
                      
                      
                      31,870Other
                      
                      
                      199,4951,911,4022,898,533Shareholders'
      EquityPreferred
      stock - 2,000,000 shares authorized, $.0001 par value, 250,000 shares
      designated as Series A, issued and outstanding
                      
                      
                      25Common
      stock - 10,000,000 shares, $.0001 par value, authorized, 6,525,981 shares
      issued and outstanding
                      
                      
                      653Additional
      paid In capital
                      
                      
                      3,841,677Accumulated
      deficit
                      
                      
                      (1,073,956
                      )Notes
      receivable
                      
                      
                      (20,293
                      )2,748,106$
                      5,646,639
 
 See notes
to consolidated financial statements
  F-1
 
 FLORHAM
      CONSULTING CORP. AND SUBSIDIARIESConsolidated
      Statement of OperationsJuly
      20, 2009 (Inception) Through December 31, 2009
  (Restated)
 
 Revenue,
      net
                  
                  $
                  850,285Operating
      ExpensesCost
      of revenue
                  
                  
                  221,155Selling
      and administrative expenses
                  
                  
                  377,590Acquisition-related
      costs
                  
                  
                  393,015Stock
      based compensation
                  
                  
                  754,417Depreciation
      and amortization
                  
                  
                  140,4901,886,667Loss
      from Operations
                  
                  
                  (1,036,382
                  )Other
      Income (Expense)Interest
      income
                  
                  
                  293Interest
      expense
                  
                  
                  (37,867
                  )(37,574
                  )Loss
      from Operations Before Income Taxes
                  
                  
                  (1,073,956
                  )Income
      TaxesCurrent
                  
                  
                  19,245Deferred
                  
                  
                  (19,245
                  )-Net
      Loss
                  
                  $
                  (1,073,956
                  )Net
      Loss Per Common Share - basic and diluted
                  
                  $
                  (0.17
                  )Weighted
      Average Number of Shares Oustanding - basic and diluted
                  
                  
                  6,166,700
 
 See notes
to consolidated financial statements
  F-2
  FLORHAM
      CONSULTING CORP. AND SUBSIDIARIESConsolidated
      Statement of Changes in Shareholders' EquityJuly
      20, 2009 (Inception) Through December 31, 2009
  (Restated)
 
 Common
      Stock
                      
                      
                      Additional
                      
                      
                      Retained
                      
                      
                      
                      
                      
                      TotalPreferred
      Stock
                      
                      
                      Common
      Stock
                      
                      
                      Warrants
                      
                      
                      Paid
      In
                      
                      
                      Earnings
                      
                      
                      Notes
                      
                      
                      Shareholders'Shares
                      
                      
                      Amount
                      
                      
                      Shares
                      
                      
                      Amount
                      
                      
                      Shares
                      
                      
                      Capital
                      
                      
                      (Deficit)
                      
                      
                      Receivable
                      
                      
                      EquityBalance
      - July 20, 2009
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -Proceeds
      from sale of common stock
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      16,666,667
                      
                      
                      
                      16,667
                      
                      
                      
                      
                      
                      
                      
                      2,483,333
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      2,500,000Common
      stock options issued in exchange for notes receivable
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      20,000
                      
                      
                      
                      -
                      
                      
                      
                      (20,000
                      )
                      
                      
                      -Costs
      incurred in sale of common stock
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (49,844
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (49,844
                      )Compensatory
      element of stock options and warrants
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      755,255
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      755,255Interest
      on notes receivable
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (293
                      )
                      
                      
                      (293
                      )Shares
      issued for purchase of subsidiary
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      359,281
                      
                      
                      
                      36
                      
                      
                      
                      -
                      
                      
                      
                      599,964
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      600,000Effect
      of shares issued in reverse merger
                      
                      
                      250,000
                      
                      
                      
                      25
                      
                      
                      
                      (10,666,667
                      )
                      
                      
                      (16,067
                      )
                      
                      
                      -
                      
                      
                      
                      16,042
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Effect
      of shares assumed in reverse merger
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      166,700
                      
                      
                      
                      17
                      
                      
                      
                      -
                      
                      
                      
                      16,927
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      16,944Warrants
      assumed in reverse merger
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      930,000
                      
                      
                      
                      
                      
                      
                      
                      -
                      
                      
                      
                      
                      
                      
                      
                      -Net
      Loss
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (1,073,956
                      )
                      
                      
                      -
                      
                      
                      
                      (1,073,956
                      )Balance
      - December 31, 2009
                      
                      
                      250,000
                      
                      
                      $
                      25
                      
                      
                      
                      6,525,981
                      
                      
                      $
                      653
                      
                      
                      
                      930,000
                      
                      
                      $
                      3,841,677
                      
                      
                      $
                      (1,073,956
                      )
                      
                      $
                      (20,293
                      )
                      
                      $
                      2,748,106
 
 See notes
to consolidated financial statements
  F-3
 
 FLORHAM
      CONSULTING CORP. AND SUBSIDIARIESConsolidated
      Statement of Cash FlowsJuly
      20, 2009 (Inception) Through December 31, 2009
  (Restated)
 
 Cash
      Flows Provided by Operating ActivitiesNet
      loss
                    
                    $
                    (1,073,956
                    )Adjustments
      to reconcile net loss to net cash provided by (used in) operating
      activities:Depreciation
      and amortization
                    
                    
                    140,490Interest
      income added to note principal
                    
                    
                    (293
                    )Interest
      expense added to note principal
                    
                    
                    37,867Deferred
      taxes
                    
                    
                    (19,245
                    )Compensatory
      element of stock options and warrants
                    
                    
                    757,767(Increase)
      Decrease in:Accounts
      receivable
                    
                    
                    4,725Inventory
                    
                    
                    (43,836
                    )Other
      current assets
                    
                    
                    (10,691
                    )Increase
      (Decrease) in:Accounts
      payable
                    
                    
                    (1,211
                    )Accrued
      liabilities
                    
                    
                    47,626Income
      taxes payable
                    
                    
                    19,245Deferred
      revenue
                    
                    
                    458,540Net
      cash provided by operating activities
                    
                    
                    317,028Cash
      Flows Used In Investing ActivitiesPurchase
      of intangible assets
                    
                    
                    (2,018,734
                    )Purchase
      of non-compete agreements
                    
                    
                    (257,000
                    )Purchase
      of fixed assets
                    
                    
                    (13,298
                    )Online
      testing website development costs
                    
                    
                    (47,655
                    )Other
      Assets
                    
                    
                    (40,000
                    )Net
      cash used in investing activities
                    
                    
                    (2,376,687
                    )Cash
      Flows Provided By Financing ActivitiesProceeds
      from sale of common stock
                    
                    
                    2,450,156Net
      Increase In Cash and Cash Equivalents
                    
                    
                    390,497Cash
      Acquired
                    
                    
                    170,000Cash
      and Cash Equivalents - end of period
                    
                    $
                    560,497Non-Cash
      Investing and Financing ActivitiesAcquisition
      of Tradename/Trademarks/Content/Other Intangible Assets and Goodwill, Net
      of Cash Payments
                    
                    $
                    2,488,185Note
      Payable Incurred
                    
                    
                    1,702,883Other
      Long Term Liabilities Incurred
                    
                    
                    199,495Issuance
      of Common Stock in Purchase of Subsidiary
                    
                    
                    600,000Sale
      of Options to Officers for Interest Bearing Notes
                    
                    
                    20,000Assumption
      of Capital Lease Obligations
                    
                    
                    49,900Supplemental
      Disclosure of Cash Flow InformationCash
      paid during the period for:Interest
                    
                    $
                    -Taxes
                    
                    $
                    -
 
 See notes
to consolidated financial statements
  F-4
 
 FLORHAM
CONSULTING CORP. AND SUBSIDIARIES
 
 Notes
to Consolidated Financial Statements
 December
31, 2009 (Restated)
 
 
  1
-  ORGANIZATION AND NATURE OF BUSINESS
 
 Florham
Consulting Corp. (“Florham”) was formed on February 9, 2005, as a Delaware
Corporation and has its corporate offices located in New York, NY. On December
31, 2009, Florham completed a reverse merger with Educational Investors, Inc.
(“EII”). Under accounting principles generally accepted in the United States,
the share exchange is considered to be an in substance capital transaction, as
opposed to a business combination.  Accordingly, the share exchange is
equivalent to the issuance of stock by Florham for the net monetary assets of
EII, accompanied by a recapitalization, and is accounted for as a change in
capital structure.  Accordingly, the accounting for the share exchange
is identical to that resulting from a reverse acquisition, with no goodwill
being recorded.  Under reverse takeover accounting, the post reverse
acquisition fiscal 2009 historical financial statements of the legal acquirer,
Florham, are those of the legal acquiree which is considered to be the
accounting acquirer, EII.  Shares and per share amounts reported have
been adjusted to reflect the recapitalization resulting from the reverse
merger.
 
 Educational
Investors, Inc. was incorporated on July 20, 2009 in Delaware and has its
corporate offices located in New York, NY.  The Company’s wholly-owned
subsidiary, Valley Anesthesia, Inc. (“Valley”), was incorporated in Delaware and
has its corporate offices located in New York, NY. EII’s wholly-owned
subsidiary, Training Direct, LLC (“Training Direct”) was formed as a limited
liability company in Connecticut on January 7, 2004 and has its corporate
offices located in Bridgeport, CT.  The above entities are
collectively referred to as Florham Consulting Corp. and Subsidiaries
(collectively the “Company”).
 
 Effective
August 20, 2009, Valley purchased certain assets and assumed certain liabilities
and operations of Valley Anesthesia Educational Programs, Inc. The Company
through Valley provides comprehensive review and update courses and study
materials to Student Registered Nurse Anesthetists in preparation for the
National Certifying Exam throughout the continental United States.
 
 Effective
December 31, 2009, EII acquired all of the membership interest in Training
Direct.  The Company through Training Direct, a state licensed
vocational training school, provides “distance learning” and “residential
training” educational programs for students to become eligible for entry-level
employment in a variety of fields and industries.
 
 The
financial statements have been restated to reclassify the previously reported
loss on discontinued operations of the accounting acquiree to shareholder’s
equity as a result of the reverse merger transaction.
  F-5
 
 The
impact of the restatement on the consolidated financial statements as of
December 31, 2009 and for the period from July 20, 2009 (Inception) through
December 31, 2009 is summarized in the following tables:
 
 PreviouslyReported
                    
                    
                    Adjustment
                    
                    
                    RestatedConsolidated Balance Sheet (1) ,
      (2)Prepaid
      Expenses
                    
                    
                    (1
                    )
                    
                    $
                    23,415
                    
                    
                    $
                    (23,415
                    )
                    
                    $
                    -Assets
      of discontinued operations
                    
                    
                    (1
                    )
                    
                    
                    17,782
                    
                    
                    
                    (17,782
                    )
                    
                    
                    -Other
      current assets
                    
                    
                    (1
                    )
                    
                    
                    -
                    
                    
                    
                    41,197
                    
                    
                    
                    41,197Additional
      paid in capital
                    
                    
                    (2
                    )
                    
                    
                    3,918,945
                    
                    
                    
                    (77,268
                    )
                    
                    
                    3,841,677Accumulated
      Deficit
                    
                    
                    (2
                    )
                    
                    $
                    (1,151,224
                    )
                    
                    $
                    77,268
                    
                    
                    $
                    (1,073,956
                    )
 
 (1)  The
adjustment pertains to the reclassification of previously reported assets of
discontinued operations and prepaid expenses into other current
assets.
 
 (2)  Includes
the adjustment to reclassify the accumulated deficit of the registrant as of
December 31, 2008 and the previously reported loss from discontinued operations
to additional paid in capital.
 
 Consolidated Statement of Operations
      (3)Loss
      from Discontinued Operations
                      
                      $
                      (22,129
                      )
                      
                      $
                      22,129
                      
                      
                      $
                      -Net
      Loss
                      
                      
                      (1,096,085
                      )
                      
                      
                      22,129
                      
                      
                      
                      (1,073,956
                      )Net
      Loss per Common Share - basic and diluted
                      
                      $
                      (0.47
                      )
                      
                      $
                      0.01
                      
                      
                      $
                      (0.46
                      )
 
 (3)  The
adjustment reclassifies the previously reported loss on discontinued operations
to additional paid in capital.
 
 Consolidated Statement of Cash Flows
      (4)Net
      Loss
                    
                    $
                    (1,096,085
                    )
                    
                    $
                    22,129
                    
                    
                    $
                    (1,073,956
                    )Loss
      from Discontinued Operations
                    
                    
                    22,129
                    
                    
                    
                    (22,129
                    )
                    
                    
                    -Prepaid
      Expenses
                    
                    
                    (23,415
                    )
                    
                    
                    23,415
                    
                    
                    
                    -Other
      current assets
                    
                    
                    -
                    
                    
                    
                    (10,691
                    )
                    
                    
                    (10,691
                    )Net
      cash provided by operating activities
                    
                    
                    304,303
                    
                    
                    
                    12,725
                    
                    
                    
                    317,028Net
      Increase in Cash and Cash Equivalents
                    
                    
                    377,772
                    
                    
                    
                    12,725
                    
                    
                    
                    390,497Cash
      Used in Discontinued Operating Activities
                    
                    
                    (13,072
                    )
                    
                    
                    13,072
                    
                    
                    
                    -Cash
      balance of discontinued operations, beginning of the year
                    
                    
                    34,853
                    
                    
                    
                    (34,853
                    )
                    
                    
                    -Cash
      balance of discontinued operations, end of the year
                    
                    $
                    (9,056
                    )
                    
                    $
                    9,056
                    
                    
                    $
                    -
 
 (4)  The
adjustment reflects the reclassification of the previously reported loss on
discontinued operations to additional paid in capital and reclassification of
certain balance sheet accounts which previously reported assets of discontinued
operations.
  F-6
  2
-   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 This
summary of significant accounting policies of the Company is presented to assist
in understanding the Company’s consolidated financial statements.  The
consolidated financial statements and notes are representations of the Company’s
management who are responsible for their integrity and
objectivity.  These accounting policies are in conformity with
accounting principles generally accepted in the United States of America and
have been consistently applied in the preparation of the financial
statements.
 
 a.
Principles of Consolidation - The accompanying consolidated financial statements
include the accounts of Florham Consulting Corp. and its wholly-owned
subsidiaries.  All significant intercompany accounts and transactions
have been eliminated.
 
 b. Cash
and Cash Equivalents - The Company considers all short-term investments, with an
original maturity of three months or less, to be cash
equivalents.  Accounts at banking institutions may at times exceed
federally insured limits.  As of December 31, 2009, the Company had
$331,818 over such limits.
 
 c.
Earnings Per Share - Basic earnings per share is computed using the weighted
average number of shares of common stock outstanding.  For purposes of
calculation basic earnings per share, awards of nonvested stock that are subject
to the satisfaction of certain conditions are excluded from the weighted average
number of common shares outstanding until all necessary conditions have been
satisfied.  Diluted earnings per share is computed using the weighted
average number of common shares and potentially dilutive common equivalent
shares outstanding, including non vested stock.
 
 d.
Revenue Recognition - The Company derives its revenue substantially from fees
and tuition charged for courses and manuals.  The fees are recognized
as revenue at the time of the attendance at the course and when the manual is
shipped to customers.  The Company recognizes revenue from the sale of
study guides when the study guides are shipped to customers. Fees for courses
and study guides are paid in advance and the Company refunds only a portion of
the fee upon cancellation. Deferred revenue is recorded when course fees are
received in advance of the time of the attendance at the course and when the
manual and study guides are shipped. Deferred revenue is also recorded for
undelivered course hours in excess of tuition billed.  Tuition billed
to students is recognized as revenue, determined by the percentage of completion
method. The Company does not accept returns of manuals and study
guides.
 
