8-K

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                             ----------------------

                                    FORM 8-K

                                 CURRENT REPORT

     PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                              ---------------------

                          DATE OF REPORT: MAY 17, 2005
                        (Date of earliest event reported)



                            INCENTRA SOLUTIONS, INC.
             (Exact name of Registrant as specified in its charter)


                                     NEVADA
                 (State or other jurisdiction of incorporation)



                333-16031                              86-0793960
          (Commission File No.)                     (I.R.S. Employer
                                                   Identification No.)



                                1140 PEARL STREET
                             BOULDER, COLORADO 80302
               (Address of principal executive offices; zip code)

                                 (303) 440-7930
              (Registrant's telephone number, including area code)

                                       N/A
          (Former Name or Former Address, if changed Since Last Report)

         Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):

         [ ] Written communications pursuant to Rule 425 under the Securities
             Act (17 CFR 230.425)

         [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
             (17 CFR 240.14a-12)

         [ ] Pre-commencement communications pursuant to Rule 14-2(b) under the
             Exchange Act (17 CFR 240.14d-2(b))

         [ ] Pre-commencement communications pursuant to Rule 13-4(e) under the
             Exchange Act (17 CFR 240.13e-4(c))



                        SECTION 2 - FINANCIAL INFORMATION

ITEM 2.02.    RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

         At 11:30 a.m. New York City time, on May 17, 2005, the registrant
hosted an investor conference call, broadcast live on the Internet at the
registrant's website, to discuss its results of operations for the three months
ended March 31, 2005. A transcript of the conference call is attached hereto as
Exhibit 99.1 and incorporated by reference herein.

                            SECTION 7 - REGULATION FD

ITEM 7.01.    REGULATION FD DISCLOSURE.

         The description of the registrant's investor conference call in Item
2.02 above is incorporated herein by reference.

                  SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS

ITEM 9.01     FINANCIAL STATEMENTS AND EXHIBITS.

(c)      Exhibits.

         Number   Documents
         ------   ---------

         99.1     Transcript of May 17, 2005 conference call.

         The information included in this Current Report on Form 8-K shall not
be deemed to be "filed" for the purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to
the liabilities of that Section, nor shall it be incorporated by reference into
a filing under the Securities Act of 1933, as amended, or the Exchange Act,
except as shall be expressly set forth by specific reference in such a filing.



                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.


                                              INCENTRA SOLUTIONS, INC.


Date: May 18, 2005                            By: /s/Thomas P. Sweeney III
                                                 -------------------------------
                                                  Thomas P. Sweeney III
                                                  Chief Executive Officer

EX-99.1

                                                                    EXHIBIT 99.1



                          TRANSCRIPT OF CONFERENCE CALL



INCENTRA SOLUTIONS, INCORPORATED
FIRST QUARTER 2005 RESULTS
MAY 17, 2005

OPERATOR:  Good  morning,  ladies and  gentlemen  and  welcome  to the  Incentra
Solutions First Quarter 2005 Results Conference.  At this time, all parties have
been  placed on a listen  only  mode and we will  open the  floor for  questions
following the presentation.

         At this time,  it is my  pleasure  to turn the floor over to your host,
Rene Caron of Allen & Caron. Please, go ahead, sir.

RENE CARON:  Thank you,  Autumn.  Good  morning and thank you for joining us for
Incentra  Solutions'  First  Quarter  Results  Conference  Call to  discuss  the
company's results for its first quarter ended March 31, 2005.

         Before we start  today's  call  there  are a few items I would  like to
cover with you.  First,  in addition to  disseminating  through PR Newswire this
morning,  today's news release  announcing the company's results  (inaudible) of
the  news  release  was  also  sent  to  a  large  number  of  conference   call
participants.  If any of you did not receive a copy of the news  release  please
call our California office at 949-474-4300  after the call and we will email you
a copy of the release.  Additionally,  a replay of the conference  call, will be
available  on the  internet  via a link  provided on the  investor's  section of
Incentra Solutions website at www.incentrasolutions.com.

