This Quarterly Report on Form 10-Q contains statements which constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward looking information includes statements concerning pharmacy sales trends, the sale of discontinued operations and demographic trends; as well as those that include or are preceded by the words "expects," "estimates," "believes," "plans," "anticipates" or similar language.

Forward looking statements may involve risks and uncertainties, known or unknown to us that could cause results to differ materially from management's expectations as projected in such forward-looking statements. These risks and uncertainties are discussed in Item 1A in our most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission (the "SEC").

You should not place undue reliance upon forward looking statements. Unless otherwise required by applicable securities laws, we assume no obligation to update our forward-looking statements to reflect subsequent events or circumstances.

Overview

We operate a chain of pharmacies and provide pharmacy management services to various not-for-profit entities. The pharmacy industry is highly competitive. The current economic environment has not impacted our Company, as our business is generally recession resistant due to the fact that prescription utilization is generally not included in discretionary spending. The long-term outlook for prescription utilization is strong due in part to the aging population and the continued development of innovative drugs that improve quality of life and control health care costs.

Recent Developments

In December 2008, we sold the inventory and prescription lists of our Topsfield, Massachusetts, store ("Topsfield") to CVS Pharmacy LLC ("CVS"). A gain of $500,000 was recognized on the sale.

In October 2008, we entered into a contract with the East Boston Neighborhood Health Center to assume management of the Health Center's pharmacy already in operation. The pharmacy immediately became our highest volume location in terms of prescriptions dispensed. As of December 31, 2008, we had successfully integrated the pharmacy dispensing software platform, the robotic dispensing unit, the work-flow software, and the point of purchase software. While the process was taxing on operational resources, we believe the changes were necessary in order to maximize the long-term profit potential of the pharmacy.

In September 2008, we sold certain assets and liabilities of ADCO Surgical Supply, Inc. ("ADCO"). A loss was recognized from discontinued operations of $17,667 and loss on disposal of certain assets and liabilities of $48,118 was recognized on the sale. In connection with the sale, we recorded a note receivable of $50,000. We and the buyer are currently in dispute over certain assets and liabilities that were included in the ADCO sale, and the note receivable has not been paid. As of December 31, 2008, we are unable to determine the final outcome of this dispute, but it may result in an additional loss on the disposal of discontinued operations.

In July 2008, we coordinated the relocation of the pharmacy that we manage for the Boston Health Care for the Homeless Program ("BHCHP") from the Barbara McInnis House to BHCHP's new, state of the art location within the Jean Yawkey Center across from Boston Medical Center. At the new pharmacy, we began dispensing patient prescriptions for patients visiting the new walk-in clinic in addition to dispensing prescriptions for the program's respite patients.

In July 2008, we opened a pharmacy in Dorchester, Massachusetts, as a mirror operation to our Peabody, Massachusetts, location to manage dispensing for a different geographical area. Significant "location insensitive" business was transferred from our other Dorchester pharmacy to gain efficiencies in the dispensing process. The new pharmacy increased dispensing capacity for the rapidly growing assisted living and adherence packaging market segment.

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 and six months ended December 31, 2008 and 2007. The following discussion should be read in conjunction with our consolidated financial statements and selected notes thereto for the three and six months ended December 31, 2008 and 2007, included herein, and our audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended June 30, 2008, as filed with the SEC.

Net Revenues. The following table sets forth for the periods indicated pharmacy and dispensing fees revenues:

                                    For the three months December 31,                             For the six months ended December 31,
                                                                  Change                                                          Change
                           2008             2007              $              %             2008             2007              $              %
Pharmacy               $ 17,446,053     $ 16,369,382     $ 1,076,671           6.6 %   $ 34,165,135     $ 31,925,502     $ 2,239,633           7.0 %
Dispensing fees           1,540,716          776,828         763,888          98.3 %      2,446,142        1,497,760         948,382          63.3 %
Total                  $ 18,986,769     $ 17,146,210     $ 1,840,559          10.7 %   $ 36,611,277     $ 33,423,262     $ 3,188,015           9.5 %

Net revenues increased $1.8 million to $19.0 million or 10.7% and $3.2 million to $36.6 million or 9.5% for the three and six months ended December 31, 2008, respectively, as compared to $17.1 million and $33.4 million for the three and six months ended December 31, 2007, respectively. The main reason for the increase in revenues was due to the addition of four new pharmacies in December 2007 and in February, July, and October 2008. We operated 24 locations as of December 31, 2008, compared to 21 locations in the prior year.

