Results of Operations

The following discussion provides information with respect to our results of
operations, liquidity, and capital resources on a comparative basis for the
three months ended September 30, 2008 and 2007. The following discussion should
be read in conjunction with our consolidated financial statements and notes
thereto for the three months ended September 30, 2008 and 2007, included herein,
and for the year ended June 30, 2008, included in our Annual Report on Form 10-K
for the year ended June 30, 2008.

Net Revenues

                          2008             2007     % Increase
Pharmacy          $ 17,344,207     $ 16,221,025             6.9
Dispensing Fees        905,426          720,932            25.6
                  $ 18,249,633     $ 16,941,957             7.7

Total revenues increased $1.3 million to $18.2 million or 7.7% for the three months ended September 30, 2008 as compared to $16.9 million for the three months ended September 30, 2007. The main reason was due to the addition of three new pharmacies in December 2007, February 2008 and July 2008. Revenue was flat at stores open more than one year due to our decision to transfer accounts with approximately $.9 million in revenue to two of the newly opened pharmacies. The transfer was done to group certain specialized accounts together in order to achieve efficiencies in the dispensing process. If the effect of the business transfer is taken into account, comparable revenue was up 5.3%. The number of prescriptions dispensed at locations open more than one year increased 11%. The number of prescriptions dispensed did not correlate to a commensurate growth in revenue due to an increased number of generic medications as a percentage of total number of prescriptions dispensed. Generic medications typically have a lower selling price than brand name medications. We recognize revenue both from the sale of prescription medications and other products as well as through dispensing fee revenue derived through the dispensing of prescriptions with inventory owned by Federally Qualified Health Centers ("FQHCs") pursuant to pharmacy management services contracts entered into between us and various FQHCs.

The pharmacy sales (revenues other than dispensing fees) increased $1.1 million to $17.3 million or 6.9% for the three months ended September 30, 2008 as compared to $16.2 million for the three months ended September 30, 2007. The increase was attributable to the opening of the three new pharmacies. Sales were flat at stores open more than one year due to our decision to transfer accounts with approximately $765,000 in sales to two of the newly opened pharmacies. If the effect of the business transfer is taken into account, comparable sales were up 4.4%.

The increase in prescription dispensing at stores open more than one year can be attributed to greater drug utilization on the part of an aging population, an overall increase in market share within certain communities and an increased utilization of pharmacy services by patients of FQHCs with whom the pharmacies have contracts to provide services. The pharmacies manage two pharmacies owned by FQHCs and additionally have contracts to provide pharmacy services to patients of five other FQHCs. The pharmacies maintain a segregated inventory owned by the FQHCs for the purpose of dispensing prescriptions to health center patients.

Dispensing fee revenue increased $184,000 to $905,000 or 25.6% for the three months ended September 30, 2008 as compared to $721,000 for the three months ended September 30, 2007. The increase can be attributed to an expanded number of and increased demand for covered medications effectuated during the fiscal year by the Massachusetts Health Safety Net Office, an increased number of prescription benefit management contracts entered into by the FQHCs contracted with us and marketing initiatives targeting the patients of the FQHCs.

Gross Profit Margins. Pharmacy gross profit margins were 22.3% for the three months ended September 30, 2008 as compared to 20.8% for the three months ended September 30, 2007. Dispensing fees were not included in the calculation as no cost of sales are estimatable for dispensing fees.

The following is a table of Pharmacy gross profit margin percentages for the three months ended September 30:

2008 2007 % Increase
22.3 20.8 7.2

The increase in gross profit margins was due to increased purchase volume discounts as well as increased dispensing of generic medications that carry higher gross profit margins. Each helped to offset declining insurance reimbursements.

Selling, General and Administrative Expenses. Selling, general and administrative expenses ("S,G&A") increased $570,580 to $4,472,000 or 14.6% for the three months ended September 30, 2008 as compared to $3,901,420 for the three months ended September 30, 2007.

The following table shows the breakdown for the three months ended September 30:

2008 2007 % Increase
$4,472,000 $3,901,420 14.6

S,G&A at the pharmacies increased $631,000 to $4.3 million or 17.1% for the three months ended September 30, 2008 as compared to $3.7 million for the three months ended September 30, 2007. The pharmacies' increase was primarily due to increased payroll costs of approximately $618,000. Labor costs at stores opened more than one year increased $277,000 due to market pressures on salary and benefit packages for pharmacists. Labor costs at the three newly opened pharmacies aggregated $313,000. The new pharmacies also added approximately $67,000 in additional overhead. The increase (in non-labor costs) was due primarily to increases in rent and utility expense as well as store supply expense.