         Finally, I've also been asked to make the following statement.  Certain
information  discussed on this morning's  conference call may constitute forward
looking  statements  within the  meaning of the  Private  Securities  Litigation
Reform  Act of 1995  and the  federal  securities  laws.  Although  the  company
believes that the expectations  reflected in such forward looking statements are
based upon reasonable assumptions at the time made it can give no assurance that
its  expectations  will be achieved.  Listeners are cautioned not to place undue
reliance on these forward looking  statements.  Forward  looking  statements are
inherently  subject  to  unpredictable  and  unanticipated   risks,  trends  and
uncertainties  such  as the  company's  inability  to  accurately  forecast  its
operating results, the company's potential inability to achieve profitability or
generate  positive  cash flow,  the  availability  of financing  and other risks
associated with the company's business. For further information on factors which
could impact the company and the statements  contained here in reference  should
be made to the company's  filings  within the  Securities & Exchange  Commission
including annual reports on Form 10-KSB,  quarterly reports on Form 10-QSB,  and
current  reports on Form 8-K.  The company  assumes no  obligation  to update or
supplement  forward looking  statements that become untrue because of subsequent
events.



         On the call the today  from  Incentra  Solutions  we have Tom  Sweeney,
Chairman  and CEO;  Paul  McKnight,  CFO;  and Mike  Knaisch,  President  of the
company's Front Porch Digital Broadcast and Media Services Division.  During the
call  management  will provide a review of the results and the company  strategy
for going forward,  after which there will be a question and answer period.  For
those  of you who are  participating  on the  call  via the web  cast  over  the
internet and who wish to submit a question to be considered for the question and
answer period,  you can do so by clicking on the ask a question  button provided
on the left  side of your  screen.  Please  submit  your  questions  as early as
possible. Questions from the internet will be taken as time permits.

         I'd now  like to turn  the  call  over  to Tom.  Good  morning  Tom and
congratulations on a great quarter.

TOM SWEENEY:  Thanks Rene.  Appreciate it.  Welcome  everybody and thank you for
joining us on the call.  As you know the company is  committed  to becoming  the
premier complete solutions  provider of IT products and services.  And I'm happy
to report that we've made great progress this past quarter in accomplishing  our
major goals,  and we have seen the early signs that our strategy is beginning to
pay  dividends.  First,  we completed the  acquisitions  of Star and PWI.  These
acquisitions are at the core of our efforts to further  penetrate the enterprise
market. Both companies have an outstanding base of enterprise  customers and are
staffed with an exceptional group of professionals.  Our integration  program is
underway and we're making steady progress  against all of our major  objectives.
We'll discuss this in more detail in a few minutes.

         Second,  our broadcast division continues to see increased ordering and
has had early success in selling our DIVAcomplete  solution with 2 new orders in
the first quarter.  In addition,  we've introduced a complete set of services to
the  broadcast  market with 2 new  products  aimed at the  mid-tier  and smaller
station  market  segments.  Mike Knaisch will provide a more detailed  review of
these accomplishments in a few minutes as well.

         Now I'd like to turn the  call  over to Paul  McKnight  to  review  the
financial performance of the company. Paul?

PAUL  MCKNIGHT:  Thank you,  Tom.  Good  morning.  I will now walk  through  the
company's  financial  performance for the first quarter.  We will do that up and
provide results  according to GAAP as well as on a pro forma basis. Now our GAAP
results  will  exclude the  results of the  businesses  prior to the  respective
acquisition dates. Accordingly,  the GAAP results will show significant increase
over the last year results.

         Now for the GAAP  numbers,  revenues  for the  quarter  were $6 million
which is a 150% increase over the prior year. Our gross margin was 2.9 million -
this is a 255%  increase over the prior year.  Our  operating  expenses were 4.9
million  - this is a 104%  increase  over the prior  year.  The net loss for the
period was $2.3 million  which was a 25% increase  over the loss last year.  The
EBITDA, on an adjusted basis was a loss of $8,000.



