----

----

| DELAWARE                                                                | 20-2783217                                    |
|-------------------------------------------------------------------------|-----------------------------------------------|
| (State      or other jurisdiction ofincorporation      or organization) | (IRS      EmployerIdentification      Number) |
| 1330      Avenue of the Americas, New York, N.Y.                        | 10019-5400                                    |
| (Address      of principal executive offices)                           | (Zip      Code)                               |

| Title      of Each Class          | Name      of Each Exchange on Which Registered |
|-----------------------------------|------------------------------------------------|
| Common      Stock, par value $.01 | Pink      OTC Markets, Inc.                    |

| Large      accelerated filer | o      |   | Accelerated      filer         | o |
|------------------------------|--------|--------|--------------------------------|---|
| Non-accelerated      filer   | ý |   | Smaller      reporting company | o |

----

----

----

| Explanatory      Note | ii                                                                                                                               |
|-----------------------|----------------------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                             |   |
|                  | PART      I                                                                                                                      | 2 |
|                  |                                                                                                                             |   |
| Item      1           | Business                                                                                                                         | 2 |
| Item      1A          | Risk      Factors                                                                                                                | 13 |
| Item      1B          | Unresolved      Staff Comments                                                                                                   | 21 |
| Item      2           | Properties                                                                                                                       | 21 |
| Item      3           | Legal      Proceedings                                                                                                           | 21 |
| Item      4           | Submission      of Matters to a Vote of Security Holders                                                                         | 23 |
|                  |                                                                                                                             |   |
|                  | PART      II                                                                                                                     | 24 |
|                  |                                                                                                                             |   |
| Item      5           | Market      for the Registrant’s Common Equity, Related Stockholder Matters and Issuer      Purchases of Equity Securities | 24 |
| Item      6           | Selected      Financial Data                                                                                                     | 28 |
| Item      7           | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations                            | 30 |
| Item      7A          | Quantitative      and Qualitative Disclosures About Market Risk                                                                  | 56 |
| Item      8           | Financial      Statements and Supplementary Data                                                                                 | 57 |
| Item      9           | Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosure                                   | 96 |
| Item      9A(T)       | Controls      and Procedures                                                                                                     | 96 |
| Item      9B          | Other      Information                                                                                                           | 98 |
|                  |                                                                                                                             |
|                  | PART      III                                                                                                                    | 99 |
|                  |                                                                                                                             |   |
| Item      10          | Directors,      Executive Officers and Corporate Governance                                                                      | 99 |
| Item      11          | Executive      Compensation                                                                                                      | 104 |
| Item      12          | Security      Ownership of Certain Beneficial Owners and Management and Related      Stockholder Matters                         |  125 |
| Item      13          | Certain      Relationships and Related Transactions, and Director      Independence                                              | 126 |
| Item      14          | Principal      Accounting Fees and Services                                                                                      | 127 |
|                  |                                                                                                                             |   |
|                  | PART      IV                                                                                                                     | 129 |
|                  |                                                                                                                             |   |
| Item      15          | Exhibits,      Financial Statement Schedules                                                                                     | 129 |

----

----

|   | · | In      November 2006, we acquired our first retail franchised brand The Athlete’s      Foot by purchasing Athlete’s Foot Brands, LLC, along with an affiliated      company and certain related assets. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      February 2007, we acquired the Bill Blass consumer products brand by      purchasing Bill Blass Holding Co., Inc. and two affiliated licensing      businesses. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Also      in February 2007, we acquired two QSR franchised brands, MaggieMoo’s and      Marble Slab Creamery, by purchasing MaggieMoo’s International, LLC and the      assets of Marble Slab Creamery, Inc.,  respectively. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      May 2007, we acquired another consumer products brand, Waverly, by      acquiring all of the intellectual property and license contracts related      to that brand and the related Gramercy and Village  brands. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      August 2007, we acquired two QSR franchised brands, Pretzel Time and      Pretzelmaker, by purchasing substantially all of the assets of Pretzel      Time Franchising, LLC and Pretzelmaker Franchising, LLC,      respectively. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      January 2008, we acquired the trademarks and other intellectual property      of TSBI Holdings, LLC, in a joint venture with third parties in order to      franchise the Shoebox’s high-fashion footwear concept domestically and      internationally under the Shoebox New York  brand. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      January 2008, we acquired Great American Cookies, a QSR franchised brand,      by purchasing substantially all of the assets of Great American Cookie      Company Franchising, LLC. Along with the franchising business of Great      American Cookies, we also acquired substantially all of the assets of      Great American Manufacturing, LLC, including a manufacturing facility that      produces cookie dough for, and supplies other products to, franchisees of      the Great American Cookies brand, which is managed by NB Supply, Inc., a      wholly-owned subsidiary of theCompany. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Location                  |   | Franchised Stores |   | Location            |   | Franchised Stores |
|---------------------------|--------|------------------------|--------|---------------------|--------|-------------------|
| Alabama                   |   | 39                     |   | Missouri            |   | 24                |
| Alaska                    |   | 1                      |   | Montana             |   | 4                 |
| Arizona                   |   | 14                     |   | Nebraska            |   | 5                 |
| Arkansas                  |   | 12                     |   | Nevada              |   | 12                |
| California                |   | 60                     |   | New      Hampshire  |   | 3                 |
| Colorado                  |   | 24                     |   | New      Jersey     |   | 23                |
| Connecticut               |   | 19                     |   | New      Mexico     |   | 1                 |
| Delaware                  |   | 4                      |   | New      York       |   | 62                |
| District      of Columbia |   | 4                      |   | North      Carolina |   | 65                |
| Florida                   |   | 101                    |   | North      Dakota   |   | 4                 |
| Georgia                   |   | 81                     |   | Ohio                |   | 31                |
| Hawaii                    |   | 8                      |   | Oklahoma            |   | 22                |
| Idaho                     |   | 3                      |   | Oregon              |   | 4                 |
| Illinois                  |   | 44                     |   | Pennsylvania        |   | 23                |
| Indiana                   |   | 20                     |   | Rhode      Island   |   | 0                 |
| Iowa                      |   | 25                     |   | South      Carolina |   | 46                |
| Kansas                    |   | 11                     |   | South      Dakota   |   | 4                 |
| Kentucky                  |   | 14                     |   | Tennessee           |   | 61                |
| Louisiana                 |   | 47                     |   | Texas               |   | 235               |
| Maine                     |   | 1                      |   | Utah                |   | 16                |
| Maryland                  |   | 29                     |   | Vermont             |   | 0                 |
| Massachusetts             |   | 10                     |   | Virginia            |   | 41                |
| Michigan                  |   | 25                     |   | Washington          |   | 11                |
| Minnesota                 |   | 8                      |   | West      Virginia  |   | 8                 |
| Mississippi               |   | 11                     |   | Wisconsin           |   | 9                 |
|                      |   |                   |   | Wyoming             |   | 5                 |
|                      |   |                   |   |                |   |              |

----

| Location         |   | Franchised Stores |   | Location                   |   | Franchised Stores |
|------------------|--------|------------------------|--------|----------------------------|--------|-------------------|
| Antigua          |   | 1                      |   | Palau                      |   | 1                 |
| Aruba            |   | 1                      |   | Panama                     |   | 1                 |
| Australia        |   | 126                    |   | Peru                       |   | 3                 |
| Bahamas          |   | 2                      |   | Philippines                |   | 9                 |
| Bahrain          |   | 5                      |   | Poland                     |   | 39                |
| Canada           |   | 95                     |   | Portugal                   |   | 11                |
| China            |   | 3                      |   | Puerto      Rico           |   | 3                 |
| Curacao          |   | 1                      |   | Qatar                      |   | 1                 |
| Denmark          |   | 1                      |   | Russia                     |   | 3                 |
| Ecuador          |   | 5                      |   | Saipan                     |   | 2                 |
| Guam             |   | 3                      |   | Saudi      Arabia          |   | 11                |
| Guatemala        |   | 1                      |   | South      Korea           |   | 38                |
| India            |   | 1                      |   | Spain                      |   | 3                 |
| Indonesia        |   | 30                     |   | St.      Kitts/Nevis       |   | 1                 |
| Kuwait           |   | 12                     |   | Sweden                     |   | 1                 |
| Lebanon          |   | 1                      |   | Trinidad      & Tobago |   | 2                 |
| Mexico           |   | 39                     |   | United      Arab Emirates  |   | 18                |
| New      Zealand |   | 10                     |   | Venezuela                  |   | 5                 |
| Oman             |   | 1                      |   | Vietnam                    |   | 1                 |
| Pakistan         |   | 1                      |   |                       |   |              |
|             |   |                   |   |                       |   |              |

----

----

----

|   | · | across      multiple categories, ranging from footwear to baked goods to ice      cream; |
|--------|--------|------------------------------------------------------------------------------------------|

|   | · | across      channels of distribution, ranging from mall-based stores to strip shopping      centers to stand-alone stores; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | across      consumer demand categories, ranging from premium to      mass-market; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | across      franchisees/licensees, ranging from individuals to multi-unit developers      to a large publicly traded company; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|

|   | · | across      geographies (both within the United States and internationally);      and |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | across      multiple demographic groups. |
|--------|--------|------------------------------------------|

----

|   | · | Integrate      Pretzel Time and Pretzelmaker, thus creating the second largest pretzel      brand in the United States by marketshare; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Improve      inventory and supply management for MaggieMoo’s franchisees to lower      operating costs; |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | Execute      a rebranding and remodeling program for Marble Slab Creamery stores to      strengthen the Marble Slab Creamerybrand; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Complete      a review of the Great American Cookies brand and create new marketing      initiatives; |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | Institute      a new training platform for TAF franchisees;and |
|--------|--------|----------------------------------------------------------------|

|   | · | Further      expand the Shoebox New York brand domestically and      internationally. |
|--------|--------|---------------------------------------------------------------------------------------|

----

----

|   | · | Certain      members of the Company’s senior management (i) failed to advise the Board      of Directors of material changes in the terms of the financing of the      Great American Cookies acquisition after the Board of Directors had      approved terms previously presented to it and (ii) made serious errors      with respect to public disclosures regarding the terms of the financing      and their impact on the Company’s financial condition that were contained      in the Company’s Current Report on Form 8-K filed with the SEC on January      29, 2008 and in the Company’s Original 2007 10-K, filed with the SEC on      March 21, 2008. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Independent      counsel did not find evidence that led it to conclude that there was an      intentional effort to keep information concerning the terms of the      financing from the Board, the Company’s independent auditing firm or the      public. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a. | Reduction in      Non-Essential Staff and Reduction of Other Recurring      Expenses |
|--------|----|--------------------------------------------------------------------------------------|

|   | b. | Restructuring of the      Credit Facility |
|--------|----|-------------------------------------------|

|   | c. | Sale of      Waverly |
|--------|----|----------------------|

|   | d. | Sale of Bill      Blass |
|--------|----|-------------------------|

----

----

----

----

|   | · | increase      our vulnerability to general adverse economic and industry      conditions; |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | require      us to dedicate a substantial portion of our cash flow from operations to      payments on our indebtedness, thereby reducing the availability of our      cash flow to fund working capital, capital expenditures, research and      development efforts and other general corporate  purposes; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | limit      our flexibility in planning for, or reacting to, changes in our business      and the industries in which weoperate; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | · | place      us at a competitive disadvantage if any of our competitors have less debt;      and |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | limit      our ability to borrow additionalfunds. |
|--------|--------|---------------------------------------------------|

----

----

|   | · | overpaying      for acquired assets or businesses; |
|--------|--------|----------------------------------------------------|

|   | · | being      unable to license, market or otherwise exploit the assets that we acquired      on anticipated terms or at all; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | negative      effects on reported results of operations from acquisition-related      expenses, amortization or impairment of acquired intangibles and      impairment of goodwill; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | diversion      of management's attention from management of day-to-day operational      issues; |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | failing      to maintain focus on, or ceasing to execute, core strategies and business      plans as our brand portfolio grew and became more    diversified; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | failing      to achieve synergies across our diverse brand  portfolio; |
|--------|--------|------------------------------------------------------------------------|

|   | · | failing      to acquire or hire additional successful managers, or being unable to      retain critical acquired managers; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | failing      to integrate acquired businesses with our existing businesses due to      unanticipated costs and difficulties, which may disrupt our existing      businesses or delay or diminish our ability to realize financial and      operational benefits from those acquisitions;  and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | underlying      risks of the businesses that we acquired, which differ depending on the      brand and its associated business and market, including those related to      entering new lines of business or markets in which we have little or no      prior experience. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Political      and economic instability or civilunrest; |
|--------|--------|---------------------------------------------------------|

|   | · | Armed      conflict, natural disasters orterrorism; |
|--------|--------|-----------------------------------------------------|

|   | · | Health      concerns or similar issues, such as a pandemic or  epidemic; |
|--------|--------|--------------------------------------------------------------------------|

|   | · | Multiple      foreign regulatory requirements that are subject to change and that differ      between jurisdictions; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | Changes      in trade protection laws, policies and measures, and other regulatory      requirements effecting trade andinvestment; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Differences      from one country to the next in legal protections applicable to      intellectual property assets, including trademarks and similar assets,      enforcement of such protections and remedies available for      infringements; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Fluctuations      in foreign currency exchange rates and interest rates;  and |
|--------|--------|-------------------------------------------------------------------------------|

----

|   | · | Adverse      consequences from changes in taxlaws. |
|--------|--------|----------------------------------------------------|

----

----

----

----

----

|              |   | 2008 |   |   | 2007   |   |
|-------------------|--------|------|--------|--------|--------|--------|
| QUARTER ENDED     |   | HIGH |   |   | LOW    |   |   | HIGH |   |   | LOW |   |
| March 31     |   | $    | 4.82   |   |   | $      | 2.83 |   |   | $ | 11.04 |   |   | $ | 7.42 |   |
| June 30      |   | $    | 3.49   |   |   | $      | 0.41 |   |   | $ | 12.98 |   |   | $ | 9.98 |   |
| September 30 |   | $    | 0.67   |   |   | $      | 0.24 |   |   | $ | 11.41 |   |   | $ | 5.56 |   |
| December 31  |   | $    | 0.30   |   |   | $      | 0.07 |   |   | $ | 7.37 |   |   | $ | 3.89 |   |

| Plan Category                                                   |   | Plan Name                              |   | Number ofsecuritiestobe issued uponexerciseof outstandingoptions,andrestricted stock |      |   | Weighted-averageexercise price ofoutstandingoptions,and restricted stock |   |   | Number ofsecuritiesremainingavailable forfutureissuance underequitycompensationplans |   |
|-----------------------------------------------------------------|--------|----------------------------------------|--------|--------------------------------------------------------------------------------------|-----------|--------|--------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------|--------|
|                                                            |   |                                   |   |                                                                                 |      |   |                                                                     |   |   |                                                                                 |   |
| Equity      compensation plans approved by security holders     |   | 1999      Equity Incentive Plan   |   |                                                                                 | 746,700   |   |                                                                     | $      | 5.50   |                                                                                 |   |   | — |   |
|                                                            |   |                                   |   |                                                                                 |      |   |                                                                     |   |   |                                                                                 |   |   |   |   |
|                                                            |   | 2006      Equity Incentive Plan   |   |                                                                                 | 1,842,500 |   |                                                                     | $      | 2.20   |                                                                                 |   |   | 1,657,500 |   |
|                                                            |   |                                   |   |                                                                                 |      |   |                                                                     |   |   |                                                                                 |   |   |   |   |
| Equity      compensation plans not approved by security holders |   | 2000      Plan                    |   |                                                                                 | 24,571    |   |                                                                     | $      | 2.90   |                                                                                 |   |   | — |   |
|                                                            |   |                                   |   |                                                                                 |      |   |                                                                     |   |   |                                                                                 |   |   |   |   |
| Total      as of December 31, 2008                              |   |                                   |   |                                                                                 | 2,613,771 |   |                                                                     | $      | 3.15   |                                                                                 |   |   | 1,657,500 |   |

----

----

| Period                                        |   | Total Numberof SharesPurchased |   |   | Average PricePaid for Shares |   |   | Total Numberof SharesPurchased asPart of PubliclyAnnouncedPlans orPrograms |   |   | Maximum Numberof Shares thatMay Yet BePurchased Underthe Plans andPrograms |   |
|-----------------------------------------------|--------|--------------------------------|--------|--------|------------------------------|--------|--------|----------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------|--------|
| January      1 - January 31, 2008             |   |                           | -      |   |                         |   | -      |                                                                       |   |   | -                                                                          |   |   |   | - |   |
| February      1 - February 29, 2008           |   |                           | -      |   |                         |   | -      |                                                                       |   |   | -                                                                          |   |   |   | - |   |
| March      1 - March 31, 2008                 |   |                           | 3,879  |   |                         | $      | 1.06   |                                                                       |   |   | -                                                                          |   |   |   | - |   |
| April      1 - April 30, 2008                 |   |                           | -      |   |                         |   | -      |                                                                       |   |   | -                                                                          |   |   |   | - |   |
| May      1 - May 31, 2008                     |   |                           | -      |   |                         |   | -      |                                                                       |   |   | -                                                                          |   |   |   | - |   |
| June      1 - June 30, 2008                   |   |                           | -      |   |                         |   | -      |                                                                       |   |   | -                                                                          |   |   |   | - |   |
| July      1 - July 31, 2008                   |   |                           | -      |   |                         |   | -      |                                                                       |   |   | -                                                                          |   |   |   | - |   |
| August      1 - August 31, 2008               |   |                           | -      |   |                         |   | -      |                                                                       |   |   | -                                                                          |   |   |   | - |   |
| September      1 - September 30, 2008         |   |                           | -      |   |                         |   | -      |                                                                       |   |   | -                                                                          |   |   |   | - |   |
| October      1 - October 31, 2008   |   |                           | -      |   |                         |   | -      |                                                                       |   |   | -                                                                          |   |   |   | - |   |
| November      1 - November 30, 2008 |   |                           | -      |   |                         |   | -      |                                                                       |   |   | -                                                                          |   |   |   | - |   |
| December 1 - December 31,      2008 |   |                           | -      |   |                         |   | -      |                                                                       |   |   | -                                                                          |   |   |   | - |   |
| Total                                         |   |                           | 3,879  |   |                         | $      | 1.06   |                                                                       |   |   | -                                                                          |   |   |   | - |   |

----

|              |   | Measurement Period - five years (1)      (2) |   |
|-------------------|--------|----------------------------------------------|--------|
|              |   | Fiscal2003                                   |   |   | Fiscal2004 |   |   | Fiscal2005 |   |   | Fiscal2006 |   |   | Fiscal2007 |   |   | Fiscal2008 |   |
| NEXC.PK           |   |                                         | 100.00 |   |   |   | 70.32 |   |   |   | 69.89 |   |   |   | 152.21 |   |   |   | 101.89 |   |   |   | 2.32 |   |
| NASDAQ            |   |                                         | 100.00 |   |   |   | 108.59 |   |   |   | 110.08 |   |   |   | 120.56 |   |   |   | 132.39 |   |   |   | 78.72 |   |
| RUSSELL      2000 |   |                                         | 100.00 |   |   |   | 117.00 |   |   |   | 120.88 |   |   |   | 141.43 |   |   |   | 137.55 |   |   |   | 89.68 |   |
| PGI      (3)      |   |                                         | 100.00 |   |   |   | 137.83 |   |   |   | 168.84 |   |   |   | 187.33 |   |   |   | 127.71 |   |   |   | 103.67 |   |

| (1) | Assumes      all distributions to stockholders are reinvested on payment      dates. |
|-----|--------------------------------------------------------------------------------------|

| (2) | Assumes      $100 initial investment on December 31, 2003 in NEXC, the PGI, the NASDAQ      Composite Index, and the Russell 2000Index. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------|

| (3) | The      PGI is an index of comparable companies to NEXC, weighted by the market      capitalization of the company at the beginning of the measurement      period. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                 |   | Year Ended December 31,                           |     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|----------|
|                                                                                                                                                                 |   | (IN      THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS) |     |
|                                                                                                                                                                 |   | 2008                                              |     |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                                                                                                                                                 |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues:                                                                                                                                                            |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Royalty      revenues                                                                                                                                                |   | $                                                 | 24,735   |   |   | $ | 15,722 |   |   | $ | 1,175 |   |   | $ | - |   |   | $ | - |   |
| Factory      revenues                                                                                                                                                |   |                                              | 17,310   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Franchise      fee revenues                                                                                                                                          |   |                                              | 3,616    |   |   |   | 3,447 |   |   |   | 749 |   |   |   | - |   |   |   | - |   |
| Licensing      and other revenues                                                                                                                                    |   |                                              | 1,295    |   |   |   | 419 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total      revenues                                                                                                                                                  |   |                                              | 46,956   |   |   |   | 19,588 |   |   |   | 1,924 |   |   |   | - |   |   |   | - |   |
|                                                                                                                                                                 |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      operating expenses                                                                                                                                        |   |                                              | (194,173 | ) |   |   | (26,696 | ) |   |   | (3,597 | ) |   |   | - |   |   |   | - |   |
|                                                                                                                                                                 |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      loss                                                                                                                                                  |   |                                              | (147,217 | ) |   |   | (7,108 | ) |   |   | (1,673 | ) |   |   | - |   |   |   | - |   |
| Total      non-operating income (expense)                                                                                                                            |   |                                              | (12,349  | ) |   |   | (857 | ) |   |   | 2,002 |   |   |   | - |   |   |   | - |   |
| (Loss)      income  from continuing operations before income      taxes                                                                                    |   |                                              | (159,566 | ) |   |   | (7,965 | ) |   |   | 329 |   |   |   | - |   |   |   | - |   |
| Income      taxes:                                                                                                                                                   |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                                                                                                                                              |   |                                              | (337     | ) |   |   | 1,562 |   |   |   | (299 | ) |   |   | - |   |   |   | - |   |
| Deferred                                                                                                                                                             |   |                                              | 6,331    |   |   |   | (2,481 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| (Loss)      income from continuing operations                                                                                                                        |   |                                              | (153,572 | ) |   |   | (8,884 | ) |   |   | 30 |   |   |   | - |   |   |   | - |   |
| Discontinued      operations:                                                                                                                                        |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)      income from discontinued operations, net of tax (expense) benefit of      $15,765, ($2,383), and ($154) for 2008, 2007, and 2006,      respectively |   |                                              | (91,593  | ) |   |   | 4,016 |   |   |   | (2,905 | ) |   |   | (3,326 | ) |   |   | (69,153 | ) |
| (Loss) gain      on sale of discontinued operations, net of income tax benefit of $4,158 in      2008                                                           |   |                                              | (10,614  | ) |   |   | - |   |   |   | 755 |   |   |   | (1,194 | ) |   |   | 20,825 |   |
| Net      loss                                                                                                                                                        |   | $                                                 | (255,779 | ) |   | $ | (4,868 | ) |   | $ | (2,120 | ) |   | $ | (4,520 | ) |   | $ | (48,328 | ) |
| Other      comprehensive loss:                                                                                                                                       |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign      currency translation adjustment                                                                                                                         |   |                                              | -        |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (3,830 | ) |
| Unrealized      holding gain on investments available for sale                                                                                                       |   |                                              | -        |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 67 |   |
| Comprehensive      loss                                                                                                                                              |   | $                                                 | (255,779 | ) |   | $ | (4,868 | ) |   | $ | (2,120 | ) |   | $ | (4,520 | ) |   | $ | (52,091 | ) |
| Loss      per share:                                                                                                                                                 |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      per share (basic and diluted) from continuing operations                                                                                                   |   | $                                                 | (2.71    | ) |   | $ | (0.17 | ) |   | $ | 0.00 |   |   | $ | - |   |   | $ | - |   |
|                                                                                                                                                                 |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) income  per      share (basic and diluted) from discontinued operations                                                                        |   |                                              | (1.81    | ) |   |   | 0.08 |   |   |   | (0.05 | ) |   |   | (0.10 | ) |   |   | (1.11 | ) |
| Net      loss per share - basic and diluted                                                                                                                          |   | $                                                 | (4.52    | ) |   | $ | (0.09 | ) |   | $ | (0.05 | ) |   | $ | (0.10 | ) |   | $ | (1.11 | ) |
|                                                                                                                                                                 |   |                                              |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding - basic and diluted                                                                                                         |   |                                              | 56,550   |   |   |   | 51,889 |   |   |   | 45,636 |   |   |   | 44,006 |   |   |   | 43,713 |   |

----

|                                                                              |   | Year      Ended December 31, |    |
|-----------------------------------------------------------------------------------|--------|------------------------------|---------|
|                                                                              |   | (IN      THOUSANDS)          |    |
|                                                                              |   | 2008                         |    |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
| CONSOLIDATED      BALANCE SHEET DATA:                                             |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      & cash equivalents                                                  |   | $                            | 8,293   |   |   | $ | 46,569 |   |   | $ | 83,536 |   |   | $ | 9,725 |   |   | $ | 69,555 |   |
| Mortgage-backed      securities, at fair value - discontinued operations          |   |                         | -       |   |   |   | - |   |   |   | - |   |   |   | 253,900 |   |   |   | 62,184 |   |
| Trademarks,      goodwill, and other non-amortizable assets                       |   |                         | 78,422  |   |   |   | 163,364 |   |   |   | 64,607 |   |   |   | - |   |   |   | - |   |
| Assets      held for sale                                                         |   |                         | -       |   |   |   | 119,183 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total      Assets                                                                 |   | $                            | 113,903 |   |   | $ | 359,610 |   |   | $ | 158,385 |   |   | $ | 266,008 |   |   | $ | 136,586 |   |
|                                                                              |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Repurchase      agreements and sales tax liabilities - discontinued    operations |   |                         | -       |   |   |   | - |   |   |   | - |   |   |   | 133,924 |   |   |   | - |   |
| Debt      (net of debt discount of $1.4 million in 2008)                          |   |                         | 140,873 |   |   |   | 109,578 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Liabilities      held for sale                                                    |   |                         | -       |   |   |   | 1,482 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total      liabilities                                                            |   |                         | 163,396 |   |   |   | 163,607 |   |   |   | 11,772 |   |   |   | 139,621 |   |   |   | 5,996 |   |
| Stockholders'      (deficit) equity                                               |   |                         | (49,493 | ) |   |   | 192,963 |   |   |   | 146,613 |   |   |   | 126,387 |   |   |   | 130,590 |   |

----

|  | · | TAF      (acquired November 7, 2006) |
|--|--------|--------------------------------------|

|  | · | MaggieMoo’s      (acquired February 28, 2007) |
|--|--------|-----------------------------------------------------|

|  | · | Marble      Slab Creamery (acquired February 28,2007) |
|--|--------|-------------------------------------------------------|

|  | · | Pretzel      Time (acquired August 7, 2007) |
|--|--------|---------------------------------------------|

|  | · | Pretzelmaker      (acquired August 7, 2007) |
|--|--------|---------------------------------------------|

|  | · | Shoebox New      York (joint venture interest – January 15,  2008) |
|--|--------|------------------------------------------------------------------------------------|

|  | · | Great      American Cookies (acquired January 29,  2008) |
|--|--------|---------------------------------------------------------------|