 e. Cost
of Revenue – Cost of revenue includes costs of printing and shipping of course
materials, costs of facilities used for presentation of courses, preparation of
course materials, and other operating costs.
 
 f.
Acquisition-Related Cost – Costs incurred in the formation of the Company and in
the acquisition of operating assets and business operations are expensed as
incurred.
 
 g.
Accounts Receivable – Accounts receivable are recorded net of an allowance for
uncollectible amounts.  On a periodic basis, the Company evaluates its
accounts receivable and establishes an allowance for doubtful accounts based on
a history of past write-offs and collections as well as current
conditions.  As of December 31, 2009, the Company recorded an
allowance of $12,688.
  F-7
  h.
Inventory - The Company generally does not maintain an inventory of manuals and
study guides.  These materials are ordered from the printing company
as customer orders are received.  Manuals received and not yet shipped
are carried at cost computed on a first-in, first-out basis.
  i. Fixed
Assets - Fixed assets are carried at cost.  Depreciation of furniture
and equipment is calculated using the straight line method over the estimated
useful lives of the related assets ranging from three to seven years. Leasehold
improvements are amortized using the straight line method over the term of the
lease. Expenditures for repairs and maintenance are charged to expense as
incurred.
 
 j.
Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
(“GAAP”) requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities as of the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.  Actual
results may differ from those estimates.  Estimates are used in
accounting for, among other things, useful lives for depreciation and
amortization, recording fair value of share based compensation, future cash
flows associated with impairment testing for long-lived assets, deferred tax
assets and the related valuation allowances and contingencies, including going
concern assessments.
 
 k. Fair
Value of Financial Instruments - The Company’s financial instruments consist
primarily of cash and cash equivalents, accounts receivable, accounts payable
and deferred revenue which approximate fair value because of their short
maturities.  The Company’s notes payable (or long-term debt)
approximates the fair value of such instruments based upon management’s best
estimate of interest rates that would be available to the Company for similar
financial arrangements at December 31, 2009.
 
 l.
Goodwill - The Company has adopted Accounting Standards Codification (“ASC”) 350
which eliminated the amortization of goodwill and substituted an annual review
of the asset for possible impairment, requiring the comparison of fair market
value to carrying value.  Fair market value is estimated using the
present value of expected future cash flows and other internally calculated
measures.  The Company has completed the required testing of goodwill
for impairment and has determined that none of its goodwill is
impaired.
 
 m.
Impairment of Long-Lived Assets - In the event that facts and circumstances
indicate that the cost of an asset may be impaired, an evaluation of
recoverability would be performed.  If an evaluation is required, the
estimated future undiscounted cash flows associated with the asset would be
compared to the asset’s carrying amount to determine if a write-down to market
value is required.  At December 31, 2009, the Company does not believe
that any impairment has occurred.
  F-8
  n.
Recently Issued Accounting Pronouncements - In September 2009, the Company
implemented the Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”).  All of the content included in the
Codification is considered authoritative.  The Codification is not
intended to amend GAAP, but codifies previous accounting
literature.  The Company has changed the referencing of authoritative
accounting literature to conform to the Codification.
 
 The
Company adopted ASC 855-10 “Subsequent Events”.  The Codification does
not require significant changes regarding recognition or disclosure of
subsequent events, but does require disclosure of the date through which
subsequent events have been evaluated for disclosure and
recognition.  The ASC is effective for financial statements issued
after June 15, 2009.  The adoption did not have a significant impact
on the Company’s financial statements.
 
 The
Company adopted Accounting Standards Update (“ASU”) 2009-13,
“Multiple-Deliverable Revenue Arrangements a consensus of the FASB Emerging
Issues Task Force”.  This ASU establishes a selling price hierarchy
for determining the selling price of a deliverable, inclusive of an estimated
selling price if neither vendor specific objective evidence nor third party
evidence is available.
 
 Management
does not believe that any recently issued, but not yet effective accounting
pronouncements, if adopted, would have a material effect on the accompanying
financial statements.
 
 o. Income
Taxes - The Company utilizes the asset and liability method of accounting for
income taxes.  The asset and liability method requires that the
current or deferred tax consequences of all events recognized in the financial
statements are measured by applying the provisions of enacted tax laws to
determine the amount of taxes payable or refundable currently or in future
years.  An allowance against deferred tax assets is recognized when it
is more likely than not that such tax benefits will not be
realized.  Adjustment to the deferred tax assets and liabilities
balances are recognized in income as they occur. The Company has determined that
there are no uncertain tax positions pursuant to ASC 740 and does not expect
this to change over the next twelve months.  The Company may recognize
the tax benefit from an uncertain tax position only if it is more likely than
not that the tax position will be sustained upon examination by the taxing
authorities based on the technical merits of the position.  The
Company recognizes accrued interest and penalties associated with uncertain tax
positions as part of the income tax provision.
 
 In
addition to its Federal income tax return, the Company and its subsidiaries are
obligated to file tax returns in various states.  All periods within
the applicable jurisdictions’ statute of limitations remain open to government
audit.
 
 p. Stock
Based Compensation - The Company recognizes the cost of directors, consultants
and employee services received in exchange for awards of equity instruments,
such as stock options, based on the fair value of those awards at the date of
grant over the requisite service period.  The Company uses the
Black-Scholes option pricing model to determine the fair value of stock-option
awards.  Stock-based compensation plans, related expenses and
assumptions used in the Black-Scholes option pricing model are more fully
described in Note 10.
  F-9
 
 q.
Industry Segment Information - The Company has determined that it operates under
one segment, and is not required to report on its operations by
segment.
 
 r.
Research and Development – Valley and Training Direct have been developing
on-line educational programs, including Valley’s on-line testing examination
center.  In addition, Valley’s and Training Direct’s programs are
continually updated to ensure that student’s are always current with the most
updated practices and procedures.  Any revisions to Training Direct’s
curriculum are always reviewed by the Connecticut Department of Higher Education
for final approval.  All Programs lead to certification from the
National Health Career Association or Connecticut State Licensure.  To
date, the costs of such research and development activities have been immaterial
and are not borne by our customers.
 
 3
- ACQUISITIONS
 
 Effective
August 20, 2009, the Company purchased certain assets and assumed certain
liabilities of Valley Anesthesia Educational Programs, Inc. for
$3,838,215.  The purchase method of accounting was used for this
transaction and the purchase price was allocated to the fair value of financial
assets, liabilities, tradename/trademark/content, group and non-group
registrations, website, review manuals, and covenants not-to compete aggregating
$3,654,658, and the excess of the purchase price over the fair value of the
identifiable assets was realized as goodwill.
 
 The
following table summarizes the consideration paid for the purchase of certain of
the assets of Valley Anesthesia Educational Programs, Inc. and the amounts of
assets acquired and liabilities assumed recognized at the acquisition
date:
 
 ConsiderationCash
                          
                          $
                          2,000,000Fair
      value of note payable
                          
                          
                          1,702,883Present
      value of earnout
                          
                          
                          79,990Net
      liabilities assumed
                          
                          
                          55,342$
                          3,838,215Acquisition-Related
      Costs Charged to Operations
                          
                          $
                          342,534Recognized
      Amounts of Identifiable Assets Acquired and Liabilities
      AssumedFinancial
      assets
                          
                          $
                          160,000Identifiable
      intangible assets
                          
                          
                          3,710,000Goodwill
                          
                          
                          183,557Financial
      liabilities
                          
                          
                          (215,342
                          )Total
      net assets acquired
                          
                          $
                          3,838,215
  F-10
 
 Effective
December 31, 2009, the Company purchased 100% of the membership interest in
Training Direct, LLC for $919,505.  The purchase method of accounting
was used for this transaction and the purchase price was allocated to the fair
value of financial assets, liabilities, fixed assets, tradename/trademark, group
registrations, certification, curriculum, and covenants not-to compete
aggregating $779,766, and the excess of the purchase price over the fair value
of the identifiable assets was realized as goodwill.
 
 The
following table summarizes the consideration paid for the membership interest in
Training Direct, LLC and the amounts of assets acquired and liabilities assumed
recognized at the acquisition date:
 
 ConsiderationCash
                      
                      $
                      200,000Fair
      value of common shares issued
                      
                      
                      600,000Present
      value of earnout
                      
                      
                      119,505$
                      919,505Acquisition-Related
      Costs Charged to Operations
                      
                      $
                      50,481Recognized
      amounts of identifiable assets acquired and liabilities
      assumedFinancial
      assets
                      
                      $
                      183,437Fixed
      assets
                      
                      
                      154,867Identifiable
      intangible assets
                      
                      
                      656,000Goodwill
                      
                      
                      139,739Financial
      liabilities
                      
                      
                      (214,538
                      )Total
      net assets acquired
                      
                      $
                      919,505
 
 The
following are the unaudited pro forma results of operations of Florham for the
year ended December 31, 2009 had the acquisitions described above been
consummated at the beginning the year.  These results include (i)
amortization of $330,571 of the purchase price allocated to fair value of
intangible assets acquired in fiscal 2009; (ii) additional compensation of
$131,250; (iii) the compensatory element of the unvested portion of time vesting
options granted to management on December 31, 2009  of $344,261; (iv)
interest income earned on the notes receivable from officers/stockholders taken
back on the option sales of $507; and (v) interest expense on notes payable in
connection with the purchase of certain assets of Valley Anesthesia Educational
Programs, Inc. of $78,278.
  F-11
 
 TrainingYear Ended December 31,
2009
                      
                      Florham
                      
                      
                      Valley
                      
                      
                      Direct
                      
                      
                      TotalRevenue
                      
                      $
                      850,285
                      
                      
                      $
                      923,903
                      
                      
                      $
                      1,149,489
                      
                      
                      $
                      2,923,677Operating
      Expenses:Cost
      of Revenue
                      
                      
                      (221,155
                      )
                      
                      
                      (196,502
                      )
                      
                      
                      (623,106
                      )
                      
                      
                      (1,040,763
                      )Interest
      Expense - net
                      
                      
                      (115,344
                      )
                      
                      
                      3,674
                      
                      
                      
                      (2,191
                      )
                      
                      
                      (113,861
                      )Other
      expenses
                      
                      
                      (2,420,346
                      )
                      
                      
                      (256,032
                      )
                      
                      
                      (489,250
                      )
                      
                      
                      (3,165,628
                      )Income
      Tax (Benefit) Expense
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Net
      (Loss) Income
                      
                      $
                      (1,906,560
                      )
                      
                      $
                      475,043
                      
                      
                      $
                      34,942
                      
                      
                      $
                      (1,396,575
                      )Net
      Loss Per Common Share - basic and diluted
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      $
                      (0.21
                      )Weighted
      Average Number of Shares Outstanding - basic and diluted
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      6,525,981
 
 4
– FIXED ASSETS
 
 The
Company’s fixed assets consist of the following at December 31,
2009:
 
 Furniture
      and equipment
                  
                  $
                  96,797Leasehold
      improvements
                  
                  
                  73,575170,372Less:  Accumulated
      depreciation
                  
                  
                  5,394Fixed
      assets at net book value
                  
                  $
                  164,978
 
 Depreciation
expense was $828 for the period ended December 31, 2009.
 
 5
- INTANGIBLES
 
 The
acquisition of certain assets of Valley Anesthesia Educational Programs, Inc.
resulted in an excess of the purchase price over the fair value of the net
assets acquired of $3,710,000, which consists of tradename/trademark/content in
the amount of $2,100,000 being amortized over an estimated useful life of 17
years; review manuals in the amount of $630,000 being amortized over an
estimated useful life of 4.5 years; group registrations in the amount of
$630,000 being amortized over an estimated useful life of 15 years; non-group
registrations in the amount of $20,000 being amortized over an estimated useful
life of 2 years; the website in the amount of $80,000 being amortized over an
estimated useful life of 3 years; and non-compete agreements in the amount of
$250,000 being amortized over the term of the agreements from 2.3 to 4
years.
 
 The
acquisition of the membership interest of Training Direct, LLC resulted in an
excess of the purchase price over the fair value of the net assets acquired of
$656,000, which consist of curriculum in the amount of $383,000 being amortized
over an estimated useful life of 12 years; certification in the amount of
$100,000 being amortized over an estimated useful life of 15 years;
tradename/trademark in the amount of $96,000 being amortized over an estimated
useful life of 18 years; agency customer relationships in the amount of $70,000
being amortized over an estimated useful life of 14 years; and non-compete
agreements in the amount of $7,000 being amortized over the term of the
agreements of 3 years.
  F-12
 
 Total
amortization expense was $139,661 for the period ended December 31,
2009.
 
 Amortization
of intangibles that will be charged to operations in fiscal 2010, 2011, 2012,
2013, 2014, and thereafter is $470,232, $466,898, $417,057, $382,779, $237,779
and $2,111,933, respectively.
 
 6
– NOTE PAYABLE
 
 In
connection with the acquisition of certain assets of Valley Anesthesia
Educational Programs, Inc. Valley issued a note payable to Valley Anesthesia
Educational Programs, Inc. in the principal amount of $2,000,000, bearing
interest at 2.5% interest per annum, payable in monthly installments of $35,493
commencing August 20, 2010.  The note is secured by the assets
transferred in the sale, including all additions and accessions thereto, as such
is renewed and replenished.  The note was recorded at fair market
value of $1,702,883 by discounting the payment stream of the note by a fair
market rate of 9.354%.
 
 Presented
below are the balances and related expenses of the note at December 31,
2009:
 
 Principal amount
                    
                    $
                    2,000,000Discount
                    
                    
                    (297,117
                    )Interest
      payable
                    
                    
                    37,8671,740,750Current portion
                    
                    
                    60,713$
                    1,680,037
 
 Interest
and debt discount charged to operations was $37,867 in fiscal 2009.
 
 The note
payable matures as follows for the years ending December 31,
 2010
                        
                        $
                        60,7132011
                        
                        
                        324,5062012
                        
                        
                        346,6392013
                        
                        
                        370,2822014
                        
                        
                        395,5372015
                        
                        
                        243,073$
                        1,740,750
 
 7
– EQUIPMENT LEASES PAYABLE
 
 The
Company is obligated under capitalized furniture and equipment
leases.  The lease obligations are payable in monthly installment of
$1,488 and $451, including imputed interest at 11.480% and 19.705%, expiring
through September 2012.
  F-13
 
 Future
annual payments of these obligations as of December 31, 2009 are as
follows:
 
 Year
      Ending December 31,2010
                          
                          $
                          23,2762011
                          
                          
                          22,3292012
                          
                          
                          12,71558,319Less
      amount representing interest
                          
                          
                          8,41949,900Less
      current portion
                          
                          
                          18,030$
                          31,870
 
 The
leases provide for the purchase of the furniture and equipment at the end of
their respective terms for a nominal amount.
 
 8
– OTHER LONG-TERM LIABILITIES
 
 Included
in other long-term liabilities is an obligation to the sellers of certain assets
of Valley Anesthesia Educational Programs, Inc. to receive 40% of the future net
revenues, as defined, from two new revenue sources for the three year periods
ended December 31, 2012.  The present value of the net revenues the
sellers are expected to receive is $79,990.
 
