10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended March 31, 2009

or

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

For the transition period from                      to                     

Commission file number: 0-14807

AMERICAN CLAIMS EVALUATION, INC.

(Exact name of registrant in its charter)

New York	11-2601199
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Jericho Plaza, Jericho, NY	11753
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (516) 938-8000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $.01	NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The aggregate market value of the registrant’s common stock held by non-affiliates was $763,047, based on the price at which the common stock was last sold on the NASDAQ Capital Market as of September 30, 2008.

The number of shares outstanding of the registrant’s common stock as of June 24, 2009 was 4,754,900.

DOCUMENTS INCORPORATED BY REFERENCE

None.

PART I

Note: As used in this Annual Report on Form 10-K, the terms “we,” “us,” “our,” “our Company” or any derivative thereof, shall mean American Claims Evaluation, Inc. and its subsidiary, Interactive Therapy Group Consultants, Inc.

Item 1. Business.

American Claims Evaluation, Inc. was incorporated in the State of New York and commenced operations in April 1982. Through March 31, 2008, we provided a full range of vocational rehabilitation and disability management services designed to maximize injured workers’ abilities in order to reintegrate them into their respective communities through our wholly owned subsidiary, RPM Rehabilitation & Associates, Inc. (“RPM”).

During the year ended March 31, 2008, we had entered into a non-binding letter of intent to sell all of the outstanding shares of stock of RPM. Accordingly, the results of RPM’s operations were classified as discontinued operations and except where specific discussions of RPM are made, all financial information presented in this Annual Report excludes RPM for all periods presented.

Subsequently, on September 12, 2008, we sold RPM for a purchase price of $150,000 in cash, plus an additional purchase price of up to $150,000 in cash contingent upon the future net earnings of RPM calculated over the five-year period after the closing of the transaction. Through March 31, 2009, no additional consideration has been earned.

On September 12, 2008, we acquired all of the issued and outstanding shares of Interactive Therapy Group Consultants, Inc. (“ITG”) for $570,000 in cash on the closing date of the transaction. As a result of subsequent purchase price adjustments and the return of funds from escrow, the resulting net purchase price was reduced to $174,632. We had been seeking an acquisition to transition into a new line of business. ITG possesses an opportunity to grow organically in its industry and through the potential for add-on acquisitions.

ITG provides a comprehensive range of services to children with developmental delays and disabilities in New York State and has developed a reputation for providing well-rounded therapeutic solutions. We work in individual or group settings, in home environments or in centers (such as day care or schools). With this acquisition, we now operate in the following three main areas of clinical services and program development:

• Early Intervention Programs — services to children from birth through two years of age.

• Preschool Programs — services to children from the ages of three to five years of age.

• School Staffing — services to school-age children.

Description of Services

Early Intervention (“EI”) Programs

Children with disabilities from birth to two years old are eligible for services under Part C of the Federal Individuals with Disabilities Education Act (“Part C”). Each state administers its Part C program as they see fit. Children in the EI program may be referred into the program by a parent, physician, day care worker or other qualified individual and receive a level of services appropriate to their disability or developmental delay. All resident children are entitled to a comprehensive evaluation that assesses their developmental levels. Children who meet the qualifying criteria for services are eligible for any or all of the following: speech-language pathology, physical therapy, occupational therapy, special instruction,

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vision therapy, social work and counseling. We contract with county governments throughout New York to evaluate and treat children in the EI system.

We offer the following EI services under contracts to various counties based on New York State Health Department approval:

• Core Evaluations: A team of providers evaluates a child in the following five developmental areas: physical, cognitive, communication, social-emotional, and adaptive behavior. If the child meets the qualifying criteria, then he/she is referred for direct services.

• Supplemental Evaluations: A specialized provider evaluates a child for a particular area of developmental need based on a referral. If the child meets the qualifying criteria, then he/she is referred for direct services.

• Home/Community Based Services: Direct EI services based on a child’s Individualized Family Service Plan (“IFSP”) are delivered by appropriately qualified personnel in the child’s natural environment. Services may include speech-language therapy, occupational therapy, physical therapy, special instruction and/or psychology services.

• Parent/Child Groups: Group EI services based on a child’s IFSP are delivered by appropriately qualified personnel in the child’s natural environment.

• Family Training: Parents and caregivers are taught about the child’s condition and assisted in embedding the child’s goals into everyday routines. Services are based on a child’s IFSP and are delivered by appropriately qualified personnel.

Preschool Programs:

Children with disabilities from three to five years old are eligible for services under the state’s education law. ITG is approved as a special education school under Section 4410 of the New York State Education Law (“NYSED”) to provide special education and related services. We contract with county governments to provide comprehensive Multi-Disciplinary Evaluations (“MDEs”) for school districts. Children who meet the qualifying criteria may receive on-going services including those provided by Special Education Itinerant Teachers (“SEIT”), speech-language pathologists, physical therapists, occupational therapists, and psychologists.

We offer the following preschool services under contracts with various counties based on NYSED approval:

• MDEs: A team of providers evaluates a child for any identified areas of concern upon referral from a school district. Every evaluation must include a psychological battery as well as a social history and may include any or all of the following: gross motor, fine motor, cognitive, communication, social-emotional, audiological, and adaptive behavior. If the child meets any of the qualifying criteria, then he/she is referred for direct services, which are decided at an Individualized Education Plan (“IEP”) meeting.

• Supplemental Evaluations: A specialized provider evaluates a child in a particular area of need based on a referral. If the child meets the qualifying criteria, then he/she is referred for direct services.

• Related Services: Direct services based on a child’s IEP are delivered by appropriately qualified personnel in a home or preschool setting. Services may include speech-language therapy, occupational therapy and/or physical therapy.

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• SEIT: An appropriately qualified special education teacher will supplement related services in the home or preschool setting. This is the only service that we provide on a tuition basis. All other services are provided on a fee-for-service basis.

School Staffing Programs:

School-age children with disabilities or delays may qualify for a host of special education and related services, which are the responsibility of the school district. Because these services are mandated, districts are required to provide them. When a district cannot provide the required service using their own personnel resources, they must contract with vendors to provide them. We contract with districts and individual schools needing to complement their resources to provide speech-language pathologists, physical therapists, occupational therapists, special education teachers, special education coordinators and psychologists. Our school staffing services range in scope from a few hours per week of a specific service to the outsourcing of an entire special education department/function, including coordination, compliance, and professional development services.

The Company had four customers that represented 19%, 15%, 14% and 11% of revenues for the year ended March 31, 2009.

Sales and Marketing

ITG’s President, our regional directors and our regional team leaders establish and maintain relationships with customers. To supplement their efforts, we use targeted marketing programs, including direct mail to our customer contacts and to members of professional organizations; public relations activities; participation in trade shows; newsletters and ongoing customer communication programs.

Competition

The market for our services is large, fragmented and highly competitive. We expect these characteristics to persist for the foreseeable future based on the following factors: the expected growth of this market, the increasing demand for highly skilled licensed professionals and the relatively low barriers to entry. Certain of our competitors are substantially larger, have greater financial resources and increased access to licensed professionals. However, with a relatively low market share in relation to the entire market for our services, we believe there is room to grow and capture additional market share.

Regulatory Matters

The services that we provide are subject to a variety of local, state and federal governmental regulations. The individuals that we utilize to provide our services are subject to licensing and certification requirements and regulations with respect to their respective professions and their interaction with children.

We are currently exploring alternatives to ITG’s corporate structure concerning non-compliance issues regarding the practice of certain licensed professions in the State of New York. If a change in professional practice structure is deemed necessary, we will take all appropriate measures to assure compliance on a timely basis. Revenues derived from services performed by these licensed professionals approximate 23% of total revenues for the year ended March 31, 2009.

In addition, our financial reporting, corporate governance , public disclosure and compliance practices are governed by laws, such as the Sarbanes-Oxley Act of 2002 (“SOX”) and rules and regulations issued by the Securities and Exchange Commission (“SEC”).

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Employees

As of March 31, 2009, we had 153 employees of which 68 were full-time and 85 were per diem. Of these full-time employees, we have two employees at our executive office in Jericho, New York and three employees at ITG’s headquarters in East Syracuse, New York. ITG employs 18 people in East Syracuse, New York, 13 in New York, New York, 19 in Rochester, New York and 13 in Amherst, New York.

To maintain good employee relations and to minimize employee turnover, we offer competitive pay and provide a full range of employee benefits. We believe that our relationship with all of our employees is generally good.

Item 1A. Risk Factors.

Forward-Looking Statements

This Form 10-K contains “forward-looking statements” including statements concerning the future of our industry, business strategy, continued acceptance of our services, market growth, and dependence on significant customers. These statements can be identified by the use of forward-looking terminology such as “may,” “expect,” “anticipate,” “estimate,” “continue,” or other similar words. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this Form 10-K. We are a “smaller reporting” company as defined by Regulation S-K and, as such, we are not required to provide the information contained in this Item pursuant to Regulation S-K. Accordingly, the risks described in this Form 10-K are not intended to be all-inclusive and are not the only risks that we face. Additional risks and uncertainties, not currently known to us or that do not currently appear to be material, may also materially adversely affect our business, financial condition and/or operating results in the future. The risk factors noted below and other factors noted throughout this Form 10-K could cause our actual financial condition or results to differ significantly from those contained in any forward-looking statement.

We may not be able to comply with all applicable government regulations.

Legislation has been introduced in the New York State Senate to amend the New York Education Law in relation to the practice of licensed professionals by EI companies and their employees and to repeal certain provisions of such related law thereto which currently prohibit corporate practice of certain licensed professions. Currently, most EI providers in New York State, including our Company, are not in compliance with the existing laws governing the practice of these licensed professions. This pending legislation attempts to reconcile conflicting provisions of the New York Education Law and New York Public Health Law which contemplates that EI companies be organized to provide a full range of EI program services. We cannot assure that such pending legislation will be enacted into law and that we will be in substantial compliance with current laws and regulations.