----

|   | · | We      did not initiate our current brand management business until the      second half of 2006 and did not begin to earn royalties or license and      franchise fees until halfway through the fourth quarter of 2006, when we      acquired TAF. We acquired Pretzel Time, Pretzelmaker, Marble Slab      Creamery, and MaggieMoo’s during2007. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We      acquired Great American Cookies on January 29, 2008. This acquisition      materially increased the Company’s royalty and franchise fee revenue. In      addition, the Company acquired a manufacturing facility, which generated      factory revenue and cost of sales expenses for the first    time. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We      acquired our joint venture interest in Shoebox New York on January 15,      2008. Fees paid by the joint venture to the Company to manage the brand      are reflected in the Company’s operating revenues, whereas the Company’s      portion of income or expense from the joint venture investment is included      in the Company’s non-operating income(expense). |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Company’s operating expenses materially increased in 2008 over the 2007      comparable periods as the Company built its brand management business over      the course of 2007 and early 2008 and built its corporate and franchising      staff and infrastructure in connection with the Company’s actual and      anticipated growth. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Starting      in late May 2008, the Company began reducing non-essential corporate staff      and incurred restructuring charges that continued through the remainder of      the year. Corporate SG&A thus decreased starting in second quarter      2008, although these decreases were offset in the fourth quarter by a      stock compensation charge of $2.1 million associated with the voluntary      cancellation of stock optiongrants. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Company recorded materially greater interest expense through the course of      2007 and the beginning of 2008 due to the increases in the Company’s      borrowings used to finance itsacquisitions. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      addition to the professional fees related to special investigations,      corporate as well as franchising professional fees increased throughout      most of 2008, as compared to 2007, due to the increased legal costs and      auditing costs associated with the events of May 2008, the growth of the      Company and the integration ofacquisitions. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Beginning      in the first quarter of 2008, the Company began incurring financing      charges consisting of legal fees related to the amendments to its credit      facility, including the January 2008 Amendment, the August 2008      restructuring, and further amendments on September 11, 2008 and December      24, 2008. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | As      a likely result of the events of May 2008 and the uncertainties      surrounding the Company’s viability, there was a significant decrease in      initial franchise fee revenue in second and third quarter of 2008 as      compared to first and fourth quarter of 2008. In contrast, royalty and      factory revenues remained relatively stable through 2008, taking into      account the acquisition of Great American Cookies in January      2008. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | As      a result of the events of May 2008 and the general downturn of the      economy, the Company recorded material impairments of its intangible      assets in the second and third quarters of2008. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      2008, we exited the licensing business for consumer branded products, and      the Company recorded losses on the sales of Waverly and Bill Blass in the      fourth quarter of 2008. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Valuation      of Deferred Tax Assets - We have deferred tax assets as a result of years      of accumulated tax loss carry-forwards. Management is developing plans to      achieve profitable operations in future years that may enable us to      recover the benefit of our deferred tax assets. The ultimate realization      of deferred tax assets is primarily dependent upon the generation of      future taxable income during periods in which those temporary differences      become deductible.  We presently do not have sufficient      objective evidence that the Company will generate future taxable income.      Accordingly, we maintain a full valuation allowance for our net deferred      tax assets. We adopted the provisions of FASB Interpretation No. 48,      “Accounting for      Uncertainty in Income Taxes” (“FIN 48”), effective January 1, 2007.      FIN 48 creates a single model to address accounting for uncertainty in tax      positions and clarifies accounting for income taxes by prescribing a      minimum recognition threshold that a tax position is required to meet      before being recognized in the financial  statements. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Valuation      of Goodwill, Trademarks and Intangible Assets - The Company accounts for      recorded goodwill and other intangible assets in accordance with SFAS No.      142, “Goodwill and Other      Intangible Assets.”  This standard classifies intangible      assets into three categories: (1) goodwill; (2) intangible assets with      indefinite lives not subject to amortization; and (3) intangible assets      with definite lives subject to amortization.  In accordance with      SFAS No. 142, we do not amortize goodwill and indefinite-lived intangible      assets. We evaluate the remaining useful life of an intangible asset      that is not being amortized each reporting period to determine whether      events and circumstances continue to support an indefinite useful      life. If an intangible asset that is not being amortized is      subsequently determined to have a finite useful life, we amortize the      intangible asset prospectively over its estimated remaining useful      life. Amortizable intangible assets are amortized on a straight-line      basis. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Valuation      of Stock-Based Compensation – Under the provisions of SFAS No.      123R “Share-Based      Payment,” share-based compensation cost is measured at the grant      date, based on the calculated fair value of the award, and is recognized      as an expense over the employee’s requisite service period (generally the      vesting period of the equity grant).  SFAS No. 123R also      requires the related excess tax benefit received upon exercise of stock      options or vesting of restricted stock, if any, to be reflected in the      statement of cash flows as a financing activity rather than an operating      activity.  |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Valuation      of Allowance for Doubtful Accounts - We maintain an allowance for doubtful      accounts for estimated losses resulting from the inability of our      customers to make required payments. In evaluating the collectability of      accounts receivable, we consider a number of factors, including the age of      the accounts, changes in status of the customers’ financial condition and      other relevant factors. Estimates of uncollectible amounts are revised      each period, and changes are recorded in the period they become      known. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

----

----

|                                                         |   | 2008           |       |
|--------------------------------------------------------------|--------|----------------|------------|
| Consolidated Balance Sheet                         |   | As of     |       |
| (in thousands)                                          |   | March 31, |       |   | June 30, |   |   | September 30, |   |   | December 31, |   |
|                                                         |   | (Unaudited)    |       |   | (Audited) |   |
| Assets                                                       |   |           |       |   |   |   |   |   |   |   |   |   |
| Cash      & cash equivalents                             |   | $              | 18,306     |   |   | $ | 12,604 |   |   | $ | 8,638 |   |   | $ | 8,293 |   |
| Trade      receivable, net of allowances                     |   |           | 5,119      |   |   |   | 5,903 |   |   |   | 4,946 |   |   |   | 5,617 |   |
| Other      receivables                                       |   |           | 4,293      |   |   |   | 3,085 |   |   |   | 1,993 |   |   |   | 834 |   |
| Inventory                                                    |   |           | 1,131      |   |   |   | 1,248 |   |   |   | 1,116 |   |   |   | 1,232 |   |
| Restricted      cash                                         |   |           | 2,371      |   |   |   | 771 |   |   |   | - |   |   |   | - |   |
| Prepaid      expenses and other current assets               |   |           | 3,006      |   |   |   | 2,869 |   |   |   | 2,161 |   |   |   | 2,439 |   |
| Total      current assets                                    |   |           | 34,226     |   |   |   | 26,480 |   |   |   | 18,854 |   |   |   | 18,415 |   |
|                                                         |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property      and equipment, net                             |   |           | 5,773      |   |   |   | 5,532 |   |   |   | 4,971 |   |   |   | 4,395 |   |
| Investment      in joint venture                             |   |           | 561        |   |   |   | 288 |   |   |   | 262 |   |   |   | 87 |   |
| Goodwill                                                     |   |           | 49,233     |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Trademarks                                                   |   |           | 204,381    |   |   |   | 106,500 |   |   |   | 78,422 |   |   |   | 78,422 |   |
| Other      intangible assets, net of amortization            |   |           | 7,040      |   |   |   | 6,743 |   |   |   | 6,400 |   |   |   | 6,158 |   |
| Deferred      financing costs, net and other assets          |   |           | 5,379      |   |   |   | 4,939 |   |   |   | 5,228 |   |   |   | 5,486 |   |
| Restricted      cash                                         |   |           | 908        |   |   |   | 908 |   |   |   | 936 |   |   |   | 940 |   |
| Assets      held for sale                                    |   |           | 122,035    |   |   |   | 60,070 |   |   |   | 52,855 |   |   |   | - |   |
| Total      Assets                                            |   |           | 429,536    |   |   | $ | 211,460 |   |   | $ | 167,928 |   |   | $ | 113,903 |   |
|                                                         |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities      and Stockholders' Equity                    |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts      payable and accrued expenses                   |   | $              | 8,923      |   |   | $ | 10,552 |   |   | $ | 6,986 |   |   | $ | 9,373 |   |
| Deferred      revenue                                        |   |           | 3,660      |   |   |   | 3,807 |   |   |   | 4,557 |   |   |   | 4,044 |   |
| Current      portion of long-term debt, net of debt discount |   |           | 39,085     |   |   |   | 40,453 |   |   |   | 1,653 |   |   |   | 611 |   |
| Acquisition      related liabilities                         |   |           | 6,699      |   |   |   | 4,918 |   |   |   | 4,749 |   |   |   | 4,689 |   |
| Total      current liabilities                               |   |           | 58,367     |   |   |   | 59,730 |   |   |   | 17,945 |   |   |   | 18,717 |   |
|                                                         |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt, net of debt discount                    |   |           | 138,833    |   |   |   | 134,511 |   |   |   | 172,462 |   |   |   | 140,262 |   |
| Deferred      tax liability                                  |   |           | 27,631     |   |   |   | 8,588 |   |   |   | 7,556 |   |   |   | - |   |
| Acquisition      related liabilities                         |   |           | 776        |   |   |   | 930 |   |   |   | 532 |   |   |   | 480 |   |
| Other      long-term liabilities                             |   |           | 3,690      |   |   |   | 3,664 |   |   |   | 3,123 |   |   |   | 3,937 |   |
| Liabilities      held for sale                               |   |           | 2,815      |   |   |   | 2,947 |   |   |   | 1,817 |   |   |   | - |   |
| Total      liabilities                                       |   |           | 232,112    |   |   |   | 210,370 |   |   |   | 203,435 |   |   |   | 163,396 |   |
|                                                         |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commitments      and Contingencies                           |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Minority      interest                                       |   |           | 1,814      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Stockholders'      equity (deficit):                         |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      stock                                         |   |           | -          |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Common      stock                                            |   |           | 568        |   |   |   | 568 |   |   |   | 569 |   |   |   | 569 |   |
| Additional      paid-in capital                              |   |           | 2,676,230  |   |   |   | 2,677,560 |   |   |   | 2,679,315 |   |   |   | 2,681,600 |   |
| Treasury      stock                                          |   |           | (1,757     | ) |   |   | (1,757 | ) |   |   | (1,757 | ) |   |   | (1,757 | ) |
| Accumulated      deficit                                     |   |           | (2,479,431 | ) |   |   | (2,675,281 | ) |   |   | (2,713,634 | ) |   |   | (2,729,905 | ) |
| Stockholders'      equity (decifit)                          |   |           | 195,610    |   |   |   | 1,090 |   |   |   | (35,507 | ) |   |   | (49,493 | ) |
| Total      liabilities and stockholders' equity (deficit)    |   | $              | 429,536    |   |   | $ | 211,460 |   |   | $ | 167,928 |   |   | $ | 113,903 |   |

----

| Consolidated Statements of Operations                                                |   | (Unaudited)                                    |    |
|-----------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                                                                |   | 2008                                           |    |
|                                                                                                |   | For the three months ended |    |
| (Dollars and shares in thousands, except per share amounts) |   | March 31                                  |    |   | June 30 |   |   | September 30 |   |   | December 31 |   |
| Revenues:                                                                                           |   |                                           |    |   |   |   |   |   |   |   |   |   |
| Royalty      revenues                                                                               |   | $                                              | 5,359   |   |   | $ | 6,452 |   |   | $ | 6,733 |   |   | $ | 6,191 |   |
| Factory      revenues                                                                               |   |                                           | 2,975   |   |   |   | 4,761 |   |   |   | 4,598 |   |   |   | 4,976 |   |
| Franchise      fee revenues                                                                         |   |                                           | 1,583   |   |   |   | 397 |   |   |   | 454 |   |   |   | 1,182 |   |
| Licensing      and other revenues                                                                   |   |                                           | 308     |   |   |   | 314 |   |   |   | 379 |   |   |   | 294 |   |
| Total      revenues                                                                                 |   |                                           | 10,225  |   |   |   | 11,924 |   |   |   | 12,164 |   |   |   | 12,643 |   |
|                                                                                                |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      expenses:                                                                            |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of sales                                                                                  |   |                                           | (2,322  | ) |   |   | (2,974 | ) |   |   | (3,093 | ) |   |   | (3,095 | ) |
| Selling,      general and administrative expenses:                                                  |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Franchising                                                                                         |   |                                           | (4,328  | ) |   |   | (4,335 | ) |   |   | (3,426 | ) |   |   | (4,869 | ) |
| Corporate                                                                                           |   |                                           | (4,366  | ) |   |   | (3,468 | ) |   |   | (2,987 | ) |   |   | (4,639 | ) |
| Professional      fees:                                                                             |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Franchising                                                                                         |   |                                           | (276    | ) |   |   | (354 | ) |   |   | (498 | ) |   |   | (557 | ) |
| Corporate                                                                                           |   |                                           | (998    | ) |   |   | (1,010 | ) |   |   | (71 | ) |   |   | (617 | ) |
| Special      Investigations                                                                         |   |                                           | -       |   |   |   | (1,932 | ) |   |   | (1,640 | ) |   |   | (325 | ) |
| Impairment      of intangible assets                                                                |   |                                           | -       |   |   |   | (109,733 | ) |   |   | (28,148 | ) |   |   | - |   |
| Depreciation      and amortization                                                                  |   |                                           | (491    | ) |   |   | (674 | ) |   |   | (935 | ) |   |   | (916 | ) |
| Restructuring      charges                                                                          |   |                                           | -       |   |   |   | (815 | ) |   |   | (281 | ) |   |   | - |   |
| Total      operating expenses                                                                       |   |                                           | (12,781 | ) |   |   | (125,295 | ) |   |   | (41,079 | ) |   |   | (15,018 | ) |
|                                                                                                |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      loss                                                                                 |   |                                           | (2,556  | ) |   |   | (113,371 | ) |   |   | (28,915 | ) |   |   | (2,375 | ) |
|                                                                                                |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-operating      income (expense):                                                                |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                                                                                |   |                                           | 250     |   |   |   | 84 |   |   |   | 44 |   |   |   | 61 |   |
| Interest      expense                                                                               |   |                                           | (2,279  | ) |   |   | (2,472 | ) |   |   | (2,793 | ) |   |   | (3,146 | ) |
| Financing      charges                                                                              |   |                                           | (37     | ) |   |   | (889 | ) |   |   | (791 | ) |   |   | (97 | ) |
| Other      (expense) income, net                                                                    |   |                                           | (483    | ) |   |   | (193 | ) |   |   | 240 |   |   |   | 152 |   |
| Total      non-operating expense                                                                    |   |                                           | (2,549  | ) |   |   | (3,470 | ) |   |   | (3,300 | ) |   |   | (3,030 | ) |
|                                                                                                |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations before income taxes                                            |   |                                           | (5,105  | ) |   |   | (116,841 | ) |   |   | (32,215 | ) |   |   | (5,405 | ) |
| Income      tax (expense) benefit:                                                                  |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                                                                             |   |                                           | (77     | ) |   |   | (107 | ) |   |   | (72 | ) |   |   | (81 | ) |
| Deferred                                                                                            |   |                                           | (1,190  | ) |   |   | 4,126 |   |   |   | - |   |   |   | 3,395 |   |
| Total      provision for income taxes                                                               |   |                                           | (1,267  | ) |   |   | 4,019 |   |   |   | (72 | ) |   |   | 3,314 |   |
|                                                                                                |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                                                                |   |                                           | (6,372  | ) |   |   | (112,822 | ) |   |   | (32,287 | ) |   |   | (2,091 | ) |
| Income      (loss) from discontinued operations, net of income taxes                                |   |                                           | 1,067   |   |   |   | (83,027 | ) |   |   | (6,067 | ) |   |   | (14,180 | ) |
|                                                                                                |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                                       |   | $                                              | (5,305  | ) |   | $ | (195,849 | ) |   | $ | (38,354 | ) |   | $ | (16,271 | ) |
|                                                                                                |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      per share (basic and diluted) from continuing operations                                  |   | $                                              | (0.11   | ) |   | $ | (1.99 | ) |   | $ | (0.57 | ) |   | $ | (0.04 | ) |
| Income      (loss) per share (basic and diluted) from discontinued      operations                  |   | $                                              | 0.02    |   |   | $ | (1.47 | ) |   | $ | (0.11 | ) |   | $ | (0.25 | ) |
| Net      income (loss) per share - basic and diluted                                                |   | $                                              | (0.09   | ) |   | $ | (3.46 | ) |   | $ | (0.68 | ) |   | $ | (0.29 | ) |
|                                                                                                |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding - basic                                                    |   |                                           | 56,267  |   |   |   | 56,621 |   |   |   | 56,639 |   |   |   | 56,671 |   |
| Weighted      average shares outstanding - diluted                                                  |   |                                           | 56,267  |   |   |   | 56,621 |   |   |   | 56,639 |   |   |   | 56,671 |   |

----

| Consolidated Balance Sheet                |   | 2007           |       |
|-----------------------------------------------------|--------|----------------|------------|
|                                                |   | As of     |       |
| (in thousands)                                 |   | March 31, |       |   | June 30, |   |   | September 30, |   |   | December 31, |   |
|                                                |   | (Unaudited)    |       |   | (Audited) |   |
| Assets                                              |   |           |       |   |   |   |   |   |   |   |   |   |
| Cash      & cash equivalents                    |   | $              | 37,980     |   |   | $ | 27,116 |   |   | $ | 29,432 |   |   | $ | 46,569 |   |
| Trade      receivable, net of allowances            |   |           | 2,853      |   |   |   | 2,631 |   |   |   | 3,837 |   |   |   | 4,710 |   |
| Other      receivables                              |   |           | 1,663      |   |   |   | 1,288 |   |   |   | 2,102 |   |   |   | 2,673 |   |
| Restricted      cash                                |   |           | 7,014      |   |   |   | 5,514 |   |   |   | 5,222 |   |   |   | 5,174 |   |
| Prepaid      expenses and other current assets      |   |           | 1,513      |   |   |   | 1,479 |   |   |   | 2,045 |   |   |   | 2,873 |   |
| Total      current assets                           |   |           | 51,023     |   |   |   | 38,028 |   |   |   | 42,638 |   |   |   | 61,999 |   |
|                                                |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property      and equipment, net                    |   |           | 2,600      |   |   |   | 2,746 |   |   |   | 2,780 |   |   |   | 3,941 |   |
| Goodwill                                            |   |           | 17,012     |   |   |   | 22,739 |   |   |   | 51,629 |   |   |   | 47,514 |   |
| Trademarks                                          |   |           | 85,500     |   |   |   | 85,500 |   |   |   | 113,000 |   |   |   | 115,850 |   |
| Other      intangible assets, net of amortization   |   |           | 5,493      |   |   |   | 5,369 |   |   |   | 6,925 |   |   |   | 6,541 |   |
| Deferred      financing costs, net and other assets |   |           | 908        |   |   |   | 1,441 |   |   |   | 2,093 |   |   |   | 2,926 |   |
| Restricted      cash                                |   |           | -          |   |   |   | 1,498 |   |   |   | 1,818 |   |   |   | 1,656 |   |
| Assets      held for sale                           |   |           | 76,928     |   |   |   | 115,666 |   |   |   | 116,847 |   |   |   | 119,183 |   |
| Total      Assets                                   |   | $              | 239,464    |   |   | $ | 272,987 |   |   | $ | 337,730 |   |   | $ | 359,610 |   |
|                                                |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities      and Stockholders' Equity           |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts      payable and accrued expenses          |   | $              | 7,547      |   |   | $ | 8,797 |   |   | $ | 6,602 |   |   | $ | 7,220 |   |
| Deferred      revenue                               |   |           | 5,267      |   |   |   | 5,651 |   |   |   | 4,965 |   |   |   | 4,033 |   |
| Current      portion of long-term debt              |   |           | 958        |   |   |   | 1,946 |   |   |   | 4,273 |   |   |   | 6,340 |   |
| Acquisition      related liabilities                |   |           | 5,450      |   |   |   | 6,254 |   |   |   | 9,415 |   |   |   | 7,360 |   |
| Total      current liabilities                      |   |           | 19,222     |   |   |   | 22,648 |   |   |   | 25,255 |   |   |   | 24,953 |   |
|                                                |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt                                 |   |           | 25,542     |   |   |   | 51,854 |   |   |   | 87,055 |   |   |   | 103,238 |   |
| Deferred      tax liability                         |   |           | 20,493     |   |   |   | 20,537 |   |   |   | 21,716 |   |   |   | 26,607 |   |
| Acquisition      related liabilities                |   |           | 2,954      |   |   |   | 5,546 |   |   |   | 2,429 |   |   |   | 3,915 |   |
| Other      long-term liabilities                    |   |           | 2,376      |   |   |   | 2,093 |   |   |   | 2,078 |   |   |   | 3,412 |   |
| Liabilities      held for sale                      |   |           | 661        |   |   |   | 1,005 |   |   |   | 2,178 |   |   |   | 1,482 |   |
| Total      liabilities                              |   |           | 71,248     |   |   |   | 103,683 |   |   |   | 140,711 |   |   |   | 163,607 |   |
|                                                |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commitments      and Contingencies                  |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Minority      interest                              |   |           | 2,824      |   |   |   | 2,982 |   |   |   | 3,038 |   |   |   | 3,040 |   |
|                                                |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stockholders'      equity:                          |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      stock                                |   |           | -          |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Common      stock                                   |   |           | 506        |   |   |   | 512 |   |   |   | 551 |   |   |   | 557 |   |
| Additional      paid-in capital                     |   |           | 2,634,694  |   |   |   | 2,637,268 |   |   |   | 2,664,771 |   |   |   | 2,668,289 |   |
| Treasury      stock                                 |   |           | (352       | ) |   |   | (1,757 | ) |   |   | (1,757 | ) |   |   | (1,757 | ) |
| Accumulated      deficit                            |   |           | (2,469,456 | ) |   |   | (2,469,701 | ) |   |   | (2,469,584 | ) |   |   | (2,474,126 | ) |
| Stockholders'      equity                           |   |           | 165,392    |   |   |   | 166,322 |   |   |   | 193,981 |   |   |   | 192,963 |   |
| Total      liabilities and stockholders' equity     |   | $              | 239,464    |   |   | $ | 272,987 |   |   | $ | 337,730 |   |   | $ | 359,610 |   |

----

| Consolidated Statements of Operations                                                |   | (Unaudited)                                    |   |
|-----------------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                                                                |   | 2007                                           |   |
|                                                                                                |   | For the three months ended |   |
| (Dollars and shares in thousands, except per share amounts) |   | March 31                                  |   |   | June 30 |   |   | September 30 |   |   | December 31 |   |
| Revenues:                                                                                           |   |                                           |   |   |   |   |   |   |   |   |   |   |
| Royalty      revenues                                                                               |   | $                                              | 2,175  |   |   | $ | 3,515 |   |   | $ | 4,899 |   |   | $ | 5,133 |   |
| Franchise      fee revenues                                                                         |   |                                           | 103    |   |   |   | 1,158 |   |   |   | 1,466 |   |   |   | 720 |   |
| Licensing      and other revenues                                                                   |   |                                           | 10     |   |   |   | 11 |   |   |   | 118 |   |   |   | 280 |   |
| Total      revenues                                                                                 |   |                                           | 2,288  |   |   |   | 4,684 |   |   |   | 6,483 |   |   |   | 6,133 |   |
|                                                                                                |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      expenses:                                                                            |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses:                                                  |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Franchising                                                                                         |   |                                           | (1,612 | ) |   |   | (2,704 | ) |   |   | (2,990 | ) |   |   | (3,382 | ) |
| Corporate                                                                                           |   |                                           | (1,978 | ) |   |   | (3,018 | ) |   |   | (2,659 | ) |   |   | (4,098 | ) |
| Professional      fees:                                                                             |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Franchising                                                                                         |   |                                           | (200   | ) |   |   | 28 |   |   |   | (238 | ) |   |   | (794 | ) |
| Corporate                                                                                           |   |                                           | (567   | ) |   |   | (368 | ) |   |   | (320 | ) |   |   | (417 | ) |
| Depreciation      and amortization                                                                  |   |                                           | (155   | ) |   |   | (232 | ) |   |   | (298 | ) |   |   | (694 | ) |
| Total      operating expenses                                                                       |   |                                           | (4,512 | ) |   |   | (6,294 | ) |   |   | (6,505 | ) |   |   | (9,385 | ) |
|                                                                                                |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      loss                                                                                 |   |                                           | (2,224 | ) |   |   | (1,610 | ) |   |   | (22 | ) |   |   | (3,252 | ) |
|                                                                                                |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-operating      income (expense):                                                                |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                                                                                |   |                                           | 759    |   |   |   | 385 |   |   |   | 291 |   |   |   | 593 |   |
| Interest      expense                                                                               |   |                                           | (160   | ) |   |   | (653 | ) |   |   | (737 | ) |   |   | (1,346 | ) |
| Other      income (expense), net                                                                    |   |                                           | 4      |   |   |   | 36 |   |   |   | (4 | ) |   |   | (25 | ) |
| Total      non-operating income (expense)                                                           |   |                                           | 603    |   |   |   | (232 | ) |   |   | (450 | ) |   |   | (778 | ) |
|                                                                                                |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations before income taxes                                            |   |                                           | (1,621 | ) |   |   | (1,842 | ) |   |   | (472 | ) |   |   | (4,030 | ) |
| Income      tax (expense) benefit:                                                                  |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                                                                             |   |                                           | 367    |   |   |   | 454 |   |   |   | 384 |   |   |   | 357 |   |
| Deferred                                                                                            |   |                                           | -      |   |   |   | (100 | ) |   |   | (976 | ) |   |   | (1,405 | ) |
| Total      provision for income taxes                                                               |   |                                           | 367    |   |   |   | 354 |   |   |   | (592 | ) |   |   | (1,048 | ) |
|                                                                                                |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                                                                |   |                                           | (1,254 | ) |   |   | (1,488 | ) |   |   | (1,064 | ) |   |   | (5,078 | ) |
| Income      from discontinued operations                                                            |   |                                           | 1,056  |   |   |   | 803 |   |   |   | 1,145 |   |   |   | 1,012 |   |
|                                                                                                |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) income                                                                              |   | $                                              | (198   | ) |   | $ | (685 | ) |   | $ | 81 |   |   | $ | (4,066 | ) |
|                                                                                                |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      per share (basic and diluted) from continuing operations                                  |   | $                                              | (0.03  | ) |   | $ | (0.03 | ) |   | $ | (0.02 | ) |   | $ | (0.09 | ) |
| Income      per share (basic and diluted) from discontinued operations                              |   | $                                              | 0.02   |   |   | $ | 0.02 |   |   | $ | 0.02 |   |   | $ | 0.02 |   |
| Net      income (loss) per share - basic and diluted                                                |   | $                                              | (0.01  | ) |   | $ | (0.01 | ) |   | $ | - |   |   | $ | (0.07 | ) |
|                                                                                                |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding - basic                                                    |   |                                           | 45,159 |   |   |   | 50,824 |   |   |   | 52,384 |   |   |   | 55,116 |   |
| Weighted      average shares outstanding - diluted                                                  |   |                                           | 45,159 |   |   |   | 54,465 |   |   |   | 54,250 |   |   |   | 55,116 |   |

----

----

----

----

----

----

----

----

----

----

----

| (IN      THOUSANDS)                                       |   | 2008   |    |   | 2007   |   |     | 2006   |   |
|-----------------------------------------------------------|--------|--------|---------|--------|--------|--------|----------|--------|--------|
| Net      cash used in operating activities                |   | $      | (10,409 | )      |   | $      | (3,407   | )      |   | $ | (890 | ) |
| Net      cash (used in) provided by investing activities  |   |   | (56,601 | )      |   |   | (146,173 | )      |   |   | 217,609 |   |
| Net      cash provided by (used in) financing activities  |   |   | 28,734  |   |   |   | 112,613  |   |   |   | (134,275 | ) |
| Net      (decrease) increase in cash and cash equivalents |   | $      | (38,276 | )      |   | $      | (36,967  | )      |   | $ | 82,444 |   |