 Also
included in other long-term liabilities is an obligation to the selling members
of Training Direct which provides for the issuance of 179,641 shares of the
Company’s Common Stock having a deemed value of $300,000 (the “Escrow
Shares”).  The Escrow Shares have been issued on March 3, 2010 and are
being held in escrow and will be released therefrom subject to the Company
achieving certain performance targets as set for in the Interest Purchase
Agreement. The present value of the Escrow Shares the selling members are
expected to receive is $119,505 as of the acquisition date.
 
 9
– CREDIT LINE
 
 Training
Direct has a credit line facility with a financial institution, which provides
for advances to be made for overdrafts of its checking account not to exceed
$10,000.  Borrowings under the credit line bear interest at a rate of
15% per annum and are guaranteed by two officers.  The outstanding
balance of the credit line at December 31, 2009 was $213.
  F-14
  10
– CAPITAL TRANSACTIONS
 
 The
Company is authorized to issue 2,000,000 shares of $0.0001 par value preferred
stock with designations, voting and other rights and preferences as may be
determined from time to time by the Board of Directors of the
Company.  The Board of Directors has authorized 250,000 shares of
Series A Preferred Stock each of which is automatically convertible into
49.11333 shares of common stock upon the Company’s filing of an amendment to its
certificate of incorporation which increases the authorized shares of common
stock to at least 50,000,000.  The Series A Preferred Stock is
entitled to receive dividends, if declared by the Board of Directors, and to
vote together with the common stock on an “as converted basis.”  The
stated or liquidation value is $0.01 per share and has a preference over the
common stock on liquidation or sale of the Company equal to the sum of the
stated value per share and an amount equal to all unpaid
dividends.  As of December 31, 2009, the Company had 250,000 shares of
the Series A Preferred Stock issued and outstanding.
 
 The
Company is authorized to issue 10,000,000 shares of $0.0001 par value common
stock.
 
 On
June 28, 2006, the Company issued an aggregate of 101,000 shares of common stock
and warrants to purchase 925,000 shares of common stock at $0.05 per share to
its founders.  The holders of the warrants have cashless exercise
rights.  These warrants were not exercisable prior to June 30, 2011
unless there is a “Change in Control” (as defined in the warrants) in the
Company, in which event the warrants will be exercisable at any time after
seventy (70) days following such Change in Control and until June 30,
2016.
 
 On March
29, 2007 the Company completed a private placement of 65,700 shares of common
stock at $1.00 per share.
 
 On
January 29, 2009, the Company issued a warrant to purchase 5,000 shares of
common stock for $0.05 per share to a consultant for financial advisory services
rendered from October 2008 through January 2009.
 
 Effective
August 20, 2009, EII issued 16,666,667 shares of its Common Stock, par value
$.001 per share, and received proceeds in the amount of $2,450,156, net of costs
of $49,844. In addition, the Company sold two stock options to two of its
executives to purchase a total of 2,333,333 shares of common
stock.  The exercise price for 1,166,668 options is  $0.25
and the exercise price for 1,166,666 options is $0.45.  The options
become exercisable based upon the company achieving certain EBTDA measurements
as defined in the Stock Option Agreements.  In addition, as
consideration for the options to acquire the common stock, the executives have
each issued notes payable to the Company in the principal amount of $10,000
bearing interest at an annual compounded rate of 4%, due and payable August 20,
2014.  The excess of the fair value of the options sold over the notes
of $8,000 was charged to operations as compensation.  The fair value
of the options was determined by the Black-Scholes option pricing model using
the following assumptions; forfeiture rate 0%, risk free interest rate 2.5%,
volatility 25%, expected life 5-7 years, and dividend rate 0%.
  F-15
  On
December 16, 2009, the Company executed an agreement and plan of merger (the
"Merger Agreement")  among the Company, EII Acquisition Corp. (a newly
formed acquisition subsidiary of the Company (“Mergerco”),
Educational  Investors,  Inc. ("EII") and its
securityholders, Sanjo Squared, LLC, Kinder Investments,  LP, Joseph
Bianco and Anil Narang (collectively, the "EII Securityholders") pursuant to
which the Mergerco would be merged with and into EII,  with EII as the
surviving corporation of the merger (the “Reverse Merger”), as a result of which
EII will become a wholly-owned subsidiary of the Company.  Under the
terms of the Merger Agreement, the EII Securityholders received (i) an aggregate
of 6,000,000 shares of
the  Company's  Common  Stock,  (ii)
options  to acquire  2,558,968 additional shares of the
Company's Common Stock, fifty percent  (50%) of which have an
initial  exercise price of
$0.45  per  share  and
fifty  percent  (50%) of which  have
an  initial exercise  price of $0.25 per share, subject to
certain performance  targets set forth in the Merger
Agreement,  and (iii) 250,000 shares of the
Company's  Series A Preferred Stock,  with each share of the
Company's Series A Preferred Stock  automatically
convertible  into 49.11333 shares of the Company's  Common
Stock upon the filing by the  Company  of
an  amendment  to
its  certificate  of  incorporation  which
increases  the  authorized  shares  of
the  Company's  Common  Stock to at least
50,000,000.  On December 31, 2009 the Reverse Merger was
consummated.
 
 In
addition to the Merger Agreement, on December 16, 2009, EII entered into an
Interest  Purchase Agreement ("TD Agreement") with Training Direct LLC
("TD") and its members and the Company  pursuant to which EII acquired
all  outstanding  membership interests,  on a
fully diluted basis, of TD in exchange for (a) $200,000 cash, (b) shares of the
Company's  Common Stock having a deemed value of $600,000 (the
"Acquisition  Shares"), and (c) shares of the
Company's  Common Stock having a deemed value of $300,000 (the "Escrow
Shares") as defined in the TD Agreement.  The acquisition became
effective December 31, 2009, and the Company issued 359,281 Acquisition Shares
and 179,641 Escrow Shares to the selling members on March 3, 2010. The Escrow
Shares will be held in escrow and released therefrom as provided in the TD
Agreement.
 
 On
December 24, 2009 the Company adopted the 2009 Stock Incentive Plan to provide
the Company with a means to assist in recruiting, retaining and rewarding
certain employees, directors and consultants and to motivate such individuals to
exert their best efforts on behalf of the Company by providing incentives
through the granting of Awards.  After giving effect to the Reverse
Merger, on December 31, 2009 the Company granted 877,360 options to certain
members of management, the directors and consultants.  The options are
exercisable at a price of $.50 per share.  548,350 of the options are
currently exercisable and 329,010 of the options vest over a two year period
from date of grant, and options not exercised expire 5 years from date of grant.
The  fair value of the options  of $746,417 was charged to
operations as compensation.  The fair value of the options was
determined by the Black-Scholes option pricing model using the following
assumptions; forfeiture rate 0%, risk free interest rate 1.63%, volatility
172.48%, expected life 2.5-3.25 years, and dividend rate 0%.  At
December 31, 2009, there was $459,686 of total unrecognized compensation cost
related to non-vested stock option awards which is expected to be recognized
over a weighted-average period of 2 years.  There are 622,640 options
under the plan available for future grants.
 
 F-16
  11
– COMMITMENTS AND CONTINGENCIES
 
 Leases
 
 The
Company leases its Bridgeport, CT facility under a lease that expires October 8,
2019, with an option to renew for an additional five years.  Terms of
the lease require minimum monthly payments of $5,850 plus annual increases of
three percent or the CPI annual increase, if greater. The Company must pay for
repairs, maintenance and insurance under this lease.
 
 The
Company also rents office space from one of its officers under a lease expiring
August 20, 2010.  The Company pays $725 per month under the
lease.  The Company also reimburses another officer $2,992 per month
for rent of office space on a month-to-month basis.
 
 The
minimum annual payments under lease obligations are as follows for the years
ending December 31:
 2010
                      
                      $
                      76,2462011
                      
                      
                      72,8482012
                      
                      
                      75,0342013
                      
                      
                      77,2852014
                      
                      
                      79,603Thereafter
                      
                      
                      411,717Total
                      
                      $
                      792,733
 
 Rent
expense for the period ended December 31, 2009 was $15,655.
 
 Commitment for Conference
Facilities
 
 Certain
of the Company’s courses are presented in conference facilities located in
hotels in various cities throughout the continental United
States.  The Company enters into contracts with the various hotels
well in advance of these upcoming courses.  These contracts provide,
among other matters, that the Company guarantee a stated minimum number of
attendees and/or guest rooms, and may hold the Company to stated percentages of
the amounts in the event of course cancellation.
 
 Employment and Consulting
Agreements
 
 The
Company and its subsidiaries have entered into various employment contracts with
its executives and an agreement with a consultant.  In addition to
base compensation, the contracts provide for compensation adjustments, as
described in the agreements, plus stock options (Note 10).  The total
base compensation commitment of the contracts is as follows for the years ending
December 31:
 
 2010
                      
                      $
                      623,3972011
                      
                      
                      345,0002012
                      
                      
                      345,000
  F-17
  Off Balance Sheet
Arrangement
 
 The
Company, through its bank, issued an irrevocable letter of credit in the amount
of $40,000, as required by the State of Connecticut Department of Higher
Education.  This letter of credit may not be extended beyond December
31, 2021. As collateral for the letter of credit, the Company purchased a
Certificate of Deposit with the bank in the amount of $40,000, which is included
in Other Assets.
 
 12 – LOSS PER SHARE
 
 For the
period ended December 31, 2009, the conversion of preferred stock, exercise of
warrants, stock options, and escrow shares issued in purchase of subsidiary were
excluded in the computations of the Company’s diluted loss per share because the
Company reported net losses from continuing operations. Anti-dilutive common
share equivalents excluded were as follows:
 
 Conversion
      of preferred stock
                    
                    
                    12,278,333Exercise
      of warrants
                    
                    
                    930,000Vested
      stock options
                    
                    
                    548,350Nonvested
      stock options
                    
                    
                    2,887,978Escrow
      shares issued in purchase of subsidiary
                    
                    
                    179,641
 
 The
following table represents the unaudited pro forma effect on earnings per share
for the dilution resulting from the conversion of the Series A Preferred
Stock.  These preferred shares were issued because the Company did not
have sufficient authorized and unissued common shares to issue to the former EII
stockholders on the date of the merger.  Upon the change in the number
of the Company’s authorized common shares, 12,278,333 common shares will be
issued in exchange for the Series A Preferred Shares.
 
 As
      reported
                      
                      
                      Pro
      Forma(Unaudited)Net
      Loss Per Common Share
                      
                      $
                      (0.17
                      )
                      
                      $
                      (0.06
                      )Weighted
      Average Number of Common Shares Outstanding
                      
                      
                      6,166,700
                      
                      
                      
                      18,445,033
  F-18
 
 13
– INCOME TAXES
 
 The
provision for income taxes consists of the following:
 
 Current:Federal
                      
                      $
                      10,000State
                      
                      
                      9,245Total
      current
                      
                      
                      19,245Deferred:Federal
                      
                      
                      (10,000
                      )State
                      
                      
                      (9,245
                      )Total
      deferred
                      
                      
                      (19,245
                      )Total
      provision for income taxes
                      
                      $
                      -
 
 Net
deferred tax assets (liabilities) would have included the following
components:
 
 Deferred Tax Asset
    (Liability)TemporaryDifference
                  
                  
                  Federal
                  
                  
                  State
                  
                  
                  TotalFor
      the period ended December 31, 2009Accumulated
      depreciation and amortization
                  
                  $
                  37,022
                  
                  
                  $
                  11,455
                  
                  
                  $
                  3,332
                  
                  
                  $
                  14,787Stock
      based compensation
                  
                  
                  754,417
                  
                  
                  
                  233,417
                  
                  
                  
                  67,898
                  
                  
                  
                  301,315Acquisition-related
      costs
                  
                  
                  393,015
                  
                  
                  
                  121,599
                  
                  
                  
                  35,371
                  
                  
                  
                  156,970Valuation
      allowance
                  
                  
                  -
                  
                  
                  
                  (356,471
                  )
                  
                  
                  (97,356
                  )
                  
                  
                  (453,827
                  )$
                  1,184,454
                  
                  
                  $
                  10,000
                  
                  
                  $
                  9,245
                  
                  
                  $
                  19,245
 
 The
following it a reconciliation of income taxes computed at the U. S. Federal
income tax rate to the actual effective income tax provision:
 
 %
      of Pre-Tax IncomeFor
      the Period EndedDecember
      31, 2009Statutory
      Federal income tax rate
                    
                    
                    (34.0
                    )
      %Non-deductible
      costs
                    
                    
                    (2.3
                    )
      %State
      income taxes, net of Federal tax benefit
                    
                    
                    0.6
                    %Tax
      valuation allowance
                    
                    
                    35.7
                    %Other,
      net
                    
                    
                    0.0
                    %0.0
                    %
 
 14
– SUBSEQUENT EVENTS
 
 Subsequent
events have been evaluated for disclosure and recognition through the time of
filing our annual report on Form 10-K/A.
  F-19




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





We have had no disagreements with our
independent registered public accountants with respect to accounting practices
or procedures or financial disclosure.





Item 9A. Controls and
Procedures.





(a) Evaluation of
Disclosure Controls and Procedures.Under Section 404 of the
Sarbanes-Oxley Act of 2002, management is required to assess the effectiveness
of the Company’s internal control over financial reporting as of the end of each
fiscal year and report, based on that assessment, whether the Company’s internal
control over financial reporting is effective.





Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting.  The Company’s internal control over
financial reporting is designed to provide reasonable assurance as to the
reliability of the Company’s financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles.





Internal
control over financial reporting, no matter how well designed, has inherent
limitations.  Therefore, internal control over financial reporting
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and may not prevent or detect all misstatements.
Moreover, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may
deteriorate.





The
Company’s management has assessed the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2009.  In making
this assessment, the Company used the criteria established by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in “Internal
Control-Integrated Framework.” These criteria are in the areas of control
environment, risk assessment, control activities, information and communication,
and monitoring.





Based on
the Company’s processes and assessment, as described above, management has
concluded that, as of December 31, 2009, the Company’s internal control over
accounts receivable and assessment of allowances for doubtful accounts was not
effective.





Upon
identification of the weakness in measuring and assessing accounts receivable,
management has evaluated remedial measures consisting principally of upgrading
of automated systems and procedures.





Although
this material weakness over preparation of the financial statements and related
disclosures existed at year end, the consolidated financial statements in this
Annual Report on Form 10-K fairly present, in all material respects, our
financial condition as of December 31, 2009 and 2008, and our results from
operations for the years then ended, in conformity with GAAP.





While
appropriate steps to remediate the material weakness described above are being
evaluated, additional measures may be required. The effectiveness of our
internal controls following our remediation efforts will not be known until we
further test those controls in connection with management’s tests of internal
control over financial reporting.





This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting. Such
report is not required by the Company’s registered public accounting
firm.




(b) Changes in
internal controls. During the year ended December 31, 2009, there were no
changes in our internal control over financial reporting identified in
connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule
15d-15 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.





Management’s Report on Internal
Control Over Financial Reporting





Our management is responsible for
establishing and maintaining adequate internal control over financial reporting
for our company in accordance with as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. Our internal control over financial reporting is
designed to provide reasonable assurance regarding the (i) effectiveness and
efficiency of operations, (ii) reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles, and (iii) compliance with applicable
laws and regulations. Our internal controls framework is based on the criteria
set forth in the Internal Control - Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission
(COSO).


33




Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.





Management’s assessment of the
effectiveness of our internal control over financial reporting is as of the year
ended December 31, 2009. We believe that internal control over financial
reporting is effective.  We have not identified any material
weaknesses considering the nature and extent of our current operations or any
risks or errors in financial reporting under current operations.