We also cannot assure that we will be able to comply with any future laws and regulations. To the extent that new regulations are adopted, we will be required to conform our activities in order to comply with such regulations. Failure to comply with applicable laws and regulations could subject us to civil remedies, including fines, injunctions, as well as potential criminal sanctions, which could have a material adverse effect on its business, operations and finances.

The industry in which we operate is highly competitive and has relatively low barriers to entry. Increased competition could result in margin erosion and loss of market share.

Our competitors include professional firms, privately held companies, schools and not-for-profit organizations and associations. Many of our existing competitors have greater financial resources, larger market share, broader and more diverse professional staffs and/or lower cost structures than we do -

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which may enable them to establish a stronger competitive position than we have. If we fail to address competitive developments quickly and effectively, it may affect our ability to maintain our current market share and/or to expand our business.

We are dependent on our professional staff and we need to hire and retain skilled personnel to sustain and grow our business.

Our success in recruiting and hiring large numbers of highly-skilled, licensed or otherwise authorized individuals to offer the multi-disciplinary services required is critical to providing high quality services. We cannot assure you we will be able to attract and retain the personnel necessary for the continuing growth of our business. Our inability to attract and retain qualified personnel could materially adversely affect our ability to maintain and grow our business significantly.

Our growth strategy assumes that we will make targeted strategic acquisitions.

A key feature of our growth strategy is strategic acquisitions. We may not be able to maintain our current rate of growth. If we fail to execute on this strategy, our revenues may not increase and our ability to achieve and sustain profitability will be impaired.

An acquisition strategy is inherently risky. Some of the risks we may face in connection with acquisitions include: identifying appropriate targets; obtaining necessary financing in an efficient and timely fashion; negotiating terms that we believe are reasonable; integrating the operations, technologies, products and personnel of the acquired entities; and maintaining our focus on our existing business.

We may not be able to identify any appropriate targets or acquire them on reasonable terms. Even if we make strategic acquisitions, we cannot assure investors that our future acquisitions will be successful and will not adversely affect our business, results of operations or financial condition.

We may not be able to achieve or maintain profitability.

We have incurred continuing operating losses and may not be able to achieve or maintain profitability on a quarterly or annual basis. Our ability to achieve or maintain profitability depends on a number of factors, including our ability to: grow our business through new contracts and market penetration, attract and hire additional licensed professionals, improve our operating margins and consummate one or more additional acquisitions.

Our business is subject to the risk of customer concentration.

Our revenue is concentrated within a limited number of clients throughout New York State; municipalities within New York State provide substantial and significant revenue. The continuation and renewal of our contracts are, among other things, contingent upon the availability of adequate Federal pass-through funding from the U.S. government. The loss or significant reduction in government funding as a result of current constraints on the U.S. budget could result in a material decrease in our revenues, earnings and cash flows. This concentration of customers may also impact our overall exposure to credit risk, either positively or negatively, in that our customers may be similarly affected by changes in economic or other conditions in New York State.

Additionally, since most of our revenue is generated under our contracts with municipalities within New York State, the non-renewal of any contracts or non-payment or significant delay in payment of invoices by any or all of such clients would likely have a material adverse effect upon our business.

The Company had four customers that represented 19%, 15%, 14% and 11% of revenues for the year ended March 31, 2009.

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Our operating results are materially impacted by the seasonality of our business.

Our business is impacted by seasonality with respect to the school year. We anticipate that our revenue will be at its lowest in the second quarter of our fiscal year (which include the months of July and August) when schools are traditionally not in session. During this period, we are faced with paying salaries for full time staff that will be under-utilized. In addition, the timing of family vacations during the summer months also complicates the scheduling of services for EI services and for preschool children. As such, we recognize that the results of operations for the second quarterly period of our fiscal year may not be indicative of the results for any other quarter or for the full year.

Our investment in recorded goodwill resulting from our acquisition could be impaired as a result of future business conditions, requiring us to record substantial write-downs that would reduce our operating income.

We have goodwill and intangible assets of $750,000 recorded on our balance sheet as of March 31, 2009. We will evaluate the recoverability of recorded goodwill annually, or when evidence of potential impairment exists. The annual impairment test is based on several factors requiring judgment. Changes in our operating performance or business conditions, in general, could result in an impairment of goodwill which could be material to our results of operations.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential shareholders could lose confidence in our financial reporting, which could harm our business and the trading price of our shares.

As of March 31, 2009, based on current requirements and our public float, we were not required to comply with the requirements of Section 404 of SOX (“SOX 404”) which require our independent auditors to opine on the effectiveness of our internal controls over financial reporting. Under current law, and our current public float, we expect to be subject to this requirement for our fiscal year ending March 31, 2010. If we fail to correct any deficiencies in the design or operating effectiveness of internal controls over financial reporting or fail to prevent fraud, current and potential shareholders could lose confidence in our financial reporting, which could harm our business and adversely impact the trading price of our common stock.

Our common stock could be delisted from the NASDAQ Capital Market.

Recently, the price of our common stock, par value $.01 (the “Shares”), has been trading below $1.00 per share. If the price of our Shares declines below $1.00 per share for 30 consecutive trading days, we may fail to meet NASDAQ’s maintenance criteria, which may result in the delisting of our Shares from the NASDAQ Capital Market. NASDAQ has recently announced that it is suspending its $1.00 minimum closing bid price rule until July 20, 2009.

In the event of such delisting, trading, if any, in our Shares may then continue to be conducted in the non-NASDAQ over-the-counter market in what are commonly referred to as the electronic bulletin board and the ''pink sheets.’’ As a result, an investor may find it more difficult to dispose of or obtain accurate quotations as to the market value of our Shares. In addition, we would be subject to a rule promulgated by the SEC that, if we fail to meet criteria set forth in such rule, imposes various requirements on broker-dealers who sell securities governed by the rule to persons other than established customers and accredited investors. For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transactions prior to the sale. Consequently, the rule may have a material adverse effect on the ability of broker-dealers to

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sell our securities, which may materially affect the ability of shareholders to sell our securities in the secondary market.

A delisting from the NASDAQ Capital Market will also make us ineligible to use Form S-3 to register a future sale of our Shares or to register the resale of our securities with the SEC, thereby making it more difficult and expensive for us to register our Shares or other securities and raise additional capital.

The price of our Shares has reflected a great deal of volatility, including a significant decrease over the past few years. The volatility may mean that, at times, our stockholders may be unable to resell their Shares at or above the price at which they acquired them.

From April 1, 2007 to March 31, 2009, the price per share of our Shares has ranged from a high of $2.23 to a low of $0.23. The price of our Shares has been, and may continue to be, highly volatile and subject to wide fluctuations. The market value of our Shares has declined in the past, in part, due to our operating performance. In the future, broad market and industry factors may decrease the market price of our Shares, regardless of our actual operating performance. Recent declines in the market price of our Shares and in broad capital markets could affect our access to capital. As a result of any such declines, many shareholders have been or may become unable to resell their Shares at or above the price at which they acquired them.

Changes to financial accounting standards may affect our reported results of operations.

We prepare our financial statements to conform to United States generally accepted accounting principles (“GAAP”). GAAP is subject to interpretation by the American Institute of Certified Public Accountants, the SEC and various bodies formed to interpret and create appropriate accounting policies. A change in those policies can have a significant effect on our reported results and may even affect our reporting of transactions that were completed before a change is announced. Accounting rules affecting many aspects of our business, including rules relating to accounting for acquisitions, asset impairments, revenue recognition, and stock option grants, have recently been revised or are currently under review. Changes to those rules or current interpretation of those rules may have a material adverse effect on our reported financial results or on the way we conduct our business.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

Our executive offices are located in Jericho, New York where we lease office space under a seven-year non-cancelable operating sublease with American Para Professional Systems, Inc. (“APPS”), an entity under the control of our Company’s Chairman of the Board, which expires on November 30, 2011. Basic rent under the sublease has been established as a pass-through with our cost being fixed at a cost equal to the pro-rated rent payable for the subleased space by APPS to the building’s landlord.

ITG leases regional operating offices in the following cities in New York: East Syracuse, New York City, Rochester and Amherst. The terms of these leases range from two to five years.

We believe that, in general, our existing facilities are adequate to meet our present needs. We believe that if we were unable to renew a lease on any of our facilities, we could find alternative space at competitive market rates and relocate our operations to such new location without any disruption to our business.

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Item 3. Legal Proceedings.

We are not engaged in any litigation.

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security holders during the fourth quarter of the year ended March 31, 2009.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our Shares trades on the NASDAQ Capital Market under the symbol “AMCE”.

The following table sets forth the range of high and low sales prices for our Shares for each quarter during the period April 1, 2007 through March 31, 2009:

	High		Low
Fiscal 2008:
Quarter ended June 30, 2007	$	2.23	$	1.63
Quarter ended September 30, 2007	$	1.94	$	0.85
Quarter ended December 31, 2007	$	1.64	$	0.76
Quarter ended March 31, 2008	$	0.93	$	0.62
Fiscal 2009:
Quarter ended June 30, 2008	$	1.69	$	0.77
Quarter ended September 30, 2008	$	1.35	$	0.65
Quarter ended December 31, 2008	$	1.00	$	0.29
Quarter ended March 31, 2009	$	1.00	$	0.23

The number of holders of our Shares was approximately 426 on June 24, 2009, computed by the number of record holders, inclusive of holders for whom Shares are being held in the name of brokerage houses and clearing agencies.

Dividends

We have never paid a cash dividend and do not presently anticipate doing so in the foreseeable future, but expect to retain earnings, if any, for use in our business.