Net revenues slightly decreased at stores open more than one year for the three and six months ended December 31, 2008, due to our decision to transfer accounts with approximately $1.8 million and $2.7 million in net revenues for the three and six months ended December 31, 2008, respectively, 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 increased approximately 6% for the three and six months ended December 31, 2008.

The total number of prescriptions dispensed increased 19% for the six months ended December 31, 2008. 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 $17.4 million or 6.6% and $2.2 million to $34.1 million or 7.0% for the three and six months ended December 31, 2008, respectively, as compared to $16.4 million and $32.0 million for the three and six months ended December 31, 2007, respectively. 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 $1.6 million and $2.4 million in sales for the three and six months ended December 31, 2008, respectively, to two of the newly opened pharmacies. If the effect of the business transfer is taken into account, comparable sales increased approximately 6% for the three and six months ended December 31, 2008.

We attribute the increase in prescription dispensing 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 $0.8 million to $1.5 million or 98.3% and $0.9 million to $2.4 million or 63.3% for the three and six months ended December 31, 2008, respectively, as compared to $0.8 million and $1.5 million for the three and six months ended December 31, 2007, respectively. The increase is primarily attributable to the our new pharmacy contract with the East Boston Neighborhood Health Center in Dorchester, as well as the 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. The following table sets forth for the periods indicated the pharmacy profit margin rate:

For the three months December 31, For the six months December 31, 2008 2007 % change 2008 2007 % change

Profit margin rate 19.8 % 22.1 % (2.3 )% 21.1 % 21.5 % (0.4 )%

Pharmacy gross profit margins were 19.8% and 21.1% for the three and six months ended December 31, 2008, respectively, as compared to 22.1% and 21.5% for the three and six months ended December 31, 2007, respectively. Dispensing fees were not included in the calculation as no cost of sales is estimatable for dispensing fees. The decrease in gross profit margin was due to declining insurance reimbursement rates and the fact that the Topsfield store's results, which had a lower than average gross profit margin rate in 2007, have been removed from continuing operations.

Selling, General and Administrative Expenses. The following table set forth for the periods indicated selling, general and administrative expenses ("SG&A"):

                              For the three months December 31,                        For the six months ended December 31,
                                                            Change                                                     Change
                       2008            2007             $            %            2008            2007             $            %

SG&A expenses       $ 4,933,177     $ 4,600,270     $ 332,907          7.2 %   $ 9,306,182     $ 8,425,900     $ 880,282         10.4 %

SG&A increased $0.3 million or 7.2% to $4.9 million and $0.9 million or 10.4% to $9.3 million for the three and six months ended December 31, 2008, respectively, as compared to $4.6 million and $8.4 million for the three months ended December 31, 2007, respectively. The increase for the three months ended December 31, 2008, was primarily due to increased payroll costs of $0.9 million related to four newly opened locations partially offset by a decrease in administrative expenses of $0.6 million. The increase for the six months ended December 31, 2008, was primarily due to increased payroll costs of $1.0 million related to the four newly opened locations, $0.4 million related to increased payroll costs at existing pharmacies, partially offset by a decrease in administrative expenses of $0.6 million. The decrease in administrative expenses of approximately $0.6 million for the three and six months ended December 31, 2008, was primarily due to the elimination of fees paid to the minority shareholders and investment banker and capital raising expenses related to the buy-out of the 20% minority interest of D.A.W., Inc., our now wholly owned pharmacy subsidiary
("D.A.W.")

Other Income (Expense), net. The following table sets forth for the periods indicated the breakdown of other income (expense), net:

                            For the three months December 31,                     For the six months ended December 31,
                                                       Change                                                  Change
                      2008          2007           $            %            2008          2007            $             %

Interest expense    $ (44,774 )   $ (8,522 )   $ (36,252 )      425.4 %    $ (92,169 )   $ (15,927 )   $ (76,242 )       478.7 %
Interest income         1,280        4,002        (2,722 )      (68.0 )%       4,403         6,835        (2,432 )       (35.6 )%
Other income            4,672       15,370       (10,698 )      (69.6 )%       6,791        16,891       (10,100 )       (59.8 )%
                    $ (38,822 )   $ 10,850     $ (49,672 )     (457.8 )%   $ (80,975 )   $   7,799     $ (88,774 )     (1138.3 )%

Other income (expense), net, is comprised of interest expense, interest income, and other income. Interest expense increased $36,252 to $44,774 and $76,242 to $92,169 for the three and six months ended December 31, 2008, respectively, as compared to $8,522 and $15,927, respectively, for the three and six months ended December 31, 2007, primarily due to the notes issued in connection with the February 2008 purchase of the remaining 20% of D.A.W.