This annual report does not include an
attestation report of the Company’s registered accounting firm regarding
internal control over financial reporting. Management’s report was not subject
to attestation by the Company’s registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission




Item 9B. Other
Information.





We do not have any information required
to be disclosed in a report on Form 8-K during the fourth quarter of 2009 that
was not reported.


34





PART III





Item 10. Directors, Executive Officers
and Corporate
Governance.





Executive
Officers and Directors





The
following table sets forth the name, age and position of each of the members of
our board of directors and executive officers as of the date of this
report:





Name
            
            Age
            
            PositionJoseph
      J. Bianco
            
            59
            
            Chief
      Executive Officer and Chairman of the BoardAnil
      Narang
            
            46
            
            President,
      Chief Operating Officer and DirectorKellis
      Veach
            
            67
            
            Chief
      Financial Officer and SecretaryDov
      Perlysky
            
            47
            
            DirectorHoward
      Spindel
            
            64
            
            DirectorDavid
      Cohen
            
            71
            
            Director





Joseph J. Biancopurchased
Lotus Performance Cars, Inc. in 1982, which he subsequently sold to General
Motors in 1987. In 1990, Mr. Bianco co-founded and became Chief
Executive Officer of Alliance Entertainment Corporation. In 1996, Mr.
Bianco and his partner sold control of NYSE-Listed Alliance, then the
leading independent distributor of CD music in the world, and
resumed his private investing activities. In 1998, an investor group
led by Mr. Bianco bought the first of several magazine distributors
that were consolidated into the Interlink Companies, of which Mr.
Bianco was Chairman. Interlink, a leading distributor of magazines to
booksellers and other retailers was sold in 2001 to the Source-Interlink
Companies. From 1997 to 2000, Mr. Bianco was also Chairman
of Cognitive Arts, Inc., a leading creator of educational software, which
was purchased from Northwestern University. From 2003 to 2004, he served on the
board of directors of Whitewing Environmental, Inc. Mr. Bianco also serves
on the Board of several other private corporations as well as two non-profit
organizations.  Mr. Bianco graduated from Yale Law School in
1975, where he was an editor of the Yale Law Journal. He became
Associate Dean at Cardozo School of Law at Yeshiva University and is
the author of two books and various articles.





Anil Narangco-founded and became President of Alliance Entertainment
Corporation in 1990. In 1996, Mr. Narang and his partner sold control
of NYSE-Listed Alliance, then the leading independent distributor of CD
music in the world. In 1998, an investor group including Mr. Narang bought
the first of several magazine distributors that were consolidated into the
Interlink Companies. Interlink, a leading distributor of magazines to
booksellers and other retailers was sold in 2001 to the Source-Interlink
Companies. From 1997 to 2000, Mr. Narang was Vice Chairman
of Cognitive Arts, Inc., a leading creator of educational software, which
was purchased from Northwestern University. In 2003, Mr. Narang co-founded and
became Co-CEO of Sheridan Square Entertainment, which was one of the largest
independent record labels in the United States. He and his partners sold
Sheridan to BTP Acquisition Corp in 2007 in a private transaction. Mr. Narang
holds a Bachelor of Arts degree in economics from Colgate University, and an MBA
in Finance from New York University.





Kellis Veachjoined EII as
Chief Financial Officer and Secretary-Treasurer in July 2009.  From
2008 to 2009, Mr. Veach was Chief Financial Officer of STB TeleMedia, Inc. From
2003 to 2008, Mr. Veach served as Vice-President of Sheridan Square
Entertainment, Inc., and as Chief Financial Officer of its distribution
subsidiary. Mr. Veach was a director of Woozyfly, Inc. from January to May,
2009. Mr. Veach graduated from Indiana University with a Bachelor of Science in
Business.




Dov Perlyskyhas served as the
Managing Member of Nesher LLC, a financial management company, from 2000 to the
present. From 1999 to the present, he has served as a director of Engex, Inc., a
closed-end mutual fund. From 2004 to the present, Mr. Perlysky has been a
director of Pharma-Bio Serv, Inc., a public company providing pharmaceutical
validation services. From 2007 to the present, he has served as a director of
Highlands State Bank, a community bank. Mr. Perlysky earned a Bachelor of
Science degree in Mathematics and Computer Science from the University of
Illinois in 1985, and a Master’s of Management degree from Northwestern
University, J.L. Kellogg Graduate School of Management, in 1991.




35


Howard Spindel is a Senior
Managing Director of Integrated Management Solutions, a consulting organization
that renders services to the financial services community since 1985. During
2005, he co-founded Integrated Investment Solutions LLC, an affiliated hedge
fund administrator. He currently serves as the Financial and Operations
Principal, Registered Options Principal or General Securities Principal of over
two dozen Financial Industry Regulatory Authority (FINRA) members. Mr. Spindel
currently serves on the Board of Directors of the Financial Management Society
of the Securities Industry and Financial Markets Association (SIFMA), on SIFMA’s
Capital Committee, on FINRA’s Small Firms Advisory Board and as chair of the
Audit Committee of the Boards of Directors of two publicly-held companies,
Engex, Inc. and Pharma-Bio Serv.  In 1982, Mr. Spindel was an
operations partner of Greenfield Partners, a New York Stock Exchange (NYSE)
member firm. In 1980, he became a financial and operations partner at S.B. Lewis
& Company, a NYSE member firm specializing in arbitrage and mergers and
acquisitions. In 1977, Mr. Spindel served as comptroller of Wm. D. Mayer &
Co., another NYSE member firm specializing in options trading. In 1975, Mr.
Spindel became associated with the NYSE as manager of the Capital and
Operational Standards Section of its Regulation and Surveillance Group. In 1974,
he was with Coopers & Lybrand as an audit supervisor. In 1968, Mr. Spindel
began his career in the Technical Research and Review Department and on the
audit staff of Oppenheim, Appel, Dixon & Co. He earned a Bachelor of Science
degree in Accounting from Hunter College of the City University of New York in
1968.  In 1971, Mr. Spindel became a Certified Public Accountant and
is a member of the American Institute of Certified Public Accountants and the
New York State Society of Certified Public Accountants.




David Cohen, Ph.D, after 20
years as an academic research scientist, served as Provost at Northwestern
University in the early 1990s and moved to Columbia University in 1995 to serve
as Vice President and Dean of the Faculty for Arts and Sciences until 2003 and
as Professor of Biological Sciences and Professor of Neuroscience in Psychiatry
until 2008. He is currently Vice President and Dean of the Faculty Emeritus for
Arts and Sciences at Columbia and Professor Emeritus of Neuroscience in
Psychiatry and Alan H. Kempner Professor Emeritus of Biological Sciences at
Columbia. Dr. Cohen has served on the board of directors of Zenith Electronics,
KLi Corporation, Thuris Corporation, Learning Sciences Corporation, and
Eduventures, Inc., as well as in an advisory capacity to Knowledge Investment
Partners and Identity Theft 911. In addition, Dr. Cohen has served on the board
of directors or trustees for various not-for-profit organizations, including the
Columbia University Press, the Research Libraries Group, Trevor Day School, The
Grass Foundation, Argonne National Laboratory, and the Fermi National
Accelerator Laboratory. He has served as a consultant for the National
Institutes of Health, the National Science Foundation, the Department of
Defense, and the National Academy of Sciences His major elected offices include
President of the Society for Neuroscience and Chairman of the Association of
American Medical Colleges. Beginning in 2009, Dr. Cohen began serving as Provost
of the University of the People, a recently launched on-line, not-for-profit
global university He earned a Bachelor of Arts degree from Harvard University in
1960 and a Ph.D. from the University of California, Berkeley, in
1963.





Significant
Employees





The following are employees who are not
executive officers, but who are expected to make significant contributions to
our business:





Timothy Sauvage, President of
Valley, co-founded Valley Anesthesia Educational Programs, Inc. in 1993
and became President of Valley Anesthesia, Inc. in August 20, 2009 with the sale
of assets to Valley Anesthesia, Inc. Mr. Sauvage is Chief Nurse Anesthetist at
the Central Iowa Health Care System in Des Moines, Iowa. Mr. Sauvage has been in
the nurse anesthesia education market for 21 years. He formerly served as
Director of Veterans Affairs-Drake University Anesthesia Clinical
Specialization. Mr. Sauvage’s areas of responsibility include teaching at each
of Valley’s courses, assisting with updating the course manual and
MemoryMasterTM, and
providing overall guidance and direction for the company. Mr. Sauvage graduated
from Murray State University with a Bachelor of Science in Nursing. He obtained
a Master of Science in Clinical Anesthesia from the Minneapolis School of
Anesthesia and has done post graduate work at Iowa State University in Ames,
Iowa.





Barbara Paradise, Vice President of
Valley,whose husband was a co-founder of Valley Anesthesia Educational
Programs, Inc., served as Vice President of Valley Anesthesia Educational
Programs, Inc. since 2001, and became Vice President of Valley Anesthesia, Inc.
in August 2008 with the sale of assets to Valley Anesthesia, Inc. Ms Paradise
contributes to the overall vision of the company, and her responsibilities
include overseeing the office operations, preparing marketing materials,
coordinating production/printing of the course manual and MemoryMasterTM, order
processing, and customer service.  Ms. Paradise graduated from
University of Wisconsin – Stout with a degree in Home Economics and has done
some graduate work at the University of Minnesota.





Joseph Monaco, President of Training
Direct, has been involved in proprietary education since 1980. Over the
past 30 years, he has held positions as President, Chief Operating Officer,
Chief Financial Officer, and Licensed School Director, for more than 8
post-secondary institutions. He has served on multiple State Association Boards
of Directors, and has been active with multiple Federal Accrediting Bureaus. Mr.
Monaco has worked closely with the State Education Department, Officials, and
State Agencies supporting Vocational Training and other Federal and State Higher
Education Organizations. Mr. Monaco attended Fairfield University, Fairfield CT
and has received various recognition and achievement awards for his service to
the Vocational – Proprietary School sector.





Ashok Narang, Vice President of
Training Direct,joined Training Direct as Vice President and Director in
the Spring of 2004. Mr. Narang has a Bachelor of Arts in Political Science from
Syracuse University, a Master of Science Degree in Education from the University
of Bridgeport and a 6th Year
Professional Diploma for Advanced Study in Educational Management and
Administration, also from the University of Bridgeport.




36


Board
of Directors





All directors will hold office until
the next annual meeting of shareholders and until their successors have been
duly elected and qualified. Officers are elected by and serve at the discretion
of the Board of Directors.





Role
of the Board of Directors





Pursuant to Delaware law, our business,
property and affairs are managed under the direction of the Company’s board of
directors. The board has responsibility for establishing broad corporate
policies and for the overall performance and direction of the Company, but is
not involved in day-to-day operations. Members of the board keep informed of the
Company’s business by participating in board meetings, by reviewing analyses and
reports sent to them regularly, and through discussions with its executive
officers.





Board
Committees





We have not established an audit
committee, compensation committee, nominating committee or other committee of
our board of directors. However, we intend to establish an audit committee,
compensation committee, nominating committee or other committee of our board of
directors which complies with the independence and other rules of the NYSE Amex
Stock Exchange.




Advisory
Board




We do not
currently have an advisory board.





Compensation
of the Board of Directors





Directors
who are also our employees do not receive additional compensation for serving on
the Board. Non-employee directors are not paid any annual cash fee. In addition,
directors are entitled to receive options under our stock option plan. All
directors are reimbursed for their reasonable expenses incurred in attending
Board meetings.




Director
Independence




Presently, we are not required to
comply with the director independence requirements of any securities
exchange.  In determining whether our directors are independent,
however, we intend to comply with the rules of the NYSE Amex Stock
Exchange.  The board of directors also will consult with counsel to
ensure that the board of directors’ determinations are consistent with those
rules and all relevant securities and other laws and regulations regarding the
independence of directors, including those adopted under the Sarbanes-Oxley Act
of 2002 with respect to the independence of future audit committee
members.  The NYSE Amex listing standards define an “independent
director” generally as a person, other than an officer of a company, who does
not have a relationship with the company that would interfere with the
director’s exercise of independent judgment.




Currently
we do not satisfy the “independent director” requirements of the NYSE Amex Stock
Exchange, which requires that a majority of a company’s directors be
independent.  Our board of directors intends to appoint additional
members, each of whom will satisfy such independence requirements.





Family
Relationships




Anil
Narang, our President, Chief Operating Officer and Director, and Ashok Narang,
the Vice President and Director of Training Direct, are brothers. Except as set
forth in the precedent sentence, there are no family relationships among
directors and executive officers.




Involvement in Certain Legal
Proceedings.





None of
our officers or directors have, during the last five years: (i) been
convicted in or is currently subject to a pending a criminal proceeding;
(ii) been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to any federal or state securities
or banking laws including, without limitation, in any way limiting involvement
in any business activity, or finding any violation with respect to such law, nor
(iii) has any bankruptcy petition been filed by or against the business of
which such person was an executive officer or a general partner, whether at the
time of the bankruptcy of for the two years prior thereto.




37


Compliance with Section 16(a) of
the Exchange Act





Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires our directors,
executive officers, and shareholders holding more than 10% of our outstanding
common stock, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in beneficial ownership of our
common stock. Executive officers, directors and greater-than-10% shareholders
are required by SEC regulations to furnish us with copies of all
Section 16(a) reports they file. Based solely on review of the copies of
such reports furnished to us for the year ended December 31, 2009, the
Section 16(a) reports required to be filed by our executive officers,
directors and greater-than-10% shareholders were filed on a timely
basis.





Code
of Ethics





As of the date of this prospectus, we
have not adopted a Code of Ethics applicable to all of our employees, officers
and directors, wherever they are located and whether they work for the Company
on a full or part-time basis.  The Company intends to adopt a Code of
Ethics in the near future so that it complies with the NYSE Amex rules and
regulations. The Code will provide rules and procedures to help the
Company’s employees, officers and directors recognize and respond to situations
that present ethical issues.   Compliance with this code will be
mandatory and those who violate the standards in this Code will be subject to
disciplinary action.





Item 11. Executive
Compensation.





The following table sets forth certain
information concerning the compensation of the chief executive officer and
certain of other executive officers of the Company whose aggregate cash
compensation exceeded $100,000 (other than the chief executive officer) for each
of the last two fiscal years.





Summary
Compensation Table





Name &
                            Principal
                            Position
                          
                          Year
                          
                          Salary ($)
                          
                          
                          Bonus
                            ($)
                          
                          
                          Stock
                            Awards($)
                          
                          
                          Option
                            Awards ($)
                          
                          
                          Non-Equity
                            Incentive Plan
                            Compensation
                            ($)
                          
                          
                          Change in
                            Pension Value
                            and Non-Qualified
                            Deferred
                            Compensation
                            Earnings ($)
                          
                          
                          All Other
                            Compensation
                            ($)
                          
                          
                          Total ($)Joseph
      J. Bianco, CEO and Chairman
                          
                          2009
                          
                          $
                          26,250
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          4,000
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          30,2502008
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-David
      Stahler (1)
                          
                          2009
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-2008
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-





(1)Prior to the reverse
merger, no compensation was paid to David Stahler for his services as our former
President, Chief Financial Officer and Secretary. In addition, Mr. Stahler did
not receive any other compensation, whether in the form of stock awards, stock
options, or otherwise. Prior to the reverse merger, no compensation was paid to
David Stahler for his services as our former sole director.





Outstanding
Equity Awards at Fiscal Year-End Table




The
following table sets forth information with respect to stock awards and grants
of options to purchase our common stock to the named executive officers during
the fiscal year ended December 31, 2009.