         Now, I'd like to provide the pro forma results. These pro forma results
will include all the results of the acquired  companies as if they were acquired
at the beginning of the period being presented. Our revenues for the period were
$16.5  million.  This  represents a 15% increase  over the prior year.  Now this
increase was due to the growth in third party product sales the continue  growth
in our  DIVArchive  sales,  and growth in the number of  terabytes  that we have
under management.

         Our gross margin for the period was 4.5 million.  As the  percentage of
revenue this  represented  27%. This is an 8% increase  over last year.  Now the
margin  percentage  was slightly  lower than expected due to the increase in our
third party product sales.

         Now for our operating expenses: It was 6.4 million in the quarter. This
was a 10% increase  over the prior year.  Now these  expenses were higher in the
quarter  due to the fees that we  incurred  that  were  related  to our  various
filings,  our  registration  statements  and other  merger  related  activities.
Otherwise, these costs were definitely in line with our expectations.

         The net  loss  for the  period  was  $2.4  million  which  was a slight
improvement  over the previous year of 2.5 million.  Now this loss did include a
$340,000 gain that  resulted  from the  revaluation  of our  derivative  warrant
liability.

         Now, our EBITDA on an adjusted  basis was $400,000 for the period.  Now
this EBITDA was ahead of our expectations. Let me define what an adjusted EBITDA
is.  First of all, it excludes  the  non-cash  stock  compensation  expense,  it
excludes the  amortization  and referral fees, and it also excludes the previous
owner's costs that were incurred in the acquired businesses prior to the closing
of the transaction.

         Our  cash  balance  at the end of the  period  was $2.2  million.  This
concludes the financial portion. And I'd to turn it back over to Tom.

TOM  SWEENEY:  Thanks,  Paul.  Now I'd  like to give you a brief  update  on our
integration  efforts to date. The company is at the beginning of its integration
plan and is already  accomplished  many of the key goals it has  established for
itself.  The introduction of first call support services has already been rolled
out to the sales  force  and as you may  recall,  first  call  support  is where
Incentra  takes the first call from  customers for  maintenance  for the various
products that it sells.  We've rolled it out for the sales force, we are signing
new contracts now at the higher gross margins;  we have approximately 60% of the
products we sell now covered  with first call  contracts  with our OEM's and are
working to  complete  the rest of the  product  line during the second and third
quarter.  This change will significantly  boost our gross margins on maintenance
contracts, and it will add to our recurring revenue streams as we go through the
year.

         Two, we have introduced our broader set of services  including one time
professional  services and recurring  services for  monitoring and management to
our  enterprise  division and we're already seeing  opportunities  appear in the
sales funnel.



         Third,  we've already  eliminated any of the redundant  expenses in our
newly  acquired  companies  and  have  moved  aggressively  to  consolidate  our
purchasing contracts to maximize our discounts.

         Lastly,  we're  preparing to roll out our enhanced  first call services
where we monitor the customer's  environment  real time and eliminate their need
to call us. This service leads to faster problem isolation and improved response
times and asset  availability for our customers.  This will be an industry first
and  we  plan  to  leverage  this  service  to  set  ourselves  apart  from  our
competitors.  We're pleased with the integration efforts to date but as you know
there  are  many  aspects  of an  integration  plan to  manage  and some are not
necessarily  directly  under our  control,  so we'll  continue  to keep our eyes
focused on it and try and accomplish everything that we have set out.

         Now,  I'd  like to make  sure  that we  cover a few  highlights  on the
enterprise and broadcast  divisions.  Mike Knaisch is going to do a quick update
on the broadcast business first.

MIKE KNAISCH:  Thanks,  Tom. As I indicated  during our conference call on March
30th, Front Porch closed a very strong first quarter of 2005. The company signed
nearly $4 million in new  contracts  for future  delivery and this total exceeds
our previous  quarterly high by more than $1 million.  Transactions  were closed
with major global broadcast brands such as Disney, MTV, Nickelodeon,  Discovery,
(inaudible)  and Sony Pictures,  as well as many leading  regional  broadcasters
throughout  Europe and Asia.  Two of these deals,  Discovery UK and  (inaudible)
were for DIVAcomplete solutions.  And as a reminder, with DIVAcomplete we supply
all of the archive management  software,  hardware  infrastructure,  and provide
first-call  support.  Both of these deals were worth  approximately $1 million a
piece will  achieve at least 50% margin  and  should  complete  delivery  in the
second quarter of this year.