Income Taxes. We recorded an income tax benefit from continuing operations of $58,083 and $8,579 for the three and six months ended December 31, 2008, respectively, and $97,730 and $84,196 for the three and six months ended December 31, 2007, respectively, primarily as due to the losses from continuing operations for each of the periods presented. In addition, we recorded income tax expense for the discontinued operations of $210,760 and $93,151 for the three and six months ended December 31, 2008, respectively, and $187,556 and $102,947 for the three and six months ended December 31, 2007, respectively, primarily due to the net gain on disposal of discontinued operations.

Discontinued Operations. For the three months ended December 31, 2008, we recognized a gain of $277,249 from discontinued operations, which consisted of a loss on disposal of discontinued operations of $11,991 net of income tax benefit of $4,240 and a gain on the disposal of the discontinued operations of $500,000 net of income taxes of $215,000. For the three months ended December 31, 2007, we recognized a gain of $137,104 from discontinued operations, which consisted of a loss on disposal of discontinued operations of $68,373 net of income tax benefit of $22,849 and a gain on the disposal of the discontinued operations of $298,628 net of income taxes of $116,000. For the six months ended December 31, 2008, we recognized a gain of $225,643 from discontinued operations, which consisted of a loss on disposal of discontinued operations of $13,883 net of income tax benefit of $2,647 and a gain on the disposal of the discontinued operations of $427,082 net of income taxes of $190,203. For the six months ended December 31, 2007, we recognized a gain of $142,985 from discontinued operations, which consisted of a loss on disposal of discontinued operations of $52,696 net of income tax benefit of $13,053 and a gain on the disposal of the discontinued operations of $298,628 net of income taxes of $116,000.

In connection with the sale of ADCO, we recorded a note receivable of $50,000. We and the buyer are currently in dispute over certain assets and liabilities that were included in the ADCO sale, and the note receivable has not been paid. As of December 31, 2008, we are unable to determine the final outcome of this dispute, but it may result in an additional loss on the disposal of discontinued operations.

Liquidity and Capital Resources

As of December 31, 2008, we had $0.5 million of cash as compared to $0.1 million at June 30, 2008, primarily as a result of the proceeds from the sale of Topsfield. Our primary source of liquidity is cash provided by operations; and our principal uses of cash are operating expenses, acquisitions, capital expenditures, and repayments of debt.

Net Cash Provided by Operating Activities from Continuing Operations. Net cash provided by operating activities from continuing operations was $0.1 million for the six months ended December 31, 2008, and consisted of our net loss adjusted for non-cash items of $0.4 million (including depreciation of $0.2 million, amortization and stock-based compensation expense of $0.1 million and deferred income taxes of $0.1 million) and net cash used from changes in working capital of $0.2 million. The net cash used from changes in working capital was principally the result of an increase in inventories and accounts receivable partially offset by an increase in accounts payable. The increase in inventories was primarily the result of new pharmacy locations and the increase in accounts receivable and accounts payable was due to the increase in sales.

Net Cash Used in Investing Activities from Continuing Operations. Net cash used in investing activities from continuing operations was $0.2 million for the six months ended December 31, 2008, and consisted of the purchase of equipment primarily due to the new pharmacy locations, the purchase of two new delivery trucks to meet the requirements of an increased delivery radius necessitated by one of our assisted living facility contracts, and the upgrade of some of our existing information technology equipment.

Net Cash Used in Financing Activities from Continuing Operations. Net cash used in financing activities was $0.1 million for the six months ended December 31, 2008, and consisted of long-term debt repayments.

We recognized a net operating loss of $121,801 and net income of $39,872 for the three and six months ended December 31, 2008. Although it is our intention is to generate an operating profit in the future, there can be no assurance that we will not generate a net operating loss. We believe that we have adequate resources to fund our operations for at least the next 12 months.

Contractual Obligations

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.

Line of Credit. ADCO has a $300,000 line of credit, which is collateralized by the building and land owned by ADCO and guaranteed by us. The interest rate for the line of credit is the Wall Street Journal Prime rate; and 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 will expire on March 1, 2009; and we are currently in the process of renewing it. As of December 31, 2008, we have $300,000 of outstanding borrowings 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.

We do not have any interest-bearing investments. The difference between the carrying amount and fair value of our long-term debt was immaterial as of December 31, 2008.