Item 1.01. Entry into a Material Definitive Agreement

On December 19, 2007, upon recommendation of the Compensation Committee, our Board of Directors approved an amendment to the current director compensation plan. Under the amended plan, each of our non-employee directors will be paid a fee of $5,000 quarterly in arrears. Under our prior director compensation plan, approved in June 2005, each of our non-employee directors was paid a fee of $1,000 per month, payable quarterly in arrears. No additional amounts are payable for committee participation.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On December 19, 2007, the Compensation Committee of our Board of Directors recommended, and the Board approved, an incentive bonus plan for fiscal year 2008 designed to motivate our employees to achieve our financial objectives and to reward them for their achievements when our company objectives are met. Under the incentive plan, target bonus amounts vary based on a percentage of the employee's base salary, and the amount of bonus actually paid to an employee will be based on the achievement by our company of positive income from operations (including the cost of the incentive plan). The target bonuses under the plan are 50% of base salary for executive officers, 25% of base salary for managers and sales personnel and 10% of base salary for all other employees. All of our employees will be entitled to participate in the incentive plan. Employees will be entitled to a bonus of two times the target bonus in the event income from operations exceeds $1 million for fiscal year 2008, including the cost of the incentive plan.

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