38





Option Awards
                                                            
                                                            Stock AwardsName
                                                            
                                                            Number
                                                              of
                                                              Securities
                                                              Underlying
                                                              Unexercised
                                                              Options
                                                              (#)
                                                              Exercisable
                                                            
                                                            Number
                                                              of
                                                              Securities
                                                              Underlying
                                                              Unexercised
                                                              Options
                                                              (#)
                                                              Unexercisable
                                                            
                                                            Equity
                                                              Incentive
                                                              Plan
                                                              Awards:
                                                              Number
                                                              of
                                                              Securities
                                                              Underlying
                                                              Unexercised
                                                              Unearned
                                                              Options (#)
                                                            
                                                            Option
                                                              Exercise
                                                              Price ($)
                                                            
                                                            Option
                                                              Expiration
                                                              Date
                                                            
                                                            Number
                                                              of Shares
                                                              or Units
                                                              of Stock
                                                              That Have
                                                              Not
                                                              Vested
                                                              (#)
                                                            
                                                            Market
                                                              Value of
                                                              Shares or
                                                              Units of
                                                              Stock
                                                              That Have
                                                              Not
                                                              Vested
                                                              ($)
                                                            
                                                            Equity
                                                              Incentive
                                                              Plan
                                                              Awards:
                                                              Number
                                                              of
                                                              Unearned
                                                              Shares,
                                                              Units or
                                                              Other
                                                              Rights
                                                              That Have
                                                              Not
                                                              Vested
                                                              (#)
                                                            
                                                            
                                                            Equity
                                                              Incentive
                                                              Plan
                                                              Awards:
                                                              Market or
                                                              Payout
                                                              Value
                                                              of
                                                              Unearned
                                                              Shares,
                                                              Units or
                                                              Other
                                                              Rights
                                                              That Have
                                                              Not
                                                              Vested
                                                              ($)Joseph
      J. Bianco, CEO and Chairman
                                                            
                                                            
                                                            -0-
                                                            
                                                            639,742
                                                            
                                                            -0-
                                                            
                                                            $
                                                            0.228
                                                            
                                                            12/31/14
                                                            
                                                            -0-
                                                            
                                                            $
                                                            -0-
                                                            
                                                            -0-
                                                            
                                                            $
                                                            -0--0-
                                                            
                                                            639,742
                                                            
                                                            -0-
                                                            
                                                            $
                                                            0.41
                                                            
                                                            12/31/14
                                                            
                                                            -0-
                                                            
                                                            $
                                                            -0-
                                                            
                                                            -0-
                                                            
                                                            $
                                                            -0-Anil
      Narang, President, COO and Director
                                                            
                                                            
                                                            -0-
                                                            
                                                            639,742
                                                            
                                                            -0-
                                                            
                                                            $
                                                            0.228
                                                            
                                                            12/31/14
                                                            
                                                            -0-
                                                            
                                                            $
                                                            -0-
                                                            
                                                            -0-
                                                            
                                                            $
                                                            -0--0-
                                                            
                                                            639,742
                                                            
                                                            -0-
                                                            
                                                            $
                                                            0.41
                                                            
                                                            12/31/14
                                                            
                                                            -0-
                                                            
                                                            $
                                                            -0-
                                                            
                                                            -0-
                                                            
                                                            $
                                                            -0-Kellis
      Veach, CFO
                                                            
                                                            
                                                            -0-
                                                            
                                                            164,505
                                                            
                                                            -0-
                                                            
                                                            $
                                                            0.50
                                                            
                                                            12/31/14
                                                            
                                                            -0-
                                                            
                                                            $
                                                            -0-
                                                            
                                                            -0-
                                                            
                                                            $
                                                            -0-





Director
Compensation





The
following table sets forth with respect to the named directors, compensation
information inclusive of equity awards and payments made in the year end
December 31, 2009. Joseph J. Bianco, our CEO and Chairman, is included in the
Summary Compensation Table.




Fees
                    Earned
                    or Paid
                    in Cash
                    ($)
                  
                  
                  Stock
                    Awards
                    ($)
                  
                  
                  Option
                    Awards
                    ($)
                  
                  
                  Non-Equity
                    Incentive Plan
                    Compensation
                    ($)
                  
                  
                  Change in Pension
                    Value and
                    Nonqualified
                    Deferred
                    Compensation
                    Earnings
                  
                  
                  All Other
                    Compensation
                    ($)
                  
                  
                  Total
                    ($)Dov Perlysky
                  
                  $
                  -0-
                  
                  
                  $
                  -0-
                  
                  
                  $
                  149,283
                  
                  
                  $
                  -0-
                  
                  
                  
                  -0-
                  
                  
                  $
                  -0-
                  
                  
                  $
                  149,283David
      Cohen
                  
                  $
                  -0-
                  
                  
                  $
                  -0-
                  
                  
                  $
                  149,283
                  
                  
                  $
                  -0-
                  
                  
                  
                  -0-
                  
                  
                  $
                  -0-
                  
                  
                  $
                  149,283Howard
      Spindel
                  
                  $
                  -0-
                  
                  
                  $
                  -0-
                  
                  
                  $
                  149,283
                  
                  
                  $
                  -0-
                  
                  
                  
                  -0-
                  
                  
                  $
                  -0-
                  
                  
                  $
                  149,283Anil
      Narang
                  
                  $
                  -0-
                  
                  
                  $
                  -0-
                  
                  
                  $
                  -0-
                  
                  
                  $
                  -0-
                  
                  
                  
                  -0-
                  
                  
                  $
                  -0-
                  
                  
                  $
                  -0-





Stock
Incentive Plan





We had no stock incentive plans as of
the fiscal year ended December 31, 2008.





On December 23, 2009, our board of
directors and holders of a majority of our issued and outstanding shares of
common stock have consented in writing to approve our 2009 Stock Incentive Plan
for key employees, directors, consultants and others providing services to us,
pursuant to which up to 1,500,000 shares of common stock shall be authorized for
issuance thereunder. Kinder Investments, L.P. and Sanjo Squared, LLC, each
affiliates of the Company, propose to enter into a new written shareholder
consent authorizing each of the name change, the share capital increase and the
2009 Stock Incentive Plan.  The following paragraphs describe the
principal terms of the 2009 Plan.





Purpose. The purpose of the
2009 Plan is to provide the Company with a means to assist in recruiting,
retaining and rewarding certain employees, directors and consultants and to
motivate such individuals to exert their best efforts on behalf of the Company
by providing incentives through the granting of awards. By granting awards to
such individuals, the Company expects that the interests of the recipients will
be better aligned with the interests of the Company.





Stock Subject to the
2009 Plan.
Currently a total of 1,500,000 shares of Common Stock may be issued under the
2009 Plan, subject to adjustments. The Company may use shares held in treasury
in lieu of authorized but unissued shares. If any award expires or terminates,
the shares subject to such award shall again be available for purposes of the
2009 Plan. Any shares used by the participant as payment to satisfy a purchase
price related to an award, and any shares withheld by the Company to satisfy an
applicable tax-withholding obligation, shall again be available for purposes of
the 2009 Plan.





Administration of
the 2009 Plan. The 2009 Plan is
administered by the board of directors. The board of directors has sole
discretion over determining individuals eligible to participate in the 2009 Plan
and the time or times at which awards will be granted and the number of shares,
if applicable, which will be granted under an award. Subject to certain
limitations, the board of directors’ power and authority includes, but is not
limited to, the ability to interpret the 2009 Plan, to establish rules and
regulations for carrying out the 2009 Plan and to amend or rescind any rules
previously established, to determine the terms and provisions of the award
agreements and to make all other determinations necessary or advisable for the
administration of the 2009 Plan.


39




Eligible Persons. Any
employee or director, as well as consultant to the Company, who is selected by
the board of directors is eligible to receive awards. The board of directors
will consider such factors as it deems pertinent in selecting participants and
in determining the type and amount of their respective awards, provided that
incentive stock options may only be granted to employees.





Grant of Awards. The types of
awards that may be granted under the 2009 Plan are stock options (either
incentive stock options or non-qualified stock options), stock appreciation
rights, performance-based awards, as well as other stock-based awards and
cash-based awards. Awards are evidenced by an agreement and an award recipient
has no rights as a stockholder with respect to any securities covered by an
award until the date the recipient becomes a holder of record of the Common
Stock.





On the
date of the grant, the exercise price must equal at least 100% of the fair
market value in the case of incentive stock options, or 110% of the fair market
value with respect to optionees who own at least 10% of the total combined
voting power of all classes of stock. The fair market value is determined by
computing the arithmetic mean of the high and low stock prices on a given
determination date. The exercise price on the date of grant is determined by the
board of directors in the case of non-qualified stock options.





Stock
appreciation rights granted under the 2009 Plan are subject to the same terms
and restrictions as the option grants and may be granted independent of, or in
connection with, the grant of options. The board of directors determines the
exercise price of stock appreciation rights. A stock appreciation right granted
independent of an option entitles the participant to payment in an amount equal
to the excess of the fair market value of a share of the Common Stock on the
exercise date over the exercise price per share, times the number of stock
appreciation rights exercised. A stock appreciation right granted in connection
with an option entitles the participant to surrender an unexercised option and
to receive in exchange an amount equal to the excess of the fair market value of
a share of the Common Stock over the exercise price per share for the option,
times the number of shares covered by the option which is surrendered. Fair
market value is determined in the same manner as it is determined for
options.





The board
of directors may also grant awards of stock, restricted stock and other awards
valued in whole or in part by reference to the fair market value of the Common
Stock. These stock-based awards, in the discretion of the board of directors,
may be, among other things, subject to completion of a specified period of
service, the occurrence of an event or the attainment of performance objectives.
Additionally, the board of directors may grant awards of cash, in values to be
determined by the board of directors. If any awards are in excess of $1,000,000
such that Section 162(m) of the Internal Revenue Code applies, the board
may, in its discretion, alter its compensation practices to ensure that
compensation deductions are permitted.




Awards
granted under the 2009 Plan are generally not transferable by the participant
except by will or the laws of descent and distribution, and each award is
exercisable, during the lifetime of the participant, only by the participant or
his or her guardian or legal representative, unless permitted by the
committee.





Awards Granted.  As
of December 31, 2009, the Company has granted the following options under the
2009 Plan:





On December 31, 2009, the board of
directors of EII granted Kellis Veach 5-year options to purchase 150,000 (the
“Veach EII Stock Options”) shares of EII common stock at an exercise price equal
to $0.50 per share, as compensation for services performed on behalf of EII in
his capacity as Chief Financial Officer. The Veach EII Stock Options shall be
exercisable as to 75,000 shares on December 31, 2010 and as to 75,000 shares on
December 31, 2011.





On December 31, 2009, the board of
directors of EII granted Ashok Narang 5-year options to purchase 150,000 (the
“Ashok Narang EII Stock Options”) shares of EII common stock at an exercise
price equal to $0.50 per share, as compensation for services performed on behalf
of EII in his capacity as Vice President of Training Direct. The Ashok Narang
EII Stock Options shall be exercisable as to 75,000 shares on December 31, 2010
and as to 75,000 shares on December 31, 2011.





Under the Merger Agreement, the Veach
and Ashok Narang Stock Options were each converted into 5-year options to
purchase an aggregate of 164,505 shares of Florham Common Stock with respect to
Mr. Veach and 164,505 shares of Florham Common Stock with respect to Mr. Narang,
each at an exercise price of $0.50. These options are exercisable as to 82,252
shares on December 31, 2010 and as to 82,253 shares on December 31,
2011.





On December 31, 2009, the board of
directors of EII granted Howard Spindel 5-year options to purchase 100,000 (the
“Spindel EII Stock Options”) shares of EII common stock at an exercise price
equal to $0.50 per share, as compensation for services performed on behalf of
EII in his capacity as a director.  The Spindel EII Stock Options vest
in full on the date of grant.


40





On December 31, 2009, the board of
directors of EII granted Dov Perlysky 5-year options to purchase 100,000 (the
“Perlysky EII Stock Options”) shares of EII common stock at an exercise price
equal to $0.50 per share, as compensation for services performed on behalf of
EII in his capacity as a director. The Perlysky EII Stock Options vest in full
on the date of grant.





On December 31, 2009, the board of
directors of EII granted David Cohen 5-year options to purchase 100,000 (the
“Cohen EII Stock Options”) shares of EII common stock at an exercise price equal
to $0.50 per share, as compensation for services performed on behalf of EII in
his capacity as a director. The Cohen EII Stock Options vest in full on the date
of grant.





On December 31, 2009, the board of
directors of EII granted Jonathan Turkel 5-year options to purchase 100,000 (the
“Turkel EII Stock Options”) shares of EII common stock at an exercise price
equal to $0.50 per share, as compensation for services performed on behalf of
EII in his capacity as a consultant. The Turkel EII Stock Options vest in full
on the date of grant.




Under the Merger Agreement, the
Spindel, Perlysky, Cohen and Turkel EII Stock Options were each converted into
5-year options to purchase an aggregate of (i) 109,670 shares of Florham Common
Stock with respect to Mr. Spindel, (ii) 109,670 shares of Florham Common Stock
with respect to Mr. Perlysky, (iii) 109,670 shares of Florham Common Stock with
respect to Dr. Cohen, and (iv) 109,670 shares of Florham Common Stock with
respect to Mr. Turkel, each at an exercise price of $0.50. Each of these options
vest in full on the date of grant.





On December 31, 2009, the board of
directors of Florham granted Leonard Katz a 5-year option to purchase an
aggregate of 109,670 shares of Florham Common Stock at an exercise price of
$0.50 in his capacity as a consultant. This option vests in full on the date of
grant.





Amendment. The 2009 Plan may
be amended, altered, suspended or terminated by the administrator at any time.
The Company may not alter the rights and obligations under any award granted
before amendment of the 2009 Plan without the consent of the affected
participant. Unless terminated sooner, the 2009 Plan will terminate
automatically on December 23, 2019.





Employment
and Consulting Agreements





Bianco
Employment Agreement





On August 20, 2009, EII entered into an
Employment Agreement with Joseph Bianco (the “Bianco Employment Agreement”)
pursuant to which Mr. Bianco was engaged through December 31, 2012 (the “Term”)
as EII’s Chief Executive Officer with the responsibility for the overall
operation of EII, as well as other duties as may be assigned to Mr. Bianco by
the board of directors of EII, including providing services to EII and its other
subsidiaries. EII pays to Mr. Bianco a salary of $70,000 per annum (the “Base
Salary”) and he is entitled to receive an annual bonus (the “Bonus”) as shall be
determined in the sole discretion of the independent members of the board of
directors of EII. Commencing on January 1, 2010, the Base Salary will be
increased to an annual amount which shall be commensurate with both (i) the
trailing twelve-month consolidated pro-forma (based on acquisitions or other
material events that may occur) earnings before interest, taxes,
depreciation and amortization of intangible assets of the EII Group for the
fiscal year ended December 31, 2009, and (ii) the then business prospects
of the EII Group, all as shall be determined by the independent members of the
Board of Directors of EII.





