Forward Looking Statements

Except for the historical information contained herein, the matters discussed in this Report on Form 10-Q may contain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, general economic and market conditions and our ability to successfully identify and thereafter consummate one or more acquisitions.

Critical Accounting Policies

Our significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements included in our Annual Report. A discussion of our critical accounting policies and estimates is included in Management's Discussion and Analysis of Financial Condition and Results of Operations (the "MD&A") in our Annual Report. There have been no material changes to the critical accounting policies or estimates reported in the MD&A section of our Annual Report.

Results of Operations - Three Months ended June 30, 2012 and 2011

Revenues for the three months ended June 30, 2012 were $1,105,243, an increase of approximately 25.6% from the $879,897 reported for the three month period ended June 30, 2011. This increase was the result of revenues generated by school staffing services provided to charter schools which totaled $672,007 during the three months ended June 30, 2012. By comparison, school staffing services totaled $453,474 in the corresponding period of the prior fiscal year. Revenues generated under our SEIT program remained consistent during the three months ended June 30, 2012 with revenues in the corresponding period in the prior fiscal year.

Cost of services as a percentage of revenues for the three month periods ended June 30, 2012 and 2011 were approximately 62.4% and 65.9%, respectively. Each year, we are required to file a standardized fiscal cost report with New York State which is used to calculate reconciliation tuition rates/adjustment factors and prospective tuition rates for our SEIT program. As a result of this rate reconciliation process, the cost of services as a percentage of revenue for the three months ended June 30, 2011 increased due to a 4.0% reduction in fees paid by preschools under the rate reconciliation process.

Selling, general and administrative expenses for the quarterly periods ended June 30, 2012 and 2011 were $538,762 and $478,894, respectively. During the three months ended June 30, 2012, the Company recorded stock-based compensation expense totaling $53,000 related to the issuance of stock options and warrants as compared to $1,767 of stock-based compensation recorded in the three months ended June 30, 2011.

Interest income for the three month periods ended June 30, 2012 and 2011 was relatively consistent at $4,153 and $4,553, respectively.

Liquidity and Capital Resources

At June 30, 2012, we had working capital of $3,498,029 as compared to working capital of $3,528,708 at March 31, 2012. We believe that we have sufficient liquidity to meet our needs for beyond the next twelve months.

During the three months ended June 30, 2012, net cash provided by operating activities was $46,492, predominately from a decrease in our accounts receivable of $150,172 offset by an operating loss of $118,557.

Cash flows from investing activities for the three months ended June 30, 2012 of $20,000 included $45,000 of proceeds received from collections of the note receivable offset by capital expenditures of $25,000.

Future minimum lease payments under non-cancelable operating leases and subleases, exclusive of future escalation charges, for the remainder of the fiscal year ending March 31, 2013 and fiscal years ending thereafter are as follows:

                               Operating
                                 Leases
2013                           $  127,000
2014                               73,000
2015                               47,000
2016                               51,000
2017                               52,000
Thereafter                         90,000
Total minimum lease payments   $  440,000

We are not aware of any pending or threatened legal action arising from the operations of our business that could have a material adverse effect on our consolidated financial condition or results of operations.

While we have not experienced any significant impact on our net revenues and profitability from the general slowdown of the economy or current global credit crisis, the continuing economic deterioration could have a negative impact in future periods.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.