Recent Sales of Unregistered Securities

None.

Use of Proceeds

Not applicable.

Company Purchases of its Equity Securities

During the year ended March 31, 2009, we purchased 6,900 Shares for an aggregate price of for an aggregate purchase price of $5,432 in private transactions.

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Item 6. Selected Financial Data.

We are a “smaller reporting company” as defined by Regulation S-K and, as such, we are not required to provide the information contained in this item pursuant to Regulation S-K.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

Critical Accounting Policies and Estimates

We make estimates and assumptions in the preparation of our consolidated financial statements in conformity with GAAP. We evaluate these estimates on an ongoing basis. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of our assets and liabilities. Actual results may differ significantly from those estimates under different assumptions and conditions. (See Forward-Looking Statements in Item 1A). We consider the following accounting policies to be the most critical due to the estimation process involved in each.

Allowance for Doubtful Accounts

We monitor collections and payments and maintain an allowance for doubtful accounts based upon our understanding of ITG’s historical experience and any specific collection issues that we have identified. While such credit losses have been within our expectations and the allowances established, we cannot guarantee that we will continue to experience the same credit loss rates that were experienced in the past. Measurement of such losses requires consideration of historical loss experience, including the need to adjust for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates and the financial health of various governmental entities. Changes to the estimated allowance for doubtful accounts could be material to our results of operations and financial condition.

Accounting for Stock-Based Compensation

We have used and expect to continue to use the Black-Scholes option pricing model to compute the estimated fair value of stock-based awards. The Black-Scholes option pricing model includes assumptions regarding dividend yields, expected volatility, expected option term and risk-free interest rates. The assumptions used in computing the fair value of stock-based awards reflect our best estimates, but involve uncertainties relating to market and other conditions, many of which are outside of our control. We estimate expected volatility by considering the historical volatility of our stock and our expectations of volatility for the expected term of stock-based compensation awards. As a result, if other assumptions or estimates had been used for options granted, stock-based compensation expense that was recorded could have been materially different. Furthermore, if different assumptions are used in future periods, stock-based compensation expense could be materially impacted in the future.

Impairment of Goodwill

As of March 31, 2009, our goodwill totaled $750,000. We will perform an assessment of goodwill at least annually for impairment and any such impairment will be recognized in the period identified. In assessing the recoverability of goodwill and other intangibles, we must make various assumptions regarding estimated future cash flows and other factors in determining the fair values of the respective assets. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for these assets in future periods. Any such resulting impairment charges could be material to our results of operations.

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Results of Operations

During the year ended March 31, 2008, we entered into a non-binding letter of intent to sell all of the outstanding shares of stock of RPM. Accordingly, the results of operations of RPM were classified as discontinued operations and except where specific discussions of RPM are made, all financial information presented in this Annual Report excludes RPM for all periods presented.

On September 12, 2008, we closed on the sale of RPM for a sales price of $150,000 in cash, plus additional proceeds up to $150,000 in cash contingent upon the future net earnings of RPM calculated over the five-year period after the closing of the transaction. Through March 31, 2009, no additional consideration has been earned. As a result of the sale of RPM, the Company recorded a gain of $90,513 during the year ended March 31, 2009.

On September 12, 2008, we acquired all of the issued and outstanding shares of ITG for $570,000 in cash on the closing date of the transaction. As a result of subsequent purchase price adjustments and the return of funds from escrow, the resulting net purchase price was $174,632. ITG provides a comprehensive range of services to children with developmental delays and disabilities. We had been seeking an acquisition to transition into a new line of business. ITG possesses an opportunity to grow organically in its industry and through the potential for add-on acquisitions.

During the period from September 13, 2008 to March 31, 2009, we recognized revenues of $3,320,926 generated by ITG. Costs of services for this period were $2,321,431, approximately 69.9% of revenue, consisting of payroll and payroll related costs paid to our staff of salaried and per diem clinicians.

Selling, general and administrative expenses for the year ended March 31, 2009 (“Fiscal 2009”) increased to $1,804,312 from $990,113 for the year ended March 31, 2008 (“Fiscal 2008”) as a result of expenses incurred by ITG’s operations. Excluding ITG’s expenses, corporate selling, general and administrative expenses for Fiscal 2009 decreased approximately $233,104 from Fiscal 2008. During Fiscal 2009, we recorded stock-based compensation expense of $21,100 in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) Statement No. 123R (revised 2004), Share-Based Payment (“SFAS 123R”) for stock options granted during the period. By comparison, stock-based compensation expense of $285,000 was recorded during Fiscal 2008.

Interest income was $115,296 and $331,027 during Fiscal 2009 and Fiscal 2008, respectively. Interest income declined dramatically in Fiscal 2009 as a result of the decrease in cash due to the acquisition of ITG and the payment of ITG’s outstanding bank debt subsequent to the acquisition as well as declining interest rates.

We acquired ITG for $570,000 in cash on September 12, 2008. Under the terms of the purchase agreement, the purchase price was subject to adjustment based on the final determination of the tangible net worth of ITG on the closing date of the acquisition (the “Final Calculation”). Based on the Final Calculation, the purchase price was reduced by $374,785. Of this amount, $170,715 was repaid by the former ITG shareholders subsequent to March 31, 2009. Since the collectability of the remaining balance is in question, we recorded a reserve of $204,070 for this uncollectible balance in Other Income/(Expense) in the Consolidated Statements of Operations during the fourth quarter of Fiscal 2009. We will continually monitor the collectability of this receivable.

We evaluate the realizability of the deferred tax assets and the need for additional valuation allowances quarterly. We believe it is more likely than not that the deferred tax assets will not be realized. As of March 31, 2009, we had net operating loss carryforwards of approximately $3,289,000 which will be available to reduce future taxable income which expire in various years ending through March 31, 2029.

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Liquidity and Capital Resources

Our unrestricted cash and cash equivalents totaled $4,143,445 at March 31, 2009. On September 12, 2008, we purchased ITG using a portion of our existing cash and cash equivalents for a purchase price of $570,000. Subsequent to the acquisition date, we paid off ITG’s line of credit and a term note payable totaling approximately $1,105,000, including interest.

Our primary source of cash is existing cash resources. At March 31, 2009, we had working capital of $4,559,015 as compared to working capital of $6,226,063 at March 31, 2008. We believe that we have sufficient cash resources and working capital to meet our present cash requirements.

During Fiscal 2009, net cash used in operating activities of continuing operations was $566,716, primarily due to our operating loss from continuing operations of $895,617, offset by a provision for an uncollectible receivable of $204,070 and depreciation and amortization of $73,923.

During Fiscal 2009, we used $432,229 in our investing activities, which consisted primarily of $570,000 of cash used to acquire ITG offset by $149,391 representing the proceeds from the sale of RPM.

Our financing activities in Fiscal 2009 used a total of $1,122,039 which was comprised of $1,105,000 to pay down ITG’s bank debt and $11,251 for payments of our capital lease obligations. We also used $5,432 in Fiscal 2009 to repurchase 6,900 Shares in private transactions.

On September 13, 2008, the President of ITG, entered into a two-year employment agreement with ITG. He is entitled to receive an annual base salary of $200,000 and is entitled to certain other benefits. The employment agreement contains non-competition, non-solicitation and confidentiality provisions.

We are currently exploring alternatives to ITG’s corporate structure concerning non-compliance issues regarding the practice of certain licensed professions in the State of New York. If a change in professional practice structure is deemed necessary, we will take all appropriate measures to assure compliance on a timely basis. Revenues derived from services performed by these licensed professionals approximate 23% of total revenues during Fiscal 2009.

Future minimum lease payments under non-cancelable capital and operating leases and subleases, exclusive of future escalation charges, are as follows:

	Capital			Operating
	Leases			Leases
2010	$	21,523		$	202,000
2011		21,523			135,000
2012		8,004			84,000
2013		—			55,000
2014		—			5,000
Total minimum lease payments		51,050		$	481,000
Less: Amounts representing interest		(5,453	)
Present value of minimum lease payments		45,597
Less: Current portion		(18,051	)
Long-term portion of capital leases	$	27,546

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

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We continue to review strategic alternatives for maximizing shareholder value. Potential acquisitions will be evaluated based on their respective merits. We believe that we have sufficient cash resources and working capital to meet our capital resource requirements for the foreseeable future.

Credit Risk

Service revenue is concentrated within a limited number of clients throughout New York State; municipalities within New York State provide substantial and significant revenue to our Company. This concentration of customers may impact our overall exposure to credit risk, either positively or negatively, in that our customers may be similarly affected by changes in economic or other conditions in New York State.

Seasonality

Our business is moderately seasonal in nature based on the timing of the school year. Accordingly, our second fiscal quarter, which includes two full months during which schools are not in session (July and August), is the quarter in which we will achieve our lowest volume of revenues.

Interest Rate Risk

Interest rate risk represents the potential loss from adverse changes in market interest rates. As we may hold U.S. Treasury securities or money market funds, we may be exposed to interest rate risk arising from changes in the level and volatility of interest rates and in the shape of the yield curve.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Recently Issued Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141R, “Business Combinations” (“SFAS 141R”), which changes how business acquisitions are accounted. SFAS 141R requires the acquiring entity in a business combination to recognize all the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. Certain provisions of this standard will, among other things, impact the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration); exclude transaction costs from acquisition accounting; and change accounting practices for acquired contingencies, acquisition-related restructuring costs, in-process research and development, indemnification assets, and tax benefits. SFAS 141R is effective for business combinations occurring after December 15, 2008. The adoption of this standard did not have a material effect on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160”), which requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and noncontrolling interest. SFAS 160 is effective for fiscal years beginning on or after December 15, 2008. The adoption of this standard did not have a material effect on our consolidated financial statements.