In addition to the Base Salary and
Bonus, Mr. Bianco may be granted options to purchase, or stock appreciation
rights in, shares of the common stock of EII. On August 20, 2009, Mr. Bianco
purchased options to purchase 1,166,667 (the “Bianco EII Stock Options”) shares
of EII common stock at an exercise price equal to $0.25 per share with respect
to 583,334 options and $0.45 per share with respect to 583,333 options in
exchange for a $10,000 principal amount promissory note from Mr. Bianco. Under
the Merger Agreement, the Bianco EII Stock Options were converted into 5-year
options to purchase an aggregate of 1,279,484 shares of Common Stock at an
exercise price equal to $0.228 per share with respect to 639,742 options (the
“Bianco Tier I Options”) and $0.41 per share with respect to 639,742 options
(the “Bianco Tier II Options”). The Bianco Tier I Options shall be exercisable
only if the EBTDA Per Share for the applicable Measuring Period exceeds the Base
Tier I EBTDA Per Share and the Bianco Tier II Options shall be exercisable only
if the EBTDA Per Share for the applicable Measuring Period exceeds the Base Tier
II EBTDA. The Bianco Tier I and Tier II Options shall be deemed vested as of the
date of grant.





Base Tier I EBTDA Per Share means: (1)
$0.036 for the Measuring Year ending December 31, 2010, (2) $0.055 for the
Measuring Year ending December 31, 2011, (3) $0.091 for the Measuring Year
ending December 31, 2012, (4) $0.109 for the Measuring Year ending December 31,
2013, and (5) $0.137 for the Measuring Year ending December 31, 2014. Base Tier
II EBTDA Per Share means: (1) $0.055 for the Measuring Year ending December 31,
2010, (2) $0.091 for the Measuring Year ending December 31, 2011, (3) $0.137 for
the Measuring Year ending December 31, 2012, (4) $0.164 for the Measuring Year
ending December 31, 2013, and (5) $0.191 for the Measuring Year ending December
31, 2014. EBTDA Per Share means (1) the net income after taxes (exclusive of any
non-recurring or extraordinary items paid or accrued) of the Company and its
consolidated subsidiaries (if any) in the applicable Measuring Year, plus (A) federal and state
income taxes paid or accrued in such Measuring Year, (B) amounts paid or accrued
in such Measuring Year in respect of depreciation of tangible assets, and (C)
amounts paid or accrued in such Measuring Year in respect of amortization of
intangible assets, including goodwill, all as set forth on the audited
consolidated statements of income or operations of the Company and its
consolidated subsidiaries (if any) in the applicable Measuring Year and as
determined in accordance with GAAP by the Company’s independent accountants,
divided by (2) the
weighted average of the outstanding Common Stock, measured on a fully diluted
basis.


41




The Bianco Employment Agreement
contains customary confidentiality, non-competition and non-solicitation
provisions.





Narang
Employment Agreement





On August 20, 2009, EII entered into an
Employment Agreement with Anil Narang (the “Narang Employment Agreement”)
pursuant to which Mr. Narang was engaged through December 31, 2012 (the “Term”)
as EII’s President and Chief Operating Officer with the responsibility for the
overall operation of EII together with Mr. Bianco, as well as other duties as
may be assigned to Mr. Narang by the board of directors of EII, including
providing services to EII and its other subsidiaries. EII pays to Mr. Narang a
salary of $70,000 per annum (the “Base Salary”) and he is entitled to receive an
annual bonus (the “Bonus”) as shall be determined in the sole discretion of the
independent members of the board of directors of EII. Commencing on January 1,
2010, the Base Salary will be increased to an annual amount which shall be
commensurate with both (i) the trailing twelve-month consolidated pro-forma
(based on acquisitions or other material events that may occur) earnings
before interest, taxes, depreciation and amortization of intangible assets of
the EII Group for the fiscal year ended December 31, 2009, and (ii) the
then business prospects of the EII Group, all as shall be determined by the
independent members of the Board of Directors of EII.





In addition to the Base Salary and
Bonus, Mr. Narang may be granted options to purchase, or stock appreciation
rights in, shares of the common stock of EII. On August 20, 2009, Mr. Narang
purchased options to purchase 1,166,667 (the “Narang EII Stock Options”) shares
of EII common stock at an exercise price equal to $0.25 per share with respect
to 583,334 options and $0.45 per share with respect to 583,333 options in
exchange for a $10,000 principal amount promissory note from Mr. Narang. Under
the Merger Agreement, the Narang EII Stock Options were converted into 5-year
options to purchase an aggregate of 1,279,484 shares of Common Stock at an
exercise price equal to $0.228 per share with respect to 639,742 options (the
“Narang Tier I Options”) and $0.41 per share with respect to 639,742 options
(the “Narang Tier II Options”). The Narang Tier I Options shall be exercisable
only if the EBTDA Per Share for the applicable Measuring Period exceeds the Base
Tier I EBTDA Per Share and the Narang Tier II Options shall be exercisable only
if the EBTDA Per Share for the applicable Measuring Period exceeds the Base Tier
II EBTDA. The Narang Tier I and Tier II Options shall be deemed vested as of the
date of grant.  Base Tier I EBTDA Per Share and EBTDA Per Share have
the same meanings set forth above under the heading “Bianco Employment
Agreement”.





The Narang Employment Agreement
contains customary confidentiality, non-competition and non-solicitation
provisions.





Veach
Employment Agreement





On August 20, 2009, EII entered into an
Employment Agreement with Kellis Veach (the “Veach Employment Agreement”)
pursuant to which Mr. Veach was engaged through December 31, 2012 (the “Term”)
as EII’s Chief Financial Officer with the responsibility for financial reporting
and operation of EII, as well as other duties as may be assigned to Mr. Veach by
the board of directors of EII, including providing services to EII and its other
subsidiaries. EII pays to Mr. Veach a salary of $70,000 per annum (the “Base
Salary”) and he is entitled to receive an annual bonus (the “Bonus”) as shall be
determined in the sole discretion of the independent members of the board of
directors of EII. Commencing on January 1, 2010, the Base Salary will be
increased to an annual amount which shall be commensurate with both (i) the
trailing twelve-month consolidated pro-forma (based on acquisitions or other
material events that may occur) earnings before interest, taxes,
depreciation and amortization of intangible assets of the EII Group for the
fiscal year ended December 31, 2009, and (ii) the then business prospects
of the EII Group, all as shall be determined by the independent members of the
Board of Directors of EII.  In addition to the Base Salary and Bonus,
Mr. Veach may be granted options to purchase, or stock appreciation rights in,
shares of the common stock of EII.





The Veach Employment Agreement contains
customary confidentiality, non-competition and non-solicitation
provisions.





Assignment
and Assumption Agreements





On December 31, 2009, Florham entered
into certain Assignment and Assumption Agreements with EII, Joseph Bianco, Anil
Narang and Kellis Veach under which EII assigned to Florham all of EII’s rights,
title and interest, and delegated all of its obligations and liabilities, to
each of the Bianco, Narang and Veach Employment Agreements to Florham. In
addition, Florham assumed all covenants, agreements, and other obligations to be
performed by EII under the Bianco, Narang and Veach Employment Agreements, and
Messrs Bianco, Narang and Veach each consented to the Assignment and Assumption
Agreement applicable to him.




42


Joseph
Monaco Consulting Agreement





On December 31, 2009, EII entered into
a Consulting Agreement with Joseph Monaco (the “Consulting Agreement”) under
which Mr. Monaco was engaged through December 31, 2010 (the “Term”) to provide
EII with such general business and consulting services as may be assigned to him
by the board of directors, including, without limitation, advising EII, its
subsidiaries, and the board with respect to (i) relationships with various state
educational departments and agencies, and (ii) analyzing and pursuing potential
acquisitions. During the Term, EII will pay Mr. Monaco a consulting fee of
$75,000 per annum and will reimburse him for all documented out-of-pocket
expenses incurred by him in the interest of the business. The Consulting
Agreement contains customary confidentiality, non-competition and
non-solicitation provisions.





Ashok
Narang Employment Agreement with Training Direct





On December 31, 2009, Training Direct
entered into an Employment Agreement with Ashok Narang (the “Training Direct
Employment Agreement”) pursuant to which Mr. Narang was engaged through December
31, 2012 (the “Term”) as Training Direct’s Vice President with the
responsibility for the overall operation of Training Direct, as well as other
duties as may be assigned to Mr. Narang by the board of directors of the
Company, including providing services to the Company and its other subsidiaries.
Training Direct will pay Mr. Narang a salary of $135,000 per annum (the “Base
Salary”) and he is entitled to receive an annual bonus (the “Bonus”) as shall be
determined in the sole discretion of the independent members of the board of
directors of the Company. In addition to the Base Salary and Bonus, Mr. Narang
may be granted options to purchase, or stock appreciation rights in, shares of
the common stock of the Company. The Training Direct Employment Agreement
contains customary confidentiality, non-competition and non-solicitation
provisions.





Limitation
on Liability and Indemnification of Directors and Officers





Section
145 of the Delaware General Corporation Law provides that a corporation may
indemnify directors and officers as well as other employees and individuals
against expenses including attorneys' fees, judgments, fines and amounts paid in
settlement in connection with various actions, suits or proceedings, whether
civil, criminal, administrative or investigative other than an action by or in
the right of the corporation, a derivative action, if they acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, if they had no reasonable cause to believe their conduct was
unlawful. A similar standard is applicable in the case of derivative actions,
except that indemnification only extends to expenses including attorneys' fees
incurred in connection with the defense or settlement of such actions, and the
statute requires court approval before there can be any indemnification where
the person seeking indemnification has been found liable to the corporation. The
statute provides that it is not exclusive of other indemnification that may be
granted by a corporation's certificate of incorporation, bylaws, agreement, and
a vote of stockholders or disinterested directors or otherwise.





Our
certificate of incorporation provides that we will indemnify and hold harmless,
to the fullest extent permitted by Section 145 of the Delaware General
Corporation Law, as amended from time to time, each person that such section
grants us the power to indemnify.





The
Delaware General Corporation Law permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for any breach
of the director's duty of loyalty to the corporation or its stockholders; acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; payments of unlawful dividends or unlawful stock
repurchases or redemptions, or any transaction from which the director derived
an improper personal benefit.





Our
certificate of incorporation provides that, to the fullest extent permitted by
applicable law, none of our directors will be personally liable to us or our
stockholders for monetary damages for breach of fiduciary duty as a
director.





Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or controlling persons of the Company, pursuant
to the foregoing provisions, or otherwise, the Company has been advised that, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered
hereunder, the Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.




43


Item 12. SecurityOwnership of Certain Beneficial
Owners and Management and Related Stockholder
Matters.





As of December 30, 2009, we had a total
of 166,700 shares of common stock issued and outstanding.  As of March
30, 2010, we have a total of 6,705,622 shares of common stock issued and
outstanding, of which 179,741 shares are held in escrow subject to future
earnings attainment.





The following table sets forth, as of
March 30, 2010: (a) the names and addresses of each beneficial owner of more
than five percent (5%) of our common stock known to us, the number of shares of
common stock beneficially owned by each such person, and the percent of our
common stock so owned before and after the reverse merger and acquisition of
Training Direct; and (b) the names and addresses of each director and executive
officer before and after the reverse merger and acquisition of Training Direct,
the number of shares our common stock beneficially owned, and the percentage of
our common stock so owned, by each such person, and by all of our directors and
executive officers as a group before and after the reverse merger and
acquisition of Training Direct. Each person has sole voting and investment power
with respect to the shares of our common stock, except as otherwise indicated.
Beneficial ownership consists of a direct interest in the shares of common
stock, except as otherwise indicated. Individual beneficial ownership also
includes shares of common stock that a person has the right to acquire within 60
days from March 30, 2010.




Unless otherwise noted, the principal
address of each of the directors and officers listed below is 845 Third Avenue,
6th
Floor, New York, New York 10022.





Name
                    
                    Share
                      Amount and
                      Nature of
                      Beneficial
                      Ownership
                      Before the
                      Reverse
                      Merger
                    
                    
                    Percentage of
                      Outstanding
                      Shares
                      Before the
                      Reverse
                      Merger (1)
                    
                    
                    Share Amount
                      and Nature of
                      Beneficial
                      Ownership After
                      the Reverse
                      Merger (2)
                    
                    
                    Percentage of
                      Outstanding
                      Shares After the
                      Reverse Merger
                      (2)David
      Stahler (3)
                    
                    
                    53,600
                    
                    
                    
                    32.15
                    %
                    
                    
                    53,600
                    
                    
                    
                    *Sanjo
      Squared, LLC (4)
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    7,311,333
                    (5)
                    
                    
                    109.03
                    %Kinder
      Investments, L.P. (6)
                    
                    
                    500
                    
                    
                    
                    *
                    
                    
                    
                    10,967,500
                    (7)
                    
                    
                    163.56
                    %Joseph
      J. Bianco
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    5,056,408
                    (8)
                    
                    
                    75.41
                    %Anil
      Narang
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    5,056,407
                    (9)
                    
                    
                    75.41
                    %Kellis
      Veach
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    (10)
                    
                    
                    —Dov
      Perlysky
                    
                    
                    5,600
                    (11)
                    
                    
                    3.4
                    %
                    
                    
                    11,627,270
                    (12)
                    
                    
                    173.40
                    %Howard
      Spindel
                    
                    
                    100
                    (13)
                    
                    
                    *
                    
                    
                    
                    109,770
                    (14)
                    
                    
                    1.64
                    %David
      Cohen
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    109,670
                    (14)
                    
                    
                    1.64
                    %All
      Directors, Executive Officers and Director Nominees before the Reverse
      Merger, as a Group
                    
                    
                    59,300
                    
                    
                    
                    35.57
                    %
                    
                    
                    59,300
                    
                    
                    
                    *All
      Directors, Executive Officers and Director Nominees after the Reverse
      Merger and after the Effective Date of the Schedule 14f-1, as a
      Group
                    
                    
                    
                    
                    
                    
                    —
                    
                    
                    
                    21,959,525
                    
                    
                    
                    327.48
                    %





* Less
than one percent.





(1)
            The
      numbers in this column are based on 166,700 shares
      outstanding.(2)
            The
      numbers are based on 6,166,700 shares outstanding, which represent the
      number of shares the Company has outstanding after the Reverse Merger, and
      does not include the issuance of (i) 12,278,333 shares of common stock
      issuable upon conversion of 250,000 shares of Series A Preferred Stock, or
      (ii) the issuance of shares upon exercise of outstanding options or
      warrants.


(3)
            Mr.
      Stahler’s address is c/o Florham Consulting Corp., 64 Beaver Street, Suite
      233, New York, New York 10004.




44





(4)
            The
      persons sharing voting, dispositive or investment powers over Sanjo (50%
      each) are Joseph J. Bianco and Anil Narang, Managers. The address of Sanjo
      is c/o Educational Investors, Inc., 845 Third Avenue, 6th
      Floor, New York, New York 10022.


(5)
            This
      number represents: (i) 2,400,000 shares of Florham Common Stock, and (ii)
      100,000 shares of Series A Preferred Stock, each of which shares of Series
      A Preferred Stock shall be converted, on the basis of 49.11333 shares of
      Florham Common Stock for each share of Series A Preferred Stock (an
      aggregate of 4,911,333 shares of Florham Common Stock) automatically upon
      the filing by the Company of an amendment to its certificate of
      incorporation increasing its authorized shares of Florham Common Stock to
      not less than 50,000,000 shares.(6)
            The
      General Partner of Kinder is Nesher, LLC. The person having voting,
      dispositive or investment powers over Nesher is Dov Perlysky, Managing
      Member. The address of Kinder is c/o Educational Investors, Inc., 845
      Third Avenue, 6th
      Floor, New York, New York 10022.