----

|                                                                                                   |   | Payments      due by period (in thousands) |    |
|--------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
|                                                                                                   |   |                                       |    |   | Less      than |   |   | 1-3 |   |   |  3-5 |   |   | Morethan |   |
| Contractual Obligations                                                                                |   | Total                                      |    |   | 1      year |   |   | Years |   |   | Years |   |   | 5      years |   |
| Long-term      Debt (a)                                                                                |   | $                                          | 156,495 |   |   | $ | 1,152 |   |   | $ | 47,442 |   |   | $ | 107,901 |   |   | $ | - |   |
| Capital      Lease Obligations (b)                                                                     |   |                                       | 21      |   |   |   | 21 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Operating      Leases (c)                                                                              |   |                                       | 13,053  |   |   |   | 1,738 |   |   |   | 3,374 |   |   |   | 3,553 |   |   |   | 4,388 |   |
| Purchase      Obligations (d)                                                                          |   |                                       | 970     |   |   |   | 970 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Other      Long-Term Liabilities Reflected on the Registrant’s Balance Sheet under      GAAP (e) |   |                                       | 2,666   |   |   |   | 781 |   |   |   | 532 |   |   |   | 105 |   |   |   | 1,248 |   |
| Total                                                                                                  |   | $                                          | 173,205 |   |   | $ | 4,662 |   |   | $ | 51,348 |   |   | $ | 111,559 |   |   | $ | 5,636 |   |

|   | (a) | Amounts      included in this chart reflect the outstanding borrowings with BTMUCC as      of December 31, 2008. We entered into the January 2008 Amendment      increasing our indebtedness by $70 million, then comprehensively      restructured the facility in August 2008, partially paid down the facility      with the proceeds from the sales of the Bill Blass and Waverly businesses      in late 2008, entered into amendments to the facility in late 2008, all of      which impacted our debt obligations and are reflected above. See Note 9 –      Long-Term Debt to      our Consolidated Financial Statements for details regarding the amount and      maturity dates of each note under the credit facility as of December 31,      2008. This chart does not reflect the additional changes to the      outstanding borrowings in 2009 including the further paydown of $5 million      of the facility in August 2009. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Capital      Lease Obligations represents a lease for computer hardware assumed      pursuant to the MaggieMoo’sacquisition. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Operating      Lease Obligations includes primarily our real estate leases for our      corporate headquarters, our Bill Blass showroom located in New York City      (for which we remained obligated until we assigned the lease on June 11,      2009), our Waverly showroom located in New York City (which we have      subleased through the lease expiration) and our NFM facility in Norcross,      Georgia. See Item 2 – Properties for      additional information. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | Purchase      Obligations represent cash consideration with respect to the acquisition      of MaggieMoo’s in the amount of $130,000 of initial cash consideration      held back for certain potential post-acquisition adjustments and      approximately $840,000 pursuant to an earn-out provision, both payable on      March 31, 2008. The $130,000 of MaggieMoo’s deferred cash consideration      was paid in March 2009. The earn-out of $840,000 has not yet been paid due      to the Company’s claims of off-sets and other on-going disputes between      the parties. Any amount of earn-out that is ultimately paid will be from      the Company’s cash on hand, as the earn-out is not permitted to be paid      out of cash generated from operations under the terms of the BTMUCC Credit      Facility. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | Other      Long–Term Liabilities include: (a) the expected net present value of      guaranteed lease obligations we assumed in connection with our acquisition      of MaggieMoo’s, related to the leases of franchisees that we guarantee,      which have been adjusted to reflect subsequent changes to those      obligations and (b) the net present value of a long-term compensation      arrangement with a franchisee of TAF. We have not included contracts for      maintenance support on hardware or software that we own because we      generally pay in advance for these services and have the option of      choosing whether or not to renew these services each  year. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                      |   | As of December 31, 2008 |   |   | % of Total |   |
|---------------------------|--------|---------------------------------------------|--------|--------|----------------------|--------|
| Fixed      Rate Debt      |   | $                                           | 55.9   |   |                 |   | 39 | % |
| Variable      Rate Debt   |   |                                        | 86.3   |   |                 |   | 61 | % |
|                      |   |                                        |   |   |                 |   |   |   |
| Total      long-term debt |   | $                                           | 142.2  |   |                 |   | 100 | % |

----

| Reports      of Independent Registered Public Accounting Firm                                                                       |   | 58 |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|----|
| Consolidated      Balance Sheets as of December 31, 2008 and 2007                                                              |   | 59 |
| Consolidated      Statements of Operations for the years ended December 31, 2008, 2007,      and 2006                          |   | 60 |
| Consolidated      Statements of Stockholders’ Equity (Deficit) for the years ended      December 31, 2008, 2007 and 2006 |   | 61 |
| Consolidated      Statements of Cash Flows for the years ended December 31, 2008, 2007      and 2006                           |   | 62 |
| Notes      to Consolidated Financial Statements                                                                                     |   | 63 |

----

Report of Independent RegisteredPublic Accounting Firm

----

|                                                                                                                                                                                       |   | DECEMBER 31, |       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|------------|
|                                                                                                                                                                                       |   | 2008              |       |   | 2007 |   |
| ASSETS                                                                                                                                                                                     |   |              |       |   |   |   |
| Cash      and cash equivalents                                                                                                                                                             |   | $                 | 8,293      |   |   | $ | 46,569 |   |
| Restricted      cash                                                                                                                                                                       |   |              | —    |   |   |   | 5,174 |   |
| Trade      receivables, net of allowances of $1,367 and $1,401,      respectively                                                                                                          |   |              | 5,617      |   |   |   | 4,710 |   |
| Other      receivables                                                                                                                                                                     |   |              | 834        |   |   |   | 2,673 |   |
| Inventory                                                                                                                                                                                  |   |              | 1,232      |   |   |   | — |   |
| Prepaid      expenses and other current assets                                                                                                                                             |   |              | 2,439      |   |   |   | 2,873 |   |
| Total      current assets                                                                                                                                                                  |   |              | 18,415     |   |   |   | 61,999 |   |
|                                                                                                                                                                                       |   |              |       |   |   |   |   |   |
| Property      and equipment, net                                                                                                                                                           |   |              | 4,395      |   |   |   | 3,941 |   |
| Investment      in joint venture                                                                                                                                                           |   |              | 87         |   |   |   | — |   |
| Goodwill                                                                                                                                                                                   |   |              | —    |   |   |   | 47,514 |   |
| Trademarks      and other non-amortizable intangible assets                                                                                                                                |   |              | 78,422     |   |   |   | 115,850 |   |
| Other      intangible assets, net of amortization                                                                                                                                          |   |              | 6,158      |   |   |   | 6,541 |   |
| Deferred      financing costs, net and other assets                                                                                                                                        |   |              | 5,486      |   |   |   | 2,926 |   |
| Restricted      cash                                                                                                                                                                       |   |              | 940        |   |   |   | 1,656 |   |
| Assets      held for sale                                                                                                                                                                  |   |              | —    |   |   |   | 119,183 |   |
| Total      Assets                                                                                                                                                                          |   | $                 | 113,903    |   |   | $ | 359,610 |   |
|                                                                                                                                                                                       |   |              |       |   |   |   |   |   |
| LIABILITIES      AND STOCKHOLDERS’ EQUITY (DEFICIT)                                                                                                                                  |   |              |       |   |   |   |   |   |
| Accounts      payable and accrued expenses                                                                                                                                                 |   | $                 | 9,220      |   |   | $ | 7,207 |   |
| Restructuring      accruals                                                                                                                                                                |   |              | 153        |   |   |   | 13 |   |
| Deferred      revenue                                                                                                                                                                      |   |              | 4,044      |   |   |   | 4,033 |   |
| Current      portion of long-term debt, net of debt discount of $541 and $0,      respectively                                                                                             |   |              | 611        |   |   |   | 6,340 |   |
| Acquisition      related liabilities                                                                                                                                                       |   |              | 4,689      |   |   |   | 7,360 |   |
| Total      current liabilities                                                                                                                                                             |   |              | 18,717     |   |   |   | 24,953 |   |
|                                                                                                                                                                                       |   |              |       |   |   |   |   |   |
| Long-term      debt, net of debt discount of $852 and $0, respectively                                                                                                                     |   |              | 140,262    |   |   |   | 103,238 |   |
| Deferred      tax liability                                                                                                                                                                |   |              | —    |   |   |   | 26,607 |   |
| Acquisition      related liabilities                                                                                                                                                       |   |              | 480        |   |   |   | 3,915 |   |
| Other      long-term liabilities                                                                                                                                                           |   |              | 3,937      |   |   |   | 3,412 |   |
| Liabilities      held for sale                                                                                                                                                             |   |              | —    |   |   |   | 1,482 |   |
| Total      liabilities                                                                                                                                                                     |   |              | 163,396    |   |   |   | 163,607 |   |
|                                                                                                                                                                                       |   |              |       |   |   |   |   |   |
| Commitments      and Contingencies                                                                                                                                                         |   |              |       |   |   |   |   |   |
|                                                                                                                                                                                       |   |              |       |   |   |   |   |   |
| Minority      Interest                                                                                                                                                                     |   |              | —    |   |   |   | 3,040 |   |
|                                                                                                                                                                                       |   |              |       |   |   |   |   |   |
| Stockholders’      equity (deficit):                                                                                                                                                 |   |              |       |   |   |   |   |   |
| Preferred      stock, $0.01 par value; 1,000,000 shares authorized; 0 shares issued and      outstanding as of December 31, 2008 and 2007,      respectively                          |   |              | —    |   |   |   | — |   |
| Common      stock, $0.01 par value; 1,000,000,000 shares authorized; 56,670,644 and      55,517,475 shares issued and outstanding as of December 31, 2008 and      2007, respectively |   |              | 569        |   |   |   | 557 |   |
| Additional      paid-in capital                                                                                                                                                            |   |              | 2,681,600  |   |   |   | 2,668,289 |   |
| Treasury      stock                                                                                                                                                                        |   |              | (1,757     | ) |   |   | (1,757 | ) |
| Accumulated      deficit                                                                                                                                                                   |   |              | (2,729,905 | ) |   |   | (2,474,126 | ) |
| Total      stockholders’ equity (deficit)                                                                                                                                            |   |              | (49,493    | ) |   |   | 192,963 |   |
| Total      liabilities and stockholders’ equity (deficit)                                                                                                                            |   | $                 | 113,903    |   |   | $ | 359,610 |   |

----

|                                                                                          |   | YEAR ENDED DECEMBER 31, |     |
|-----------------------------------------------------------------------------------------------|--------|----------------------------------------|----------|
|                                                                                          |   | 2008                                   |     |   | 2007 |   |   | 2006 |   |
| Revenues:                                                                                     |   |                                   |     |   |   |   |   |   |   |
| Royalty      revenues                                                                         |   | $                                      | 24,735   |   |   | $ | 15,722 |   |   | $ | 1,175 |   |
| Factory      revenues                                                                         |   |                                   | 17,310   |   |   |   | — |   |   |   | — |   |
| Franchise      fee revenues                                                                   |   |                                   | 3,616    |   |   |   | 3,447 |   |   |   | 749 |   |
| Licensing      and other revenues                                                             |   |                                   | 1,295    |   |   |   | 419 |   |   |   | — |   |
| Total      revenues                                                                           |   |                                   | 46,956   |   |   |   | 19,588 |   |   |   | 1,924 |   |
|                                                                                          |   |                                   |     |   |   |   |   |   |   |   |   |   |
| Operating      expenses:                                                                      |   |                                   |     |   |   |   |   |   |   |   |   |   |
| Cost      of sales                                                                            |   |                                   | (11,484  | ) |   |   | — |   |   |   | — |   |
| Selling,      general and administrative expenses:                                            |   |                                   |     |   |   |   |   |   |   |   |   |   |
| Franchising                                                                                   |   |                                   | (16,958  | ) |   |   | (10,688 | ) |   |   | (454 | ) |
| Corporate                                                                                     |   |                                   | (15,460  | ) |   |   | (11,753 | ) |   |   | (694 | ) |
| Professional      fees:                                                                       |   |                                   |     |   |   |   |   |   |   |   |   |   |
| Franchising                                                                                   |   |                                   | (1,685   | ) |   |   | (1,204 | ) |   |   | (115 | ) |
| Corporate                                                                                     |   |                                   | (2,696   | ) |   |   | (1,672 | ) |   |   | (1,034 | ) |
| Special      Investigations                                                                   |   |                                   | (3,897   | ) |   |   | — |   |   |   | — |   |
| Impairment      of intangible assets                                                          |   |                                   | (137,881 | ) |   |   | — |   |   |   | — |   |
| Depreciation      and amortization                                                            |   |                                   | (3,016   | ) |   |   | (1,379 | ) |   |   | (221 | ) |
| Restructuring      charges                                                                    |   |                                   | (1,096   | ) |   |   | — |   |   |   | (1,079 | ) |
| Total      operating expenses                                                                 |   |                                   | (194,173 | ) |   |   | (26,696 | ) |   |   | (3,597 | ) |
|                                                                                          |   |                                   |     |   |   |   |   |   |   |   |   |   |
| Operating      loss                                                                           |   |                                   | (147,217 | ) |   |   | (7,108 | ) |   |   | (1,673 | ) |
|                                                                                          |   |                                   |     |   |   |   |   |   |   |   |   |   |
| Non-operating      (expense) income:                                                          |   |                                   |     |   |   |   |   |   |   |   |   |   |
| Interest      income                                                                          |   |                                   | 439      |   |   |   | 2,028 |   |   |   | 1,450 |   |
| Interest      expense                                                                         |   |                                   | (10,690  | ) |   |   | (2,896 | ) |   |   | — |   |
| Financing      charges                                                                        |   |                                   | (1,814   | ) |   |   | — |   |   |   | — |   |
| Other      (expense) income, net                                                              |   |                                   | (284     | ) |   |   | 11 |   |   |   | 552 |   |
| Total      non-operating income (expense)                                                     |   |                                   | (12,349  | ) |   |   | (857 | ) |   |   | 2,002 |   |
|                                                                                          |   |                                   |     |   |   |   |   |   |   |   |   |   |
| (Loss)      income from continuing operations before income taxes                             |   |                                   | (159,566 | ) |   |   | (7,965 | ) |   |   | 329 |   |
| Income      taxes (expense) benefit:                                                          |   |                                   |     |   |   |   |   |   |   |   |   |   |
| Current                                                                                       |   |                                   | (337     | ) |   |   | 1,562 |   |   |   | (299 | ) |
| Deferred                                                                                      |   |                                   | 6,331    |   |   |   | (2,481 | ) |   |   | — |   |
|                                                                                          |   |                                   |     |   |   |   |   |   |   |   |   |   |
| (Loss)      income from continuing operations                                                 |   |                                   | (153,572 | ) |   |   | (8,884 | ) |   |   | 30 |   |
|                                                                                          |   |                                   |     |   |   |   |   |   |   |   |   |   |
| Net      loss from discontinued operations, net of taxes of $19,923, ($2,383) and      ($64): |   |                                   | (102,207 | ) |   |   | 4,016 |   |   |   | (2,150 | ) |
|                                                                                          |   |                                   |     |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                                 |   | $                                      | (255,779 | ) |   | $ | (4,868 | ) |   | $ | (2,120 | ) |
|                                                                                          |   |                                   |     |   |   |   |   |   |   |   |   |   |
| Loss      per share (basic and diluted) from continuing operations                            |   | $                                      | (2.71    | ) |   | $ | (0.17 | ) |   | $ | 0.00 |   |
| (Loss)      income per share (basic and diluted) from discontinued      operations            |   |                                   | (1.81    | ) |   |   | 0.08 |   |   |   | (0.05 | ) |
| Net      loss per share – basic and diluted                                             |   | $                                      | (4.52    | ) |   | $ | (0.09 | ) |   | $ | (0.05 | ) |
|                                                                                          |   |                                   |     |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding - basic and diluted                                  |   |                                   | 56,550   |   |   |   | 51,889 |   |   |   | 45,636 |   |

----

|                                                        |   |      |   |   |   |   |   | ADDITIONAL |   |   |        |   |   |     |       |   |   |   |
|-------------------------------------------------------------|--------|-----------|--------|--------|--------|--------|--------|------------|--------|--------|-------------|--------|--------|----------|------------|--------|--------|--------|
|                                                        |   | PREFERRED |   |   | COMMON |   |   | PAID-IN    |   |   | ACCUMULATED |   |   | TREASURY |       |   |   |   |
|                                                        |   | STOCK     |   |   | STOCK  |   |   | CAPITAL    |   |   | DEFICIT     |   |   | STOCK    |       |   | TOTAL  |   |
| Balance      as of December 31, 2005                        |   | $         | -      |   |   | $      | 440    |       |   | $      | 2,593,085   |   |   | $        | (2,467,138 | )      |   | $      | - |   |   | $ | 126,387 |   |
| Net      loss                                               |   |      | -      |   |   |   | -      |       |   |   | -           |   |   |     | (2,120     | )      |   |   | - |   |   |   | (2,120 | ) |
| Total      comprehensive loss                               |   |      |   |   |   |   |   |       |   |   |        |   |   |     |       |   |   |   |   |   |   |   | (2,120 | ) |
| Exercise      of options and warrants                       |   |      | -      |   |   |   | -      |       |   |   | 1           |   |   |     | -          |   |   |   | - |   |   |   | 1 |   |
| Stock      based compensation                               |   |      | -      |   |   |   | -      |       |   |   | 3,177       |   |   |     | -          |   |   |   | - |   |   |   | 3,177 |   |
| Common      stock issued                                    |   |      | -      |   |   |   | 41     |       |   |   | 19,479      |   |   |     | -          |   |   |   | - |   |   |   | 19,520 |   |
| Common      stock repurchased                               |   |      | -      |   |   |   | -      |       |   |   | -           |   |   |     | -          |   |   |   | (352 | ) |   |   | (352 | ) |
| Balance      as of December 31, 2006                        |   |      | -      |   |   |   | 481    |       |   |   | 2,615,742   |   |   |     | (2,469,258 | )      |   |   | (352 | ) |   |   | 146,613 |   |
| Net      loss                                               |   |      | -      |   |   |   | -      |       |   |   | -           |   |   |     | (4,868     | )      |   |   | - |   |   |   | (4,868 | ) |
| Total      comprehensive loss                               |   |      |   |   |   |   |   |       |   |   |        |   |   |     |       |   |   |   |   |   |   |   | (4,868 | ) |
| Surrender      of shares from cashless exercise of warrants |   |      | -      |   |   |   | -      |       |   |   | -           |   |   |     | -          |   |   |   | (1,405 | ) |   |   | (1,405 | ) |
| Exercise      of options and warrants                       |   |      | -      |   |   |   | 16     |       |   |   | 4,702       |   |   |     | -          |   |   |   | - |   |   |   | 4,718 |   |
| Stock      based compensation                               |   |      | -      |   |   |   | -      |       |   |   | 4,704       |   |   |     | -          |   |   |   | - |   |   |   | 4,704 |   |
| Common      stock issued                                    |   |      | -      |   |   |   | 60     |       |   |   | 43,141      |   |   |     | -          |   |   |   | - |   |   |   | 43,201 |   |
|                                                        |   |      |   |   |   |   |   |       |   |   |        |   |   |     |       |   |   |   |   |   |   |   |   |   |
| Balance      as of December 31, 2007                        |   |      | -      |   |   |   | 557    |       |   |   | 2,668,289   |   |   |     | (2,474,126 | )      |   |   | (1,757 | ) |   |   | 192,963 |   |
| Net      loss                                               |   |      | -      |   |   |   | -      |       |   |   | -           |   |   |     | (255,779   | )      |   |   | - |   |   |   | (255,779 | ) |
| Total      comprehensive loss                               |   |      |   |   |   |   |   |       |   |   |        |   |   |     |       |   |   |   |   |   |   |   | (255,779 | ) |
| Exercise      of options and warrants                       |   |      | -      |   |   |   | 1      |       |   |   | 4           |   |   |     | -          |   |   |   | - |   |   |   | 5 |   |
| Stock      based compensation                               |   |      | -      |   |   |   | -      |       |   |   | 8,657       |   |   |     | -          |   |   |   | - |   |   |   | 8,657 |   |
| Common      stock issued                                    |   |      | -      |   |   |   | 11     |       |   |   | 4,650       |   |   |     | -          |   |   |   | - |   |   |   | 4,661 |   |
| Balance      as of December 31, 2008                        |   | $         | -      |   |   | $      | 569    |       |   | $      | 2,681,600   |   |   | $        | (2,729,905 | )      |   | $      | (1,757 | ) |   | $ | (49,493 | ) |

----

|                                                                                                |   | 2008   |     |   | 2007   |   |     | 2006   |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|
|                                                                                                |   |   |     |   |   |   |     |   |   |
| Cash      flows from operating activities:                                                          |   |   |     |   |   |   |     |   |   |
| Net      loss                                                                                       |   | $      | (255,779 | )      |   | $      | (4,868   | )      |   | $ | (2,120 | ) |
| Add:      net loss (income) from discontinued operations                                            |   |   | 102,207  |   |   |   | (4,016   | )      |   |   | 2,150 |   |
| Net      (loss) income from continuing operations                                                   |   |   | (153,572 | )      |   |   | (8,884   | )      |   |   | 30 |   |
| Adjustments      to reconcile net loss to net cash (used in) provided by operating      activities: |   |   |     |   |   |   |     |   |   |   |   |   |
| Impairment      of intangible assets                                                                |   |   | 137,881  |   |   |   | —  |   |   |   | — |   |
| Depreciation      and amortization                                                                  |   |   | 3,016    |   |   |   | 1,379    |   |   |   | 221 |   |
| Deferred      income taxes                                                                          |   |   | (6,331   | )      |   |   | 3,019    |   |   |   | — |   |
| Stock      based compensation                                                                       |   |   | 5,291    |   |   |   | 4,287    |   |   |   | 1,632 |   |
| Amortization      of loan costs and debt discount                                                   |   |   | 2,571    |   |   |   | —  |   |   |   | — |   |
| Accrued      interest                                                                               |   |   | 41       |   |   |   | —  |   |   |   | — |   |
| Restructuring                                                                                       |   |   | 443      |   |   |   | —  |   |   |   | — |   |
| Loss      on investment in Shoebox New York                                                         |   |   | 266      |   |   |   | —  |   |   |   | — |   |
| Amortization      of loan fees                                                                      |   |   | —  |   |   |   | 319      |   |   |   | — |   |
| Other      non-cash expenses                                                                        |   |   | —  |   |   |   | 27       |   |   |   | — |   |
| Changes      in assets and liabilities, net of acquired assets and      liabilities:                |   |   |     |   |   |   |     |   |   |   |   |   |
| Increase      in trade receivables, net of allowances                                               |   |   | (907     | )      |   |   | (2,851   | )      |   |   | (791 | ) |
| Decrease      in inventory                                                                          |   |   | 427      |   |   |   | —  |   |   |   | — |   |
| Increase      in prepaid expenses and other assets                                                  |   |   | (1,530   | )      |   |   | (1,348   | )      |   |   | (1,096 | ) |
| Decrease      (increase) in interest and other receivables                                          |   |   | 3,378    |   |   |   | (1,025   | )      |   |   | 663 |   |
| Increase      (decrease) in accounts payable and accrued expenses                                   |   |   | 1,401    |   |   |   | 273      |   |   |   | (249 | ) |
| Increase      in restructuring accruals and other liabilities                                       |   |   | 140      |   |   |   | —  |   |   |   | 314 |   |
| Decrease      in deferred revenue                                                                   |   |   | (400     | )      |   |   | (1,385   | )      |   |   | — |   |
| Net      cash provided by operating activities from continuing      operations                      |   |   | (7,885   | )      |   |   | (6,189   | )      |   |   | 724 |   |
| Net      cash provided by operating activities from discontinued      operations                    |   |   | (2,524   | )      |   |   | 2,782    |   |   |   | (1,614 | ) |
| Net      cash used in operating activities                                                          |   |   | (10,409  | )      |   |   | (3,407   | )      |   |   | (890 | ) |
|                                                                                                |   |   |     |   |   |   |     |   |   |   |   |   |
| Cash      flows from investing activities:                                                          |   |   |     |   |   |   |     |   |   |   |   |   |
| Decrease      (increase) in restricted cash                                                         |   |   | 5,890    |   |   |   | (5,532   | )      |   |   | 7,335 |   |
| Purchase      of trademarks, including registration costs                                           |   |   | (46      | )      |   |   | (123     | )      |   |   | — |   |
| Purchases      of property and equipment                                                            |   |   | (676     | )      |   |   | (3,930   | )      |   |   | (151 | ) |
| Acquisitions,      net of cash acquired                                                             |   |   | (95,000  | )      |   |   | (49,518  | )      |   |   | (43,135 | ) |
| Investment      in Shoebox New York                                                                 |   |   | (725     | )      |   |   | —  |   |   |   | — |   |
| Distributions      from Shoebox New York                                                            |   |   | 371      |   |   |   | —  |   |   |   | — |   |
| Cash      provided by discontinued operations for investing    activities                           |   |   | 33,585   |   |   |   | (87,070  | )      |   |   | 253,560 |   |
| Net      cash (used in) provided by investing activities                                            |   |   | (56,601  | )      |   |   | (146,173 | )      |   |   | 217,609 |   |
|                                                                                                |   |   |     |   |   |   |     |   |   |   |   |   |
| Cash      flows from financing activities:                                                          |   |   |     |   |   |   |     |   |   |   |   |   |
| Proceeds      from debt borrowings                                                                  |   |   | 70,000   |   |   |   | 110,801  |   |   |   | — |   |
| Financing      costs                                                                                |   |   | (2,549   | )      |   |   | (3,049   | )      |   |   | — |   |
| Principal      payments on debt                                                                     |   |   | (37,353  | )      |   |   | (1,223   | )      |   |   | — |   |
| Exercise      of options and warrants                                                               |   |   | 5        |   |   |   | 3,313    |   |   |   | 1 |   |
| Purchase      of treasury stock                                                                     |   |   | —  |   |   |   | —  |   |   |   | (352 | ) |
| Cash      used in discontinued operations for financing activities                                  |   |   | (1,369   | )      |   |   | 2,771    |   |   |   | (133,924 | ) |
| Net      cash provided by (used in) financing activities                                            |   |   | 28,734   |   |   |   | 112,613  |   |   |   | (134,275 | ) |
| Net      (decrease) increase in cash and cash equivalents                                           |   |   | (38,276  | )      |   |   | (36,967  | )      |   |   | 82,444 |   |
| Cash      and cash equivalents, at beginning of period                                              |   |   | 46,569   |   |   |   | 83,536   |   |   |   | 1,092 |   |
| Cash      and cash equivalents, at end of period                                                    |   | $      | 8,293    |   |   | $      | 46,569   |   |   | $ | 83,536 |   |

----

| (1) | ORGANIZATION      AND DESCRIPTION OF THE BUSINESS |
|-----|---------------------------------------------------|

----

| (in thousands)       |   | DECEMBER 31,2008 |   |   | DECEMBER 31,2007 |   |
|---------------------------|--------|-----------------------|--------|--------|-----------------------|--------|
| Cash                      |   | $                     | 6,632  |   |                  | $      | 12,764 |   |
| Money      market account |   |                  | 1,661  |   |                  |   | 33,805 |   |
| Total                     |   | $                     | 8,293  |   |                  | $      | 46,569 |   |

| (in thousands) |   | BeginningBalance |   |   | Acquisitions |   |   | Additions |   |   | Write-Offs |   |   | EndingBalance |   |
|---------------------|--------|------------------|--------|--------|--------------|--------|--------|-----------|--------|--------|------------|--------|--------|---------------|--------|
| 2006                |   | $                | -      |   |         | $      | 530    |      |   | $      | -          |   |   | $             | -      |   |   | $ | 530 |   |
| 2007                |   | $                | 530    |   |         | $      | 158    |      |   | $      | 713        |   |   | $             | -      |   |   | $ | 1,401 |   |
| 2008                |   | $                | 1,401  |   |         | $      | -      |      |   | $      | 1,816      |   |   | $             | 1,850  |   |   | $ | 1,367 |   |

| (in thousands) |   | DECEMBER 31,2008 |   |   | DECEMBER 31,2007 |   |
|---------------------|--------|-----------------------|--------|--------|-----------------------|--------|
| Finished      goods |   | $                     | 728    |   |                  | $      | - |   |
| Raw      materials  |   |                  | 504    |   |                  |   | - |   |
| Total               |   | $                     | 1,232  |   |                  | $      | - |   |