         We're now aggressively  selling DIVAcomplete around the world and these
deals provide  evidence that those are partners and prospects  find the strategy
compelling.  The  second  quarter  launch  begins  in  earnest  at the  National
Association  of  Broadcaster's  Conference in Las Vegas last month.  This is the
first NAB show where Front Porch had a booth.  We released  DIVArchive 5.8 which
included  important  new  functionality  such as tighter  integration  with Avid
technology and other product  enhancements  intended to protect our  competitive
advantages.   We  launched  3  new  products    DIVAworks,   DIVAdirector,   and
DIVAmonitor.  There was a lot of  activity  at the  booth  and  there  were many
indications that the show was a success.  274 visitors  registered at our booth,
more than double what we achieved at the International  Broadcaster's Conference
in  Amsterdam  last  September.  171 of  those  registered  visitors  were  from
broadcasters  throughout the Americas and this traffic is an important indicator
of future demand in the Americas  which has been lacking  behind the activity in
the international markets.

         Our team  conducted  extensive  product  demonstrations  for  broadcast
networks in the US as well as many independent  stations.  Independent  stations
were drawn by our new products  DIVAworks and  DIVAdirector--a  bundled offering
that should  greatly  help us penetrate  the



large market for low-end broadcast archives.  International  prospects were also
very active, with over a 100 customers and prospects stopped by the booth.

         As we look to the  second  quarter  and  beyond we  believe we are well
positioned to achieve our annual plan. Overall our 6-month funnel remains strong
with  $12.5  million  in  opportunities  and more  than  half of them are in the
Americas.  We're  currently  competing  for at  least  8  opportunities  to sell
DIVAcomplete  solutions.  We are already  responding to a number of requests for
proposal  on both  DIVAworks  and  DIVAdirector,  and  we're  still  adding  new
opportunities as we follow up on leads from NAB.

         The  next big  event on our  marketing  calendar  is the  International
Broadcasters'  Conference in Amsterdam  this  September.  We'll have an expanded
booth presence there, again  demonstrating  DIVAcomplete,  as well our other new
products.  And given our dominance in the European  market we expect a very good
show.

         That's the update, Tom.

TOM  SWEENEY:  Thanks,  Mike.  Now a couple of  comments  about  the  Enterprise
Division and its results: the Enterprise group relies on strong repeat customers
from existing customers such as Washington Mutual,  Standard Insurance,  Xilinx,
Jack in the Box,  Elan  Pharmaceuticals  and  Holland  America to name a few. We
signed  new,  multi-year  managed  service  contracts  with  Recruit  Max,  Good
Technology,  TeleCity, Aon, and others, and we saw a significant increase in the
volume of terabytes under  management,  increasing by a hundred  terabytes since
the end of the year for customers such as DataReturn, Food Technology, Cable and
Wireless, Network Supply and SpyOS and others.

         Finally,  we've  conducted  a number of  customer  awareness  events to
introduce our broader set of capabilities to our Enterprise  clients and each of
these has been  well-attended with strong interest from our customers in regards
to complete solutions and managed services.

         We expect to see strictly  increasing sales of first-call  services and
corresponding  increases in our gross margins.  Product demand remains strong in
the marketplace although we do not expect the second quarter sales to be as high
as the first. We are gaining interest in our expanded  services and pursue those
opportunities vigorously.  Overall the sales funnel on the Enterprise side is at
more than $24  million;  however,  we believe the funnel  needs to go higher and
should with our demand  generation  programs and our hiring of additional  sales
professionals.  Now, on the reversed stock split that was announced  previously.
Our 14C has been mailed to existing shareholders; that went out yesterday, so we
expect the actual effective date of the reverse split to be around June 10.