(7)
            This
      number represents: (i) 500 shares of Florham Common Stock owned prior to
      the Reverse Merger; (ii) 3,600,000 shares of Florham Common Stock, and
      (iii) 150,000 shares of Series A Preferred Stock, which automatically
      convert into an aggregate of 7,367,000 shares of Florham Common Stock upon
      the filing by the Company of an amendment to its certificate of
      incorporation increasing its authorized shares of Florham Common Stock to
      not less than 50,000,000 shares.(8)
            This
      number represents: (i) options to purchase 1,279,484 shares of Florham
      Common Stock at an exercise price equal to $0.228 per share with respect
      to 639,742 options and $0.41 per share with respect to 639,742 options;
      (ii) 1,200,000 shares of Florham Common Stock owned by Sanjo Squared, LLC;
      (iii) 50,000 shares of Series A Preferred Stock owned by Sanjo, each of
      which shares of Series A Preferred Stock shall be converted, on the basis
      of 49.11333 shares of Florham Common Stock for each share of Series A
      Preferred Stock (an aggregate of 2,455,667 shares of Florham Common Stock)
      automatically upon the filing by the Company of an amendment to its
      certificate of incorporation increasing its authorized shares of Florham
      Common Stock to not less than 50,000,000 shares; (iv) 80,838 Acquisition
      Shares issued on March 3, 2010 pursuant to the Interest Purchase Agreement
      dated as of December 31, 2009; and (v) 40,419 Escrow Shares issued on
      March 3, 2010 pursuant to the Interest Purchase Agreement dated as of
      December 31, 2009.


(9)
            This
      number represents: (i) options to purchase 1,279,484 shares of Florham
      Common Stock at an exercise price equal to $0.228 per share with respect
      to 639,742 options and $0.41 per share with respect to 639,742 options;
      (ii) 1,200,000 shares of Florham Common Stock owned by Sanjo Squared, LLC;
      (iii) 50,000 shares of Series A Preferred Stock owned by Sanjo, each of
      which shares of Series A Preferred Stock shall be converted, on the basis
      of 49.11333 shares of Florham Common Stock for each share of Series A
      Preferred Stock (an aggregate of 2,455,666 shares of Florham Common Stock)
      automatically upon the filing by the Company of an amendment to its
      certificate of incorporation increasing its authorized shares of Florham
      Common Stock to not less than 50,000,000 shares; (iv) 80,838 Acquisition
      Shares issued on March 3, 2010 pursuant to the Interest Purchase Agreement
      dated as of December 31, 2009; and (v) 40,419 Escrow Shares issued on
      March 3, 2010 pursuant to the Interest Purchase Agreement dated as of
      December 31, 2009.(10)
            Does
      not include options to purchase an aggregate of 164,505 shares of Florham
      Common Stock at an exercise price of $0.50 per share, of which (i) 82,252
      options shall vest on December 31, 2010; and (ii) 82,253 options shall
      vest on December 31, 2011.


(11)
            This
      number represents: (i) 500 shares owned by Kinder Investments, L.P.; (ii)
      100 shares owned by Mr. Perlysky; and (iii) 5,000 shares owned by Krovim,
      LLC, whose manager is Nesher, LLC. Mr. Perlysky is the Managing Member of
      Nesher, LLC. Does not include: (a) 100 shares owned by Laya Perlysky, Mr.
      Perlysky’s spouse; and (b) 1,800 shares owned by the LDP Family
      Partnership, whose General Partner is Mrs. Perlysky. Mr. Perlysky
      disclaims beneficial ownership of the shares owned by Mrs. Perlysky and
      the LDP Family Partnership.(12)
            This
      number represents: (i) 500 shares owned by Kinder Investments, L.P.; (ii)
      100 shares owned by Mr. Perlysky; (iii) 5,000 shares owned by Krovim, LLC,
      whose manager is Nesher, LLC; (iv) options to purchase 109,670 shares of
      Florham Common Stock at an exercise price equal to $0.50 per share; (v)
      3,600,000 shares of Florham Common Stock owned by Kinder Investments,
      L.P., (vi) 150,000 shares of Series A Preferred Stock owned by Kinder,
      which automatically converts into an aggregate of 7,367,000 shares of
      Florham Common Stock upon the filing by the Company of an amendment to its
      certificate of incorporation increasing its authorized shares of Florham
      Common Stock to not less than 50,000,000 shares; and (vii) warrants to
      purchase 545,000 shares of Florham Common Stock at $0.05 per share
      exercisable on or after March 12, 2010 owned by Krovim,
    LLC.(13)
            This
      number represents shares owned by Jash Group, Inc. Mr. Spindel, Senior
      Vice President of Jash Group, Inc., has the ability to vote these shares
      but otherwise disclaims beneficial ownership. Does not include 100 shares
      owned by Mr. Spindel’s spouse, as to which he disclaims beneficial
      ownership.


(14)
            This
      number represents options to purchase shares of Florham Common Stock at an
      exercise price equal to $0.50 per
share.





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





In our two prior fiscal years, and the
subsequent period through the date hereof, there have been no transactions
between members of management, five percent stockholders, “affiliates,”
promoters and finders, except as set forth below.  Each of the
transactions listed below was negotiated on an “arm’s length”
basis.


45




Prior to
the reverse merger, we used office space provided to us by our former President,
David Stahler, at no cost. The amount of office space used by Florham was
insignificant.





The
mother of our prior President is a co-trustee of a trust which owns
approximately 14% of the capital stock of Chocolate Printing Company, Inc., one
of our prior clients.





Lease





EII’s and Valley’s principal executive
offices are located at 845 Third Avenue, 6th Floor,
New York, New York 10022. Valley rents office space from one of its officers
under a lease expiring August 20, 2010 and pays $725 per month. EII also
reimburses another officer $2,992 per month for rent of office space on a
month-to-month basis.





Employment
and Consulting Agreements





On August 20, 2009, EII entered into an
Employment Agreement with Joseph Bianco (the “Bianco Employment Agreement”)
pursuant to which Mr. Bianco was engaged through December 31, 2012 (the “Term”)
as EII’s Chief Executive Officer with the responsibility for the overall
operation of EII, as well as other duties as may be assigned to Mr. Bianco by
the board of directors of EII, including providing services to EII and its other
subsidiaries. EII pays to Mr. Bianco a salary of $70,000 per annum (the “Base
Salary”) and he is entitled to receive an annual bonus (the “Bonus”) as shall be
determined in the sole discretion of the independent members of the board of
directors of EII. Commencing on January 1, 2010, the Base Salary will be
increased to an annual amount which shall be commensurate with both (i) the
trailing twelve-month consolidated pro-forma (based on acquisitions or other
material events that may occur) earnings before interest, taxes,
depreciation and amortization of intangible assets of the EII Group for the
fiscal year ended December 31, 2009, and (ii) the then business prospects
of the EII Group, all as shall be determined by the independent members of the
Board of Directors of EII. The Bianco Employment Agreement contains customary
confidentiality, non-competition and non-solicitation provisions.





On August 20, 2009, EII entered into an
Employment Agreement with Anil Narang (the “Narang Employment Agreement”)
pursuant to which Mr. Narang was engaged through December 31, 2012 (the “Term”)
as EII’s President and Chief Operating Officer with the responsibility for the
overall operation of EII together with Mr. Bianco, as well as other duties as
may be assigned to Mr. Narang by the board of directors of EII, including
providing services to EII and its other subsidiaries. EII pays to Mr. Narang a
salary of $70,000 per annum (the “Base Salary”) and he is entitled to receive an
annual bonus (the “Bonus”) as shall be determined in the sole discretion of the
independent members of the board of directors of EII. Commencing on January 1,
2010, the Base Salary will be increased to an annual amount which shall be
commensurate with both (i) the trailing twelve-month consolidated pro-forma
(based on acquisitions or other material events that may occur) earnings
before interest, taxes, depreciation and amortization of intangible assets of
the EII Group for the fiscal year ended December 31, 2009, and (ii) the
then business prospects of the EII Group, all as shall be determined by the
independent members of the Board of Directors of EII. The Narang Employment
Agreement contains customary confidentiality, non-competition and
non-solicitation provisions.





On
August 20, 2009, EII entered into an Employment Agreement with Kellis Veach (the
“Veach Employment Agreement”) pursuant to which Mr. Veach was engaged through
December 31, 2012 (the “Term”) as EII’s Chief Financial Officer with the
responsibility for financial reporting and operation of EII, as well as other
duties as may be assigned to Mr. Veach by the board of directors of EII,
including providing services to EII and its other subsidiaries. EII pays to Mr.
Veach a salary of $70,000 per annum (the “Base Salary”) and he is entitled to
receive an annual bonus (the “Bonus”) as shall be determined in the sole
discretion of the independent members of the board of directors of EII.
Commencing on January 1, 2010, the Base Salary will be increased to an annual
amount which shall be commensurate with both (i) the trailing twelve-month
consolidated pro-forma (based on acquisitions or other material events
that may occur) earnings before interest, taxes, depreciation and
amortization of intangible assets of the EII Group for the fiscal year ended
December 31, 2009, and (ii) the then business prospects of the EII Group,
all as shall be determined by the independent members of the Board of Directors
of EII.  In addition to the Base Salary and Bonus, Mr. Veach may be
granted options to purchase, or stock appreciation rights in, shares of the
common stock of EII.  The Veach Employment Agreement contains
customary confidentiality, non-competition and non-solicitation
provisions.





On
December 31, 2009, we entered into certain Assignment and Assumption Agreements
with EII, Joseph Bianco, Anil Narang and Kellis Veach under which EII assigned
to us all of EII’s rights, title and interest, and delegated all of its
obligations and liabilities, to each of the Bianco, Narang and Veach Employment
Agreements to us. In addition, we assumed all covenants, agreements, and other
obligations to be performed by EII under the Bianco, Narang and Veach Employment
Agreements, and Messrs Bianco, Narang and Veach each consented to the Assignment
and Assumption Agreement applicable to him.




46


On December 31, 2009, EII entered into
a Consulting Agreement with Joseph Monaco (the “Consulting Agreement”) under
which Mr. Monaco was engaged through December 31, 2010 (the “Term”) to provide
EII with such general business and consulting services as may be assigned to him
by the board of directors, including, without limitation, advising EII, its
subsidiaries, and the board with respect to (i) relationships with various state
educational departments and agencies, and (ii) analyzing and pursuing potential
acquisitions. During the Term, EII will pay Mr. Monaco a consulting fee of
$75,000 per annum and will reimburse him for all documented out-of-pocket
expenses incurred by him in the interest of the business. The Consulting
Agreement contains customary confidentiality, non-competition and
non-solicitation provisions.





On December 31, 2009, Training Direct
entered into an Employment Agreement with Ashok Narang (the “Training Direct
Employment Agreement”) pursuant to which Mr. Narang was engaged through December
31, 2012 (the “Term”) as Training Direct’s Vice President with the
responsibility for the overall operation of Training Direct, as well as other
duties as may be assigned to Mr. Narang by the board of directors of the
Company, including providing services to the Company and its other subsidiaries.
Training Direct will pay Mr. Narang a salary of $135,000 per annum (the “Base
Salary”) and he is entitled to receive an annual bonus (the “Bonus”) as shall be
determined in the sole discretion of the independent members of the board of
directors of the Company. In addition to the Base Salary and Bonus, Mr. Narang
may be granted options to purchase, or stock appreciation rights in, shares of
the common stock of the Company. The Training Direct Employment Agreement
contains customary confidentiality, non-competition and non-solicitation
provisions.





Stock
Option Grants/Issuances to Management, Directors and Consultants





On August 20, 2009, Joseph Bianco
purchased options to purchase 1,166,667 (the “Bianco EII Stock Options”) shares
of EII common stock at an exercise price equal to $0.25 per share with respect
to 583,334 options and $0.45 per share with respect to 583,333 options in
exchange for a $10,000 principal amount promissory note from Mr. Bianco, as
compensation for services performed on behalf of EII in his capacity as Chief
Executive Officer.





Under
the merger agreement, the Bianco EII Stock Options were converted into 5-year
options to purchase an aggregate of 1,279,484 shares of our common stock at an
exercise price equal to $0.228 per share with respect to 639,742 options (the
“Bianco Tier I Options”) and $0.41 per share with respect to 639,742 options
(the “Bianco Tier II Options”). The Bianco Tier I Options shall be exercisable
only if the EBTDA Per Share for the applicable Measuring Period exceeds the Base
Tier I EBTDA Per Share and the Bianco Tier II Options shall be exercisable only
if the EBTDA Per Share for the applicable Measuring Period exceeds the Base Tier
II EBTDA. The Bianco Tier I and Tier II Options shall be deemed vested as of the
date of grant.





Base Tier I EBTDA Per Share means: (1)
$0.036 for the Measuring Year ending December 31, 2010, (2) $0.055 for the
Measuring Year ending December 31, 2011, (3) $0.091 for the Measuring Year
ending December 31, 2012, (4) $0.109 for the Measuring Year ending December 31,
2013, and (5) $0.137 for the Measuring Year ending December 31, 2014. Base Tier
II EBTDA Per Share means: (1) $0.055 for the Measuring Year ending December 31,
2010, (2) $0.091 for the Measuring Year ending December 31, 2011, (3) $0.137 for
the Measuring Year ending December 31, 2012, (4) $0.164 for the Measuring Year
ending December 31, 2013, and (5) $0.191 for the Measuring Year ending December
31, 2014. EBTDA Per Share means (1) the net income after taxes (exclusive of any
non-recurring or extraordinary items paid or accrued) of the Company and its
consolidated subsidiaries (if any) in the applicable Measuring Year, plus (A) federal and state
income taxes paid or accrued in such Measuring Year, (B) amounts paid or accrued
in such Measuring Year in respect of depreciation of tangible assets, and (C)
amounts paid or accrued in such Measuring Year in respect of amortization of
intangible assets, including goodwill, all as set forth on the audited
consolidated statements of income or operations of the Company and its
consolidated subsidiaries (if any) in the applicable Measuring Year and as
determined in accordance with GAAP by the Company’s independent accountants,
divided by (2) the
weighted average of the outstanding common stock, measured on a fully diluted
basis.





On August 20, 2009, Anil Narang
purchased options to purchase 1,166,667 (the “Narang EII Stock Options”) shares
of EII common stock at an exercise price equal to $0.25 per share with respect
to 583,334 options and $0.45 per share with respect to 583,333 options in
exchange for a $10,000 principal amount promissory note from Mr. Narang, as
compensation for services performed on behalf of EII in his capacity as
President and Chief Operating Officer.





Under the merger agreement, the Narang
EII Stock Options were converted into 5-year options to purchase an aggregate of
1,279,484 shares of our common stock at an exercise price equal to $0.228 per
share with respect to 639,742 options (the “Narang Tier I Options”) and $0.41
per share with respect to 639,742 options (the “Narang Tier II Options”). The
Narang Tier I Options shall be exercisable only if the EBTDA Per Share for the
applicable Measuring Period exceeds the Base Tier I EBTDA Per Share and the
Narang Tier II Options shall be exercisable only if the EBTDA Per Share for the
applicable Measuring Period exceeds the Base Tier II EBTDA. The Narang Tier I
and Tier II Options shall be deemed vested as of the date of
grant.  Base Tier I EBTDA Per Share and EBTDA Per Share have the same
meanings set forth above.





On December 31, 2009, the board of
directors of EII granted Kellis Veach 5-year options to purchase 150,000 (the
“Veach EII Stock Options”) shares of EII common stock at an exercise price equal
to $0.50 per share, as compensation for services performed on behalf of EII in
his capacity as Chief Financial Officer. The Veach EII Stock Options shall be
exercisable as to 75,000 shares on December 31, 2010 and as to 75,000 shares on
December 31, 2011.


