For the year ended December 31, 2008, net loss was $5.7 million, or negative $0.52 per diluted share, on revenues of $25.1 million. This reflects a decrease from the year 2007 in which net income was $7.0 million, or $0.63 per diluted share, on revenues of $55.9 million.

Earle Steinberg, President and CEO, stated, "The deterioration of the economic situation in the fourth quarter of 2008 and continuing into 2009 has made the challenges of our recovery more difficult. We continue to believe that our unique set of expertise and capabilities positions us to provide real and tangible results for clients by improving their profits and reducing their costs more quickly and more effectively. Although not yet evidenced in our financial performance, our prospect list and pipeline is significantly improved both in quantity and quality. However, in the current economy the sales cycle process can be extended and require more levels of approval for new projects, which delays new business.

"We continue to work hard to reduce our fixed costs, both by the furlough of consultants not actively working on client engagements, and by focusing on expense reduction throughout the organization. This has enabled us to shift to a business model where costs vary much more based on our level of business.

"We believe that our balance sheet is sufficient to provide the resources to enable us to recover. Our cash balance at year end was $8.3 million, or $0.76 per diluted share. Although a decrease from the prior quarter's balance of $10.7 million, or $0.97 per diluted share, we expect to receive tax refunds in the first half of 2009 approximately of $3.6 million. We have had a line of credit available to us, but we have not drawn on it for over 3 years. Based on our current forecast, we will not need access to a line of credit in 2009. We have notified the bank that we will not request an extension of our line of credit when it expires on March 31, 2009.

"We remain confident that we are on the right course to achieve the end results we, as your management team, and you, as our shareholders, expect."

Fourth Quarter and Year 2008 Financial Performance

Revenue

Revenue for the fourth quarter of 2008 was $3.5 million, compared to $13.5 million in the fourth quarter of 2007. Consulting revenue from US government clients, represented by our Government practice, was $0.9 million, or 25% of revenue, in the fourth quarter of 2008, compared to $11 million, or 81% of revenue, in the fourth quarter of 2007. Consulting revenue from commercial clients, represented by our Aerospace and Defense, Healthcare, Industrial, Transportation and Logistics, and European practices, was $2.2 million, or 62% of revenue, in the fourth quarter of 2008, compared to $2.2 million, or 16% of revenue, in the fourth quarter of 2007. Reimbursement of expenses was $0.4 million, or 13% of revenue in the fourth quarter of 2008, compared to $0.4 million, or 3% of revenue in the fourth quarter of 2007.

Revenue for the year ended December 31, 2008 was $25.1 million, compared to $55.9 million for the year ended December 31, 2007. Consulting revenue from US government clients was $13.0 million, or 52% of revenue, for the year ended December 31, 2008, compared to $49.4 million, or 88% of revenue, for the year ended December 31, 2007. Consulting revenue from commercial clients was $10.3 million, or 41% of revenue, for the year ended December 31, 2008, compared to $5.7 million, or 10% of revenue, for the year ended December 31, 2007. Reimbursement of expenses was $1.8 million, or 7% of revenue for the year ended December 31, 2008, compared to $0.8 million, or 1% of revenue, for the year ended December 31, 2007.

Gross Margins

Gross profit margins for the fourth quarter of 2008 were 29%, compared to 53% for the fourth quarter of 2007. Gross profit margins for the year ended December 31, 2008 were 40%, compared to 52% for the year ended December 31, 2007. The drop in quarterly and year-to-date gross margins is related to the slowdown of our government programs in the first quarter of 2008 and to lower utilization rates of our consultants in 2008, particularly in the second, third and fourth quarters.

Selling, General & Administrative (SG&A)

SG&A costs for the fourth quarter of 2008 were $3.6 million, compared to $5.2 million in the fourth quarter of 2007. The $1.6million decrease is related primarily to a $0.4 million decrease in stock-based compensation during the fourth quarter of 2008, a $0.7 million decrease in sales commissions and executive bonus, a $0.1 million decrease in our use of outside consultants, a $0.2 million decrease in legal expense, and a $0.2million decrease in other costs due to a decline in activity and the number of consultants we employed as compared to the same period in 2007.

SG&A costs for the year ended December 31, 2008 were $18.5 million, compared to $18.4 million for the year ended December 31, 2007. The $0.1million increase is related primarily to a $1.8million increase in costs incurred in utilizing unassigned consultants to work on sales efforts, as compared to the prior year when a majority of these individuals were working on billable client projects, a $0.3 million increase in stock-based compensation, a $0.5 million increase in severance costs related to the reduction in our labor force during the second quarter of 2008, and a $0.2million increase in bad debt allowance.