Corporate overhead decreased approximately $60,000 to $161,000 or 27.1% for the three months ended September 30, 2008 as compared to $221,000 for the three months ended September 30, 2007 due mainly to the elimination of: fees paid to the minority shareholders for an extension of $99,990 and investment banker and capital raising expense of $28,016. These decreases were partially offset by increases in legal expenses of $39,000; salaries of $16,000, stock option expense of $9,000 and public relations expense of $7,000.

Interest Expense: Interest expense increased by $39,990 to $47,395 or 540% for the three months ended September 30, 2008 as compared to $7,405 for the three months ended September 30, 2007.

The following table shows the breakdown of interest expense for the three months ended September 30:

2008 2007 % Increase
$47,395 $7,405 540.0

The pharmacies' interest expense decreased $2,476 to $1,453 or 63% for the three months ended September 30, 2008 as compared to $3,929 for the three months ended September 30, 2007 due to pay down on interest bearing notes.

Corporate interest expense increased $42,466 or 1,221.7% for the three months ended September 30, 2008 as compared to $3,476 for the three months ended September 30, 2007, due to interest on notes issued in connection with the February 2008 purchase of the remaining 20% of D.A.W., Inc., our now wholly owned pharmacy subsidiary ("D.A.W.").

Income Tax Expense. Income tax expense decreased by $5,610 to $17,720 or 24% for the three months ended September 30, 2008 as compared to $23,330 for the three months ended September 30, 2007.

The following table shows income taxes for the three months ended September 30:

                            2008          2007        % (Increase) decrease
Pharmacy                  $ 100,000     $ 105,200                       (4.9 )
Corporate                   (39,800 )     (70,420 )                     43.5
                             60,200        34,780                       73.1
Discontinued operations     (33,900 )     (11,450 )                   (196.1 )

                          $  26,300     $  23,330                      (24.0 )

The pharmacies income tax expense decreased by $5,200 to $100,000 or 4.9% for the three months ended September 30, as compared to $105,200 for the three months ended September 30, 2007 due to less net income.

Corporate tax benefit decreased by $30,620 to $39,800 or 43.5% for the three months ended September 30, 2008 as compared to $70,420 for the three months ended September 30, 2007 due to decreased expenses mainly related to the buyout of the 20% interest in D.A.W.

The discontinued operations' tax benefit increased by $22,450 to $33,900 or 196.1% for the three months ended September 30, 2008 as compared to $11,450 for the three months ended September 30, 2007, mainly due to the loss on disposal of certain assets and liabilities of our medical discontinued operation.

Liquidity and Capital Resources

Net cash provided by operating activities from continuing operations was $150,419 for the three months ended September 30, 2008 as compared to $105,981 for the three months ended September 30, 2007. Cash was used to fund operations for the medical and corporate operations.

Net cash used in investing activities was $160,151 for the three months ended September 30, 2008 as compared $610,415 the three months ended September 30, 2007. The cash used was to fund the purchase of property and equipment.

Net cash used in financing activities was $71,687 for the three months ended September 30, 2008 and consisted of repayment of long-term debt, as compared to $46,186 the three months ended September 30, 2007.

Our primary source of liquidity is cash provided from operations. Our principal uses of cash are: acquisitions, capital expenditures and repayment of debt.

Cash. At September 30, 2008, cash was $407,707 as compared to $140,688 at June 30, 2008 due to increased collections on accounts receivables and increased revenues.

Asset security interest. The pharmacy has an agreement with its major supplier to purchase pharmaceuticals. This agreement terminates January 31, 2012. Payment for merchandise delivered is secured by a first primary interest in all assets of D.A.W.

Accounts receivable. At September 30, 2008, we had net accounts receivable of $5,082,956 as compared to $4,963,542 at June 30, 2008. Accounts receivable increased due to increased sales from the pharmacies.

Debt. At September 30, 2008, debt was $2,242,271 as compared to $2,313,958 at June 30, 2008. Our debt has decreased due to the payments made on long-term debt.

Line of Credit. In October 2004, our discontinued operation, ADCO, obtained a $300,000 line of credit which is collateralized by property owned by ADCO and guaranteed by us. The interest rate for the line of credit is the Wall Street Journal Prime Rate. Repayment of the line of credit is in monthly payments of interest only, with the principal being due at maturity, unless renewed. The line of credit expires November 30, 2008. We intend to renew the line of credit. As of the date of this report, we have drawn $300,000 on the line of credit. The line of credit is classified in the Liabilities to be disposed of from discontinued operations on our balance sheet.

Please note that we do not have any interest bearing investments. The difference between the Company's carrying amount and fair value of its long-term debt was immaterial at September 30, 2008.