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In October 2008, the FASB issued FSP FAS No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP FAS 157-3”) with an immediate effective date, including prior periods for which financial statements have not been issued. FSP FAS 157-3 clarifies the application of fair value in inactive markets and allows for the use of management’s internal assumptions about future cash flows with appropriately risk-adjusted discount rates when relevant observable market data does not exist. The objective of FSP FAS 157-3 has not changed and continues to be the determination of the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date. The adoption of FSP FAS 157-3 did not have a material effect on our consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

We are a “smaller reporting company” as defined by Regulation S-K and, as such, are not required to provide the information contained in this item pursuant to Regulation S-K.

Item 8. Financial Statements and Supplementary Data.

The financial statements required by this Item are set forth at the pages indicated in Item 13 on page 22 of this Annual Report.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A(T). Controls and Procedures.

a). Disclosure Controls and Procedures.

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)) that are designed to assure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

As required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this Annual Report, under the supervision and with the participation of our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of that date.

b). Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, the principal executive officer and principal financial officer, and effected by the board of directors and management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP including those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures

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are being made only in accordance with authorizations of management and the directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.

Management conducted an evaluation of the effectiveness of the internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that internal control over financial reporting was effective as of March 31, 2009.

Management is aware, however, that there is a lack of segregation of duties due to the small number of employees dealing with general administrative and financial matters. However, management has concluded that considering the employees involved and the control procedures in place, the risks associated with such lack of segregation are insignificant and the potential benefits of adding employees to clearly segregate duties do not justify the expenses associated with such increases.

This Annual Report does not include an attestation report of our current independent registered public accounting firm regarding internal control over financial reporting.

c). Changes in Internal Control over Financial Reporting.

There were no changes in our internal control over financial reporting that occurred during the fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the internal control over financial reporting. We have excluded from this assessment the internal control over financial reporting of ITG, which we acquired in September 2008. The total net assets and net revenue of ITG represented $1.4 million and $3.3 million, respectively, of the total consolidated total assets and net revenues for the year ended March 31, 2009.

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The executive officers and directors of our Company are as follows:

Name	Age		Position(s) with the Company
Gary Gelman		62	Chairman of the Board, President and Chief Executive Officer
Gary J. Knauer		49	Chief Financial Officer, Treasurer and Secretary
Edward M. Elkin, M.D.		70	Director
Peter Gutmann		80	Director
Joseph Looney		51	Director

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Gary Gelman, the founder of our Company, has been Chairman of the Board since July 1, 1985 and President, Chief Executive Officer and a director since inception. Mr. Gelman served as Treasurer from inception to October 1991. Since 1973, Mr. Gelman has also been Chief Executive Officer and a principal of American Para Professional Systems, Inc. (“APPS”), which provides nurses who perform physical examinations of applicants for life and/or health insurance for insurance companies. He received a B.A. from Queens College, City University of New York.

Gary J. Knauer joined our Company as its Controller in July 1991 and has served as Chief Financial Officer and Treasurer since October 1991 and as Secretary since March 1993. Before joining the Company, he was employed from October 1984 to June 1991 by the accounting firm of KPMG LLP. He is a Certified Public Accountant and holds a B.S. from the State University of New York at Binghamton. Since February 1994, Mr. Knauer also has served as Chief Financial Officer of APPS.

Edward M. Elkin, M.D. has been a director of our Company since July 1, 1985. He is currently a health program consultant. Previously, Dr. Elkin had been performing services relating to utilization review and quality assurance in hospitals for the New York State Department of Health. He is certified by the American Board of Pediatrics and the American Board of Quality Assurance and Utilization Review Physicians. He received his B.A. from Harvard College and his M.D. from New York University School of Medicine.

Peter Gutmann has been a director of our Company since July 1, 1985. For more than the past twenty years, he has been a Professor of Economics and Finance at Baruch College, City University of New York and was Chairman of the Economics and Finance Department from 1971 to 1977. He received a B.A. from Williams College, a B.S. from Massachusetts Institute of Technology, an M.A. from Columbia University and a PhD. from Harvard University.

Joseph Looney has been a director of our Company since June 14, 2005. He is currently the Vice President — Finance for NBTY, Inc., a vertically integrated manufacturer and distributor of vitamins and nutritional supplements. He was the Chief Financial Officer of EVCI Career College Holding Corp. from October 2005 to May 2006. Previously, he had been the Chief Financial Officer and Secretary of Astrex, Inc., a distributor of electronic components, since 2002. From 1996-2002, he was the Chief Financial Officer, V.P. of Finance and Assistant Secretary of Manchester Technologies, Inc., a network integrator and reseller of computer products. From 1984 to1996, he was employed by the accounting firm of KPMG LLP. He is a Certified Public Accountant and has a B.A. from Queens College, City University of New York and an M.S. from Long Island University. Since 1996, Mr. Looney has also been an Adjunct Professor of Accounting and Business Law at Hofstra University.

The directors are elected at the Annual Meeting of Shareholders and hold office until the next Annual Meeting of Shareholders and until their respective successors have been elected and qualified or until their prior death, resignation or removal. Executive officers are elected annually by, and serve at the discretion of, the Board of Directors (the “Board”).

We have a separately-designated standing audit committee established in accordance with section 3(a)(58)(A) of the Exchange Act. Messrs. Elkin, Gutmann and Looney are the members of the Audit Committee. The Board has determined that Mr. Looney is (i) the “audit committee financial expert”, as defined in regulations adopted pursuant to SOX and (ii) “independent” in accordance with rules promulgated under the Exchange Act.

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Code of Ethics

We adopted a Code of Ethics (the “Code of Ethics”) that applies to our Chief Executive Officer, Chief Financial Officer, directors and employees. Any amendments or waivers to the Code of Ethics will be promptly disclosed as required by applicable laws, rules and regulations of the SEC. The Code of Ethics was filed as an exhibit to our Annual Report on Form 10-KSB for the fiscal year ended March 31, 2004.

Section 16(a) Beneficial Ownership Reporting Compliance

Under Federal securities laws, our directors, executive officers and any person holding more than 10% of our Shares are required to report their ownership of our Shares and any changes in that ownership to the SEC on the SEC’s Forms 3, 4 and 5. Based on our review of the copies of such forms we have received, we believe that all officers, directors and owners of greater than 10% of our Company’s equity securities complied on a timely basis with all filing requirements applicable to them with respect to transactions during Fiscal 2009.

Item 11. Executive Compensation.

The following table sets forth all compensation paid or accrued to our Chief Executive Officer (principal executive officer) and Chief Financial Officer (collectively, the “Named Executive Officers”) for each of our last two fiscal years:

SUMMARY COMPENSATION TABLE

	Fiscal						Option		All Other
Name and	Year Ended						Awards		Compensation
Principal Position	March 31,		Salary		Bonus		(1)		(2)		Total
Gary Gelman		2009	$	244,311		—		—	$	12,020	$	256,331
Chairman,		2008	$	244,311		—	$	285,000	$	11,542	$	540,853
President and CEO
Gary J. Knauer		2009	$	156,008		—	$	15,600	$	7,541	$	179,149
Treasurer,		2008	$	144,917		—		—	$	7,203	$	152,120
Secretary and CFO

(1)

Represents the compensation costs of stock option awards for financial reporting purposes for the fiscal year under SFAS 123R, rather than an amount paid to or realized by the Named Executive Officer. See Note 7 of the Notes to Consolidated Financial Statements for a discussion of the assumptions used in calculating the aggregate grant date fair value computed in accordance with SFAS 123R. There can be no assurance that the SFAS 123R amounts will ever be realized.

(2)

The amounts shown in All Other Compensation include our incremental cost for the provision to the Named Executive Officers of certain specified perquisites as follows:

	Fiscal		Personal Use		401(k)
	Year Ended		of Company		Matching
Named Executive Officer	March 31,		Automobile		Contributions		Total
Gary Gelman		2009	$	8,259	$	3,761	$	12,020
		2008	$	8,167	$	3,375	$	11,542
Gary J. Knauer		2009	$	5,150	$	2,391	$	7,541
		2008	$	4,980	$	2,223	$	7,203

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Employment Agreements

Mr. Gelman’s employment agreement with our Company provides for him to be employed as Chairman of the Board and Chief Executive Officer at an annual salary of $238,800, plus sick and vacation pay of approximately $6,000. In addition, Mr. Gelman is entitled to participate in all employee benefit programs and other policies and programs of our Company. Mr. Gelman is not required to devote any specific number of hours to the business of our Company. He is subject to a non-competition and non-disclosure covenant for a period of two years following termination of employment with us.

Compensation Plans

The following describes plans adopted by our Company pursuant to which cash or non-cash compensation was paid or distributed during the years ended March 31, 2009 and 2008 or pursuant to which such compensation may be distributed in the future to the Named Executive Officers:

401(k) Profit Sharing Plans

We currently maintain two 401(k) plans which cover all employees having reached the age of 21 with one or more years of service. Under the terms of these plans, there are vesting requirements with respect to our contributions, but employees are fully vested in their own salary deferral contributions. We do not provide for any other retirement benefit for any of our employees, including executive officers.

Stock Option Plans

In July 1985, our Company’s Board adopted the 1985 Stock Option Plan (the “1985 Plan”). The 1985 Plan had previously expired, except as to options outstanding. During the year ended March 31, 2009, these options expired on their respective expiration dates.

On May 7, 1997, the Board adopted the 1997 Incentive Stock Option Plan (the “1997 Plan”) covering 750,000 Shares. Our shareholders ratified and approved the 1997 Plan in September 1997. There are no remaining options available for grant under the 1997 Plan. The 1997 Plan has expired, except as to options outstanding (consisting of options to purchase 395,000 Shares at March 31, 2009).