----

|   | •  | Level 1 —      inputs to the valuation methodology based on quoted prices (unadjusted)      for identical assets or liabilities in active  markets. |
|--------|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | •  | Level 2 —      inputs to the valuation methodology based on quoted prices for similar      assets and liabilities in active markets for substantially the full term      of the financial instrument; quoted prices for identical or similar      instruments in markets that are not active for substantially the full term      of the financial instrument; and model-derived valuations whose inputs or      significant value drivers areobservable. |
|--------|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | •  | Level 3 —      inputs to the valuation methodology based on unobservable prices or      valuation techniques that are significant to the fair value      measurement. |
|--------|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

|                                                         |   | Estimated                   |   |   | December 31, |   |
|--------------------------------------------------------------|--------|-----------------------------|--------|--------|-------------------|--------|
|                                                         |   | Useful Lives           |   |   | 2008              |   |   | 2007 |   |
| Furniture      and fixtures                                  |   | 7 - 10 Years |   |   | $                 | 745    |   |   | $ | 661 |   |
| Computers      and equipment                                 |   | 3 - 5 Years  |   |   |              | 1,591  |   |   |   | 914 |   |
| Software                                                     |   | 3 Years                |   |   |              | 699    |   |   |   | 486 |   |
| Building                                                     |   | 29 Years               |   |   |              | 966    |   |   |   | - |   |
| Land                                                         |   | Unlimited                   |   |   |              | 263    |   |   |   | - |   |
| Leasehold      improvements                                  |   | Term of Lease     |   |   |              | 2,937  |   |   |   | 2,772 |   |
| Total      property and equipment                            |   |                        |   |   |              | 7,201  |   |   |   | 4,833 |   |
| Less      accumulated depreciation and amortization          |   |                        |   |   |              | (2,806 | ) |   |   | (892 | ) |
| Property      and equipment, net of accumulated depreciation |   |                        |   |   | $                 | 4,395  |   |   | $ | 3,941 |   |

----

|                        |   | Balance at December 31, 2008 |   |   | Impairments in 2008 |   |     | Additions/Reclassificationsin 2008 |   |   | Balance at December 31, 2007 |   |
|-----------------------------|--------|--------------------------------------------------|--------|--------|-------------------------------|--------|----------|-----------------------------------------|--------|--------|--------------------------------------------------|--------|
| The      Athlete's Foot     |   | $                                                | 11,350 |   |                          | $      | (40,364  | )                                       |   | $      | 45                                               |   |   | $ | 51,669 |   |
| Great      American Cookies |   |                                             | 44,891 |   |                          |   | (45,328  | )                                       |   |   | 90,219                                           |   |   |   | - |   |
| Marble      Slab Creamery   |   |                                             | 9,062  |   |                          |   | (15,174  | )                                       |   |   | 118                                              |   |   |   | 24,118 |   |
| MaggieMoo's                 |   |                                             | 4,194  |   |                          |   | (17,392  | )                                       |   |   | -                                                |   |   |   | 21,586 |   |
| Pretzel      Time           |   |                                             | -      |   |                          |   | (17,076  | )                                       |   |   | (310                                             | )      |   |   | 17,386 |   |
| Pretzelmaker                |   |                                             | 8,925  |   |                          |   | (2,166   | )                                       |   |   | -                                                |   |   |   | 11,091 |   |
| Subtotal:                   |   |                                             | 78,422 |   |                          |   | (137,500 | )1                                      |   |   | 90,072                                           |   |   |   | 125,850 |   |
| UCC2                        |   |                                             | -      |   |                          |   | (37,514  | )                                       |   |   | -                                                |   |   |   | 37,514 |   |
| Total                       |   | $                                                | 78,422 |   |                          | $      | (175,014 | )                                       |   | $      | 90,072                                           |   |   | $ | 163,364 |   |

|                                 |   | December 31, |   |
|--------------------------------------|--------|-------------------|--------|
|                                 |   | 2008              |   |   | 2007 |   |
| The      Athlete's Foot              |   | $                 | -      |   |   | $ | 2,546 |   |
| Marble      Slab Creamery            |   |              | -      |   |   |   | 2,001 |   |
| MaggieMoo's                          |   |              | -      |   |   |   | 5,086 |   |
| Pretzel      Time & Pretzelmaker |   |              | -      |   |   |   | 367 |   |
| UCC                                  |   |              | -      |   |   |   | 37,514 |   |
| Total                                |   | $                 | -      |   |   | $ | 47,514 |   |

|                        |   | December 31, |   |
|-----------------------------|--------|-------------------|--------|
|                        |   | 2008              |   |   | 2007 |   |
| The      Athlete's Foot     |   | $                 | 11,350 |   |   | $ | 49,123 |   |
| Great      American Cookies |   |              | 44,891 |   |   |   | - |   |
| Marble      Slab Creamery   |   |              | 9,062  |   |   |   | 22,117 |   |
| MaggieMoo's                 |   |              | 4,194  |   |   |   | 16,500 |   |
| Pretzel      Time           |   |              | -      |   |   |   | 17,386 |   |
| Pretzelmaker                |   |              | 8,925  |   |   |   | 10,724 |   |
| Total                       |   | $                 | 78,422 |   |   | $ | 115,850 |   |

----

|                                |   | December 31, |   |
|-------------------------------------|--------|-------------------|--------|
|                                |   | 2008              |   |   | 2007 |   |
| The      Athlete's Foot             |   | $                 | 2,600  |   |   | $ | 2,600 |   |
| Great      American Cookies         |   |              | 780    |   |   |   | - |   |
| Marble      Slab Creamery           |   |              | 1,229  |   |   |   | 1,229 |   |
| MaggieMoo's                         |   |              | 654    |   |   |   | 654 |   |
| Pretzel      Time                   |   |              | 1,322  |   |   |   | 1,012 |   |
| Pretzelmaker                        |   |              | 788    |   |   |   | 788 |   |
| UCC                                 |   |              | -      |   |   |   | 1,370 |   |
| Total      Other Intangible Assets  |   |              | 7,373  |   |   |   | 7,653 |   |
| Less:      Accumulated Amortization |   |              | (1,215 | ) |   |   | (1,112 | ) |
| Total                               |   | $                 | 6,158  |   |   | $ | 6,541 |   |

|                                |   | Goodwill          |   |   | Trademarks and OtherNon-Amortizable Assets |   |   | Other AmortizableIntangibles |   |   | Total             |   |
|-------------------------------------|--------|-------------------|--------|--------|-----------------------------------------------------------|--------|--------|-----------------------------------|--------|--------|-------------------|--------|
|                                |   | December 31, |   |   | December 31,                                         |   |   | December 31,                 |   |   | December 31, |   |
|                                |   | 2008              |   |   | 2007                                                      |   |   | 2008                              |   |   | 2007              |   |   | 2008 |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
|                                |   |              |   |   |                                                      |   |   |                              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Franchising                         |   | $                 | -      |   |                                                      | $      | 10,000 |                              |   | $      | 78,422            |   |   | $ | 115,850 |   |   | $ | 7,373 |   |   | $ | 6,283 |   |   | $ | 85,795 |   |   | $ | 132,133 |   |
| UCC                                 |   |              | -      |   |                                                      |   | 37,514 |                              |   |   | -                 |   |   |   | - |   |   |   | - |   |   |   | 1,370 |   |   |   | - |   |   |   | 38,884 |   |
| Less:      Accumulated depreciation |   |              | -      |   |                                                      |   | -      |                              |   |   | -                 |   |   |   | - |   |   |   | 1,215 |   |   |   | 1,112 |   |   |   | 1,215 |   |   |   | 1,112 |   |
| Total                               |   | $                 | -      |   |                                                      | $      | 47,514 |                              |   | $      | 78,422            |   |   | $ | 115,850 |   |   | $ | 6,158 |   |   | $ | 6,541 |   |   | $ | 84,580 |   |   | $ | 169,905 |   |

|                        |   | Weighted AverageAmortization Period |   |   | For the year ended December 31, |   |
|-----------------------------|--------|-----------------------------------------------|--------|--------|----------------------------------------------------------|--------|
|                        |   | (Years)                                       |   |   | 2009                                                     |   |   | 2010 |   |   | 2011 |   |   | 2012 |   |   | 2013 |   |   | Thereafter |   |
| The      Athlete's Foot     |   |                                          | 20     |   |                                                     | $      | 130 |   |   | $ | 130 |   |   | $ | 130 |   |   | $ | 130 |   |   | $ | 130 |   |   | $ | 1,669 |   |
| Great      American Cookies |   |                                          | 7      |   |                                                     |   | 111 |   |   |   | 111 |   |   |   | 111 |   |   |   | 111 |   |   |   | 111 |   |   |   | 121 |   |
| Marble      Slab            |   |                                          | 20     |   |                                                     |   | 61 |   |   |   | 61 |   |   |   | 61 |   |   |   | 61 |   |   |   | 61 |   |   |   | 811 |   |
| MaggieMoo's                 |   |                                          | 20     |   |                                                     |   | 33 |   |   |   | 33 |   |   |   | 33 |   |   |   | 33 |   |   |   | 33 |   |   |   | 430 |   |
| Pretzel      Time           |   |                                          | 5      |   |                                                     |   | 401 |   |   |   | 211 |   |   |   | 211 |   |   |   | 78 |   |   |   | - |   |   |   | - |   |
| Pretzel      Maker          |   |                                          | 5      |   |                                                     |   | 166 |   |   |   | 166 |   |   |   | 166 |   |   |   | 53 |   |   |   | - |   |   |   | - |   |
| Total      Amortization     |   |                                          |   |   |                                                     | $      | 902 |   |   | $ | 712 |   |   | $ | 712 |   |   | $ | 466 |   |   | $ | 335 |   |   | $ | 3,031 |   |

----

|                                             |   | December 31, |   |
|--------------------------------------------------|--------|-------------------|--------|
|                                             |   | 2008              |   |   | 2007 |   |
| Accounts      payable                            |   | $                 | 5,883  |   |   | $ | 709 |   |
| Accrued      interest payable                    |   |              | 353    |   |   |   | 1,925 |   |
| Accrued      professional fees                   |   |              | 901    |   |   |   | 1,227 |   |
| Deferred      rent - current portion             |   |              | 80     |   |   |   | 85 |   |
| Accrued      compensation and benefits           |   |              | 106    |   |   |   | 531 |   |
| Refundable      franchise fees and gift cards    |   |              | 24     |   |   |   | 811 |   |
| Income      taxes                                |   |              | 429    |   |   |   | 103 |   |
| Accrued      acquisition costs                   |   |              | -      |   |   |   | 382 |   |
| All      other                                   |   |              | 1,444  |   |   |   | 1,434 |   |
| Total      accounts payable and accrued expenses |   | $                 | 9,220  |   |   | $ | 7,207 |   |

----

| A roll forward of the restructuring accrual is as follows:(in thousands) |   | EmployeeSeparationBenefits |    |
|----------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|---------|
|                                                                                                                       |   |                       |    |
| 2006      Restructuring:                                                                                                   |   |                       |    |
| Restructuring      liability as of December 31, 2005                                                                  |   | $                          | — |   |
| Charges      to continuing operations                                                                                      |   |                       | 895     |   |
| Cash      payments and other                                                                                               |   |                       | (750    | ) |
| Restructuring      liability as of December 31, 2006                                                                  |   |                       | 145     |   |
|                                                                                                                       |   |                       |    |   |
| 2007      Restructuring:                                                                                                   |   |                       |    |   |
| Cash      payments and other                                                                                               |   |                       | (132    | ) |
| Restructuring      liability as of December 31, 2007                                                                  |   |                       | 13      |   |
|                                                                                                                       |   |                       |    |   |
| 2008      Restructuring:                                                                                                   |   |                       |    |   |
| Charges      to continuing operations                                                                                      |   |                       | 1,096   |   |
| Cash      payments and other                                                                                               |   |                       | (956    | ) |
| Restructuring      liability as of December 31, 2008                                                                  |   | $                          | 153     |   |

----

|   | · | The      outstanding loans, as of August 15, 2008, were restructured into three      separate tranches.  Approximately $86.3 million of notes backed      by the individual franchise brands were classified as “Class A Franchise      Notes” and were set to mature on July 31, 2013; approximately $41.7      million of notes backed by a second-lien against all of the Company’s      franchised brands were classified as “Class B Franchise Note” and were set      to mature on July 31, 2011; and the remaining $47.6 million of notes      backed by the Bill Blass and Waverly brands were classified as “Brand      Notes” and were set to mature on January 1,  2010. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Class A Franchise Notes bear interest at LIBOR (which in all cases under      the Amended Credit Facility is the one-month LIBOR rate as in effect from      time to time) plus 3.75% per year through July 31, 2011 and then LIBOR      plus 5% per year thereafter until maturity on July 31,    2013. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Class B Franchise Note bore interest at a fixed rate of 12% per year      through July 31, 2009 and then 15% per year thereafter. The interest rate      was later amended and reduced to 8% per year effective on January 20,      2009, as discussed below. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | The      Brand Note securing the Waverly brand (which has since been paid in full)      bore interest at LIBOR plus 5% per year; provided that if the Waverly      brand had not been sold by December 31, 2008 then the interest rate would      have increased to LIBOR plus 7% per year. The Brand Note securing the Bill      Blass brand (which has since been converted to a Deficiency Note in the      amount of $14.2 million, as discussed below) bore interest at LIBOR plus      7% per year; provided that if the Bill Blass brand had not been sold by      December 31, 2008, then the interest rate would have increased to LIBOR      plus 9% per year. If the proceeds from the sale of either the Bill Blass      or Waverly brand were insufficient to repay the respective Brand Note in      full, such Brand Note automatically converted to a note in the amount of      the remaining principal balance which bears interest at 15% per year (a      “Deficiency Note”). The original maturity date for any Deficiency Note was      January 1, 2010. In connection with the issuance of the Deficiency Note      associated with the Bill Blass brand, as discussed below, this maturity      date was later extended to July 31, 2013, and the cash interest and      principal payments due under the Deficiency Note were deferred until the      maturity date. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Mandatory      minimum principal payments were eliminated for the remainder of 2008 and      substantially reduced through 2010. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | BTMUCC      was entitled to receive warrants to purchase 2.8 million shares of the      Company’s common stock if the applicable subsidiary of the Company still      owned Waverly or Bill Blass and the Brand Notes remained unpaid by March      31, 2009.  This provision later was waived, as discussed      below. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | BTMUCC      will be entitled to receive warrants covering up to 2.8 million shares of      the Company’s common stock if the Class B Franchise Note has not been      repaid by July 31, 2009 (later extended to December 31, 2009 as discussed      below), with the number of shares being subject to pro-rata reduction if      less than 50% of original principal amount of the Class B Franchise Note      remains outstanding at that time. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                               |   | December 31, |    |
|--------------------------------------------------------------------|--------|-------------------|---------|
|                                                               |   | 2008              |    |   | 2007 |   |
| Class      A Franchise Notes                                       |   | $                 | 86,300  |   |   | $ | - |   |
| Class      B Franchise Note                                        |   |              | 41,724  |   |   |   | - |   |
| Deficiency      Note                                               |   |              | 14,242  |   |   |   | - |   |
| Original      Credit Facility                                      |   |              | -       |   |   |   | 109,578 |   |
| Total                                                              |   | $                 | 142,266 |   |   | $ | 109,578 |   |
|                                                               |   |              |    |   |   |   |   |   |
| Range      of interest rates on variable rate debt during the year |   | 5.4%      to 8.8% |    |   | 7.5%      to 8.0% |   |
| Weighted-average      rate on variable rate debt at year-end       |   |              | 5.9     | % |   |   | 7.6 | % |

----

|       |   | Class A |   |   | Class B(1) |   |   | Deficiency Note(2) |   |   | Total  |   |
|------------|--------|--------------|--------|--------|-----------------|--------|--------|-------------------------|--------|--------|--------|--------|
| 2009       |   | $            | 780    |   |            | $      | 372    |                    |   | $      | -      |   |   | $ | 1,152 |   |
| 2010       |   |         | 2,700  |   |            |   | 712    |                    |   |   | -      |   |   |   | 3,412 |   |
| 2011       |   |         | 3,390  |   |            |   | 40,640 |                    |   |   | -      |   |   |   | 44,030 |   |
| 2012       |   |         | 3,918  |   |            |   | -      |                    |   |   | -      |   |   |   | 3,918 |   |
| 2013       |   |         | 75,512 |   |            |   | -      |                    |   |   | 28,471 |   |   |   | 103,983 |   |
| Thereafter |   |         | -      |   |            |   | -      |                    |   |   | -      |   |   |   | - |   |
| Total      |   | $            | 86,300 |   |            | $      | 41,724 |                    |   | $      | 28,471 |   |   | $ | 156,495 |   |

|   | (1) | As      discussed below, on August 6, 2009, the Company paid down $5.0 million of      the Class B Franchise Note, which reduced the Class B Notes and total debt      to approximately $36.7 million and $151.5 million,      respectively. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Maturities      related to the Deficiency Note include payment-in-kind (“PIK”) interest of      approximately $14.2 million. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------|

----

| (in thousands)            |   | DECEMBER 31, |   |
|--------------------------------|--------|-------------------|--------|
|                           |   | 2008              |   |   | 2007 |   |
| Assumed      lease obligations |   | $                 | 891    |   |   | $ | 1,023 |   |
| Assumed      Lease Guarantees  |   |              | 354    |   |   |   | 1,354 |   |
| Total                          |   | $                 | 1,245  |   |   | $ | 2,377 |   |
|                           |   |              |   |   |   |   |   |   |
|                           |   | DECEMBER 31, |   |
|                           |   | 2008              |   |   | 2007 |   |
| Current                        |   | $                 | 765    |   |   | $ | 1,546 |   |
| Long term                 |   |              | 480    |   |   |   | 831 |   |
| Total                          |   | $                 | 1,245  |   |   | $ | 2,377 |   |

----

| 2009   |   | $      | 765   |   |
|--------|--------|--------|-------|--------|
| 2010   |   |   | 419   |   |
| 2011   |   |   | 50    |   |
| 2012   |   |   | 3     |   |
| 2013   |   |   | 8     |   |
|   |   | $      | 1,245 |   |

| (in      thousands)                                                |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Federal                                                            |   | $      | (5,940 | )      |   | $      | 781    |   |   | $ | 196 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| State      and Local                                               |   |   | (261   | )      |   |   | (93    | )      |   |   | (152 | ) |
| Foreign                                                            |   |   | 207    |   |   |   | 231    |   |   |   | 37 |   |
| Total      income tax expense (benefit) from continuing operations |   | $      | (5,994 | )      |   | $      | 919    |   |   | $ | 81 |   |

| (in      thousands)                                                                |   | 2008   |                |   | 2007   |   |   | 2006   |   |
|------------------------------------------------------------------------------------|--------|--------|---------------------|--------|--------|--------|--------|--------|--------|
| Current                                                                            |   | $      | 337                 |   |   | $      | (1,562 | )      |   | $ | 299 |   |
| Deferred                                                                           |   |   | (6,331              | )      |   |   | 2,481  |   |   |   | - |   |
| Total      income tax expense (benefit) from continuing operations                 |   | $      | (5,994              | )      |   | $      | 919    |   |   | $ | 299 |   |
|                                                                               |   |   |                |   |   |   |   |   |   |   |   |   |
| Taxes      on (loss) income from and gains on sale of discontinued      operations |   |   |        (19,923 | )      |   |   | 2,383  |   |   |   | (154 | ) |
| Taxes      on (loss) income                                                        |   | $      | (25,917             | )      |   | $      | 3,302  |   |   | $ |  145 |   |

----

|                                     |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| U.S.      Statutory Federal Rate         |   |   | -35.0  | %      |   |   | -35.0  | %      |   |   | -35.0 | % |
| Increase/(decrease)      resulting from: |   |   |   |   |   |   |   |   |   |   |   |   |
| State      taxes, net of federal benefit |   |   | -5.4   | %      |   |   | -6.7   | %      |   |   | -3.2 | % |
| Changes      in valuation allowance      |   |   | 36.5   | %      |   |   | 48.9   | %      |   |   | 43.8 | % |
| Other                                    |   |   | .2     | %      |   |   | 4.4    | %      |   |   | -4.0 | % |
| Effective      Tax Rate                  |   |   | -3.7   | %      |   |   | 11.6   | %      |   |   | 1.6 | % |

----

|  (in      thousands)                      |   | 2008   |     |   | 2007   |   |
|------------------------------------------------|--------|--------|----------|--------|--------|--------|
| Deferred      Tax Assets:                      |   |   |     |   |   |   |
| Federal      Net Operating Loss Carry-forwards |   | $      | 287,954  |   |   | $      | 273,601 |   |
| State      Net Operating Loss Carry-forwards   |   |   | 2,654    |   |   |   | 498 |   |
| Investments                                    |   |   | 5,667    |   |   |   | 5,667 |   |
| Capital      Loss Carry-forwards               |   |   | 52,228   |   |   |   | 65,947 |   |
| Tax      Credit Carry-forwards                 |   |   | 4,150    |   |   |   | 4,150 |   |
| AMT      Tax credit Carry-forwards             |   |   | 25       |   |   |   | 25 |   |
| Intangible      Assets                         |   |   | 45,579   |   |   |   | – |   |
| Depreciation      and Amortization             |   |   | 620      |   |   |   | 145 |   |
| Stock-based      compensation                  |   |   | 3,627    |   |   |   | 1,698 |   |
| Other                                          |   |   | 2,157    |   |   |   | 945 |   |
| Gross      Deferred Tax Asset                  |   | $      | 404,661  |   |   | $      | 352,676 |   |
|                                           |   |   |     |   |   |   |   |   |
| Deferred      Tax Liabilities                  |   |   |     |   |   |   |   |   |
| Amortization      of intangibles               |   | $      | –  |   |   | $      | (3,671 | ) |
| Basis      difference of assets acquired       |   |   | –  |   |   |   | (23,325 | ) |
| Gross      Deferred Tax Liability              |   | $      | –  |   |   | $      | (26,996 | ) |
|                                           |   |   |     |   |   |   |   |   |
| Valuation      Allowance                       |   |   | (404,661 | )      |   |   | (352,287 | ) |
| Net      Deferred Tax Liability                |   | $      | –  |   |   | $      | (26,607 | ) |

----

----

|                                         |   | 2008                 |      |   | 2007                                         |   |   | 2006                 |   |
|----------------------------------------------|--------|----------------------|-----------|--------|----------------------------------------------|--------|--------|----------------------|--------|
| (In      thousands, except per shareamounts) |   | Number      ofshares |      |   | Weightedaverageexerciseprice(per      share) |   |   | Number      ofshares |   |   | Weightedaverageexerciseprice(per      share) |   |   | Number      ofshares |   |   | Weightedaverageexerciseprice(per      share) |   |
| Outstanding      at beginning of year        |   |                 | 6,994     |   |                                         | $      | 5.37   |                 |   |   | 7,174 |   |   | $ | 4.17 |   |   |   | 1,949 |   |   | $ | 3.52 |   |
| Granted                                      |   |                 | 2,022     |   |                                         | $      | 1.27   |                 |   |   | 1,733 |   |   | $ | 7.72 |   |   |   | 5,366 |   |   | $ | 4.31 |   |
| Exercised                                    |   |                 | ( 54 | )      |                                         | $      | 0.08   |                 |   |   | (1,732 | ) |   | $ | 2.72 |   |   |   | ( 120 | ) |   | $ | (.10 | ) |
| Cancelled/Forfeited/Expired                  |   |                 | (4,957    | )      |                                         | $      | 5.08   |                 |   |   | ( 181 | ) |   | $ | 5.83 |   |   |   | ( 21 | ) |   | $ | (.83 | ) |
| Outstanding      at end of year              |   |                 | 4,005     |   |                                         | $      | 3.73   |                 |   |   | 6,994 |   |   | $ | 5.37 |   |   |   | 7,174 |   |   | $ | 4.17 |   |
| Exercisable      at year-end                 |   |                 | 3,158     |   |                                         | $      | 4.42   |                 |   |   | 2,723 |   |   | $ | 5.13 |   |   |   | 2,616 |   |   | $ | 3.57 |   |

|                                  |   | 2006      Plan                    |   |   | 1999      Plan                      |   |   | 2000      Plan                    |   |   | Warrants                            |   |   | Total                             |   |
|---------------------------------------|--------|-----------------------------------|--------|--------|-------------------------------------|--------|--------|-----------------------------------|--------|--------|-------------------------------------|--------|--------|-----------------------------------|--------|
|                                  |   | Number ofShares(inthousands) |   |   | Weighted      -AverageExercisePrice |   |   | Number ofShares(inthousands) |   |   | Weighted      -AverageExercisePrice |   |   | Number ofShares(inthousands) |   |   | Weighted      -AverageExercisePrice |   |   | Number ofShares(inthousands) |   |   | Weighted      -AverageExercisePrice |   |   | Number ofShares(inthousands) |   |   | Weighted      -AverageExercisePrice |   |
| Outstanding      at January 1, 2008   |   |                              | 1,974  |   |                                | $      | 7.34   |                              |   |   | 3,915                               |   |   | $                                 | 4.31   |   |   |   | 89 |   |   | $ | 2.71 |   |   |   | 1,016 |   |   | $ | 5.85 |   |   |   | 6,994 |   |   | $ | 5.37 |   |
| Granted                               |   |                              | 1,522  |   |                                |   | 0.85   |                              |   |   | -                                   |   |   |                              | -      |   |   |   | - |   |   |   | - |   |   |   | 500 |   |   |   | 2.54 |   |   |   | 2,022 |   |   |   | 1.27 |   |
| Exercised                             |   |                              | -      |   |                                |   | -      |                              |   |   | 50                                  |   |   |                              | -      |   |   |   | 4 |   |   |   | 1.06 |   |   |   | - |   |   |   | - |   |   |   | 54 |   |   |   | 0.08 |   |
| Forfeited      / Cancelled            |   |                              | 1,653  |   |                                |   | 7.09   |                              |   |   | 3,118                               |   |   |                              | 4.10   |   |   |   | 61 |   |   |   | 2.74 |   |   |   | 125 |   |   |   | 4.10 |   |   |   | 4,957 |   |   |   | 5.08 |   |
| Outstanding      at December 31, 2008 |   |                              | 1,843  |   |                                | $      | 2.20   |                              |   |   | 747                                 |   |   | $                                 | 5.50   |   |   |   | 24 |   |   | $ | 2.90 |   |   |   | 1,391 |   |   | $ | 4.81 |   |   |   | 4,005 |   |   | $ | 3.73 |   |

|                            |   | 2008   |   |   | 2007            |   |   | 2006   |   |
|---------------------------------|--------|--------|--------|--------|-----------------|--------|--------|--------|--------|
|                            |   |   |   |   | Weighted-       |   |   |   |   |   | Weighted- |   |   |   |   |   | Weighted- |   |
|                            |   |   |   |   | Average         |   |   |   |   |   | Average |   |   |   |   |   | Average |   |
|                            |   |   |   |   | Per Share  |   |   |   |   |   | Per Share |   |   |   |   |   | Per Share |   |
|                            |   |   |   |   | Grant Date |   |   |   |   |   | Grant Date |   |   |   |   |   | Grant Date |   |
|                            |   | Shares |   |   | Fair Value |   |   | Shares |   |   | Fair Value |   |   | Shares |   |   | Fair Value |   |
| Non-vested      at December 31, |   |   | 4,271  |   |            | $      | 2.35   |   |   |   | 4,257 |   |   | $ | 1.43 |   |   |   | 178 |   |   | $ | 1.93 |   |
| Granted                         |   |   | 2,022  |   |            | $      | 1.31   |   |   |   | 1,733 |   |   | $ | 3.91 |   |   |   | 5,366 |   |   | $ | 1.48 |   |
| Vested                          |   |   | 3,114  |   |            | $      | 2.07   |   |   |   | 1,690 |   |   | $ | 1.63 |   |   |   | (1,266 | ) |   | $ | 1.69 |   |
| Forfeited                       |   |   | 2,332  |   |            | $      | 2.38   |   |   |   | 29 |   |   | $ | 1.87 |   |   |   | (21 | ) |   | $ | 2.92 |   |
| Non-vested      at December 31, |   |   | 847    |   |            | $      | 0.81   |   |   |   | 4,271 |   |   | $ | 2.35 |   |   |   | 4,257 |   |   | $ | 1.43 |   |