         Finally,  in closing we had a solid first  quarter  across all measures
and pleased at the  progress  the company is making.  Our number one priority is
completing  our  integration  efforts,  and  continuing  to  recruit  and  train
additional sales professionals across the entire business.



         That's all for our comments  today.  Thank you for joining the call and
we will now open it up for questions.

OPERATOR:  Thank you.  At this time,  if you do have a  question,  you may press
star, one, on your keypad. If at any point, your question has been answered, you
may remove yourself from the queue by pressing pound.  Once again,  that's star,
one, to ask a question at this time. Please hold while I poll for all questions.

         Thank  you,  our first  question  is from Ron  Mischner  from M Capital
Management.

RON MISCHNER:  Good morning.

TOM SWEENEY:  Good morning, Ron.

RON MISCHNER: Three questions: number one, the line-up looking forward between 3
or 4 parts that you've got here sounds pretty  positive and so first question is
why-excuse-me-why will sales in the second quarter be less than the first?

TOM SWEENEY: Oh, yeah, so let me explain a little bit about the first quarter of
volume, Ron and an explanation on the second. And the first quarter had a couple
of large  transactions  that were about a million dollars.  Both of those are in
our funnel - we expected to close them.  One of them in  particular we closed on
the last day of the month and actually  shipped it the same day, and so that was
a  little  faster  than  we  had  originally  expected,   and  of  course  large
transactions tend to skew the numbers up a little bit. We certainly have a large
number of transactions  in the second  quarter.  In fact the company overall did
about four  hundred  transactions  in the  quarter  but we would be remiss if we
didn't  suggest that the product  volume is probably  going to be slightly  less
than in the second quarter than it was in the first.

RON  MISCHNER:  OK.  Between the parts,  first DIVA call,  third party  services
etcetera.  How would you  categorize  the growth going  forward?  Which ones are
going to be the strongest, etcetera?

TOM SWEENEY:  Yeah. So let me try and answer it this way. The broadcast business
is going  through a fairly  significant  growth rate right now, in terms of both
the archive sales of the primary  software  product as well as gaining  interest
for complete  solutions,  and as you know the complete  solutions as that pushes
up, it drives the revenue much higher and still has really  great gross  margin,
so we would like to see a doubling of the number of  archives  that we sold from
last year to this  year.  Last year we did about 43, we said this year we'd like
to do somewhere around 80. I know that we have got plenty of activity inside our
funnel from a broadcast  perspective  so we feel pretty good about that.  On the
Enterprise  side we want to  achieve  the same  growth as a  percentage  but the
broadcast  business  today in its pure form is only 20% of the  revenues  of the
company.  So, when you put the two together we still see pretty heavy growth.  I
think we had told  people at the end of last year,  I think when we did our call
in  March,  that  we  expected  somewhere  between  a  20  to  30%  growth  rate
year-over-year, all combined.



RON MISCHNER:  Right.  You're sticking with that then.

TOM  SWEENEY:  Yeah,  I  think  that's  still  pretty  good  guidance  from  our
perspective.

RON MISCHNER:  OK. And at this  juncture,  what would be your guidance for gross
margin goals.

TOM SWEENEY:  Well, we came in at 27% for the first quarter. That was lower then
we expected  because of higher product values and some of those bigger  business
deals carry lower margin percentages.  We would like to see the gross margins up
above 30%, and my product  volume mix is going to determine to some degree where
that  percentage  comes out. But, we would like to get it up over 30% as quickly
as possible but we may be able to do it in the second  quarter.  What I can tell
is that right now, if you compare the company to other  systems  integrators  or
solutions  providers  we're at the top of the class for gross margin  percentage
and we think we're low.

RON  MISCHNER:  OK. And you still  think that based on EBITDA  basis we'll break
even towards the second half?

TOM SWEENEY:  Yeah. Our guidance has been we'd like to be EBITDA positive by the
third quarter. The first quarter exceeded our expectations. We got a much better
EBITDA  performance  than we  expected,  primarily  because  we shipped a lot of
product and software.  The second  quarter,  we're expecting it to be neutral to
positive  and I think we're in good shape  overall for the year.  We feel pretty
confident about where the trends are.