On August 25, 2000, the Board adopted the 2000 Incentive Stock Plan (the “2000 Plan”). Our shareholders ratified and approved the 2000 Plan in October 2000. The 2000 Plan permits the granting of options to purchase 750,000 Shares. At March 31, 2009, options to purchase 141,000 Shares were outstanding under the 2000 Plan.

On June 14, 2005, the Board adopted the 2005 Stock Incentive Plan (the “2005 Plan”) covering 1,000,000 Shares. Our Company’s shareholders ratified and approved the 2005 Plan in October 2005. At March 31, 2009, options to purchase 710,000 Shares were outstanding under the 2005 Plan.

On June 20, 2007, the Board adopted the 2007 Stock Incentive Plan (the “2007 Plan”) covering 1,000,000 Shares. Our shareholders ratified and approved the 2007 Plan in October 2007.

At March 31, 2009, options to purchase 1,000,000, 290,000 and 9,000 Shares were available for grant under the 2007 Plan, 2005 Plan and 2000 Plan, respectively.

Under the 2000 Plan, 2005 Plan and the 2007 Plan, either incentive stock options or nonstatutory options may be granted as an incentive to key employees (including directors and officers who are key

18

employees), non-employee directors, independent contractors and consultants of our Company and to offer an additional inducement in obtaining the services of such individuals.

The exercise price of the Shares under each option is determined by a committee appointed by the Board (the “Committee”); provided, however, that the exercise price shall not be less than the fair market value of the Shares on the date of the grant plus 10% for a more than 10% shareholder. The term of each option granted is established by the Committee, in its sole discretion, provided that the term shall not exceed ten years from the date of the grant.

All of our Plans provide that the number of Shares subject thereto and the outstanding options and their exercise prices are to be appropriately adjusted for mergers, consolidations, recapitalizations, stock dividends, stock splits or combinations of shares.

The current Committee appointed by the Board to administer our stock option plans consists of Messrs. Gutmann, Elkin and Looney, all independent directors within the meaning of the Qualitative Listing Rules of the NASDAQ Stock Market. The Board may at any time terminate or from time to time amend or alter any of the existing Plans.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth summary information regarding the outstanding equity awards held by the Named Executive Officers at March 31, 2009:

	Option Awards
	Number of			Number of
	Securities			Securities
	Underlying			Underlying
	Unexercised			Unexercised		Option
	Options			Options		Exercise		Option
	(#)			(#)		Price		Expiration
Name	Exercisable			Unexercisable		($)		Date
Gary Gelman		250,000			—	$	2.56		11/01/10
		250,000			—	$	1.94		08/15/15
		300,000			—	$	1.97		06/20/17
Gary J. Knauer		25,000			—	$	2.50		06/29/09
		25,000			—	$	2.56		11/01/10
		50,000			—	$	1.80		06/06/12
		30,000			—	$	1.70		10/07/13
		50,000			—	$	2.24		02/10/15
		20,000			—	$	1.94		08/15/15
		25,000	(1)		—	$	1.76		02/12/17
		20,000	(1)		—	$	1.63		10/15/18

(1) These options, as well as all other options listed, are fully vested. However, the option grants contain disposition restrictions which prohibit the sale of 50% of the awarded options until the first anniversary of the grant date and the remaining 50% of the awarded options until the second anniversary of the grant date.

The closing price of our Shares on March 31, 2009 was $0.69 per share.

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Director Compensation

Each director who is not a salaried employee receives an annual retainer of $1,000 and a uniform fee of $500 for each Board meeting and/or Audit Committee meeting attended in person. In addition, Mr. Looney receives an additional fee of $500 per Audit Committee meeting attended in person as the “audit committee financial expert” serving on our Audit Committee.

Director compensation in Fiscal 2009 was as follows:

	Fees Earned or
	Paid in Cash		Total
Name	($)		($)
Peter Gutmann	$	2,500	$	2,500
Edward Elkin, M.D.	$	2,500	$	2,500
Joseph Looney	$	3,500	$	3,500

(1) As of March 31, 2009, the aggregate number of option awards outstanding for Messrs. Elkin, Gutmann and Looney are 81,000, 75,000 and 20,000 Shares, respectively.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table and notes thereto set forth information regarding the beneficial ownership of our Shares as of June 24, 2009 by (i) each person known by us to be the beneficial owner of more than 5% of such voting security, (ii) each current director, (iii) each Named Executive Officer and (iv) all executive officers and directors of our Company as a group. The percentages have been calculated by taking into account all Shares owned on such date as well as all such Shares with respect to which such person has the right to acquire beneficial ownership at such date or within 60 days thereafter. Unless otherwise indicated, all persons listed below have sole voting and sole investment power over the Shares owned.

	Amount and Nature
Name and Address	of Beneficial			Percent of
of Beneficial Owner	Ownership (1)(6)			Class (1)
Gary Gelman (2)		3,696,400	(3)		66.5	%
The Edward & Michael Gelman 2008 Trust (2)		1,000,000	(3)(4)		21.0	%
Peter Gutmann (2)		121,000	(5)		2.50	%
Edward M. Elkin, M.D. (2)		81,000			1.70	%
Joseph Looney (2)		20,000			(9	)
Gary J. Knauer (2)		245,000			4.90	%
J. Morton Davis		388,024	(7)		8.12	%
Kinder Investments, L.P.		292,500	(8)		6.15	%
All executive officers and directors as a group (five persons)		4,163,400			69.67	%

(1)

Based on a total of 4,754,900 Shares issued and outstanding as of June 24, 2009. In addition, 1,221,000 Shares which directors and executive officers described in the table have the right to acquire within 60 days of such date pursuant to the exercise of options granted under our stock option plans are included since these are deemed outstanding for the purpose of computing the percentage of Shares owned by such persons in accordance with the provisions of Rule 13d-3(d)(1)(i) promulgated under the Exchange Act.

(2)

Address is c/o American Claims Evaluation, Inc., One Jericho Plaza, Jericho, NY 11753.

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(3)	Includes 1,000,000 Shares owned by The Edward & Michael Gelman 2008 Trust (the “Trust”). As investment trustee of the Trust, Mr. Gelman has beneficial ownership of such Shares.
(4)	Mr. Gelman is the investment trustee of the Trust and, as such, has beneficial ownership of the Shares owned by the Trust.
(5)	Includes 4,000 Shares owned by the wife of Mr. Gutmann, as to which beneficial ownership is disclaimed.
(6)	Includes the presently exercisable portions of outstanding stock options (aggregating 1,221,000 Shares) which, in the case of Messrs. Gelman, Gutmann, Elkin, Looney and Knauer are 800,000, 75,000, 81,000, 20,000 and 245,000 Shares, respectively.
(7)	386,924 of these Shares are owned of record by D.H. Blair Investment Banking Corp., whose address is 44 Wall Street, New York, NY (“Blair Investment”). Mr. J. Morton Davis, the sole shareholder of Blair Investment, has reported that Blair Investment’s Shares may be deemed to be beneficially owned by him. Mr. Davis owns 1,100 Shares directly.
(8)	These Shares are owned of record by Kinder Investments, L.P. (“Kinder”), Nesher, LLC, the general partner of Kinder (“Nesher”) and Dov Perlysky, the managing member of Nesher (“Perlysky”). The reporting parties’ business address is 100 Park Avenue, New York, NY. Nesher and Kinder may be deemed to beneficially own 292,500 Shares. Perlysky may be deemed to beneficially own 292,572 Shares, consisting of 292,500 Shares owned directly by Kinder and 72 Shares owned directly by Perlysky’s wife.
(9)	Less than 1%.

Equity Compensation Plan Information

	Number of securities				Number of securities remaining
	to be issued upon		Weighted-average		available for future issuance
	exercise of		exercise price of		under equity compensation
	outstanding options,		outstanding options		plans (excluding securities
	warrants and rights		warrants and rights		reflected in column (a))
Plan category	(a)		(b)		(c)
Equity compensation plans approved by security holders		1,246,000	$	2.12		1,246,000
Equity compensation plans not approved by security holders		—		N/A		—
Total		1,246,000	$	2.12		1,246,000

Item 13. Certain Relationships and Related Transactions, and Director Independence.

We entered into a seven-year non-cancelable operating sublease which expires November 30, 2011 for office space with APPS, an entity under the control of our Chairman of the Board. Basic rent under the sublease has been established as a pass-through with our cost being fixed at a cost equal to the pro-rated rent payable for the subleased space by APPS to the building’s landlord. See “Item 2. Description of Property.”

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Director Independence

Our Board consists of Gary Gelman, Peter Gutmann, Edward M. Elkin, M.D. and Joseph Looney. Except for Mr. Gelman, all of such directors are “independent” as such term is defined in the Marketplace Rules of the NASDAQ Stock Market.

Item 14. Principal Accountant Fees and Services.

The aggregate fees billed or billable for the fiscal years ended March 31, 2009 and 2008 for professional services rendered by Holtz Rubenstein Reminick LLP are as follows:

	Fiscal Year Ended March 31,
	2009		2008
Audit Fees (1)	$	58,000	$	45,000
Audit-Related Fees (2)		35,000		—
Tax Fees		—		—
All Other Fees		—		—
Total Fees	$	93,000	$	45,000

(1)	Consists of fees for services provided in connection with the audit of our financial statements and review of our quarterly financial statements.
(2)	Consists of fees for services provided in connection with the audit of ITG’s balance sheet as of the acquisition date.

Audit Committee Pre-Approval and Permissible Non-Audit Services of Independent Registered Public Accounting Firm.

The Audit Committee, consisting of Messrs. Elkin, Gutmann and Looney, is to pre-approve all audit and non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services as allowed by law or regulation. The independent registered public accounting firm and our management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval and the fees incurred to date. The Audit Committee may also pre-approve particular services on a case-by-case basis.