----

|                                             |   | 2006      Plan          |   |   | 1999      Plan                                  |   |   | 2000      Plan                |   |   | Warrants                                        |   |   | Total                   |   |
|--------------------------------------------------|--------|-------------------------|--------|--------|-------------------------------------------------|--------|--------|-------------------------------|--------|--------|-------------------------------------------------|--------|--------|-------------------------|--------|
|                                             |   | StockOptionsOutstanding |   |   | StockOptionsCurrentlyExercisableand      Vested |   |   | Stock OptionsOutstanding |   |   | StockOptionsCurrentlyExercisableand      Vested |   |   | StockOptionsOutstanding |   |   | StockOptionsCurrentlyExercisableand      Vested |   |   | StockOptionsOutstanding |   |   | StockOptionsCurrentlyExercisableand      Vested |   |   | StockOptionsOutstanding |   |   | StockOptionsCurrentlyExercisableand      Vested |   |
|                                             |   |                    |   |   |                                            |   |   |                          |   |   |                                            |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Number      (in thousands)                       |   |                    | 1,843  |   |                                            |   | 1,046  |                          |   |   | 747                                             |   |   |                    | 697    |   |   |   | 24 |   |   |   | 24 |   |   |   | 1,391 |   |   |   | 1,391 |   |   |   | 4,005 |   |   |   | 3,158 |   |
| Weighted-average      exercise price             |   | $                       | 2.20   |   |                                            | $      | 2.95   |                          |   | $      | 5.50                                            |   |   | $                       | 5.89   |   |   | $ | 2.90 |   |   | $ | 2.90 |   |   | $ | 4.81 |   |   | $ | 4.81 |   |   | $ | 3.73 |   |   | $ | 4.42 |   |
| Aggregate      intrinsic value (in thousands)    |   | $                       | 177    |   |                                            | $      | -      |                          |   | $      | 6                                               |   |   | $                       | -      |   |   | $ | - |   |   | $ | - |   |   | $ | 20 |   |   | $ | 20 |   |   | $ | 203 |   |   | $ | 20 |   |
| Weighted-average      remaining contractual term |   |                    | 9.20   |   |                                            |   | 9.00   |                          |   |   | 4.51                                            |   |   |                    | 4.30   |   |   |   | 7.00 |   |   |   | 7.00 |   |   |   | 4.72 |   |   |   | 4.72 |   |   |   | 6.76 |   |   |   | 6.07 |   |

|   | · | Options      to acquire approximately 3,375,000 shares of Company common stock and      warrants to acquire 125,000 shares of Company common stock were issued to      UCC Capital employees on June 6, 2006 in connection with the acquisition      of UCC Capital. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | In      connection with the acquisition of UCC Capital, the Company compensated      our financial advisor for the transaction, Jefferies & Company, Inc.,      through the payment of a fee of $77,000 and the issuance of warrants      exercisable through June 2009 to purchase 440,000 shares of Company common      stock at an exercise price of $3.19 pershare. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | On      October 31, 2006, the Compensation Committee approved the issuance of      175,000 non-qualified options to members of our Board of      Directors. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | On      November 7, 2006, in connection with the acquisition of TAF, the Company      issued warrants exercisable through November 7, 2009 to purchase 500,000      shares of Company common stock at an exercise price of    $6.49. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Company has granted options as part of our long-term incentive plan to      employees hired following the Company’s relocation to New      York. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | On      January 24, 2007, as part of bonuses distributed to employees for the year      ended December 31, 2006, the Company issued options to employees      exercisable through January 24, 2017 to purchase 51,500 shares of Company      common stock at an exercise price of$8.95. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | On      February 15, 2007, in connection with the acquisition of Bill Blass, the      Company issued warrants exercisable through February 15, 2017 to purchase      400,000 shares of Company common stock at exercise prices of $8.89. The      vesting of these warrants is contingent upon the Bill Blass business      meeting three earnings targets on September 30, 2008, December 31, 2009,      and December 31, 2010. As of December 31, 2007, the first earnings target      was the only one that has been deemed probable; therefore, the Company      only deemed the first tranche of 133,333 warrants as      outstanding. Subsequently, the Bill Blass business did meet the      earning target on September 30, 2008, and the first tranche of 133,333      warrants vested on February 15, 2009. As a result of the sale of the      Bill Blass business, the other two tranches of warrants will not vest. On      February 21, 2007, the Company issued options exercisable through February      21, 2017 to purchase 5,000 shares of the Company common stock to an      employee of Bill Blass at an exercise price of $10.90 per      share. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | On      May 2, 2007, in connection with the acquisition of Waverly, the Company      issued warrants exercisable through May 2, 2017 to purchase 50,000 shares      of Company common stock at exercise prices of $12.43. These warrants were      immediately vested upon issuance. The warrant was priced at the market      price on the date of grant and the related compensation expense has been      included in the purchase priceallocation. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | During      the three months ended June 30, 2007, in      connection with their employment with the Company, the Company issued      107,500 options to employees exercisable through June 21, 2017 at exercise      prices ranging from $11.61 to $12.87 per share. Additionally, the Company      granted approximately 29,000 options to a member of the Board of Directors      exercisable through May 4, 2017 at an exercise price of $12.19 per      share. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | During      the three months ended September 30, 2007, the Company issued options to      purchase 305,000 common shares to employees which are exercisable through      September 24, 2017 at exercise prices ranging from $7.26 to $10.00 per      share. Additionally, the Company granted 775,000 options to members of the      Board of Directors exercisable through September 6, 2017 at exercise      prices of $6.90 per share. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | During      the three months ended December 31, 2007, the Company issued options to      purchase 100,000 common shares to the spokesperson of our Waverly brand      which are exercisable through December 6, 2017 at an exercise price of      $4.70 per share. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | During      the three months ended December 31, 2007, the Company issued options to      purchase 178,000 common shares to employees which are exercisable through      December 31, 2017 at exercise prices ranging from $4.70 to $4.84 per      share. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | On      January 29, 2008, as partial consideration for an amendment to our BTMUCC      credit facility, the Company issued to BTMUCC a warrant to purchase      200,000 shares of  common stock at an exercise price of $0.01      per share. BTMUCC may exercise the warrant in full or in part at any time      from the date of issuance through January 29, 2018. The warrants were      assigned a value of $914,000 which has been included as part of debt      discount, net of debt. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Also      on January 29, 2008 and in connection with the acquisition of Great      American Cookie, the Company issued warrants to certain Great American      Cookie franchisees to purchase 300,000 shares of the Company’s common      stock. The warrants have an exercise price of $4.23 and were immediately      vested upon issuance. The warrants were assigned a value of $1,029,000      which has been included in the purchase price of Great American      Cookie. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | On      March 19, 2008, the Company issued options to purchase 295,000 common      shares to employees which are exercisable through March 19, 2018 at an      exercise price of $2.83 per share. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | On      June 24, 2008 as part of an employment retention plan, the Company issued      options to purchase 397,000 common shares to employees which are      exercisable through June 24, 2018 at an exercise price of $0.41 per share.      Additionally, the Company granted  380,000 options to senior      management, which are exercisable through June 24,  2018. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      connection with the August 15, 2008 Amended Credit Facility (see Note 9 –      Long-Term Debt),      the Company determined that it was probable that a warrant for 2.8 million      shares of common stock related to the repayment of the Class B Franchise      Note would be issued. The warrant was assigned a value of $980,000 that      has been recorded as a discount ondebt. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | During      the three months ended September 30, 2008, the Company issued options to      purchase 350,000 common shares to employees, which are exercisable through      August 26, 2018 and September 30, 2018 at exercise prices ranging from      $0.28 to $0.41 per share. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | During      the three months ended December 31, 2008, the Company issued options to      purchase 100,000 common shares to employees, which are exercisable through      November 4, 2018 and November 12, 2018 at an exercise price of $0.12 per      share. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | On      November 30, 2008, directors and executives of the Company voluntarily      forfeited an aggregate of 856,666 stock options (both vested and unvested)      having exercise prices of greater than $6.90  per share. This      action was initiated by management to reduce future      expenses  (2009 and beyond) and to more efficiently utilize      shares authorized under the Company’s equity compensation plan to      meet the plans’ purposes to attract, motivate and retain key talent. The      individuals who forfeited options both received and were promised nothing      in return, such as future equity grants to replace the forfeited      options.  In accordance with SFAS No. 123R, the Company      accelerated the remaining expense on these cancelled awards resulting in      charges of $2.1 million, which is included in the total stock-based      compensation expense of $5.3 million, for the year ended December 31,      2008. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| Operating      Leases (in thousands) |   | For      the Year Ending December 31, |   |
|--------------------------------------|--------|---------------------------------------|--------|
|                                 |   | 2009                                  |   |   | 2010 |   |   | 2011 |   |   | 2012 |   |   | 2013 |   |   | Thereafter |
| Gross      lease commitments         |   | $                                     | 1,856  |   |   | $ | 1,823 |   |   | $ | 1,839 |   |   | $ | 1,892 |   |   | $ | 1,966 |   |   | $ | 5,107 |   |
| Less:      sub-leases                |   |                                  | 118    |   |   |   | 142 |   |   |   | 146 |   |   |   | 150 |   |   |   | 155 |   |   |   | 719 |   |
| Lease      commitments, net          |   | $                                     | 1,738  |   |   | $ | 1,681 |   |   | $ | 1,693 |   |   | $ | 1,742 |   |   | $ | 1,811 |   |   | $ | 4,388 |   |

| (c) | OTHER |
|-----|-------|

----

----

| ($      in thousands)                                                                        |   | 2008   |     |   | 2007   |   |    | 2006   |   |
|----------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|---------|--------|--------|
| Revenues                                                                                     |   | $      | 13,905   |   |   | $      | 14,980  |   |   | $ | 2,422 |   |
| Operating      costs and expenses                                                            |   |   | (15,075  | )      |   |   | (5,908  | )      |   |   | (6,816 | ) |
| Impairment      of intangible assets (1)                                                     |   |   | (104,396 | )      |   |   | – |   |   |   | – |   |
| Operating      income (loss)                                                                 |   |   | (105,566 | )      |   |   | 9,072   |   |   |   | (4,394 | ) |
| Interest      and other expense, net                                                         |   |   | (3,909   | )      |   |   | (2,404  | )      |   |   | 1,335 |   |
| Minority      interest                                                                       |   |   | 2,117    |   |   |   | (269    | )      |   |   | – |   |
| (Loss)      income before income taxes                                                       |   |   | (107,358 | )      |   |   | 6,399   |   |   |   | (3,059 | ) |
| Current      tax                                                                             |   |   | (352     | )      |   |   | (1,845  | )      |   |   | 218 |   |
| Deferred      tax (benefit)                                                                  |   |   | 16,117   |   |   |   | (538    | )      |   |   | (64 | ) |
| Net      (loss) income from discontinued operations                                          |   |   | (91,593  | )      |   |   | 4,016   |   |   |   | (2,905 | ) |
| (Loss)      on disposal of discontinued operations, net of income tax benefit of      $4,158 |   |   | (10,614  | )      |   |   | – |   |   |   | – |   |
| Gain      on sale of discontinued wireless business                                          |   |   | –  |   |   |   | – |   |   |   | 755 |   |
|                                                                                         |   |   |     |   |   |   |    |   |   |   |   |   |
| Net      (loss) income from all discontinued operations                                      |   | $      | (102,207 | )      |   | $      | 4,016   |   |   | $ | (2,150 | ) |

----

|                                                                                    |   | Quarter Ended  |    |
|-----------------------------------------------------------------------------------------|--------|----------------|---------|
|                                                                                    |   | March      31, |    |   | June      30, |   |   | September      30, |   |   | December      31, |   |
| (in      thousands, except per share amounts)                                           |   | 2008           |    |   | 2008 |   |   | 2008 |   |   | 2008 |   |
|                                                                                    |   |           |    |   |   |   |   |   |   |   |   |   |
| Revenues                                                                                |   | $              | 10,225  |   |   | $ | 11,924 |   |   | $ | 12,164 |   |   | $ | 12,643 |   |
| Operating      expenses                                                                 |   |           | (12,781 | ) |   |   | (125,295 | )1 |   |   | (41,079 | )2 |   |   | (15,018 | ) |
| Operating      loss                                                                     |   |           | (2,556  | ) |   |   | (113,371 | ) |   |   | (28,915 | ) |   |   | (2,375 | ) |
| Non-operating      expense                                                              |   |           | (2,549  | ) |   |   | (3,470 | ) |   |   | (3,300 | ) |   |   | (3,030 | ) |
| Loss      from continuing operations before income taxes                                |   |           | (5,105  | ) |   |   | (116,841 | ) |   |   | (32,215 | ) |   |   | (5,405 | ) |
| Income      tax (expense) benefit                                                       |   |           | (1,267  | ) |   |   | 4,019 |   |   |   | (72 | ) |   |   | 3,314 |   |
| Loss      from continuing operations                                                    |   |           | (6,372  | ) |   |   | (112,822 | ) |   |   | (32,287 | ) |   |   | (2,091 | ) |
| Income      (loss) from discontinued operations                                         |   |           | 1,067   |   |   |   | (83,027 | ) |   |   | (6,067 | ) |   |   | (14,180 | ) |
| Net      loss                                                                           |   | $              | (5,305  | ) |   | $ | (195,849 | ) |   | $ | (38,354 | ) |   | $ | (16,271 | ) |
|                                                                                    |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations per common share basic and    diluted              |   | $              | (0.11   | ) |   | $ | (1.99 | ) |   | $ | (0.57 | ) |   | $ | (0.04 | ) |
| Income      (loss) from discontinued operations per common share basic and      diluted |   | $              | 0.02    |   |   | $ | (1.47 | ) |   | $ | (0.11 | ) |   | $ | (0.25 | ) |
| Net      loss per share - basic and diluted                                             |   | $              | (0.09   | ) |   | $ | (3.46 | ) |   | $ | (0.68 | ) |   | $ | (0.29 | ) |
|                                                                                    |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding - basic                                        |   |           | 56,267  |   |   |   | 56,621 |   |   |   | 56,639 |   |   |   | 56,671 |   |
| Weighted      average shares outstanding - diluted                                      |   |           | 56,267  |   |   |   | 56,621 |   |   |   | 56,639 |   |   |   | 56,671 |   |

|  | (1) |  Includes      impairment of intangible assets of$109,733. |
|--|-----|-----------------------------------------------------------------|

|  | (2) | Includes      impairment of intangible assets of$28,148. |
|--|-----|----------------------------------------------------------|

|                                                                             |   | Quarter Ended  |   |
|----------------------------------------------------------------------------------|--------|----------------|--------|
|                                                                             |   | March      31, |   |   | June      30, |   |   | September      30, |   |   | December      31, |   |
| (in      thousands, except per share amounts)                                    |   | 2007           |   |   | 2007 |   |   | 2007 |   |   | 2007 |   |
|                                                                             |   |           |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                                         |   | $              | 2,288  |   |   | $ | 4,684 |   |   | $ | 6,483 |   |   | $ | 6,133 |   |
| Operating      expenses                                                          |   |           | (4,512 | ) |   |   | (6,294 | ) |   |   | (6,505 | ) |   |   | (9,385 | ) |
| Operating      loss                                                              |   |           | (2,224 | ) |   |   | (1,610 | ) |   |   | (22 | ) |   |   | (3,252 | ) |
| Non-operating      income (expense)                                              |   |           | 603    |   |   |   | (232 | ) |   |   | (450 | ) |   |   | (778 | ) |
| Loss      from continuing operations before income taxes                         |   |           | (1,621 | ) |   |   | (1,842 | ) |   |   | (472 | ) |   |   | (4,030 | ) |
| Income      tax benefit (expense)                                                |   |           | 367    |   |   |   | 354 |   |   |   | (592 | ) |   |   | (1,048 | ) |
| Loss      from continuing operations                                             |   |           | (1,254 | ) |   |   | (1,488 | ) |   |   | (1,064 | ) |   |   | (5,078 | ) |
| Income      from discontinued operations                                         |   |           | 1,056  |   |   |   | 803 |   |   |   | 1,145 |   |   |   | 1,012 |   |
| Net      (loss) income                                                           |   | $              | (198   | ) |   | $ | (685 | ) |   | $ | 81 |   |   | $ | (4,066 | ) |
|                                                                             |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations per common share basic and    diluted       |   | $              | (0.03  | ) |   | $ | (0.03 | ) |   | $ | (0.02 | ) |   | $ | (0.09 | ) |
| Income      from discontinued operations per common share basic and      diluted |   | $              | 0.02   |   |   | $ | 0.02 |   |   | $ | 0.02 |   |   | $ | 0.02 |   |
| Net      loss per share - basic and diluted                                      |   | $              | (0.01  | ) |   | $ | (0.01 | ) |   | $ | - |   |   | $ | (0.07 | ) |
|                                                                             |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding - basic                                 |   |           | 45,159 |   |   |   | 50,824 |   |   |   | 52,384 |   |   |   | 55,116 |   |
| Weighted      average shares outstanding - diluted                               |   |           | 45,159 |   |   |   | 54,465 |   |   |   | 54,250 |   |   |   | 55,116 |   |

----

|                                                                                       |   | 2008                   |     |   | 2007                  |   |
|--------------------------------------------------------------------------------------------|--------|------------------------|----------|--------|-----------------------|--------|
|                                                                                       |   | For the nine |     |   | For the six |   |   | For the three |   |   | For the nine |   |   | For the six |   |   | For the three |   |
|                                                                                       |   | months                 |     |   | months                |   |   | months |   |   | months |   |   | months |   |   | months |   |
| (in thousands)                                                                        |   | ended                  |     |   | ended                 |   |   | ended |   |   | ended |   |   | ended |   |   | ended |   |
|                                                                                       |   | September 30,     |     |   | June 30,         |   |   | March 31, |   |   | September 30, |   |   | June 30, |   |   | March 31, |   |
|                                                                                       |   |                   |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                 |   |                   |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                              |   | $                      | (239,508 | )      |                  | $      | (201,154 | ) |   | $ | (5,305 | ) |   | $ | (802 | ) |   | $ | (883 | ) |   | $ | (198 | ) |
| Add:      Net loss (income) from discontinued operations                                   |   |                   | 88,027   |   |                  |   | 81,960 |   |   |   | (1,067 | ) |   |   | (3,004 | ) |   |   | (1,859 | ) |   |   | (1,056 | ) |
| Net      loss from continuing operations                                                   |   |                   | (151,481 | )      |                  |   | (119,194 | ) |   |   | (6,372 | ) |   |   | (3,806 | ) |   |   | (2,742 | ) |   |   | (1,254 | ) |
| Adjustments      to reconcile net loss to net cash (used in) provided by                   |   |                   |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impairment      of intangible assets                                                       |   |                   | 137,881  |   |                  |   | 109,733 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Depreciation      and amortization                                                         |   |                   | 2,100    |   |                  |   | 1,165 |   |   |   | 491 |   |   |   | 684 |   |   |   | 386 |   |   |   | 184 |   |
| Deferred      income taxes                                                                 |   |                   | (2,936   | )      |                  |   | (2,936 | ) |   |   | 1,190 |   |   |   | 1,279 |   |   |   | - |   |   |   | - |   |
| Stock      based compensation                                                              |   |                   | 3,005    |   |                  |   | 2,230 |   |   |   | 1,344 |   |   |   | 2,695 |   |   |   | 1,811 |   |   |   | 640 |   |
| Amortization      of loan costs and debt discount                                          |   |                   | 1,615    |   |                  |   | 1,069 |   |   |   | 490 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Restructuring                                                                              |   |                   | 443      |   |                  |   | 443 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Loss      on investment in Shoebox New York                                                |   |                   | 249      |   |                  |   | 220 |   |   |   | 104 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Changes      in assets and liabilities, net of acquired assets and      liabilities:       |   |                   |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase      in trade receivables, net of allowances                                      |   |                   | (236     | )      |                  |   | (1,193 | ) |   |   | (410 | ) |   |   | (1,793 | ) |   |   | (588 | ) |   |   | (739 | ) |
| Decrease      in inventory                                                                 |   |                   | 543      |   |                  |   | 410 |   |   |   | 527 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| (Increase)      decrease in prepaid expenses and other assets                              |   |                   | (187     | )      |                  |   | (1,070 | ) |   |   | (1,197 | ) |   |   | (2,004 | ) |   |   | (917 | ) |   |   | (417 | ) |
| Decrease      (increase) in interest and other receivables                                 |   |                   | 2,220    |   |                  |   | 1,129 |   |   |   | (80 | ) |   |   | (542 | ) |   |   | 273 |   |   |   | (172 | ) |
| (Decrease)      increase in accounts payable and accrued expenses                          |   |                   | (1,868   | )      |                  |   | 2,795 |   |   |   | 1,790 |   |   |   | (1,732 | ) |   |   | (3,484 | ) |   |   | 38 |   |
| Increase      (decrease) in restructuring accruals and other liabilities                   |   |                   | 317      |   |                  |   | 327 |   |   |   | (12 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Increase      (decrease) in deferred revenue                                               |   |                   | 113      |   |                  |   | (637 | ) |   |   | (784 | ) |   |   | (934 | ) |   |   | (129 | ) |   |   | 701 |   |
| Net      cash used in operating activities from continuing    operations                   |   |                   | (8,222   | )      |                  |   | (5,509 | ) |   |   | (2,919 | ) |   |   | (6,153 | ) |   |   | (5,390 | ) |   |   | (1,019 | ) |
| Net      cash (used in) provided by operating activities from discontinued      operations |   |                   | (1,143   | )      |                  |   | (127 | ) |   |   | (32 | ) |   |   | 1,171 |   |   |   | 532 |   |   |   | 649 |   |
| Net      cash used in operating activities                                                 |   |                   | (9,365   | )      |                  |   | (5,636 | ) |   |   | (2,951 | ) |   |   | (4,982 | ) |   |   | (4,858 | ) |   |   | (370 | ) |
|                                                                                       |   |                   |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                 |   |                   |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Decrease      (increase) in restricted cash                                                |   |                   | 5,894    |   |                  |   | 5,151 |   |   |   | 3,551 |   |   |   | (5,742 | ) |   |   | (5,714 | ) |   |   | (5,716 | ) |
| Purchases      of property and equipment                                                   |   |                   | (578     | )      |                  |   | (477 | ) |   |   | (340 | ) |   |   | (2,725 | ) |   |   | (2,446 | ) |   |   | (2,191 | ) |
| Acquisitions,      net of cash acquired                                                    |   |                   | (95,000  | )      |                  |   | (95,000 | ) |   |   | (93,515 | ) |   |   | (49,785 | ) |   |   | (23,751 | ) |   |   | (27,022 | ) |
| Purchase      of trademarks, including registration costs                                  |   |                   | (46      | )      |                  |   | (46 | ) |   |   | (31 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Investment      in Shoebox New York                                                        |   |                   | (725     | )      |                  |   | (725 | ) |   |   | (725 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Distributions      from Shoebox New York                                                   |   |                   | 216      |   |                  |   | 216 |   |   |   | 60 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Increase      in minority interest                                                         |   |                   | -        |   |                  |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 53 |   |
| Net      cash used in discontinued operations for investing    activities                  |   |                   | (765     | )      |                  |   | (765 | ) |   |   | (713 | ) |   |   | (87,122 | ) |   |   | (76,829 | ) |   |   | (39,854 | ) |
| Net      cash used in investing activities                                                 |   |                   | (91,004  | )      |                  |   | (91,646 | ) |   |   | (91,713 | ) |   |   | (145,374 | ) |   |   | (108,740 | ) |   |   | (74,730 | ) |
|                                                                                       |   |                   |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                 |   |                   |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from debt borrowings                                                         |   |                   | 70,000   |   |                  |   | 70,000 |   |   |   | 70,000 |   |   |   | 91,800 |   |   |   | 53,800 |   |   |   | 26,500 |   |
| Financing      costs                                                                       |   |                   | (2,549   | )      |                  |   | (1,670 | ) |   |   | (1,670 | ) |   |   | - |   |   |   | 607 |   |   |   | 273 |   |
| Principal      payments on debt                                                            |   |                   | (3,918   | )      |                  |   | (3,918 | ) |   |   | (834 | ) |   |   | (472 | ) |   |   | - |   |   |   | - |   |
| Exercise      of options and warrants                                                      |   |                   | 5        |   |                  |   | 5 |   |   |   | 5 |   |   |   | 2,153 |   |   |   | - |   |   |   | - |   |
| Net      cash (used in) provided by discontinued operations for financing      active      |   |                   | (1,100   | )      |                  |   | (1,100 | ) |   |   | (1,100 | ) |   |   | 2,771 |   |   |   | 2,771 |   |   |   | 2,771 |   |
| Net      cash provided by financing activities                                             |   |                   | 62,438   |   |                  |   | 63,317 |   |   |   | 66,401 |   |   |   | 96,252 |   |   |   | 57,178 |   |   |   | 29,544 |   |
| Net      (decrease) in cash and cash equivalents                                           |   |                   | (37,931  | )      |                  |   | (33,965 | ) |   |   | (28,263 | ) |   |   | (54,104 | ) |   |   | (56,420 | ) |   |   | (45,556 | ) |
| Cash      and cash equivalents, at beginning of period                                     |   |                   | 46,569   |   |                  |   | 46,569 |   |   |   | 46,569 |   |   |   | 83,536 |   |   |   | 83,536 |   |   |   | 83,536 |   |
| Cash      and cash equivalents, at end of period                                           |   | $                      | 8,638    |   |                  | $      | 12,604 |   |   | $ | 18,306 |   |   | $ | 29,432 |   |   | $ | 27,116 |   |   | $ | 37,980 |   |
|                                                                                       |   |                   |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      paid during the period for interest                                              |   | $                      | 9,735    |   |                  | $      | 4,862 |   |   | $ | 2,037 |   |   | $ | 1,184 |   |   | $ | - |   |   | $ | - |   |
| Cash      paid during the period for taxes                                                 |   | $                      | 195      |   |                  | $      | 135 |   |   | $ | 65 |   |   | $ | 588 |   |   | $ | 324 |   |   | $ | 117 |   |

----

----

| (in      thousands)               |   |   |   |
|-----------------------------------|--------|--------|--------|
|                              |   |   |   |
| Purchase price:                   |   |   |   |
| Cash      payments                |   | $      | 89,028 |   |
| Stock      consideration          |   |   | 5,690  |   |
| Direct      acquisition costs     |   |   | 769    |   |
| Total      purchase price         |   | $      | 95,487 |   |
|                              |   |   |   |   |
| Allocation of purchase    price:  |   |   |   |   |
| Trademarks                        |   | $      | 43,500 |   |
| Goodwill                          |   |   | 1,719  |   |
| Franchise      agreements         |   |   | 780    |   |
| Supply/Customer      Relationship |   |   | 45,000 |   |
| Assets      acquired              |   |   | 5,013  |   |
| Total      assets acquired        |   |   | 96,012 |   |
| Total      liabilities assumed    |   |   | (525   | ) |
| Net      assets acquired          |   | $      | 95,487 |   |

|                                         |   | 2008        |     |   | 2007        |   |
|----------------------------------------------|--------|-------------|----------|--------|-------------|--------|
| (In      thousands except per share amounts) |   | As Reported |     |   | As Adjusted |   |   | As Reported |   |   | As Adjusted |   |
|                                         |   |        |     |   |        |   |   |   |   |   |   |   |
| Revenues                                     |   | $           | 46,956   |   |        | $      | 49,051 |   |   | $ | 19,588 |   |   | $ | 45,033 |   |
| Operating      (loss) profit                 |   |        | (147,217 | )      |        |   | (146,366 | ) |   |   | (7,108 | ) |   |   | 4,661 |   |
| Net      loss                                |   |        | (255,779 | )      |        |   | (255,504 | ) |   |   | (4,868 | ) |   |   | (599 | ) |
| Basic      and diluted loss per share        |   | $           | (4.52    | )      |        | $      | (4.52 | ) |   | $ | (0.09 | ) |   | $ | (0.01 | ) |