RON MISCHNER:  OK.  Thank you.

TOM SWEENEY:  Yes.

OPERATOR:  And thank you at this time I would like to remind all participants to
ask a question you may press star, one, on your keypad.

         And now I would  like to turn the  floor  over the Rene  Caron  for any
questions via email.

TOM SWEENEY:  Rene, you may have your phone on mute.

RENE CARON:  I'm sorry Autumn,  I'd like to give it one more second to see if we
have any more questions  from the telephone  audience and if not we'll start the
email questions and answer period.

         OK. At this time,  we'll answer some questions we received via email. I
will remind  everyone  that many of the questions  we've  received may have been
already answered during the company's formal presentation or during the previous
question and answer  period.  So, if you submitted  questions  that have already
been answered we will not be repeating those questions.



         The first  question,  Tom,  comes from someone who is interested in the
Front Porch Digital Media and Broadcast  Services  division and the question is:
"How far  along are most  North  American  broadcasters  in their  migration  to
digital archiving systems,  and what does Incentra see as its key sales catalyst
in this market going forward?"

TOM SWEENEY:  Mike, I'd like you to answer that.

MIKE  KNAISCH:  Well,  as we've  said  before,  we know that the  Americas,  and
specifically  the US market,  is lagging behind both Europe and Asia in terms of
adoption  but we are  beginning  to see more  deliberate  activity  of the major
broadcasters,  major  networks  throughout the US as well the  independent  call
letter stations in the secondary and tertiary markets.  We're currently involved
in several  proposals to the major US networks and as I said we're also seeing a
lot of that activity from the independents.

         As for catalysts in this market, there are several that I've mentioned.
The first is the obsolescence of the analog systems that they have been used and
they wear out and must replace them with digital  systems as there are no analog
systems being produced anymore. The second catalyst would be the creation of new
television  channels  to  broadcast  more  content to more  audiences  and these
complex systems are much more easily managed in a digital operation.  Third, the
improvement of the US advertising  business,  the revenues  generated from that,
will fuel additional capitol investments and ultimately competitive pressure. As
major networks move into the digital world the remaining laggards will be forced
into that same mode. So those are the primary catalysts that I point to.

RENE CARON: Thank you, Mike. The next question is: "Are there other major market
opportunities  that the  company is  focusing  on apart from its  broadcast  and
enterprise businesses?"

TOM  SWEENEY:  Today,  the focus is truly on the  enterprise  and the  broadcast
based.  We may as we go forward  through this year and next year create  another
vertical  focus  either  inside  the  enterprise  segment or in looking at other
market  segments,  but today we have our hands full with both of those and we're
pretty happy with the opportunity we have in front of us so we're not planning a
major expansion or vertical expansion at this point.

RENE  CARON:  Thank you,  Tom.  Next  question  is: "Is the  company  adequately
capitalized to meet its current sales goals and its business plan?"

TOM SWEENEY: Well, we think the company is adequately capitalized. We would tell
you that you know having  enough money is a measure of where are you running and
where are you in relation to positive  cash flow. So we think we're on the right
track right now; we like the trends we've been  experiencing  and we think we're
going to get sustainable positive cash flow, you know, EBITDA from operations as
we get to the  third  quarter.  Our next  objective  is to get to free cash flow
where we're actually able to take care of any debt service that the company has.
Right now we think we are positioned well but, that's it.



RENE CARON:  OK. The next  question  has to do with the reverse  split,  which I
believe you had mentioned is anticipated to become  effective around the 10th of
June. And that question has to do is: "Are all shares including options, rewards
and such affected by the reverse split?"

TOM SWEENEY: Yes, and when we announce the 10 to 1 reverse. All of the shares of
the company: preferred shares, common, stock options, warrants, all of them will
be adjusted in a reverse and the strike prices will be increased accordingly. So
it was effective across all forms of capitol.