The engagement of Holtz Rubenstein Reminick LLP for the fiscal years ended March 31, 2009 and 2008 and the scope of audit-related services, including the audits and reviews described above, were all pre-approved by the Audit Committee.

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PART IV

Item 15. Exhibits and Financial Statement Schedules.

Documents filed with this report:

1.	Financial Statements:
	Report of Independent Registered Public Accounting Firm
	Consolidated Balance Sheets as of March 31, 2009 and 2008
	Consolidated Statements of Operations for the years ended March 31, 2009 and 2008
	Consolidated Statements of Stockholders’ Equity for the years ended March 31, 2009 and 2008
	Consolidated Statements of Cash Flows for the years ended March 31, 2009 and 2008
	Notes to Consolidated Financial Statements
	Financial Statement Schedules
	Financial statement schedules have been omitted because they are either not required or not applicable or because the required information is presented in the financial statements or related notes.
2.	Exhibits

3	Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit E to the Company’s Proxy Statement for the Annual Meeting, dated September 14, 2007).
3.2	By-Laws (Incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-KSB for its year ended March 31, 2008).
10.3	1997 Stock Incentive Plan (Incorporated by reference to Exhibit 4 to the Company’s Registration Statement on Form S-8, File No. 333-39071, dated October 30, 1997).
10.4	2000 Stock Incentive Plan (Incorporated by reference to Exhibit A to the Company’s Proxy Statement dated September 11, 2000).
10.5	Employment Agreement, dated June 7, 2001, between the Company and Gary Gelman (Incorporated by reference to Exhibit 10.1 to the Company’s Annual Report on Form 10-KSB for its year ended March 31, 2001).
10.6	Sublease Agreement, dated August 20, 2004, between American Para Professional Systems, Inc. and the Company with respect to the premises at One Jericho Plaza, Jericho, NY (Incorporated by reference to Exhibit 10 to the Company’s Form 10-QSB for the quarter ended September 30, 2005).

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10.8	2005 Stock Incentive Plan (Incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-KSB for its year ended March 31, 2005).
10.9	2007 Stock Incentive Plan (Incorporated by reference to Exhibit F to the Company’s Proxy Statement for the Annual Meeting, dated September 14, 2007).
10.10	Stock Purchase Agreement by and among American Claims Evaluation, Inc., John Torrens, Kyle Palin Torrens and Carlena Palin Torrens, dated September 12, 2008 (Incorporated by reference to Exhibit 10.10 to the Company’s Form 8-K dated September 16, 2008).
10.11	Escrow Agreement by and among American Claims Evaluation, Inc., John Torrens, Kyle Palin Torrens, Carlena Palin Torrens and Siller Wilk LLP dated September 12, 2008 (Incorporated by reference to Exhibit 10.11 to the Company’s Form 8-K dated September 16, 2008).
10.12	Stock Purchase Agreement by and between American Claims Evaluation, Inc. and Stephen D. Renz, dated September 12, 2008 (Incorporated by reference to Exhibit 10.12 to the Company’s Form 8-K dated September 16, 2008).
10.13	Employment Agreement dated September 12, 2008, between Interactive Therapy Group Consultants, Inc. and John Torrens (Incorporated by reference to Exhibit 10.13 to the Company’s Form 10-QSB for the quarter ended September 30, 2008).
10.14	Lease Agreement, dated April 13, 2005, with respect to the Interactive Therapy Group Consultants, Inc. office located at 19 West 21st Street, New York, NY.
10.15	Lease Agreement, dated January 4, 2008, with respect to the Interactive Therapy Group Consultants, Inc. office located at One Adler Drive, East Syracuse, NY.
10.16	Lease Agreement, dated February 4, 2009, with respect to the Interactive Therapy Group Consultants, Inc. office located at 331 Alberta Drive, Amherst, NY.
14	Code of Ethics (Incorporated by reference to Exhibit 14 to the Company’s Annual Report on Form 10-KSB for its year ended March 31, 2004).
23.1	Consent of Independent Registered Public Accounting Firm.
31.1	Rule 13a-14(a)/15d-14(a) Certification.
31.2	Rule 13a-14(a)/15d-14(a) Certification.
32.1	Section 1350 Certification of Chief Executive Officer.
32.2	Section 1350 Certification of Chief Financial Officer.

24

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AMERICAN CLAIMS EVALUATION, INC.
By:	/s/ Gary Gelman
	Gary Gelman
	Chairman of the Board, President and Chief Executive Officer

DATE: June 24, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

SIGNATURES	TITLE	DATE
/s/ Gary Gelman Gary Gelman	Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)	June 24, 2009
/s/ Gary J. Knauer Gary J. Knauer	Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)	June 24, 2009
/s/ Edward M. Elkin	Director	June 24, 2009
Edward M. Elkin, M.D.
/s/ Peter Gutmann	Director	June 24, 2009
Peter Gutmann
/s/ Joseph Looney	Director	June 24, 2009
Joseph Looney

25

AMERICAN CLAIMS EVALUATION, INC.

Table of Contents

	Page
Report of Independent Registered Public Accounting Firm		F-1
Financial Statements:
Balance Sheets as of March 31, 2009 and 2008		F-2
Statements of Operations for the years ended March 31, 2009 and 2008		F-3
Statements of Stockholders’ Equity for the years ended March 31, 2009 and 2008		F-4
Statements of Cash Flows for the years ended March 31, 2009 and 2008		F-5
Notes to Financial Statements		F-6

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
American Claims Evaluation, Inc.

We have audited the accompanying consolidated balance sheets of American Claims Evaluation, Inc. and subsidiary as of March 31, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Claims Evaluation, Inc. and subsidiary as of March 31, 2009 and 2008, and results of their operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ Holtz Rubenstein Reminick LLP
Melville, New York

June 24, 2009

F-1

AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY

Consolidated Balance Sheets

March 31, 2009 and 2008

	2009			2008
Assets
Current assets:
Cash and cash equivalents	$	4,143,445		$	6,239,442
Accounts receivable (net of allowance for doubtful accounts of $60,000 in 2009)		847,510			—
Receivable from former ITG shareholders		170,715			—
Current assets of discontinued operations		—			111,337
Prepaid expenses and other current assets		119,514			33,560
Total current assets		5,281,184			6,384,339
Goodwill		750,000			—
Property and equipment, net		235,493			92,072
Other assets		17,415			—
Non-current assets of discontinued operations		—			7,674
Total assets	$	6,284,092		$	6,484,085
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	99,492		$	18,936
Accrued expenses		604,626			106,190
Capital leases payable — current portion		18,051			—
Current liabilities of discontinued operations		—			33,150
Total current liabilities		722,169			158,276
Long-term liabilities:
Capital leases payable — net of current portion		27,546			—
Commitments
Stockholders’ equity:
Common stock, $0.01 par value. Authorized 20,000,000 shares in 2009 and 2008; issued 5,050,000 shares; outstanding 4,754,900 shares and 4,761,800 shares in 2009 and 2008, respectively		50,500			50,500
Additional paid-in capital		4,952,199			4,931,099
Retained earnings		998,951			1,806,051
		6,001,650			6,787,650
Treasury stock, at cost		(467,273	)		(461,841	)
Total stockholders’ equity		5,534,377			6,325,809
Total liabilities and stockholders’ equity	$	6,284,092		$	6,484,085

See accompanying notes to consolidated financial statements.

F-2

AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY

Consolidated Statements of Operations

Years ended March 31, 2009 and 2008

	2009			2008
Revenues	$	3,320,926		$	—
Cost of services		2,321,431			—
Gross profit		999,495			—
Selling, general, and administrative expenses		1,804,312			990,113
Operating loss from continuing operations		(804,817	)		(990,113	)
Other income (expense):
Interest income		115,296			331,027
Interest expense		(2,026	)		—
Reserve for uncollectible receivable		(204,070	)		—
Loss from continuing operations		(895,617	)		(659,086	)
Discontinued operations (note 2):
Gain on sale of discontinued operations		90,513			—
Gain (loss) from discontinued operations		(1,996	)		7,277
Provision for loss on disposal		—			(20,000	)
Net loss	$	(807,100	)	$	(671,809	)
Net income (loss) per share:
From continuing operations — basic and diluted	$	(0.19	)	$	(0.14	)
From discontinued operations — basic and diluted		0.02			—
	$	(0.17	)	$	(0.14	)
Weighted average shares — basic and diluted		4,760,075			4,761,800

See accompanying notes to consolidated financial statements.

F-3

AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY

Consolidated Statements of Stockholders’ Equity

Years ended March 31, 2009 and 2008

					Additional										Total
	Common stock				paid-in		Retained			Treasury stock					stockholders’
	Shares		Par value		capital		earnings			Shares		Amount			equity
Balance at March 31, 2007		5,050,000	$	50,500	$	4,646,099	$	2,477,860			288,200	$	(461,841	)	$	6,712,618
Net loss		—		—		—		(671,809	)		—		—			(671,809	)
Stock compensation expense		—		—		285,000		—			—		—			285,000
Balance at March 31, 2008		5,050,000		50,500		4,931,099		1,806,051			288,200		(461,841	)		6,325,809
Net loss		—		—		—		(807,100	)		—		—			(807,100	)
Purchase of treasury shares											6,900		(5,432	)		(5,432	)
Stock compensation expense		—		—		21,100		—			—		—			21,100
Balance at March 31, 2009		5,050,000	$	50,500	$	4,952,199	$	998,951			295,100	$	(467,273	)	$	5,534,377

See accompanying notes to consolidated financial statements.