----

----

|   | · | The      Company did not maintain a sufficient number of accounting personnel with      an appropriate level of technical expertise in GAAP. As a result, the      Company’s policies and procedures were not effective to ensure the timely      identification of and response to financial reporting risks arising from      complex and non-routine transactions. This material weakness resulted      in errors and delays in the preparation of the Company’s preliminary 2008      financial statements. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Company did not have adequate number of personnel or resources to      both timely perform all of our period-end closing procedures and address      the extraordinary circumstances that the Company faced in 2008, including      the special investigation, changes to the Company’s business,      restructuring of the credit facility and changes in management. As a      result, the Company diverted personnel and resources to address the more      immediate needs of the Company and did not complete timely monthly or      quarterly financial reporting procedures. The material weakness resulted      in delays in the preparation of the Company’s 2008 financial      statements. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | The      Company had a diffused management structure that lacked sufficient clarity      as to the roles and responsibilities of senior management, including for      communications with the Board of Directors, oversight of the Company’s      legal matters that impact the Company’s consolidated financial statements      and other public disclosures, and oversight of financial planning,      analysis and reporting. As a result, information that impacted financial      reporting was not shared within or across corporate functions leading to      information relating to a significant agreement affecting the Company’s      financial condition not being communicated effectively among members      of management or to the Board ofDirectors. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                   |   | Age    |   | Position                                                                                                                                                              |
|------------------------|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| David      S. Oros     |   | 49     |   | Chairman      of the Board, Restructuring Committee1      (Chairman)                                                                                                  |
|                   |   |   |   |                                                                                                                                                                  |
| James      T. Brady    |   | 68     |   | Director,      Audit Committee (Chairman), Compensation Committee, Nominating/Corporate      Governance Committee (Chairman),  Restructuring      Committee |
|                   |   |   |   |                                                                                                                                                                  |
| Paul      Caine        |   | 44     |   | Director,      Audit Committee, Nominating/Corporate Governance  Committee                                                                                            |
|                   |   |   |   |                                                                                                                                                                  |
| Edward      J. Mathias |   | 67     |   | Director,      Audit Committee, Compensation Committee (Chairman)                                                                                                     |
|                   |   |   |   |                                                                                                                                                                  |
| George      P. Stamas  |   | 58     |   | Director,      RestructuringCommittee                                                                                                                                 |

----

| 1 | On      May 18, 2008, we established an ad hoc Restructuring Committee of our      Board of Directors, consisting of David S. Oros, James T. Brady and George      P. Stamas. The Restructuring Committee was charged with overseeing, on      behalf of the Board, the Company’s efforts to improve our financial      condition and evaluate our restructuring alternatives. On May 12, 2009,      the Restructuring Committee was disbanded after the Board’s determination      that this ad hoc committee was no longer needed in light of the progress      made to date by the Company in its restructuring efforts and the reduced      number of members on the Board.   |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                  |   | Age |   | Position                                   |
|-----------------------|--------|-----|--------|--------------------------------------------|
| Kenneth      J. Hall1 |   | 51  |   | Chief      Executive Officer               |
| Mark      E. Stanko2  |   | 47  |   | Chief      Financial Officer and Treasurer |
| Sue      J. Nam3      |   | 39  |   | General      Counsel and Secretary         |
| Chris      Dull4      |   | 36  |   | President,      NFM                        |

| 1 | Mr.      Hall joined the Company on March 25, 2008 as our Executive Vice President,      Chief Financial Officer and Treasurer. He became our Chief Executive      Officer on August 15, 2008. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Mr.      Stanko joined the Company on April 30, 2008 as the Chief Financial Officer      and Treasurer of NFM. He became the Company’s Chief Financial Officer on      November 12, 2008. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Ms.      Nam joined the Company on September 24, 2007 as General      Counsel.  She became Secretary on December 6,    2007. |
|---|----------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Mr.      Dull joined the Company on February 28, 2007 as Executive Vice President      of the QSR Franchising of NFM. On May 22, 2007, he was promoted to      President of the QSR Division of NFM. He then was appointed President of      NFM on August 31, 2007 and appointed an executive officer of the Company      on February 13, 2009. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | appointing,      replacing, overseeing and compensating the work of a firm to serve as the      registered independent public accounting firm to audit the Company's      financial statements; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | discussing      the scope and results of the audit with the independent registered public      accounting firm and reviewing with management and the independent      registered public accounting firm the Company's interim and year-end      operating results; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | considering      the adequacy of the Company's internal accounting controls and audit      procedures; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | approving      (or, as permitted, pre-approving) all audit and non-audit services to be      performed by the independent registered public accounting firm;      and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | providing      an avenue of communication among the independent auditors, management,      employees and the Board. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

----

|   | · | identifying,      evaluating and recommending nominees to serve on the Board of Directors      and committees of the Board ofDirectors; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | conducting      searches for appropriate directors and evaluating the performance of the      Board of Directors and of individualdirectors; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | screening      and recommending to the Board of Directors individuals qualified to become      the chief executive officer of the Company or to become senior executive      officers of the Company; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | assessing      the policies, procedures and performance of the Board of Directors and its      committees; |
|--------|--------|------------------------------------------------------------------------------------------------------------|

|   | · | developing,      evaluating and recommending to the Board of Directors any changes or      updates to the Company’s policies on business ethics, conflicts of      interest and related partytransactions; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | making      recommendations regarding director compensation to the Board of Directors;      and |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | overseeing      the Company’s corporate governance procedures and    practices. |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | reviewing      and approving corporate goals and objectives that are relevant to the      compensation of the chief executive officer and other executive      officers; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | evaluating      the chief executive officer's performance and setting compensation in      light of corporate objectives; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | reviewing      and approving the compensation of the Company's other executive      officers; |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | · | administering      the Company’s stock option and stock incentive plans;  and |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | reviewing      and making recommendations to the Board of Directors with respect to the      Company’s overall compensation objectives, policies and practices,      including with respect to incentive compensation and equity      plans. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | In      May 2008, the Company engaged FTI Consulting, Inc. (“FTI”) to assist the      Company in its restructuring efforts and public relations. Since 1992, Mr.      Dunn has served as a director of FTI and/or as its President and Chief      Executive Officer.  This engagement is described in Item 13      under the caption “Certain Related Party      Transactions for 2008.” Mr. Dunn resigned as a director on      September 25, 2008. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In      July 2007, the Company entered into a commercial agreement with Mr. Traub      and a business that he owns and operates, Marvin Traub Associates. This      agreement is described in Item 13 under the caption “Certain Related Party      Transactions for 2008.” The Board of Directors determined that Mr.      Traub should be considered an independent director on September 25, 2008      in connection with the resignation of Mr. Dunn from the Board of      Directors. Mr. Traub resigned as a director on December 4,      2008. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|   | · | Base      salary; |
|--------|--------|-------------------|

|   | · | Equity-based      awards; |
|--------|--------|---------------------------|

|   | · | Cash      bonuses; |
|--------|--------|--------------------|

|   | · | Perquisites      and other personal benefits; and |
|--------|--------|---------------------------------------------------|

|   | · | Other      compensation. |
|--------|--------|--------------------------|

----

|   | · | Payments      of life, health and/or disability insurance premiums;    and/or |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | Car      expenses. |
|--------|--------|--------------------|

----

| Name      andPrincipal      Position |   | Year   |   | Salary($) |    |   | Bonus($) |   |    | StockAwards($) |   |   | OptionAwards($) |   |   | Non-EquityIncentivePlanCompensation($) |    |   | Change in PensionValue      andNonqualifiedDeferredCompensationEarnings($) |   |   | All      OtherCompensation($) |   |   | Total($) |   |
|--------------------------------------|--------|--------|--------|-----------|---------|--------|----------|--------|---------|----------------|--------|--------|-----------------|--------|--------|----------------------------------------|---------|--------|--------------------------------------------------------------------------------------|--------|--------|-------------------------------|--------|--------|----------|--------|
| (1)                                  |   |   |   | (2)       |    |   | (3)      |   |    |           |   |   | (4)             |   |   |                                   |    |   |                                                                                 |   |   | (5)                           |   |   |     |   |
|                                 |   |   |   |      |    |   |     |   |    |           |   |   |            |   |   |                                   |    |   |                                                                                 |   |   |                          |   |   |     |   |   |   |   |   |
| Kenneth      J. Hall                 |   | 2008   |   | $         | 369,102 |   |     | $      | 375,000 |           |   |   | -               |   |   | $                                      | 86,648  |   |                                                                                 |   | -      |                          |   |   | -        |   |   | $ | 17,766 |   |   | $ | 848,516 |   |
| Chief      Executive Officer         |   |   |   |      |    |   |     |   |    |           |   |   |            |   |   |                                   |    |   |                                                                                 |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |
|                                 |   |   |   |      |    |   |     |   |    |           |   |   |            |   |   |                                   |    |   |                                                                                 |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |
| Mark      E. Stanko                  |   | 2008   |   | $         | 132,218 |   |     |   | -       |           |   |   | -               |   |   | $                                      | 2,710   |   |                                                                                 |   | -      |                          |   |   | -        |   |   |   | - |   |   | $ | 135,088 |   |
| Chief      Financial Officer         |   |   |   |      |    |   |     |   |    |           |   |   |            |   |   |                                   |    |   |                                                                                 |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |
|                                 |   |   |   |      |    |   |     |   |    |           |   |   |            |   |   |                                   |    |   |                                                                                 |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |
| Sue      J. Nam                      |   | 2008   |   | $         | 265,937 |   |     | $      | 238,000 |           |   |   | -               |   |   | $                                      | 22,515  |   |                                                                                 |   | -      |                          |   |   | -        |   |   | $ | 3,954 |   |   | $ | 530,406 |   |
| General      Counsel                 |   |   |   |      |    |   |     |   |    |           |   |   |            |   |   |                                   |    |   |                                                                                 |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |
|                                 |   |   |   |      |    |   |     |   |    |           |   |   |            |   |   |                                   |    |   |                                                                                 |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |
| Robert      W. D’Loren         |   | 2008   |   | $         | 454,807 |   |     |   | -       |           |   |   | -               |   |   |                                   | -       |   |                                                                                 |   | -      |                          |   |   | -        |   |   | $ | 18,143 | (6) |   | $ | 427,950 |   |
| Former      Chief                    |   | 2007   |   | $         | 750,000 |   |     |   | -       |           |   |   | -               |   |   |                                   | -       |   |                                                                                 |   | -      |                          |   |   | -        |   |   | $ | 35,167 | (7) |   | $ | 785,167 |   |
| Executive Officer               |   | 2006   |   | $         | 427,083 |   |     |   |    |           |   |   |            |   |   | $                                      | 701,406 |   |                                                                                 |   |   |                          |   |   |     |   |   | $ | 40,162 | (8) |   | $ | 1,168,651 |   |
|                                 |   |   |   |      |    |   |     |   |    |           |   |   |            |   |   |                                   |    |   |                                                                                 |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |
| David      B. Meister                |   | 2008   |   | $         | 51,563  |   |     |   | -       |           |   |   | -               |   |   | $                                      | 277,245 |   |                                                                                 |   | -      |                          |   |   | -        |   |   | $ | 1,033 |   |   | $ | 329,841 |   |
| Former  Chief              |   | 2007   |   | $         | 225,000 |   |     |   | -       |           |   |   | -               |   |   |                                   | -       |   |                                                                                 |   | -      |                          |   |   | -        |   |   | $ | 4,863 |   |   | $ | 229,863 |   |
| Financial      Officer               |   | 2006   |   | $         | 69,375  |   |     |   |    |           |   |   |            |   |   | $                                      | 40,671  |   |                                                                                 |   |   |                          |   |   |     |   |   |   | - |   |   | $ | 110,046 |   |
|                                 |   |   |   |      |    |   |     |   |    |           |   |   |            |   |   |                                   |    |   |                                                                                 |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |
| James      Haran                     |   | 2008   |   | $         | 227,404 |   |     |   | -       |           |   |   | -               |   |   |                                   | -       |   |                                                                                 |   | -      |                          |   |   | -        |   |   | $ | 7,175 |   |   | $ | 234,579 |   |
| Former      Executive                |   | 2007   |   | $         | 375,000 |   |     |   | -       |           |   |   | -               |   |   |                                   | -       |   |                                                                                 |   | -      |                          |   |   | -        |   |   | $ | 15,150 |   |   | $ | 390,150 |   |
| Vice        President      |   | 2006   |   | $         | 338,542 |   |     |   |    |           |   |   |            |   |   | $                                      | 145,117 |   |                                                                                 |   |   |                          |   |   |     |   |   |   | - |   |   | $ | 483,659 |   |
|                                 |   |   |   |      |    |   |     |   |    |           |   |   |            |   |   |                                   |    |   |                                                                                 |   |   |                          |   |   |     |   |   |   |   |   |   |   |   |   |
| Charles      Zona                    |   | 2008   |   | $         | 125,000 |   |     | $      | 100,000 |           |   |   | -               |   |   | $                                      | 433,066 |   |                                                                                 |   | -      |                          |   |   | -        |   |   |   | - |   |   | $ | 658,066 |   |
| Former      Executive                |   | 2007   |   | $         | 300,000 |   |     |   | -       |           |   |   | -               |   |   |                                   | -       |   |                                                                                 |   | -      |                          |   |   | -        |   |   |   | - |   |   | $ | 300,000 |   |
| Vice        President      |   | 2006   |   | $         | 18,182  |   |     |   |    |           |   |   |            |   |   | $                                      | 10,994  |   |                                                                                 |   |   |                          |   |   |     |   |   |   |   |   |   | $ | 29,176 |   |

| (1) | Mr.      Hall has been the Company’s Chief Executive Officer since August 15, 2008.      Mr. Hall joined the Company as the Executive Vice President, Chief      Financial Officer and Treasurer on March 25, 2008. Mr. Stanko has been the      Company’s Chief Financial Officer and Treasurer since November 12, 2008.      He joined the Company on April 30, 2008 as the Chief Financial Officer of      NFM. Ms. Nam has been the Company’s General Counsel since she joined the      Company on September 26, 2007 and was appointed Secretary on December 6,      2008. Mr. D’Loren was the Chief Executive Officer of the Company from June      6, 2006 to August 15, 2008. Mr. Meister was the Senior Vice President,      Chief Financial Officer and Treasurer from September 12, 2006 to March 21,      2008. Mr. Haran was the Executive Vice President, M&A and Operations      from June 6, 2006 until August 14, 2008. Mr. Zona was the Executive Vice      President, Licensing and Brands from December 11, 2006 until May 30,      2008. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The      amount for the year ended December 31, 2008 for Mr. Hall is based on an      initial base salary of $400,000, prorated from March 25, 2008 (the date      his employment commenced) to May 31, 2008, and his current base salary of      $500,000, prorated from June 1, 2008 through December 31, 2008. The amount      for the year ended December 31, 2008 for Mr. Stanko is based on an initial      base salary of $185,000, prorated from April 30, 2008 (the date his      employment commenced) to October 15, 2008, and his current base salary of      $225,000, prorated from October 16, 2008 to December 31, 2008. The amount      included for the year ended December 31, 2008 for Ms. Nam is based on a      base salary of $250,000, prorated from January 1, 2008 through September      30, 2008, and her current base salary of $300,000, prorated from October      1, 2008 to December 31, 2008. The amounts included for the year ended      December 31, 2008 for Messrs. D’Loren, Meister, Haran and Zona is based on      a base salary of $750,000, $225,000, $375,000 and $300,000, respectively,      prorated to their separation dates of August 15, 2008,  March      21, 2008, August 14, 2008 and May 30, 2008, respectively. See the section      captioned “Employment Agreements” below for more in-depth information      regarding each executive’s employment agreement and, where applicable,      separation agreement. The amounts included for the year ended December 31,      2006 for Messrs. D’Loren, Meister, Haran and Zona is based on a base      salary of $750,000, $225,000, $375,000 and $300,000, respectively,      prorated from their employment start dates of June 6, 2006, September 12,      2006, June 6, 2006 and December 11, 2006, respectively. Mr. Meister’s      amount for 2006 does not include $29,000 which was paid to Mr. Meister for      services as a consultant with the Company from July 2006 until September      2006. The amount for Mr. Haran for 2006 includes a deferred bonus of      $125,000 from UCC Capital that the Company assumed upon the      acquisition |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (3) | For      the year ended December 31, 2008, Mr. Hall received a total of $375,000 in      quarterly cash bonuses in accordance with the amendment to his employment      agreement. Ms. Nam received $25,000 on March 31, 2008 pursuant to her      original employment agreement, an additional $5,000 on March 31, 2008 as a      discretionary interim bonus, and $208,000 in retention bonuses in the      latter half of 2008 pursuant to the amendments to her employment      agreement. Mr. Zona received $100,000  on March 31, 2008 as a      discretionary interim bonus. See the section captioned “Employment      Agreements” below for more in-depth information regarding payment of      bonuses pursuant to each executive’s respective employment agreements and      payment of discretionary interim bonuses.  For the years ended      December 31, 2007 and December 31, 2006, respectively, Messrs. D’Loren,      Meister, Haran and Zona did not receive any  bonuses. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | The      amounts in the Option Awards column represents expenses for stock options      in each respective year as prescribed by FAS 123R. For the year ended      December 31, 2008, Mr. Hall received a grant of 250,000 stock options on      June 24, 2008 in connection with his initial hire under the same terms as      those stock options granted under the 2008 Retention Program. He also      received 250,000 additional stock options on August 26, 2008 in connection      with his promotion to the position of Chief Executive Officer. Mr. Stanko      received a grant of 20,000 stock options on June 24, 2008 in connection      with the 2008 Retention Program and 30,000 stock options on November 12,      2008 in connection with his promotion to the position of Chief Financial      Officer and Treasurer. Ms. Nam received a grant of 25,000 stock options on      March 19, 2008 in connection with a discretionary interim bonus and      100,000 stock options on June 24, 2008 in connection with the first      amendment to her employment agreement under the same terms as those stock      options granted under the 2008 Retention Program. On November 12, 2008,      Ms. Nam voluntarily agreed to cancel, pursuant to the Stock Option      Cancellation Program, 100,000 stock options that were granted to her on      September 24, 2007 in accordance with her employment agreement and in      connection with her hire. Mr. Meister was not granted any options in      2008.  However, pursuant to a separation agreement between the      Company and Mr. Meister, the Company agreed to accelerate the vesting of      the 200,000 options that he received on September 12, 2006 and extend the      post-employment exercise period for those options until December 31, 2009.      Mr. Zona received a grant of 25,000 options on March 19, 2008. Pursuant to      a separation agreement between the Company and Mr. Zona, Mr. Zona agreed      to voluntarily surrender 166,666 of his unvested options granted on      December 11, 2006, and the Company agreed to accelerate the vesting of      25,000 options granted to Mr. Zona on March 19, 2008 and to extend the      post-employment exercise period on the 25,000 options and his vested      83,334 options until December 31, 2009. For the year ended December 31,      2007, Messrs. D’Loren, Meister, Haran and Zona did not receive any stock      option awards. For the year ended December 31, 2006, Messrs. D’Loren,      Meister, Haran and Zona received option awards pursuant to the terms of      their employment agreements. See “Grants of Plan-Based Awards Table,”      “Outstanding Equity Awards at Fiscal Year-End Table,” and accompanying      notes for additional information. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | For      the year ended December 31, 2008, Mr. Hall received a total of $17,766      comprised of the Company’s payment pursuant to his employment agreement of      $3,267 for the      employee portion of premiums for life and health insurance and $14,499 for      car expenses; Ms. Nam received a total of $4,111 comprised of the      Company’s payment pursuant to her employment agreement of the employee      portion of premiums for life and health insurance; Mr. Haran received a      total of $7,175 comprised of the Company’s payment pursuant to his      employment agreement of car expenses; and Mr. Meister received a total of      $1,221 comprised of the Company’s payment pursuant to his employment      agreement of the employee portion of premiums for life and health      insurance. For the year ended December 31, 2007 for “All Other      Compensation,” Mr. Meister received a total of $4,863 comprised of the      Company’s payment of the employee portion of premiums for health      insurance, and Mr. Haran received a total of $15,150 comprised of the      Company’s payment of car expenses. See notes 6, 7 and 8 below for      discussion regarding payments to and from Mr. D’Loren in 2008, 2007 and      2006, respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | For      the year ended December 31, 2008, Mr. D’Loren received a total of $18,143,      comprised of the Company’s payment of $7,001 for the employee portion of      premiums for life and health insurance, $10,764 for car expenses and $378      for club dues. The amount of “All Other Compensation” for 2008 takes into      account reimbursements by Mr. D’Loren in 2008, pursuant to the Separation      Agreement by and between the Company and Mr. D’Loren dated August 15, 2008      (the “D’Loren Separation Agreement”). In reviewing our executives’      compensation and expense reimbursements for 2007 and 2008, we became aware      that certain expenses that the Company had agreed to pay pursuant to Mr.      D’Loren’s employment agreement, such as health and life insurance      premiums, in fact were not paid by the Company, whereas other expenses      that arguably were not authorized under Mr. D’Loren’s employment agreement      or by the Compensation Committee had been paid or reimbursed by the      Company. After netting these expenses, the Company came to believe that      the classification of $65,069 of expenses that we paid in 2008 and $65,923      of expenses that we paid in 2007 as business expenses or authorized      perquisites was questionable. Mr. D’Loren did not agree with the Company’s      conclusion. Nonetheless, pursuant to the D’Loren Separation Agreement, he      reimbursed the Company $130,992, which represented the entire amount of      the disputed expenses for 2008 and2007. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | For      the year ended December 31, 2007, Mr. D’Loren received a total of $35,167      comprised of the Company’s payment of $13,383 for the employee portion of      premiums for life and health insurance, $16,027 for car expenses, and      $5,757 for club dues. The amount of “All Other Compensation” for 2007      takes into account reimbursements by Mr. D’Loren in 2008, pursuant to the      D’Loren Separation Agreement. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (8) | For      the year ended December 31, 2006, Mr. D’Loren received a total of $40,162      in all other compensation which included insurance premiums for life and      long term disability of $28,830, car expenses of $9,842 and club dues of      $1,490. This amount was not affected by the D’Loren Separation      Agreement. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Name                         |   | GrantDate |   |   | Number      ofSecuritiesUnderlyingOptionsGranted (#) |          |   | Exercise orBase      Price($/Sh) |    |   | ExpirationDate |   |     | Grant      Date Fair Value ofOption      Awards |   |
|------------------------------|--------|-----------|--------|--------|-----------------------------------------------------------|---------------|--------|---------------------------------------|---------|--------|----------------|--------|----------|-------------------------------------------------|--------|
|                         |   |      |   |   |                                                      |          |   |                                  |    |   |           |   |     |                                            |   |
| Kenneth      J. Hall         |   | 06/24/08  |   |   |                                                      | 250,000       |   |                                  | $       | 0.41   |           |   | 06/24/18 |                                            |   | $ | 32,534 |   |
|                         |   | 08/26/08  |   |   |                                                      | 250,000       |   |                                  | $       | 0.41   |           |   | 08/26/18 |                                            |   | $ | 54,114 |   |
|                         |   |      |   |   |                                                      |          |   |                                  |    |   |           |   |     |                                            |   |   |   |   |
| Mark      E. Stanko          |   | 06/24/08  |   |   |                                                      | 20,000        |   |                                  | $       | 0.41   |           |   | 06/24/18 |                                            |   | $ | 2,603 |   |
|                         |   | 11/12/08  |   |   |                                                      | 30,000        |   |                                  | $       | 0.12   |           |   | 11/12/18 |                                            |   | $ | 107 |   |
|                         |   |      |   |   |                                                      |          |   |                                  |    |   |           |   |     |                                            |   |   |   |   |
| Sue      J. Nam              |   | 03/19/08  |   |   |                                                      | 25,000        |   |                                  | $       | 2.83   |           |   | 03/19/18 |                                            |   | $ | 9,501 |   |
|                         |   | 06/24/08  |   |   |                                                      |  100,000 |   |                                  | $  | 0.41   |           |   | 06/24/18 |                                            |   | $  | 13,014 |   |
|                         |   |      |   |   |                                                      |          |   |                                  |    |   |           |   |     |                                            |   |   |   |   |   |   |
| Robert      W. D’Loren |   |      | -      |   |                                                      |          | -      |                                  |    |   | -              |   |     |                                            | -      |   |   |   | - |   |
|                         |   |      |   |   |                                                      |          |   |                                  |    |   |           |   |     |                                            |   |   |   |   |   |   |
| David      Meister           |   |      | -      |   |                                                      |          | -      |                                  |    |   | -              |   |     |                                            | -      |   |   |   | - |   |
|                         |   |      |   |   |                                                      |          |   |                                  |    |   |           |   |     |                                            |   |   |   |   |   |   |
| James      Haran             |   |      | -      |   |                                                      |          | -      |                                  |    |   | -              |   |     |                                            | -      |   |   |   | - |   |
|                         |   |      |   |   |                                                      |          |   |                                  |    |   |           |   |     |                                            |   |   |   |   |   |   |
| Charles      Zona (1)        |   | 03/19/08  |   |   |                                                      | 25,000        |   |                                  | $       | 0.17   |           |   | 12/31/09 |                                            |   | $ | 4,250 |   |