47




On December 31, 2009, the board of
directors of EII granted Ashok Narang 5-year options to purchase 150,000 (the
“Ashok Narang EII Stock Options”) shares of EII common stock at an exercise
price equal to $0.50 per share, as compensation for services performed on behalf
of EII in his capacity as President of Training Direct. The Ashok Narang EII
Stock Options shall be exercisable as to 75,000 shares on December 31, 2010 and
as to 75,000 shares on December 31, 2011.





Under the merger agreement, the Veach
and Ashok Narang Stock Options were each converted into 5-year options to
purchase an aggregate of 164,505 shares of our common stock with respect to Mr.
Veach and 164,505 shares of our common stock with respect to Mr. Narang, each at
an exercise price of $0.50. These options are exercisable as to 82,252 shares on
December 31, 2010 and as to 82,253 shares on December 31, 2011.





On
December 31, 2009, the board of directors of EII granted Howard Spindel 5-year
options to purchase 100,000 (the “Spindel EII Stock Options”) shares of EII
common stock at an exercise price equal to $0.50 per share, as compensation for
services performed on behalf of EII in his capacity as a
director.  The Spindel EII Stock Options vest in full on the date of
grant.





On December 31, 2009, the board of
directors of EII granted Dov Perlysky 5-year options to purchase 100,000 (the
“Perlysky EII Stock Options”) shares of EII common stock at an exercise price
equal to $0.50 per share, as compensation for services performed on behalf of
EII in his capacity as a director. The Perlysky EII Stock Options vest in full
on the date of grant.





On December 31, 2009, the board of
directors of EII granted David Cohen 5-year options to purchase 100,000 (the
“Cohen EII Stock Options”) shares of EII common stock at an exercise price equal
to $0.50 per share, as compensation for services performed on behalf of EII in
his capacity as a director. The Cohen EII Stock Options vest in full on the date
of grant.





On December 31, 2009, the board of
directors of EII granted Jonathan Turkel 5-year options to purchase 100,000 (the
“Turkel EII Stock Options”) shares of EII common stock at an exercise price
equal to $0.50 per share, as compensation for services performed on behalf of
EII in his capacity as a consultant. The Turkel EII Stock Options vest in full
on the date of grant.





Under the merger agreement, the
Spindel, Perlysky, Cohen and Turkel EII Stock Options were each converted into
5-year options to purchase an aggregate of (i) 109,670 shares of our common
stock with respect to Mr. Spindel, (ii) 109,670 shares of our common stock with
respect to Mr. Perlysky, (iii) 109,670 shares of our common stock with respect
to Dr. Cohen, and (iv) 109,670 shares of our common stock with respect to Mr.
Turkel, each at an exercise price of $0.50. Each of these options vest in full
on the date of grant.





On December 31, 2009, the board of
directors of Florham granted Leonard Katz a 5-year option to purchase an
aggregate of 109,670 shares of our common stock at an exercise price of $0.50 in
his capacity as a consultant. This option vests in full on the date of
grant.





Florham
Common Stock as Part of Merger Consideration





Under the merger agreement, the
shareholders of EII were issued an aggregate of 6,000,000 shares of our common
stock as part of the merger consideration. Of such shares, 2,400,000 were issued
to Sanjo Squared, LLC, an entity controlled by two of our officers and
directors, and 3,600,000 were issued to Kinder Investments, L.P., an entity
controlled by one of our directors. Such shares are subject to the terms of
lock-up agreements as set forth below.





Lock
Up Agreements





All of our shares of common stock owned
or to be owned by the Joseph Bianco, Anil Narang, Sanjo Squared, LLC and Kinder
Investments, LP (directly or indirectly) are restricted from public or private
sale for a period of twelve months following the effective date of the reverse
merger (December 31, 2009) without our prior written consent.





Series
A Convertible Preferred Stock





Under the merger agreement, the
shareholders of EII were issued 250,000 shares of our Series A Preferred Stock,
with each share of Series A Preferred Stock automatically convertible into
49.11333 shares of our common stock upon the filing by us of an amendment to its
certificate of incorporation which increases the authorized shares of our common
stock to at least 50,000,000. Of such shares, 100,000 were issued to Sanjo
Squared, LLC and 150,000 were issued to Kinder Investments,
L.P.


48




Acquisition
and Escrow Shares under the Interest Purchase Agreement





On December 16, 2009, EII entered into
an interest  purchase agreement with the members of Training Direct,
and our company, pursuant to which EII acquired all outstanding membership
interests, on a fully diluted basis, of Training Direct in exchange for (a)
$200,000 cash, (b) shares of our common stock having a deemed value
of  $600,000 (the “Acquisition Shares”), with such number of
Acquisition Shares to be determined by dividing $600,000 by the “Discounted
VWAP” (as defined below) for the 20 “Trading Days” (as defined below)
immediately following the consummation of the reverse merger, and (c) shares of
our  common stock having a deemed value of $300,000 (the “Escrow
Shares”), with such number of Escrow Shares to be determined by dividing
$300,000 by the Discounted VWAP for the 20 Trading Days immediately following
the consummation of the reverse merger. The Escrow Shares will be held in escrow
and released therefrom as provided in the purchase agreement. “Discounted VWAP”
is defined in the purchase agreement as 70% of the “VWAP” of our common stock,
but in no event less than $0.40 per share. “VWAP” is defined in the purchase
agreement as a fraction, the numerator of which is the sum of the product of (i)
the closing trading price for our common stock on the applicable national
securities exchange on each Trading Day of the 20 Trading Days following the
consummation of the reverse merger, and (ii) the volume of our common stock on
the applicable national securities exchange for each such day and the
denominator of which is the total volume of our common stock on the applicable
national securities exchange during such twenty day period, each as reported by
Bloomberg Reporting Service or other recognized market price reporting service.
“Trading Day” is defined in the purchase agreement as any day on which the New
York Stock Exchange or other national securities exchange on which our common
stock trades is open for trading.





The Discounted VWAP for the twenty
Trading Days after the effective date of the reverse merger was
$1.67.  Accordingly, on March 3, 2010 we issued an aggregate of
359,281 Acquisition Shares and 179,641 Escrow Shares, of which an aggregate of
161,676 Acquisition Shares and 80,838 Escrow Shares were issued to Joseph Bianco
and Anil Narang.





Review, Approval and Ratification of
Related Party Transactions




Given our small size and limited
financial resources, we had not adopted prior to the reverse merger formal
policies and procedures for the review, approval or ratification of
transactions, such as those described above, with our executive officers,
directors and significant shareholders.  However, we intend that such
transactions will, on a going-forward basis, be subject to the review, approval
or ratification of our board of directors, or an appropriate committee
thereof.




Director
Independence




Presently, we are not required to
comply with the director independence requirements of any securities
exchange.  In determining whether our directors are independent,
however, we intend to comply with the rules of the NYSE Amex Stock
Exchange.  The board of directors also will consult with counsel to
ensure that the board of directors’ determinations are consistent with those
rules and all relevant securities and other laws and regulations regarding the
independence of directors, including those adopted under the Sarbanes-Oxley Act
of 2002 with respect to the independence of future audit committee
members.  The NYSE Amex listing standards define an “independent
director” generally as a person, other than an officer of a company, who does
not have a relationship with the company that would interfere with the
director’s exercise of independent judgment.




Currently
we do not satisfy the “independent director” requirements of the NYSE Amex Stock
Exchange, which requires that a majority of a company’s directors be
independent.  Our board of directors intends to appoint additional
members, each of whom will satisfy such independence requirements.





Conflicts of
Interest




Certain
potential conflicts of interest are inherent in the relationships between our
officers and directors of and us.




Conflicts Relating to Officers and
Directors




To date,
we do not believe that there are any conflicts of interest involving our
officers or directors.




With
respect to transactions involving real or apparent conflicts of interest, we
have adopted policies and procedures which require that: (i) the fact of
the relationship or interest giving rise to the potential conflict be disclosed
or known to the directors who authorize or approve the transaction prior to such
authorization or approval, (ii) the transaction be approved by a majority
of our disinterested outside directors, and (iii) the transaction be fair
and reasonable to us at the time it is authorized or approved by our
directors.




49


Item 14. Principal Accountant Fees and
Services.




Appointment
of Auditors





Our Board of Directors selected Raich
Ende Malter & Co. LLP as our auditors for the year ended December 31,
2009.





Audit
Fees





Raich Ende Malter & Co. LLP billed
us $65,000 and $17,083 in fees for audit services for the year ended December
31, 2009 and 2008, respectively.





Audit-Related
Fees





We did not pay any fees to Raich Ende
Malter & Co. LLP for assurance and related services that are not reported
under Audit Fees above during our fiscal years ending December 31, 2009 and
2008.





Tax
and All Other Fees





We did not pay any fees to Raich Ende
Malter & Co. LLP for tax compliance, tax advice, tax planning or other work
during our fiscal years ending December 31, 2009 and December 31,
2008.





Pre-Approval
Policies and Procedures





We have implemented pre-approval
policies and procedures related to the provision of audit and non-audit
services. Under these procedures, our board of directors pre-approves all
services to be provided by Raich Ende Malter & Co. LLP and the estimated
fees related to these services.





With respect to the audit of our
financial statements as of December 31, 2009, and for the year then ended, none
of the hours expended by Raich Ende Malter & Co. LLP’s engagement to audit
those financial statements were attributed to work by persons other than Raich
Ende Malter & Co. LLP, and its full-time, permanent employees.





PART
IV





Item 15. Exhibits, Financial Statement
Schedules.





(a)
Financial Statements and Schedules





1. Financial
Statements





The following financial statements are
filed as part of this report under Item 8 of Part II “Financial Statements and
Supplementary Data:





A.           Report
of Independent Registered Public Accounting Firm.





B.           Consolidated
Balance Sheets as of December 31, 2009 and 2008.




C.           Consolidated
Statements of Operations for the years ended of December 31, 2009 and
2008.




D.           Consolidated
Statements of Changes in Shareholders’ Equity for the years ended of December
31, 2009 and 2008.




E.           Consolidated
Statements of Cash Flows as of December 31, 2009 and 2008.





F.           Notes
to Consolidated Financial Statements.




50


2.Financial
Statement Schedules




Financial statement schedules not
included herein have been omitted because they are either not required, not
applicable, or the information is otherwise included herein.





(b)
Exhibits.





EXHIBIT
INDEX




Exhibit
              No.
            
            Description2.1
            
            Agreement
      and Plan of Merger dated as of December 16, 2009 by and among Educational
      Investors, Inc., Florham Consulting Corp., EII Acquisition Corp., Sanjo
      Squared, LLC, Kinder Investments, L.P., Joseph J. Bianco and Anil Narang
      (Incorporated by reference from our Current Report on Form 8-K, filed on
      January 7, 2010).3.1
            
            Certificate
      of Incorporation (Incorporated by reference from our registration
      statement on Form SB-2, File No., which was declared effective on May 4,
      2007).3.2
            
            By-Laws
      (Incorporated by reference from our registration statement on Form SB-2,
      File No., which was declared effective on May 4, 2007).4.1
            
            Form
      of amended warrant issued to warrant holders (Incorporated by reference
      from our Current Report on Form 8-K, filed on April 27,
    2009).4.2
            
            Certificate
      of Designation, Preferences and Rights of the Series A Convertible
      Preferred Stock (Incorporated by reference from our Current Report on Form
      8-K, filed on January 7, 2010).10.1
            
            Employment
      Agreement dated as of August 20, 2009 between Educational Investors, Inc.
      and Joseph J. Bianco (Incorporated by reference from our Current Report on
      Form 8-K, filed on January 7, 2010).10.2
            
            Employment
      Agreement dated as of August 20, 2009 between Educational Investors, Inc.
      and Anil Narang (Incorporated by reference from our Current Report on Form
      8-K, filed on January 7, 2010).10.3
            
            Employment
      Agreement dated as of August 20, 2009 between Educational Investors, Inc.
      and Kellis Veach (Incorporated by reference from our Current Report on
      Form 8-K, filed on January 7, 2010).10.4
            
            Form
      of Assignment and Assumption Agreement (Incorporated by reference from our
      Current Report on Form 8-K, filed on January 7, 2010).10.5
            
            Consulting
      Agreement dated as of December 31, 2009 between Educational Investors,
      Inc. and Joseph Monaco (Incorporated by reference from our Current Report
      on Form 8-K, filed on January 7, 2010).10.6
            
            Form
      of Lock-Up Agreement (Incorporated by reference from our Current Report on
      Form 8-K, filed on January 7, 2010).10.7
            
            Form
      of Florham Consulting Corp. Management Stock Option Agreement
      (Incorporated by reference from our Current Report on Form 8-K, filed on
      January 7, 2010).10.8
            
            Form
      of Florham Consulting Corp. Management Stock Option Agreement for Joseph
      J. Bianco and Anil Narang (Incorporated by reference from our Current
      Report on Form 8-K, filed on January 7, 2010).10.9
            
            Form
      of Florham Consulting Corp. Director/Consultant Stock Option Agreement
      (Incorporated by reference from our Current Report on Form 8-K, filed on
      January 7, 2010).10.10
            
            Interest
      Purchase Agreement dated as of December 16, 2009 by and among Educational
      Investors, Inc., Florham Consulting Corp., TD Management, Inc. and Joseph
      Monaco (Incorporated by reference from our Current Report on Form 8-K,
      filed on January 7, 2010).10.11
            
            Employment
      Agreement dated as of December 31, 2009 between Training Direct, LLC and
      Ashok Narang Incorporated by reference from our Current Report on Form
      8-K, filed on January 7, 2010).31.1
            
            Certification
      by Chief Executive Officer pursuant to Sarbanes Oxley Section
      302.*31.2
            
            Certification
      by Chief Financial Officer pursuant to Sarbanes Oxley Section
      302.*32.1
            
            Certification
      by Chief Executive Officer pursuant to 18 U.S.C. Section
      1350.*32.2
            
            Certification
      by Chief Financial Officer pursuant to 18 U.S.C. Section
      1350.*





* Filed
herewith.


51




SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this Amendment No. 2 to the Form 10-K/A
Annual Report to be signed on its behalf by the undersigned on July 28,
2010, thereunto duly authorized.




FLORHAM
      CONSULTING CORP.By:
                            /s/
      Joseph J. BiancoJoseph
      J. Bianco
                              Chief
      Executive Officer (Principal
                              Executive
      Officer)By:
                            /s/
      Kellis VeachKellis
      Veach
                              Chief
      Financial Officer (Principal
                              Financial
      and Accounting
Officer)





Pursuant
to the requirements of the Securities Exchange Act of 1934, this Amendment
No. 2 to the Form 10-K/A Annual Report has been signed by the
following persons in the capacities and on the dates
indicated.




SIGNATURE
                  
                  TITLE
                  
                  DATE/s/ Joseph J. Bianco
                    Joseph J. Bianco
                  
                  Chief Executive Officer and Chairman of the
                    Board of Directors (Principal Executive
                    Officer)
                  
                  July
      28, 2010/s/ Kellis Veach
                    Kellis Veach
                  
                  Chief Financial Officer and Secretary
                    (Principal Financial and Accounting Officer)
                  
                  July
      28, 2010/s/ Anil K. Narang
                    Anil K. Narang
                  
                  President, Chief Operating Officer and Director
                  
                  July
      28, 2010/s/ Dov Perlysky
                    Dov Perlysky
                  
                  Director
                  
                  July
      28, 2010Howard Spindel
                  
                  Director/s/ David Cohen
                    David Cohen
                  
                  Director
                  
                  July
      28, 2010


52