F-4

AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

Years ended March 31, 2009 and 2008

	2009			2008
Cash flows from operating activities:
Loss from continuing operations:	$	(895,617	)	$	(659,086	)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for uncollectible receivable		204,070			—
Depreciation and amortization		73,923			20,276
Stock-based compensation expense		21,100			285,000
Provision for doubtful accounts		60,000			—
Changes in assets and liabilities:
Accounts receivable		(125,350	)		—
Prepaid expenses and other current assets		(21,396	)		(1,948	)
Other assets		1,150			—
Accounts payable		(78,032	)		1,524
Accrued expenses		193,436			33,620
Net cash used in operating activities of continuing operations		(566,716	)		(320,614	)
Operating activities of discontinued operations		34,439			12,172
Net cash used in operating activities		(532,277	)		(308,442	)
Cash flows from investing activities:
Acquisition of business, net of cash acquired		(568,375	)		—
Proceeds from sale of subsidiary, net of cash divested		149,391			—
Capital expenditures		(13,245	)		(39,055	)
Net cash used in investing activities		(432,229	)		(39,055	)
Investing activities of discontinued operations		(9,452	)		(2,637	)
Net cash used in investing activities		(441,681	)		(41,692	)
Cash flows from financing activities:
Payment of debt		(1,105,356	)		—
Payment of capital lease payable		(11,251	)		—
Purchase of treasury shares		(5,432	)		—
Net cash used in financing activities		(1,122,039	)		—
Net decrease in cash and cash equivalents		(2,095,997	)		(350,134	)
Cash and cash equivalents — beginning of year		6,239,442			6,589,576
Cash and cash equivalents — end of year	$	4,143,445		$	6,239,442
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	2,026		$	—

See accompanying notes to consolidated financial statements.

F-5

AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2009 and 2008

(1) Summary of Significant Accounting Policies

(a)	Nature of Business
	American Claims Evaluation, Inc. (the “Company”) operated in a single segment that provided a full range of vocational rehabilitation and disability management services through a wholly owned subsidiary, RPM Rehabilitation & Associates, Inc. (“RPM”). Subsequent to March 31, 2008, the Company entered into a non-binding letter of intent to sell this subsidiary. Accordingly, the financial statements present the results of RPM as discontinued operations. The following footnotes relate only to the Company’s continuing operations, unless otherwise noted.
	On September 12, 2008, the Company acquired Interactive Therapy Group Consultants, Inc. (“ITG”), a provider of comprehensive services to children with developmental delays and disabilities. The results of operations for ITG are included in the consolidated results of operations beginning September 13, 2008.
(b)	Principles of Consolidation
	The Company’s financial statements are prepared on a consolidated basis and include the Company and its wholly owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation.
(c)	Cash and Cash Equivalents
	All highly liquid investments with a maturity of three months or less at the date of purchase are considered to be cash equivalents. From time to time, the Company invests its excess cash in money market accounts that are stated at cost and approximate market value.
(d)	Allowance for Doubtful Accounts
	The Company must make estimates of the uncollectability of all accounts receivable. Management specifically analyzes receivables, historical bad debts and changes in circumstances when evaluating the adequacy of the allowance for doubtful accounts.
(e)	Revenue Recognition
	The Company recognizes revenue for services when there is evidence of billable time expended. Deferred revenue is recorded for amounts attributable to special education programs when invoiced and recognized over the applicable program periods.
(f)	Property and Equipment
	Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are amortized over the shorter of the estimated lives of the improvements or the remaining term of the lease.

F-6

AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2009 and 2008

(g)	Goodwill
	Goodwill represents the excess of the purchase price over the fair value of acquired assets and liabilities. Goodwill shall be assessed at least annually for impairment and any such impairment will be recognized in the period identified.
(h)	Income Taxes
	Deferred tax assets and liabilities are recognized for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted tax laws. Changes in enacted tax rates are reflected in the financial statements in the periods they occur. Deferred tax assets are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized.
	On April 1, 2008, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of Statement of Financial Accounting Standards (“SFAS”) Statement No. 109, “Accounting for Income Taxes”. FIN 48 clarifies the accounting and reporting for uncertainties in income tax law and prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. FIN 48 prescribes a two-step evaluation process for tax positions. The first step is recognition based on a determination of whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step is to measure a tax position that meets the more-likely-than-not threshold. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. If a tax position does not meet the more-likely-than-not recognition threshold, the benefit of that position is not recognized in the financial statements. The adoption of FIN 48 had no material impact on the Company’s consolidated results of operations or financial condition.
(i)	Earnings (Loss) per Share
	Basic earnings (loss) per share is computed on the weighted average common shares outstanding. Diluted earnings per share reflects the maximum dilution from potential common shares issuable pursuant to the exercise of stock options, if dilutive, outstanding during each period. Employee and director stock options to purchase 1,246,000 and 1,233,500 shares of common stock for the years ended March 31, 2009 and 2008, respectively, were not included in the diluted loss per share calculations because their effect would have been anti-dilutive.
(j)	Fair Value of Financial Instruments
	The carrying values of the Company’s monetary assets and liabilities approximate fair value as a result of the short-term nature of such assets and liabilities.
(k)	Concentration of Credit Risk
	Service revenue is concentrated within a limited number of clients throughout New York State; municipalities within New York State provide substantial and significant revenue to ITG. This

F-7

AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2009 and 2008

	concentration of customers may impact ITG’s overall exposure to credit risk, either positively or negatively, in that ITG’s customers may be similarly affected by changes in economic or other conditions in New York State.
	The Company had four customers that represented 19%, 15%, 14% and 11% of revenue for the year ended March 31, 2009.
(l)	Use of Estimates
	The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.
(m)	Stock-Based Compensation
	The Company accounts for stock-based compensation in accordance with SFAS No. 123 (revised 2004), Share-Based Payment (“SFAS 123R”). Under the provisions of SFAS 123R, stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized on a straight-line basis over the vesting period.
(n)	Recently Issued Accounting Pronouncements
	In December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS 141R”), which changes how business acquisitions are accounted for. SFAS 141R requires the acquiring entity in a business combination to recognize all the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. Certain provisions of this standard will, among other things, impact the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration); exclude transaction costs from acquisition accounting; and change accounting practices for acquired contingencies, acquisition-related restructuring costs, in-process research and development, indemnification assets, and tax benefits. SFAS 141R is effective for business combinations occurring after December 15, 2008. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements.
	In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160”), which requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and noncontrolling interest. SFAS 160 is effective for fiscal years beginning on or after December 15, 2008. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements.
	In October 2008, the FASB issued FSP FAS No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Is Asset Not Active” (“FSP FAS 157-3”) with an immediate effective date, including prior periods for which financial statements have not been issued. FSP FAS 157-3 clarifies the application of fair value in inactive markets and allows for the use of management’s internal assumptions about future cash flows with appropriately risk-adjusted discount rates when relevant observable market data does not exist. The objective of FSP FAS 157-3 has not changed and continues to be the determination of the price that would be received in an

F-8

AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2009 and 2008

orderly transaction that is not a forced liquidation or distressed sale at the measurement date. The adoption of FSP FAS 157-3 did not have a material effect on the Company’s consolidated financial statements.

(2)	Acquisition
	On September 12, 2008 (the “Closing Date”), the Company acquired all of the issued and outstanding shares of ITG for $570,000 in cash, subject to adjustment as described below. ITG provides a comprehensive range of services to children with developmental delays and disabilities. The Company had been seeking an acquisition to transition into a new line of business. ITG possesses an opportunity to grow organically in its industry and through the potential for add-on acquisitions.
	The business combination was accounted for using the purchase method of accounting and, accordingly, the purchase price was allocated to assets acquired and liabilities assumed based on estimated fair values at the date of acquisition as follows:

Current assets	$	1,031,831
Property and equipment		204,099
Other assets		18,565
Total assets acquired	$	1,254,495
Current liabilities	$	667,658
Notes payable		1,105,356
Capital leases payable		56,849
Total liabilities assumed	$	1,829,863
Net assets acquired	$	(575,368	)
The purchase price has been calculated as follows:
Purchase price paid on the Closing Date	$	570,000
Note receivable — former ITG shareholders		(374,785	)
Escrowed funds to be returned		(20,583	)
Adjusted purchase price	$	174,632
Goodwill	$	750,000

The Company is currently in the process of obtaining an appraisal of the assets acquired and liabilities assumed in the ITG acquisition to allocate the purchase price of the individual assets acquired and liabilities assumed. We expect this appraisal to be completed by July 31, 2009 and result in the identification and valuation of a number of intangible assets. The results of the appraisal are not expected to have a material effect on the Company’s consolidated financial statements.

Under the terms of the stock purchase agreement, the purchase price was subject to adjustment based on the final determination of the tangible net worth of ITG on the Closing Date (the “Final Calculation”). Based on the Final Calculation, a negative adjustment to the purchase price, amounting to $374,785, was required. Subsequent to March 31, 2009, the former ITG shareholders refunded $170,715 of the purchase price. At March 31, 2009, the Company recorded a receivable from the former ITG shareholders for this balance. Since the collectability of the remaining balance of $204,070 is in question, the Company has recorded a reserve for the uncollectible balance of $204,070. A provision for the uncollectible receivable has been included in Other Income/(Expense) in the Consolidated Statement of Operations for the year ended March 31, 2009.

F-9

AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2009 and 2008

Pursuant to the terms of the acquisition, $105,000 of the purchase price had been deposited into an escrow account in respect of an outstanding obligation of ITG regarding unpaid workers’ compensation premiums and in respect of any accounts receivable not collected within 240 days of the Closing Date. At the conclusion of the escrow period, the workers’ compensation liability was satisfied and accounts receivable totaling $20,583 remained uncollected. Accordingly, $20,583 of the escrowed funds was returned to the Company in May 2009. A receivable for this balance has been included in prepaid expenses and other current assets in the Consolidated Balance Sheet at March 31, 2009. All remaining escrow funds were released to the former ITG shareholders.