|  | (1) | Pursuant      to a separation agreement between the Company and Mr. Zona, Mr. Zona      agreed to voluntarily surrender 166,666 of his unvested options granted on      December 11, 2006 and the Company agreed to accelerate the vesting of      25,000 options granted to Mr. Zona on March 19, 2008 and to extend the      post-employment exercise period on the 25,000 options until December 31,      2009. We have provided this additional information in tabular form above      by the addition of an “Expiration Date” column, even though not required      by SEC rules. For additional information with respect to Mr. Zona’s      employment agreement and separation agreement, see “Employment Agreements      - Charles A. Zona.” |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                            |   | Option      Awards                                                 |    |   | Stock      Awards                                                    |   |
|---------------------------------|--------|--------------------------------------------------------------------|---------|--------|----------------------------------------------------------------------|--------|
| Name                            |   | Number      ofSecuritiesUnderlyingUnexercisedOptions(#)Exercisable |    |   | Number      ofSecuritiesUnderlyingUnexercisedOptions(#)Unexercisable |   |   | EquityIncentivePlanAwards:NumberofSecuritiesUnderlyingUnexercisedUnearnedOptions(#) |   |   | OptionExercisePrice($) |   |   | OptionExpirationDate |   |   | NumberofShares      orUnits      ofStockThatHaveNotVested(#) |   |   | MarketValueofSharesor      Unitsof      StockThatHaveNotVested($) |   |   | EquityIncentivePlanAwards:Numberof      UnearnedShares,Units      orOtherRights ThatHave      NotVested(#) |   |   | EquityIncentivePlanAwards:Market      orPayoutValue      of UnearnedShares,Units      orOtherRights ThatHave      NotVested($) |   |
|                            |   |                                                               |    |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Kenneth      J. Hall(1)         |   |                                                               | 125,000 |   |                                                                 |   | 125,000 |   |   |   | - |   |   | $ | 0.41 |   |   | 06/24/18 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                            |   |                                                               | 125,000 |   |                                                                 |   | 125,000 |   |   |   |   |   |   | $ | 0.41 |   |   | 08/26/18 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                            |   |                                                               |    |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mark      E. Stanko(2)          |   |                                                               | 10,000  |   |                                                                 |   | 10,000 |   |   |   | - |   |   | $ | 0.41 |   |   | 06/24/18 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                            |   |                                                               | -       |   |                                                                 |   | 30,000 |   |   |   |   |   |   | $ | 0.12 |   |   | 11/12/18 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                            |   |                                                               |    |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sue      J. Nam(3)              |   |                                                               | -       |   |                                                                 |   | 25,000 |   |   |   |   |   |   | $ | 2.83 |   |   | 03/19/18 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                            |   |                                                               | 50,000  |   |                                                                 |   | 50,000 |   |   |   |   |   |   | $ | 0.41 |   |   | 06/24/18 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                            |   |                                                               |    |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Robert      W. D’Loren(4) |   |                                                               | -       |   |                                                                 |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                            |   |                                                               |    |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| David      B. Meister(5)        |   |                                                               | 200,000 |   |                                                                 |   | - |   |   |   | - |   |   | $ | 6.08 |   |   | 12/31/2009 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                            |   |                                                               |    |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| James      Haran(6)             |   |                                                               | -       |   |                                                                 |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                            |   |                                                               |    |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Charles      Zona(7)            |   |                                                               | 88,334  |   |                                                                 |   | - |   |   |   | - |   |   | $ | 6.96 |   |   | 12/31/2009 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                            |   |                                                               | 25,000  |   |                                                                 |   |   |   |   |   |   |   |   | $ | 0.17 |   |   | 12/31/2009 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (1) | On      June 24, 2008, Mr. Hall was granted 250,000 stock options, encompassing      the initial grant of options that was supposed to have been awarded in      accordance with his employment agreement and in connection with his hire      but were not issued because of delays in the filing of our periodic      financial statements. Mr Hall was granted the initial 250,000 stock      options on terms consistent with those options granted under the 2008      Retention Program. Accordingly, the June 24, 2008 grant provided for the      stock options to vest in equal amounts over four quarters after the date      of grant on September 24, 2008, December 24, 2008, March 24, 2009 and June      24, 2009 and for accelerated vesting upon certain events. On August 26,      2008, in accordance with an amendment to Mr. Hall’s employment agreement      in connection with his promotion to the position of Chief Executive      Officer, Mr. Hall was granted an additional 250,000 stock options. The      August 26, 2008 grant provides for 125,000 of the options to vest      immediately upon the grant date and 125,000 of the options to vest on      February 1, 2009 with accelerated vesting upon certain events. For      additional information with respect to Mr. Hall’s employment agreement and      amendments thereto, see “Employment Agreements – Kenneth J.      Hall.” |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | On      June 24, 2008, as part of the 2008 Retention Program, Mr. Stanko was      granted 20,000 stock options, encompassing the initial grant of options      that were supposed to have been awarded in connection with his hire but      were not issued because of delays in the filing of our periodic financial      statements. The June 24, 2008 grant provides for the options to vest in      equal amounts over four quarters after the date of grant on September 24,      2008, December 24, 2008, March 24, 2009 and June 24, 2009 and for      accelerated vesting upon certain events. On November 12, 2008, in      accordance with his employment agreement, Mr. Stanko was granted an      additional 30,000 stock options. The November 12, 2008 grant provides for      the stock options to vest in equal amounts on the three anniversaries of      grant and for accelerated vesting upon certain events. For additional      information with respect to Mr. Stanko’s employment agreement and      amendments thereto, see “Employment Agreements – Mark E.      Stanko.” |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (3) | On      September 24, 2007, in accordance with her employment agreement and in      connection with her hire, Ms. Nam was granted 100,000 stock options. The      options were to vest in equal amounts on the three anniversaries of grant.      On November 12, 2008, Ms. Nam voluntarily agreed to cancel the 100,000      stock options pursuant to the Stock Option Cancellation Program. On March      19, 2008, Ms. Nam was granted 25,000 stock options that vest in equal      amounts on the three anniversaries of grant. On June 24, 2008, in      accordance with the first amendment to Ms Nam’s employment agreement, she      was granted 100,000 stock options on terms consistent with those options      granted under the 2008 Retention Program. Accordingly, the June 24, 2008      grant provided for the stock options to vest in equal amounts over four      quarters after the date of grant on September 24, 2008, December 24, 2008,      March 24, 2009 and June 24, 2009 and for accelerated vesting upon certain      events. For additional information with respect to Ms. Nam’s employment      agreement and amendments thereto, see “Employment Agreements – Sue J.      Nam.” |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | On      June 6, 2006, in accordance with his employment agreement and in      connection with his hire, Mr. D’Loren was granted a warrant to purchase      125,000 shares and 2,686,976 stock options. Both the warrant and stock      options were to vest in equal amounts on the three anniversaries of grant.      Accordingly, 83,334 shares underlying the warrant and 1,641,317 shares      underlying the options vested on June 6, 2008. (Mr. D’Loren partially      exercised his options and purchased 150,000 shares in 2007.) Mr. D’Loren      resigned from the Company on August 15, 2008. Pursuant to his employment,      separation and warrant/option grant agreements, respectively, all of Mr.      D’Loren’s unexercisable warrants and options, totaling 937,325 shares,      expired upon his resignation. Mr. D’Loren did not exercise any of his      exercisable warrants or options, totaling 1,724,651 shares, within the 90      day post-employment exercise period provided in the warrant and option      grant agreements. Thus, all of the securities underlying Mr. D’Loren’s      exercisable and unexercisable warrants and options listed above expired in      2008. For additional information with respect to Mr. D’Loren’s employment      agreement and separation agreement, see “Employment Agreements – Robert W.      D’Loren.” |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | On      September 12, 2006, in accordance with his employment agreement and in      connection with his hire, Mr. Meister was granted 200,000 stock options      that were to vest in equal amounts on the three anniversaries of grant.      Accordingly, 66,667 stock options vested on September 12, 2007. On March      21, 2008, Mr. Meister’s employment was terminated without “Cause,” and all      unvested options immediately vested and became fully exercisable pursuant      to his employment agreement. Pursuant to a separation agreement, the      Company agreed to extend the post-employment exercise period on Mr.      Meister’s 200,000 options until December 31, 2009. For additional      information with respect to Mr. Meister’s employment agreement and      separation agreement, see “Employment Agreements - David B.      Meister.” |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | On      June 6, 2006, in accordance with his employment agreement and in      connection with his hire, Mr. Haran was granted 581,788 stock options that      were to vest in equal amounts on the three anniversaries of grant.      Accordingly, 193,930 stock options vested on June 6, 2007. Mr. Haran      resigned from the Company on August 14, 2008. Pursuant to his employment,      separation and option grant agreements, respectively, all of Mr. Haran’s      unexercisable options, totaling 387,858 shares, expired upon his      resignation. Mr. Haran did not exercise any of his exercisable options,      totaling 193,930 shares, within the 90 day post-employment exercise period      provided in the option grant agreement. Thus, all of the securities      underlying Mr. Haran’s exercisable and unexercisable options listed above      expired in 2008. For additional information with respect to Mr. Haran’s      employment agreement and separation agreement, see “Employment Agreements      – James Haran.” |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | On      December 11, 2006, in accordance with his employment agreement and in      connection with his hire, Mr. Zona was granted 250,000 stock options that      were to vest in equal amounts on the three anniversaries of grant.      Accordingly, 83,334 stock options vested on December 11, 2007. Mr. Zona’s      employment was terminated on May 30, 2008. Under his employment agreement,      Mr. Zona was entitled to accelerated vesting of all unvested options of      the December 2006 grant.      However, pursuant to a separation agreement, Mr. Zona agreed to      voluntarily surrender 166,666 of his unvested options from the December      2006 grant. The Company agreed to extend the post-employment exercise      period on Mr. Zona’s vested 83,334 options through December 31, 2009,      accelerate the vesting of 25,000 options granted to Mr. Zona on March 19,      2008, and extend the post-employment exercise period on the 25,000 options      until December 31, 2009. For additional information with respect to Mr.      Zona’s employment agreement and separation agreement, see “Employment      Agreements - Charles A. Zona.” |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | · | any      earned but unpaid base salary through the date of employment termination      and any declared but unpaid annualbonus; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      amount equal to his base salary (at the rate then in effect) for the      greater of the remainder of the initial three year term or eighteen      months, payable over a six-month period or such shorter period as is      required to comply with Section 409A of the Internal Revenue Code and      applicable regulations adoptedthereunder; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | continued      participation in NexCen’s group medical plan on the same basis as he      previously participated or receive payment of, or reimbursement for, COBRA      premiums (or, if COBRA coverage is not available, reimbursement of      premiums paid for other medical insurance in an amount not to exceed the      COBRA premium) for an eighteen month period following termination, subject      to termination of this arrangement if a successor employer provides him      with health insurance coverage; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | accelerated      vesting of all unvested options issued under the employment agreement with      the vested options remaining exercisable for twelve  months. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | an      amount equal to the greater of (x) his base salary (at the rate then in      effect) for the remainder of the initial three year term or (y) two times      the sum of (1) his base salary (at the rate then in effect) and (2) a      bonus calculated as 100% of Mr. Hall’s base salary at the rate then in      effect, but in any event not to exceed $1,400,000 in the event that Mr.      Hall’s employment is terminated on or before January 31, 2009, with any      such payment to be paid over a six-month period or such shorter period as      is required to comply with Section 409A of the Internal Revenue Code and      applicable regulations adoptedthereunder; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | any      earned but unpaid base salary through the date of employment termination      and any declared but unpaid annualbonus; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      amount equal to his base salary (at the rate then in effect) for twelve      months, payable over a six-month period or such shorter period as is      required to comply with Section 409A of the Internal Revenue Code and      applicable regulations adoptedthereunder; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | continued      participation in NexCen’s group medical plan on the same basis as he      previously participated or receive payment of, or reimbursement for, COBRA      premiums (or, if COBRA coverage is not available, reimbursement of      premiums paid for other medical insurance in an amount not to exceed the      COBRA premium) for twelve months following termination, subject to      termination of this arrangement if a successor employer provides him with      health insurance coverage; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | accelerated      vesting of all unvested options issued under the employment agreement with      the vested options remaining exercisable for 90 days pursuant to the 2006      Plan. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | any      earned but unpaid base salary through the date of employment termination      and any declared but unpaid annualbonus; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      amount equal to her base salary (at the rate then in effect) for six      months, payable over a six-month period or such shorter period as is      required to comply with Section 409A of the Internal Revenue Code and      applicable regulations adoptedthereunder; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | continued      participation in NexCen’s group medical plan on the same basis as she      previously participated or receive payment of, or reimbursement for, COBRA      premiums (or, if COBRA coverage is not available, reimbursement of      premiums paid for other medical insurance in an amount not to exceed the      COBRA premium) for six months following termination, subject to      termination of this arrangement if a successor employer provides her with      health insurance coverage; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | accelerated      vesting of all unvested options issued under the employment agreement with      the vested options remaining exercisable for 90 days pursuant to the 2006      Plan. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | $50,000      upon the successful closing of the restructuring of the Company’s credit      facility, with such bonus payable on or about October 15,      2008; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $50,000      upon the successful closing of the sale of the Bill Blass      business; |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | $50,000      upon the successful closing of the sale of the Waverly business;      and |
|--------|--------|----------------------------------------------------------------------------------------|

|   | · | $50,000      upon continued employment through March 31,  2009. |
|--------|--------|-----------------------------------------------------------------|

----

|   | · | any      earned but unpaid base salary through the date of employment termination      and any declared but unpaid annualbonus; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      amount equal to his base salary (at the rate then in effect) for the      greater of the remainder of the initial three-year term or two years,      payable over a six-month period or such shorter period as is required to      comply with Section 409A of the Internal Revenue Code and applicable      regulations adopted thereunder; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | continued      participation in NexCen’s group medical plan on the same basis as he      previously participated or receive payment of, or reimbursement for, COBRA      premiums (or, if COBRA coverage is not available, reimbursement of      premiums paid for other medical insurance in an amount not to exceed the      COBRA premium) for a two-year period following termination, subject to      termination of this arrangement if a successor employer provides him with      health insurance coverage; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | accelerated      vesting of all unvested options and restricted shares issued on June 6,      2006 pursuant to the 1999 Equity IncentivePlan. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | any      earned but unpaid base salary through the date of employment termination      and any declared but unpaid annualbonus; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      amount equal to his base salary (at the rate then in effect) for a period      of twelve months, payable over a six-month period or such shorter period      as is required to comply with Section 409A of the Internal Revenue Code      and applicable regulations adoptedthereunder; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | continued      participation in NexCen’s group medical plan on the same basis as he      previously participated or receive payment of, or reimbursement for, COBRA      premiums (or, if COBRA coverage is not available, reimbursement of      premiums paid for other medical insurance in an amount not to exceed the      COBRA premium) for a one-year period following termination, subject to      termination of this arrangement if a successor employer provides him with      health insurance coverage; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | accelerated      vesting of all unvested options issued on September 12, 2006 pursuant to      the 1999 Equity Incentive Plan. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | any      earned but unpaid base salary through the date of employment termination      and any declared but unpaid annualbonus; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      amount equal to his base salary (at the rate then in effect) for a period      of eighteen months, payable over a six-month period or such shorter period      as is required to comply with Section 409A of the Internal Revenue Code      and applicable regulations adoptedthereunder; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | continued      participation in NexCen’s group medical plan on the same basis as he      previously participated or receive payment of, or reimbursement for, COBRA      premiums (or, if COBRA coverage is not available, reimbursement of      premiums paid for other medical insurance in an amount not to exceed the      COBRA premium) for a one-year period following termination, subject to      termination of this arrangement if a successor employer provides him with      health insurance coverage; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | accelerated      vesting of all unvested options issued on June 6, 2006 pursuant to the      1999 Equity Incentive Plan. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------|

----

|   | · | any      earned but unpaid base salary through the date of employment termination      and any declared but unpaid annualbonus; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | · | an      amount equal to his base salary (at the rate then in effect) for a period      of six months, payable over a six-month period or such shorter period as      is required to comply with Section 409A of the Internal Revenue Code and      applicable regulations adoptedthereunder; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | continued      participation in NexCen’s group medical plan on the same basis as he      previously participated or receive payment of, or reimbursement for, COBRA      premiums (or, if COBRA coverage is not available, reimbursement of      premiums paid for other medical insurance in an amount not to exceed the      COBRA premium) for a one-year period following termination, subject to      termination of this arrangement if a successor employer provides him with      health insurance coverage; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | accelerated      vesting of all unvested options issued on December 11, 2006 pursuant to      the 2006 Plan. |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

----

| Name                         |   | Cash SeverancePayment($) |    |   | Continuation ofMedical/WelfareBenefits (Present Value)($)(1) |   |   | Value of Accelerated Vesting of EquityAwards($)(2) |   |   | Accrued but UnusedPaid Time off($) |   |   | Total Termination Benefits($) |   |
|------------------------------|--------|-------------------------------|---------|--------|-----------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------|--------|--------|--------------------------------------------------------|--------|--------|-----------------------------------------|--------|
| Robert      W. D’Loren |   | $                             | 0       |   |                                                                        | $      | 14,722 |                                                                        |   | $      | 0                                                      |   |   | $                                       | 0      |   |   | $ | 14,722 |   |
|                         |   |                          |    |   |                                                                        |   |   |                                                                        |   |   |                                                   |   |   |                                    |   |   |   |   |   |   |
| David      B. Meister        |   | $                             | 225,000 |   |                                                                        | $      | 15,330 |                                                                        |   | $      | 256,994                                                |   |   | $                                       | 26,827 |   |   | $ | 524,151 |   |
|                         |   |                          |    |   |                                                                        |   |   |                                                                        |   |   |                                                   |   |   |                                    |   |   |   |   |   |   |
| James      Haran             |   | $                             | 281,250 |   |                                                                        | $      | 14,722 |                                                                        |   | $      | 0                                                      |   |   | $                                       | 0      |   |   | $ | 295,972 |   |
|                         |   |                          |    |   |                                                                        |   |   |                                                                        |   |   |                                                   |   |   |                                    |   |   |   |   |   |   |
| Charles      Zona            |   | $                             | 150,000 |   |                                                                        | $      | 9,466  |                                                                        |   | $      | 372,165                                                |   |   | $                                       | 29,000 |   |   | $ | 560,631 |   |

|  | (1) | Calculated      at insurance premium rates in effect at December 31, 2008 for the period      of time of the benefit. |
|--|-----|-----------------------------------------------------------------------------------------------------------------------|

|  | (2) | This      amount represents the unamortized portion of the expense related to the      accelerated vesting of stock options granted to those named executive      officers whose employment was terminated without Cause, as of the date of      termination, the event that triggered  acceleration. |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Voluntary      termination; |
|--------|--------|-----------------------------|

|   | · | Involuntary      termination without “Cause” or termination by the executive for “Good      Reason;” |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | · | Termination      without “Cause” or termination by the executive for “Good Reason” within      twelve months of a “Change of Control;”or |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Separation      due to disability or death. |
|--------|--------|---------------------------------------------|

----

| Name                 |   | Payment/Benefits Upon Termination($)            |   | Voluntary Termination/With Cause($) |   |   | Involuntary TerminationWithout Cause/TerminationWith Good Reason($) |   |      | Separation Due toChange of Control($) |   |   | Separation Due toDeath/Disability($) |   |
|----------------------|--------|-----------------------------------------------------------|--------|-----------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------|--------|-----------|-----------------------------------------------------------|--------|--------|------------------------------------------------|--------|
| Kenneth      J. Hall |   | Accrued      but unused vacation time                     |   | $                                             | 1,923  |   |                                                                                    | $      | 1,923     |                                                      |   | $      | 1,923                                          |   |   | $ | 1,923 |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Declared      but unpaid annual bonus                     |   | $                                             | 0      |   |                                                                                    | $      | 0         |                                                      |   | $      | 0                                              |   |   |   | n/a |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Severance      payment                                    |   |                                          | n/a    |   |                                                                                    | $      | 1,400,000 |                                                      |   | $      | 1,999,900                                      |   |   |   | n/a |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Continued      healthcare coverage (1)                    |   |                                          | n/a    |   |                                                                                    | $      | 31,195    |                                                      |   | $      | 31,195                                         |   |   |   | n/a |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Value      of AcceleratedVesting      of Equity Awards(2) |   |                                          | n/a    |   |                                                                                    | $      | 35,852    |                                                      |   | $      | 35,852                                         |   |   |   | n/a |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Total:                                                    |   | $                                             | 1,923  |   |                                                                                    | $      | 1,468,970 |                                                      |   | $      | 2,068,870                                      |   |   | $ | 1,923 |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
| Mark      E. Stanko  |   | Accrued      but unused vacation time                     |   | $                                             | 6,599  |   |                                                                                    | $      | 6,599     |                                                      |   | $      | 6,599                                          |   |   | $ | 6,599 |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Declared      but unpaid annual bonus                     |   | $                                             | 0      |   |                                                                                    | $      | 0         |                                                      |   | $      | 0                                              |   |   |   | n/a |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Severance      payment                                    |   |                                          | n/a    |   |                                                                                    | $      | 225,000   |                                                      |   | $      | 224,900                                        |   |   |   | n/a |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Continued      healthcare coverage (1)                    |   |                                          | n/a    |   |                                                                                    | $      | 20,297    |                                                      |   | $      | 20,297                                         |   |   |   | n/a |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Value      of AcceleratedVesting      of Equity Awards(2) |   |                                          | n/a    |   |                                                                                    | $      | 4,690     |                                                      |   | $      | 4,690                                          |   |   |   | n/a |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Total:                                                    |   | $                                             | 6,599  |   |                                                                                    | $      | 256,586   |                                                      |   | $      | 256,486                                        |   |   | $ | 6,599 |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
| Sue      J. Nam      |   | Accrued      but unused vacation time                     |   | $                                             | 5,192  |   |                                                                                    | $      | 5,192     |                                                      |   | $      | 5,192                                          |   |   | $ | 5,192 |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Declared      but unpaid annual bonus                     |   | $                                             | 0      |   |                                                                                    | $      | 0         |                                                      |   | $      | 0                                              |   |   |   | n/a |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Severance      payment                                    |   |                                          | n/a    |   |                                                                                    | $      | 300,000   |                                                      |   | $      | 357,900                                        |   |   |   | n/a |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Continued      healthcare coverage(1)                     |   |                                          | n/a    |   |                                                                                    | $      | 11,780    |                                                      |   | $      | 11,780                                         |   |   |   | n/a |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Value      of AcceleratedVesting      of Equity Awards(2) |   |                                          | n/a    |   |                                                                                    | $      | 38,735    |                                                      |   | $      | 38,735                                         |   |   |   | n/a |   |
|                 |   |                                                      |   |                                          |   |   |                                                                                    |   |      |                                                      |   |   |                                           |   |   |   |   |   |
|                 |   | Total:                                                    |   | $                                             | 5,192  |   |                                                                                    | $      | 355,707   |                                                      |   | $      | 413,607                                        |   |   | $ | 5,192 |   |

|   | (1) | Calculated      at the present value of insurance premiums to be paid over the benefit      period: |
|--------|-----|-----------------------------------------------------------------------------------------------------|

|   | Kenneth      J. Hall - 1.5 years |
|--------|----------------------------------|

|   | Mark      E. Stanko - 1 year |
|--------|------------------------------|

|   | Sue      J. Nam - 1 year |
|--------|--------------------------|

|   | (2) | This      amount represents the unamortized portion of the expense related to each      respective named executive officer’s acceleration of stock option awards      as of December 31, 2008. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Name                                        |   | Fees Earned or Paid in Cash($) |   |   | Stock Awards($) |   |   | Option Awards($)(8) |   |   | Non-EquityIncentive PlanCompensation($) |   |   | Change in Pension Value and NonqualifiedDeferred CompensationEarnings |   |   | All Other Compensation($) |   |   | Total($) |   |
|---------------------------------------------|--------|---------------------------------------------------------|--------|--------|----------------------|--------|--------|--------------------------|--------|--------|----------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------|--------|--------|-------------------------------------|--------|--------|----------|--------|
| David      S. Oros                          |   |                                                    | -      |   |                 |   | -      |                     |   |   | -                                            |   |   |                                                                                                | -      |   |                                |   | -      |     |   | $ | 152,188 | (9) |   | $ | 152,188 |   |
|                                        |   |                                                    |   |   |                 |   |   |                     |   |   |                                         |   |   |                                                                                                |   |   |                                |   |   |     |   |   |   |   |   |   |   |   |
| James      T. Brady                         |   | $                                                       | 97,500 | (1)    |                 |   | -      |                     |   |   | -                                            |   |   |                                                                                                | -      |   |                                |   | -      |     |   |   | - |   |   | $ | 97,500 |   |
|                                        |   |                                                    |   |   |                 |   |   |                     |   |   |                                         |   |   |                                                                                                |   |   |                                |   |   |     |   |   |   |   |   |   |   |   |
| Paul      Caine                             |   | $                                                       | 75,500 | (2)    |                 |   | -      |                     |   |   | -                                            |   |   |                                                                                                | -      |   |                                |   | -      |     |   |   | - |   |   | $ | 75,000 |   |
|                                        |   |                                                    |   |   |                 |   |   |                     |   |   |                                         |   |   |                                                                                                |   |   |                                |   |   |     |   |   |   |   |   |   |   |   |
| Jack      B. Dunn, IV(former      director) |   | $                                                       | 34,228 | (3)    |                 |   | -      |                     |   |   | -                                            |   |   |                                                                                                | -      |   |                                |   | -      |     |   |   | - |   |   | $ | 34,228 |   |
|                                        |   |                                                    |   |   |                 |   |   |                     |   |   |                                         |   |   |                                                                                                |   |   |                                |   |   |     |   |   |   |   |   |   |   |   |
| Edward      J. Mathias                      |   | $                                                       | 82,500 | (4)    |                 |   | -      |                     |   |   | -                                            |   |   |                                                                                                | -      |   |                                |   | -      |     |   |   | - |   |   | $ | 82,500 |   |
|                                        |   |                                                    |   |   |                 |   |   |                     |   |   |                                         |   |   |                                                                                                |   |   |                                |   |   |     |   |   |   |   |   |   |   |   |
| Jack      Rovner(former      director)      |   | $                                                       | 32,761 | (5)    |                 |   | -      |                     |   |   | -                                            |   |   |                                                                                                | -      |   |                                |   | -      |     |   |   | - |   |   | $ | 32,761 |   |
|                                        |   |                                                    |   |   |                 |   |   |                     |   |   |                                         |   |   |                                                                                                |   |   |                                |   |   |     |   |   |   |   |   |   |   |   |
| George      P. Stamas                       |   | $                                                       | 48,500 | (6)    |                 |   | -      |                     |   |   | -                                            |   |   |                                                                                                | -      |   |                                |   | -      |     |   |   | - |   |   | $ | 48,500 |   |
|                                        |   |                                                    |   |   |                 |   |   |                     |   |   |                                         |   |   |                                                                                                |   |   |                                |   |   |     |   |   |   |   |   |   |   |   |
| Marvin      Traub(former      director)     |   | $                                                       | 41,033 | (7)    |                 |   | -      |                     |   |   | -                                            |   |   |                                                                                                | -      |   |                                |   | -      |     |   |   | - |   |   | $ | 41,033 |   |

| (1) | Consists      of $20,000 annual retainer, $30,000 in Board attendance fees, $12,500      retainer as chairman of the Audit Committee, $32,500 in Audit Committee      meeting fees, and $2,500 retainer as chairman of the Nominating/Corporate      Governance Committee. Mr. Brady currently is and was the chairman of the      Audit Committee and the Nominating/Corporate Governance Committee      throughout the fiscal year ended December 31,  2008. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Consists      of $20,000 annual retainer, $25,500 in Board attendance fees, and $30,000      in Audit Committee meeting fees. Mr. Caine has been a member of the Audit      Committee throughout the fiscal year ended December 31,    2008. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Consists      of $14,728 annual retainer (which reflects payment of $5,000 each for the      first and second quarter and $4,728 for the third quarter prorated to the      date of resignation) and $19,500 in Board attendance fees. Mr. Dunn      resigned as a director on September 25,2008. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Consists      of $20,000 annual retainer, $30,000 in Board attendance fees, $2,500      retainer as chairman of the Compensation Committee, and $30,000 in Audit      Committee meeting fees. Mr. Mathias currently is and was the chairman of      the Compensation Committee and a member of the Audit Committee throughout      the fiscal year ended December 31,2008. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Consists      of $13,261 annual retainer (which reflects payment of $5,000 each for the      first and second quarter and $3,261 for the third quarter prorated to the      date of resignation) and $19,500 in Board attendance fees. Mr. Rovner      resigned as a director on August 29,2008. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Consists      of $20,000 annual retainer and $28,500 in Board attendance      fees. |
|-----|-------------------------------------------------------------------------------------|

| (7) | Consists      of $18,553 annual retainer (which reflects payment of $5,000 each for the      first, second and third quarter and $3,533 for the fourth quarter prorated      to the date of resignation) and $22,500 in Board attendance fees. Mr.      Traub resigned as a director on December 4,  2008. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | No      stock or option awards were granted to directors in 2008. In addition, as      of December 31, 2008, all of the non-qualified options granted to the      directors in 2007 were cancelled either (1) voluntarily by the director      through the Company’s Stock      Option Cancellation Program instituted on November 12, 2008 (see      Item 5 - Securities Authorized for Issuance under Equity Compensation      Plans for further detail about this program) or (2) in accordance with the      option grant agreements which provided that the grantee would forfeit any      unvested options uponresignation. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (9) | In      June 2006, Mr. Oros relinquished his position as Chief Executive Officer      of the Company, remaining as Chairman. Under the terms of his amended      employment agreement, for a period of three years ending in June 2009, Mr.      Oros remains an employee to provide advice and guidance to the Company and      to assist with the management and business transition processes. Mr. Oros      receives an annual salary of $200,000 and health care coverage as an      employee during this period. Starting in May 2008, Mr. Oros agreed to      defer payment of his salary to provide the Company with additional      liquidity. The Company recommenced payment of Mr. Oros’ salary, including      the amounts deferred, in October 2008. $54,541 of Mr. Oros’ deferred 2008      salary was paid in 2009, and thus is not included in the amounts above.      The Company paid $10,724 for the employee’s portion of the premiums for      Mr. Oros’ health care coverage in2008. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | each      of our directors and executive officers individually;  and |
|--------|--------|----------------------------------------------------------------------|

|   | · | all      our directors and executive officers as agroup. |
|--------|--------|----------------------------------------------------------|

|                                                                                                |   | Beneficial Ownershipof Shares |      |
|-----------------------------------------------------------------------------------------------------|--------|-----------------------------------------|-----------|
| Name                                                                                                |   | Number                                  |      |   | Percent |   |
|                                                                                                |   |                                    |      |   |   |   |
| David      S. Oros (1)                                                                              |   |                                    | 2,385,879 |   |   |   | 3.56 | % |
| James      T. Brady (2)                                                                             |   |                                    | 127,500   |   |   |   | * |   |
| Paul      Caine                                                                                     |   |                                    | -         |   |   |   | - |   |
| Edward      J. Mathias (3)                                                                          |   |                                    | 175,700   |   |   |   | * |   |
| George      P. Stamas (4)                                                                           |   |                                    | 171,868   |   |   |   | * |   |
| Kenneth      J. Hall (5)                                                                            |   |                                    | 530,000   |   |   |   | * |   |
| Mark      E. Stanko (6)                                                                             |   |                                    | 20,000    |   |   |   | * |   |
| Sue      J. Nam (7)                                                                                 |   |                                    | 108,334   |   |   |   | * |   |
| Robert      W. D’Loren (8)                                                                    |   |                                    | 3,692,103 |   |   |   | 6.48 | % |
| David      Meister (9)                                                                              |   |                                    | 200,000   |   |   |   | * |   |
| James      Haran (10)                                                                               |   |                                    | 517,499   |   |   |   | * |   |
| Charles      A. Zona (11)                                                                           |   |                                    | 118,334   |   |   |   | * |   |
|  All      named executive officers for 2008 and current directors as a group (12      Persons) |   |                                    |      |   |   |   | 11.13 | % |

| * | Less      than 1%. |
|---|--------------------|

| (1) | Consists      of (i) 1,261,000 shares of common stock owned directly by Mr. Oros, (ii)      764,279 shares of common stock owned by Mr. Oros and his wife, (iii)      exercisable warrants to purchase 155,000 shares of common stock, (iv)      exercisable options to purchase 55,600 shares of common stock and (v)      150,000 shares of exercisable restrictedstock. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Consists      of (i) 2,500 shares of common stock owned directly by Mr. Brady and (ii)      exercisable options to purchase 125,000 shares of common      stock. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (3) | Consists      of (i) 14,000 shares of common stock owned directly by Mr. Mathias, (ii)      exercisable options to purchase 125,000 shares of common stock, (iii)      29,000 shares of common stock held indirectly in a retirement account and      (iv) 7,700 shares of common stock held as custodian for Ellen      Mathias. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Consists      of (1) 11,268 shares of common stock owned directly by Mr. Stamas and (ii)      exercisable options to purchase 160,600 shares of common      stock. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Consists      of (i) 30,000 shares of common stock owned directly by Mr. Hall and (ii)      exercisable options to purchase 500,000 shares of common      stock. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Consists      of exercisable options to purchase 20,000 shares of common      stock. |
|-----|--------------------------------------------------------------------------------------|

| (7) | Consists      of exercisable options to purchase 108,334 shares of common      stock. |
|-----|---------------------------------------------------------------------------------------|

| (8) | Consists      of (i) 1,041,384 shares of common stock owned directly by Mr. D’Loren,      (ii) 1,775,193 shares of common stock owned by D’Loren Realty LLC, which      is solely owned and managed by Mr. D’Loren and (iii) 875,526 shares of      common stock owned by D’Loren 2008 Retained Annuity Trust. The shares of      common stock held by Mr. D’Loren exclude 537,308 shares held by the Robert      D’Loren Family Trust Dated March 29, 2002 (the “Family Trust”), the      beneficiaries of which are two minor children of Mr. D’Loren. The Family      Trust is irrevocable, the trustee is not a member of Mr. D’Loren’s      immediate family, and the trustee has independent authority to vote and      dispose of the shares held by the Family Trust. As a result, Mr. D’Loren      disclaims any beneficial ownership of the shares held by the Family      Trust. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9) | Consists      of exercisable options to purchase 200,000 shares of common stock, which      remain exercisable through December 31,2009. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------|

| (10) | Consists      of 517,499 shares of common stock owned directly by Mr.    Haran. |
|------|---------------------------------------------------------------------------------|

| (11) | Consists      of (i) 10,000 shares of common stock owned directly by Mr. Zona and (ii)      exercisable options to purchase 108,334 shares of common stock, which      remain exercisable through December 31,2009. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                    |   | 2008   |      |   | 2007   |   |
|-------------------------|--------|--------|-----------|--------|--------|--------|
| Audit      Fees         |   | $      | 1,267,900 |   |   | $      | 668,211 |   |
| Audit-Related      Fees |   |   | 232,100   |   |   |   | 287,699 |   |
| Tax      Fees           |   |   | -         |   |   |   | 37,608 |   |
| Total      Fees         |   | $      | 1,500,000 |   |   | $      | 993,528 |   |