RENE CARON: OK, fine. The next question is somewhat related to the reverse split
but also  generally  related to the  company's  plans going  forward in order to
attract  additional  interest in the company's  shares to absorb any supply that
may come into the market in the future.

TOM  SWEENEY:  Well,  the company has had a fairly  vigorous  public  relations,
investor relations, program that it's been involved over the last few months. We
finished  meetings with folks in April.  We're  planning to go back to meet with
institutions  again in the  month of June and to follow up with them in terms of
our  performance  versus the  expectations.  We have seen  interest from a large
number of these institutions, many of them had provided commentary early on that
they  wanted  to see the  company  reverse  the  stock and  adjust  its  capitol
structure.  We have done  that and at the same time  we've  been  posting  solid
results, and so let's hope that the work that we've been doing with them getting
capital  structure  corrected,   and  the  results  themselves  will  put  those
institutions in a position where they will want to buy.

RENE CARON: OK. Tom, I think we also have at this point at least one or two more
telephone  questions  that have been  queued up, so Autumn,  I'd like to turn it
back to you and pick up any  questions  that may be coming in from the telephone
conference.

OPERATOR:  Thank you and I'd just like to make  another  reminder,  if you would
like to ask a question over the phone you may press star, one, on your keypad.

         And thank you, our next question is from Chris Moore of Bristol.

CHRIS  MOORE:  Good  morning.  I know it's  largely a function of the  projected
revenue  mix but you talked  about the next goal being  reaching  pre-cash  flow
positive. Roughly on a quarterly basis, what kind of levels are we talking about
- - is that in $17-17.5 million range - excuse me, on a quarterly basis.

TOM SWEENEY:  Ah, let's see here so well, good morning,  Chris, thanks for being
on the call.  In terms of where we need to be, to be pre-cash flow  positive,  I
think  that the number  has got to be higher  than 17.  I'm  looking at my Chief
Financial  Officer  right now.  My guess is that the number has got to closer to
the 18-20  range,  OK. OK, I think  that's  probably in line with what we expect
with the product mix.

CHRIS  MOORE:  Gotcha,  and one  other  question.  In terms  of the  maintenance
margins,  on some of the  revenue in  particular,  you talked  about that likely
expanding pretty rapidly over the next 12



months or so just from a kind of basis point perspective. What kind of expansion
are we talking about?

TOM SWEENEY:  Yeah, I'll actually give you some specifics  around it.  Generally
maintenance  contracts will have margins  associated  with them in the 10 to 12%
range.

CHRIS MOORE:  OK.

TOM SWEENEY:  Our new  contracts  with our  manufacturers  now have  maintenance
margins  that  are at 25%  and go as high  as 45%  based  on  volume,  so  we're
expecting a very, very significant change.

CHRIS MOORE:  Gotcha and that further expansion you'll feel later on this year?

TOM SWEENEY: Yeah, actually it started already. We've already started looking at
maintenance contracts right now at the higher discounts and generating recurring
revenues.  As I mentioned  we have about 60% of the  product  line  covered.  We
should have the majority of it finished up by the end of the second  quarter and
going into the third quarter,  so we're going to see those increased  margins as
we go forward during the year and we would expect to sign  somewhere  around $10
million  dollars of  maintenance  contracts  this year. So, we look at it as key
synergy that comes out of the acquisition plan.

CHRIS MOORE:  Sounds good, thanks.

TOM SWEENEY:  Thanks, Chris.

OPERATOR:  Thank you,  Mr.  Caron at this time,  there  appears to be no further
questions.

RENE CARON:  OK. At this point,  Tom, we'd like to turn the call back to you for
any closing remarks.

TOM SWEENEY: Well, I think we're all set. Thank you all again for joining in the
call if you came online. For those that are listening to the web cast either now
or later,  we certainly  appreciate  your interest as well. And as always myself
and the management team are available to meet with people to answer questions or
to provide more insight into the company's operations. Thank you.

OPERATOR:   Thank  you;  this  does  conclude  today's  teleconference.   Please
disconnect your line and have a great day.