----

----

| Report      of Independent Registered Public Accounting Firm                                                              | 58 |
|---------------------------------------------------------------------------------------------------------------------------|----|
| Consolidated      Balance Sheets as of December 31, 2008 and 2007                                                    | 59 |
| Consolidated      Statements of Operations for the years ended December 31, 2008, 2007,      and 2006                | 60 |
| Consolidated      Statements of Stockholders’ Equity for the years ended December 31,      2008, 2007 and 2006 | 61 |
| Consolidated      Statements of Cash Flows for the years ended December 31, 2008, 2007      and 2006                 | 62 |
| Notes      to Consolidated Financial Statements                                                                           | 63 |

| *2.1  |   | Agreement      and Plan of Merger dated June 5, 2006, by and among UCC Capital Corp., UCC      Consulting Corp., UCC Servicing, LLC, Aether Holdings, Inc., AHINV      Acquisition Corp., the holders of UCC Shares identified therein and Robert      W. D’Loren, as the Security holders’      Representative.  (Designated as Exhibit 2.1 to the Form 8−K      filed on June 7, 2006)                                    |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *2.2  |   | Equity      Interest and Asset Purchase Agreement dated August 21, 2006, by and among      Aether Holdings, Inc., NexCen Franchise Brands, Inc., NexCen Franchise      Management, Inc., Athlete’s Foot Marketing Associates, LLC, Athlete’s Foot      Brands, LLC, Robert J. Corliss, Donald Camacho, Timothy Brannon and Martin      Amschler.  (Designated as Exhibit 2.1 to the Form 8−K filed on      August 22, 2006) |
| *2.3  |   | Stock      Purchase Agreement dated December 19, 2006, by and among NexCen Brands,      Inc., Blass Acquisition Corp., Haresh T. Tharani, Mahesh T. Tharani and      Michael Groveman, Bill Blass Holding Co., Inc., Bill Blass International      LLC and Bill Blass Licensing Co., Inc.  (Designated as Exhibit      2.1 to the Form 8−K filed on December 21, 2006)                                                                  |
| *2.4  |   | Agreement      and Plan of Merger dated February 14, 2007, by and among NexCen Brands,      Inc., MM Acquisition Sub, LLC, MaggieMoo’s International, LLC, Stuart      Olsten, Jonathan Jameson, and the Securityholders’      Representative.  (Designated as Exhibit 2.1 to the Form 8−K      filed on February 21, 2007)                                                                                                 |
| *2.5  |   | Asset      Purchase Agreement dated February 14, 2007, by and among NexCen Brands,      Inc., NexCen Acquisition Corp., and Marble Slab Creamery,      Inc.  (Designated as Exhibit 2.2 to the Form 8−K filed on      February 21, 2007)                                                                                                                                                                                                |
| *2.6  |   | Asset      Purchase Agreement dated March 13, 2007, by and among NexCen Brands, Inc.,      WV IP Holdings, LLC and F. Schumacher & Co.  (Designated as      Exhibit 2.4 to the Form 10-K filed on March 16, 2007)                                                                                                                                                                                                                         |
| *2.7  |   | Asset      Purchase Agreement dated August 7, 2007, by and among NexCen Asset      Acquisition, LLC, Pretzel Time Franchising, LLC, Pretzelmaker Franchising,      LLC and Mrs. Fields Famous Brands, LLC dated August 7,      2007.  (Designated as Exhibit 2.1 to the Form 8-K filed on      August 9, 2007)                                                                                                                                |
| *2.8  |   | Asset      Purchase Agreement dated January 29, 2008, by and among NexCen Brands,      Inc., NexCen Asset Acquisition, LLC, Great American Cookie Company      Franchising, LLC, Great American Manufacturing, LLC and Mrs. Fields Famous      Brands, LLC.  (Designated as Exhibit 2.1 to the Form 8−K filed      on January 29, 2008)                                                                                                 |
| *2.9  |   | Asset      Purchase Agreement dated September 29, 2008, by and among NexCen Brands,      Inc., NexCen Fixed Asset Company, LLC, NexCen Brand Management, Inc., WV      IP Holdings, LLC, and Iconix Brand Group, Inc..  (Designated as      Exhibit 2.1 to the Form 8−K filed on September 30,2008)                                                                                                                                     |
| *2.10 |   | Asset      Purchase Agreement dated December 24, 2008, by and among NexCen Brands,      Inc., NexCen Fixed Asset Company, LLC, NexCen Brand Management, Inc., Bill      Blass Holding Co., Inc., Bill Blass Licensing Co., Inc., Bill Blass Jeans,      LLC, Bill Blass International, LLC and Peacock International Holdings,      LLC.  (Designated as Exhibit 2.1 to the Form 8−K filed on      December 29, 2008)                   |
| *3.1  |   | Certificate      of Incorporation of NexCen Brands, Inc.  (Designated as Exhibit      3.1 to the Form 10-Q filed on August 5, 2005)                                                                                                                                                                                                                                                                                                           |
| *3.2  |   | Certificate      of Amendment of Certificate of Incorporation of NexCen Brands,      Inc.  (Designated as Exhibit 3.1 to the Form 8-K filed on      November 1, 2006)                                                                                                                                                                                                                                                                         |

----

| *3.3   |   | Amended      and Restated By-laws of NexCen Brands, Inc.  (Designated as      Exhibit 3.1 to the Form 8-K filed on March 7, 2008)                                                                                                                                                               |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *4.1   |   | Form      of Common Stock Certificate.  (Designated as Exhibit 4.3 to the      Form S-8 filed on December 1, 2006)                                                                                                                                                                              |
| *4.2   |   | Registration      Rights Agreement dated June 5, 2006, by and among Aether Holdings, Inc.      and the stockholders listed on Exhibit A thereto.  (Designated      as Exhibit 10.6 to the Form 8−K filed on June 7, 2006)                                                                 |
| *4.3   |   | Registration      Rights Agreement dated November 7, 2006, by and among NexCen Brands, Inc.,      Robert Corliss and Athlete’s Foot Marketing Associates,      LLC.  (Designated as Exhibit 4.2 to the Form 8−K filed on      November 14, 2006)                                    |
| *4.4   |   | Registration      Rights Agreement dated February 15, 2007, by and among NexCen Brands,      Inc., Haresh Tharani, Mahesh Tharani, Michael Groveman and Designer Equity      Holding Company, LLC.  (Designated as Exhibit 4.2 to the Form      8-K filed on February 21, 2007)                 |
| *4.5   |   | Registration      Rights Agreement dated February 28, 2007, by and among NexCen Brands, Inc.      and the holders of the outstanding limited liability company interests of      MaggieMoo’s International, LLC.  (Designated as Exhibit 4.1 to      the Form 8-K filed on March 6, 2007) |
| *4.6   |   | Registration      Rights Agreement dated August 7, 2007, by and among NexCen Brands, Inc.,      Pretzelmaker Franchising, LLC, and Pretzel Time Franchising,      LLC.  (Designated as Exhibit 4.1 to the Form 8−K filed on August      8, 2007)                                          |
| *4.7   |   | Registration      Rights Agreement dated January 29, 2008, by and among NexCen Brands,      Inc.Great      American Cookie Company Franchising, LLC and Great American Manufacturing,      LLC.  (Designated as Exhibit 4.1 to the Form 8−K filed on      January 29, 2008)               |
| *4.8   |   | Registration      Rights Agreement dated January 29, 2008, by and between NexCen Brands,      Inc. and BTMU Capital Corporation.  (Designated as Exhibit 4.4      to the Form 8−K filed on January 29, 2008)                                                                              |
| *+4.9  |   | Stock      Purchase Warrant dated June 5, 2006, issued to Robert      D’Loren.  (Designated as Exhibit 10.2 to the Form 8−K filed on      June 7, 2006)                                                                                                                             |
| *4.10  |   | Stock      Purchase Warrant dated June 5, 2006, issued to Jefferies & Company,      Inc.  (Designated as Exhibit 10.3 to the Form 8−K filed on June      7, 2006)                                                                                                                     |
| *+4.11 |   | Stock      Option Grant Agreement by and between Aether Holdings, Inc. and Robert W.      D’Loren. (Designated as Exhibit 10.5 to the Form 8−K filed on June 7,      2006)                                                                                                                    |
| *4.12  |   | Common      Stock Warrant dated November 7, 2006, issued to Robert      Corliss.  (Designated as Exhibit 4.1 to the Form 8−K filed on      November 14, 2006)                                                                                                                             |
| *4.13  |   | Common      Stock Warrant dated February 15, 2007, issued to Designer Equity Holding      Company, LLC.  (Designated as Exhibit 4.1 to the Form 8-K filed      on February 21, 2007)                                                                                                            |
| *4.14  |   | Common      Stock Warrant dated May 2, 2007, issued by NexCen Brands, Inc. to Ellery      Homestyles, LLC.  (Designated as Exhibit 4.1 to the Form 8-K      filed on May 8, 2007)                                                                                                               |
| *4.15  |   | Form      of Common Stock Warrant issued by NexCen Brands, Inc. to certain      Franchisees on January 29, 2008.  (Designated as Exhibit 4.2 to      the Form 8−K filed on January 29, 2008)                                                                                              |
| *4.16  |   | Common      Stock Warrant dated January 29, 2008, issued to BTMU Capital      Corporation.  (Designated as Exhibit 4.3 to the Form 8−K filed      on January 29, 2008)                                                                                                                    |
| *4.17  |   | Promissory      Note in the principal amount of $1,500,000 issued by NexCen Brands, Inc.      to Marble Slab Creamery, Inc.  (Designated as Exhibit 4.2 to the      Form 8-K filed on March 6, 2007)                                                                                            |
| *4.18  |   | Promissory      Note in the principal amount of $3,500,000 issued by NexCen Brands, Inc.      to Marble Slab Creamery, Inc.  (Designated as Exhibit 4.3 to the      Form 8-K filed on March 6, 2007)                                                                                            |
| *9.1   |   | Voting      Agreement dated November 7, 2006, by and between NexCen Brands, Inc. and      Robert Corliss.  (Designated as Exhibit 9.1 to the Form 8−K      filed on November 14, 2006)                                                                                                    |
| *9.2   |   | Voting      Agreement dated November 7, 2006, by and between NexCen Brands, Inc. and      Athlete’s Foot Marketing Associates, LLC.  (Designated as      Exhibit 9.2 to the Form 8−K filed on November 14, 2006)                                                                    |
| *9.3   |   | Voting      Agreement dated February 15, 2007, by and between NexCen Brands, Inc. and      Haresh Tharani, Mahesh Tharani, and Michael      Groveman.  (Designated as Exhibit 9.1 to the Form 8-K filed on      February 21, 2007)                                                              |
| *9.4   |   | Voting      Agreement dated February 28, 2007, by and among NexCen Brands, Inc.,      Stuart Olsten and Jonathan Jameson.  (Designated as Exhibit 9.1      to the Form 8-K filed on March 6, 2007)                                                                                              |
| *9.5   |   | Voting      Agreement dated August 7, 2007, by and among NexCen Brands, Inc.,      Pretzelmaker Franchising, LLC, and Pretzel Time Franchising,      LLC.  (Designated as Exhibit 9.1 to the Form 8−K filed on August      8, 2007)                                                       |
| *9.6   |   | Voting      Agreement dated January 29, 2008, by and among NexCen Brands, Inc. and      Great American Cookie Company Franchising, LLC and Great American      Manufacturing, LLC.  (Designated as Exhibit 9.1 to the Form 8−K      filed on January 29,2008)                             |

----

| *+10.1  |   | 2006      Management Bonus Plan.  (Designated as Exhibit 10.4 to the Form      8−K filed on June 7, 2006)                                                                                                                                                                                                        |
|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *+10.2  |   | 2006      Long-Term Equity Incentive Plan.  (Designated as Exhibit 10.1 to      the Form 8−K filed on November 1, 2006)                                                                                                                                                                                          |
| *+10.3  |   | Form      of 2006 Long-Term Equity Incentive Plan Director Stock Option Award      Agreement.  (Designated as Exhibit 10.15 to the Form 10-K      filed on March 16, 2007)                                                                                                                                   |
| *+10.4  |   | Form      of 2006 Long-Term Equity Incentive Plan Employee/Management Stock Option      Award Agreement.  (Designated as Exhibit 10.16 to the Form      10-K filed on March 16, 2007)                                                                                                                        |
| *10.5   |   | Engagement      Agreement dated July 2007, by and between NexCen Brands, Inc. and Marvin      Traub Associates, Inc.  (Designated as Exhibit 10.1 to the Form      10-Q filed on August 9, 2007)                                                                                                                       |
| *+10.6  |   | Employment      Agreement dated June 6, 2006, by and between Aether Holdings, Inc. and      Robert W. D’Loren.  (Designated as Exhibit 10.1 to the Form 8−K      filed on June 7, 2006)                                                                                                                    |
| *+10.7  |   | Separation      Agreement dated August 15, 2008 by and between NexCen Brands, Inc. and      Robert W. D’Loren.  (Designated as Exhibit 10.1 to the Form 8-K      filed on August 19, 2008)                                                                                                                       |
| *+10.8  |   | Employment      Agreement dated September 12, 2006, by and between Aether Holdings, Inc.      and David B. Meister. (Designated as Exhibit 10.1 to the Form 8−K dated      September 13, 2006)                                                                                                                             |
| *+10.9  |   | Separation      Agreement dated April 28, 2008, by and between NexCen Brands, Inc. and      David Meister. (Designated as Exhibit 10.9 to the Form 10-K/A filed on      August 11, 2009)                                                                                                                                         |
| *+10.10 |   | Employment      Agreement dated June 6, 2006, by and between Aether Holdings, Inc. and      James Haran.    (Designated as Exhibit 10.24 to the      Form 10−K/A filed on April 30, 2007)                                                                                                              |
| *+10.11 |   | Separation      and General Release Agreement dated August 14, 2008, by and between NexCen      Brands, Inc. and James Haran.  (Designated as Exhibit 10.4 to      the Form 8-K filed on August 19, 2008)                                                                                                              |
| *+10.12 |   | Employment      Agreement dated December 11, 2006, by and between NexCen Brands, Inc. and      Charles A. Zona.  (Designated as Exhibit 10.1 to the Form 8−K      filed on December 13, 2006)                                                                                                                    |
| *+10.13 |   | Separation      Agreement and Release of Claims dated June 26, 2008, by and between NexCen      Brands, Inc. and Charles A. Zona.  (Designated as Exhibit 10.1      to the Form 8-K filed on June 27, 2008)                                                                                                            |
| *+10.14 |   | Employment      Agreement dated August 29, 2007, by and between NexCen Brands, Inc. and      Sue Nam.  (Designated as Exhibit 10.1 to the Form 10-Q filed on      November 9, 2007)                                                                                                                                    |
| +10.15  |   | Amendment      No. 1 to Employment Agreement dated July 15, 2008, by and between NexCen      Brands, Inc. and Sue Nam.                                                                                                                                                                                                           |
| +10.16  |   | Amendment      No. 2 to Employment Agreement dated September 26, 2008, by and between      NexCen Brands, Inc. and Sue Nam.                                                                                                                                                                                                      |
| *+10.18 |   | Employment      Agreement dated March 19, 2008, by and between NexCen Brands, Inc. and      Kenneth J. Hall.  (Designated as Exhibit 10.2 to the Form 8-K      filed on August 19, 2008)                                                                                                                               |
| *+10.19 |   | Amendment      No. 1 to Employment Agreement dated August 15, 2008, by and between NexCen      Brands, Inc. and Kenneth J. Hall.  (Designated as Exhibit 10.3      to the Form 8-K filed on August 19, 2008)                                                                                                           |
| *+10.20 |   | Employment      Agreement dated  November 12, 2008, by and between NexCen      Brands, Inc., NexCen Franchise Management, Inc. and Mark      Stanko.  (Designated as Exhibit 10.1 to the Form 8-K filed on      November 12, 2008)                                                                           |
| +10.21  |   | Employment      Agreement dated July 1, 2008, by and between NexCen Brands, Inc. and Chris      Dull.                                                                                                                                                                                                                            |
| +10.22  |   | Amended      and Restated Employment Agreement effective as of June 30, 2009 by and      between NexCen Brands, Inc. and Chris Dull.                                                                                                                                                                                             |
| *10.23  |   | Amended      and Restated Security Agreement, by and among NexCen Holding Corp., the      Subsidiary Borrowers Parties thereto and BTMU Capital Corporation, dated      August 15, 2008.  (Designated as Exhibit 10.1 to the Form 8-K      filed on August 21, 2008)                                                   |
| *10.24  |   | First      Amendment to Amended and Restated Security Agreement by and among NexCen      Brands, Inc., NexCen Holding Corp., the Subsidiary Borrowers parties      thereto and BTMU Capital Corporation dated September 11,      2008.  (Designated as Exhibit 10.16 to the Form 10-K/A filed on      August 11, 2009) |
| *10.25  |   | Second      Amendment to Amended and Restated Security Agreement by and among NexCen      Brands, Inc., NexCen Holding Corp., the Subsidiary Borrowers parties      thereto and BTMU Capital Corporation dated December 24,      2008.  (Designated as Exhibit 10.1 to the Form 8-K filed on      December 29, 2008)   |
| *10.26  |   | Amended      and Restated Note Funding Agreement, by and among NexCen Holding      Corporation, the Subsidiary Borrowers Parties thereto, NexCen Brands, Inc.      and BTMU Capital Corporation, dated August 15,      2008.  (Designated as Exhibit 10.2 to the Form 8-K filed on      August 21, 2008)               |
| *10.27  |   | Amended      and Restated Franchise Management Agreement, by and between NexCen      Franchise Management, Inc. and Athlete’s Foot Brands, LLC, dated August      15, 2008.  (Designated as Exhibit 10.3 to the Form 8-K filed on      August 21, 2008)                                                          |
| *10.28  |   | Second      Amended and Restated Brand Management Agreement, by and among NexCen Brand      Management, Inc., NexCen Holding Corporation, Bill Blass Jeans, LLC and      Bill Blass International, LLC, dated August 15,      2008.  (Designated as Exhibit 10.4 to the Form 8-K filed on      August 21, 2008)        |

----

| *10.29 |   | Second      Amended and Restated Brand Management Agreement, by and between NexCen      Brand Management, Inc. and WV IP Holdings, LLC, dated August 15, 2008.      (Designated as Exhibit 10.5 to the Form 8-K filed on August 21,      2008)                                                                                              |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *10.30 |   | Second      Amended and Restated Franchise Management Agreement, by and among NexCen      Franchise Management, Inc., PT Franchise Brands, LLC and PT Franchising,      LLC, dated August 15, 2008.  (Designated as Exhibit 10.6 to the      Form 8-K filed on August 21, 2008)                                                   |
| *10.31 |   | Second      Amended and Restated Franchise Management Agreement, by and among NexCen      Franchise Management, Inc., PM Franchise Brands, LLC and PM Franchising,      LLC, dated August 15, 2008.  (Designated as Exhibit 10.7 to the Form      8-K filed on August 21, 2008)                                                        |
| *10.32 |   | Amended      and Restated Franchise Management Agreement, by and among NexCen Franchise      Management, Inc., Marble Slab Franchise Brands, LLC and Marble Slab      Franchising, LLC, dated August 15, 2008.  (Designated as Exhibit      10.8 to the Form 8-K filed on August 21, 2008)                                        |
| *10.33 |   | Amended      and Restated Franchise Management Agreement, by and among NexCen Franchise      Management, Inc., MaggieMoo’s Franchise Brands, LLC and MaggieMoo’s      Franchising, LLC, dated August 15, 2008.  (Designated as Exhibit      10.9 to the Form 8-K filed on August 21, 2008)                       |
| *10.34 |   | Amended      and Restated Franchise Management Agreement, by and among NexCen Franchise      Management, Inc. GAC Franchise Brands, LLC and GAC Franchising, LLC, dated      August 15, 2008.  (Designated as Exhibit 10.10 to the Form 8-K      filed on August 21, 2008)                                                   |
| *10.35 |   | Amended      and Restated Supply Management Agreement, by and between NB Supply      Management Corp. and GAC Supply, LLC, dated August 15,      2008.  (Designated as Exhibit 10.11 to the Form 8-K filed on      August 21, 2008)                                                                                     |
| *10.36 |   | Amended      and Restated Supply Management Agreement, by and between NB Supply      Management Corp. and GAC Manufacturing, LLC, dated August 15,      2008.  (Designated as Exhibit 10.12 to the Form 8-K filed on      August 21, 2008)                                                                              |
| *10.37 |   | Omnibus      Amendment dated January 27, 2009 by and among NexCen Brands, Inc., NexCen      Holding Corporation, the Subsidiary Borrowers parties thereto, the      Managers parties thereto, and BTMU Capital      Corporation.  (Designated as Exhibit 10.1 to the Form 8-K filed      on January 29, 2009)                     |
| *10.38 |   | Waiver      and Omnibus Amendment dated July 15, 2009 by and among NexCen Brands,      Inc., NexCen Holding Corporation, the Subsidiary Borrowers parties      thereto, the Managers parties thereto, and BTMU Capital      Corporation.  (Designated as Exhibit 10.1 to the Form 8-K filed      on July 20, 2009)                |
| *10.39 |   | Omnibus      Amendment dated August 6, 2009 by and among NexCen Brands, Inc., NexCen      Holding Corporation, the Subsidiary Borrowers parties thereto, the      Managers parties thereto, and BTMU Capital      Corporation.  (Designated as Exhibit 10.3 to the Form 8-K filed      on August 6, 2009)                         |
| *10.40 |   | Australia      License Agreement dated August 6, 2009, by and among TAF Australia, LLC,      The Athlete’s Foot Australia Pty Ltd. and RCG Corporation Ltd. (Designated      as Exhibit 10.1 to the Form 8-K filed on August 6,2009)                                                                                                  |
| *10.41 |   | New      Zealand License Agreement dated August 6, 2009, by and among TAF      Australia, LLC, The Athlete’s Foot Australia Pty Ltd. and RCG Corporation      Ltd. (Designated as Exhibit 10.2 to the Form 8-K filed on August 6,      2009)                                                                                          |
| *10.42 |   | Settlement      and Release Agreement dated January 29, 2008 by and among NexCen Brands,      Inc., Great American Cookie Company Franchising, LLC, Mrs. Fields Famous      Brands, LLC, Mrs. Fields Original Cookies, Inc. and certain Franchisees.      (Designated as Exhibit 10.1 to the Form 8−K filed on January 29,      2008) |
| 21.1   |   | Subsidiaries      of NexCen Brands, Inc.                                                                                                                                                                                                                                                                                                    |
| 23.1   |   | Consent      of KPMG LLP                                                                                                                                                                                                                                                                                                                    |
| 31.1   |   | Certification      pursuant to 17 C.F.R § 240.15d−14 (a), as adopted pursuant to Section 302      of the Sarbanes−Oxley Act of 2002 for Kenneth J. Hall.                                                                                                                                                                   |
| 31.2   |   | Certification      pursuant to 17 C.F.R § 240.15d−14 (a), as adopted pursuant to Section 302      of the Sarbanes−Oxley Act of 2002 for Mark E. Stanko.                                                                                                                                                                    |
| **32.1 |   | Certifications      pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the      Sarbanes−Oxley Act of 2002 for Kenneth J. Hall and Mark E. Stanko      .                                                                                                                                                        |

----

----

|   | NEXCEN      BRANDS, INC. |
|--------|--------------------------|
|   |                     |
|   | By:                      | /s/      Kenneth J. Hall |   |
|   |                     | KENNETH      J. HALL |   |
|   |                     | Chief      Executive Officer |   |

----

| SIGNATURE                  |   | TITLE                        |   | DATE                 |   |
|----------------------------|--------|------------------------------|--------|----------------------|--------|
|                       |   |                         |   |                 |   |
| /s/      David S. Oros     |   | Chairman      of the Board   |   | October      6, 2009 |   |
| DAVID      S. OROS         |   |                         |   |                 |   |
|                       |   |                         |   |                 |   |
| /s/      Kenneth J. Hall   |   | Chief      Executive Officer |   | October      6, 2009 |   |
| KENNETH      J. HALL       |   |                         |   |                 |   |
|                       |   |                         |   |                 |   |
| /s/      Mark E. Stanko    |   | Chief      Financial Officer |   | October      6, 2009 |   |
| MARK      E. STANKO        |   |                         |   |                 |   |
|                       |   |                         |   |                 |   |
| /s/      James T. Brady    |   | Director                     |   | October      6, 2009 |   |
| JAMES      T. BRADY        |   |                         |   |                 |   |
|                       |   |                         |   |                 |   |
| /s/      Paul Caine        |   | Director                     |   | October      6, 2009 |   |
| PAUL      CAINE            |   |                         |   |                 |   |
|                       |   |                         |   |                 |   |
| /s/      Edward J. Mathias |   | Director                     |   | October      6, 2009 |   |
| EDWARD      J. MATHIAS     |   |                         |   |                 |   |
|                       |   |                         |   |                 |   |
| /s/      George P. Stamas  |   | Director                     |   | October      6, 2009 |   |
| GEORGE      P. STAMAS      |   |                         |   |                 |   |

----