In conjunction with the acquisition, ITG’s former majority shareholder will serve as President of ITG and was given a two-year employment agreement at an annual base salary of $200,000.

The following pro forma information for the years ended March 31, 2009 and 2008 assume that the ITG acquisition was made as of April 1, 2007:

	2009			2008
Revenues	$	6,069,160		$	5,902,406
Loss from continuing operations	$	(1,076,030	)	$	(1,049,647	)
Net loss	$	(985,517	)	$	(1,062,370	)
Net loss per share — basic and diluted	$	(0.21	)	$	(0.22	)

	The pro forma supplemental information is not necessarily indicative of actual results had the acquisition occurred on the first day of the respective period, nor is it necessarily indicative of future results. The pro forma supplemental information does not reflect potential synergies, integration costs, or other costs or savings.
	The Company is currently exploring alternatives to ITG’s corporate structure concerning non-compliance issues regarding the practice of certain licensed professions in the State of New York. If a change in professional practice structure is deemed necessary, the Company will take all appropriate measures to assure compliance on a timely basis. Revenues derived from services performed by these licensed professionals approximate 23% of total revenues.
(3)	Discontinued Operations
	On September 12, 2008, the Company sold RPM for a purchase price of $150,000 in cash, plus an additional purchase price of up to $150,000 in cash contingent upon the future net earnings of RPM calculated over the five year period after the closing of the transaction. Through March 31, 2009, no additional consideration has been earned. A gain on the sale of RPM of $90,513 was recorded for the year ended March 31, 2009.
	The Company followed the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, related to the accounting and reporting for segments of a business to be disposed of. Accordingly, the results of RPM’s operations have been classified as discontinued operations in all periods presented.
	Revenue and earnings from discontinued operations were $753,857 and $7,277, respectively, for the year ended March 31, 2008.

F-10

AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2009 and 2008

(4)	Property and Equipment
	Property and equipment consists of the following at March 31, 2009 and 2008:

					Estimated
	2009		2008		useful life
Equipment	$	175,998	$	125,510	5 years
Computer software		89,147		—	3 - 10 years
Furniture and fixtures		19,602		18,272	5 - 10 years
Assets under capital leases		56,220		—	5 years
Leasehold improvements		15,556		—	Life of lease
		356,523		143,782
Less accumulated depreciation		121,030		51,710
	$	235,493	$	92,072

	Depreciation and amortization expense for the years ended March 31, 2009 and 2008 amounted to $73,923 and $20,276, respectively.
(5)	Capital Leases
	The Company has entered into various capital leases for the purchase of office equipment and furniture and fixtures. These leases require monthly payments totaling $1,794, inclusive of interest at 9% per annum. These leases expire at various dates through September 2011.
	Annual maturities of capital lease obligations at March 31, 2009 are as follows:

2010	$	21,523
2011		21,523
2012		8,004
Total minimum lease payments		51,050
Less: amounts representing interest		(5,453	)
Present value of minimum lease payments		45,597
Less: current portion		(18,051	)
Capital leases payable — net of current portion	$	27,546

Included in property and equipment at March 31, 2009 are assets acquired under capital lease arrangements of $56,220 with related accumulated depreciation of $14,461.

F-11

AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2009 and 2008

(6)	Income Taxes
	No provisions for income tax expense were recorded for the years ended March 31, 2009 and 2008. This differs from that which would have resulted when applying the statutory Federal income tax rate as a result of the following items:

	Year ended March 31,
	2009						2008
	Amount			Percent			Amount			Percent
Expected income tax benefit at the statutory Federal tax rate	$	(274,000	)		(34	)%	$	(210,000	)		(34	)%
Increase in valuation allowance		274,000			34			210,000			34
Actual income tax expense	$	—			—		$	—			—

The tax effects of temporary differences comprising the Company’s deferred tax assets at March 31, 2009 and 2008 are as follows:

	2009			2008
Deferred tax assets:
Net operating loss carryforwards	$	1,011,000		$	737,000
Stock compensation expense		107,000			107,000
Capital loss carryforwards		249,000			—
Valuation allowance		(1,367,000	)		(844,000	)
	$	—		$	—

	At March 31, 2009, the Company had net operating loss carryforwards of approximately $3,289,000 for Federal income tax purposes, which will be available to reduce future taxable income. The Company also has a capital loss carryforward of approximately $732,000 at March 31, 2009 related to the sale of RPM which may be utilized to offset future capital gains.
	Based upon the uncertainty of whether the Company’s net operating losses (“NOLs”) or capital loss carryforwards may ultimately be utilized prior to their respective expirations, valuation allowances of $274,000 and $210,000 were recorded during the years ended March 31, 2009 and 2008, respectively. Benefits currently considered unrealizable could be adjusted in the future if estimates of future taxable income during the carryforward period are revised.
	The utilization of such NOLs and capital losses is subject to certain limitations under Federal income tax laws. The Company’s NOLs and capital losses are scheduled to expire in various fiscal years ending through March 31, 2029 and March 31, 2014, respectively.
(7)	Stock Options
	The Company has four stock option plans, the 1997 Incentive Stock Option Plan (“1997 Plan”), the 2000 Incentive Stock Option Plan (“2000 Plan”), the 2005 Incentive Stock Option Plan (“2005 Plan”) and the 2007 Incentive Stock Option Plan (“2007 Plan”). The 1997 Plan has expired except as to options outstanding. The 2000, 2005 and 2007 Plans provide for incentive or nonqualified stock options to be granted to key employees, officers, directors, independent contractors and consultants of the Company. The Company had a fifth stock option plan, the 1985 Stock Option Plan, which had previously expired

F-12

AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2009 and 2008

except as to options outstanding. During the year ended March 31, 2009, these options expired on their respective expiration dates.

Under the 2000, 2005 and 2007 Plans, options may be granted at prices not less than the fair market value on the date the option is granted. Options become exercisable and vest as determined at the date of grant by a committee of the Board of Directors. Options expire ten years after the date of grant unless an earlier expiration date is set at the time of grant.

Changes in the options outstanding during the years ended March 31, 2009 and 2008 are summarized in the following table:

						Weighted
				Weighted		Average
				Average		Remaining	Aggregate
				Exercise		Contractual	Intrinsic
	Shares			Price		Term	Value
Outstanding at March 31, 2007		1,236,000		$	1.95	4.6 years
Granted		300,000			1.97	10 years
Expired		(300,000	)		1.26	—
Outstanding at March 31, 2008		1,233,500			2.12	6 years
Granted		45,000			2.11	10 years
Expired		(32,500	)		2.19	—
Outstanding at March 31, 2009		1,246,000		$	2.12	5.3 years	$	—

At March 31, 2009, there were options to purchase 1,000,000, 290,000 and 9,000 shares available for grant under the 2007 Plan, 2005 Plan and 2000 Plan, respectively.

There were no outstanding options which were exercisable and in-the-money as of March 31, 2009 resulting in no aggregate intrinsic value. Aggregate intrinsic value represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s closing price of $0.69 as of March 31, 2009, which would have been received by the option holders had these option holders exercised their options as of that date.

The Company recognized stock-based compensation totaling $21,200 and $285,000 for the years ended March 31, 2009 and 2008, respectively, based on the fair value of stock options granted. This expense is included in selling, general and administrative expenses in the Consolidated Statements of Operations. At March 31, 2009, all outstanding options to purchase shares are fully vested. However, certain option grants contain disposition restrictions which prohibit the sale of 50% of the awarded options until the first anniversary of the grant date and the remaining 50% of the awarded options until the second anniversary of the grant date.

The per share weighted average fair values of stock options granted during the years ended March 31, 2009 and 2008 were $0.47 and $0.95, respectively. The Company’s calculations were made using the Black-Scholes option pricing model with the following weighted average assumptions for the years ended March 31, 2009 and 2008: expected volatility, 61.7% and 47.6%, respectively; risk-free interest rates of 3.18% and 5.05%, respectively; expected option term, five years following the grant date and expected dividend yields of 0%.

F-13

AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2009 and 2008

	The Company estimates expected volatility by considering the historical volatility of the Company’s stock. The risk-free interest rate is based on the United States Treasury constant maturity interest rate whose term is consistent with the expected life of the award. The expected option term was calculated using the simplified method prescribed in Securities and Exchange Commission Staff Accounting Bulletin No. 107. Under this method, the expected option life is equal to the sum of the weighted average vesting term plus the original contract term divided by two.
(8)	Retirement Plans
	The Company sponsors retirement plans pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), for all employees meeting certain service requirements. Participants may contribute a percentage of compensation not to exceed the maximum allowed under the Code. The plans provide for matching contributions by the Company which amounted to $21,065 and $5,736 for the years ended March 31, 2009 and 2008, respectively.
(9)	Commitments
	The Company leases office space under non-cancellable operating leases expiring in various years through April 2013. The future minimum lease payments under these operating leases are as follows:

2010	$	161,000
2011		93,000
2012		55,000
2013		55,000
2014		5,000
	$	369,000

On August 20, 2004, the Company entered into a seven-year non-cancelable operating sublease commencing December 1, 2004, for office space with American Para Professional Systems, Inc. (“APPS”), an entity under the control of the Company’s Chairman of the Board. Basic rent under the sublease has been established as a pass-through with the Company’s cost being fixed at a cost equal to the pro-rated rent payable for the subleased space by APPS to the building’s landlord. Rent expense paid to this related entity under the sublease for the years ended March 31, 2009 and 2008 was $39,732 and $38,574, respectively.

Minimum lease payments under the related party sublease as of March 31, 2009 are as follows:

2010	$	41,000
2011		42,000
2012		29,000
	$	112,000

F-14

EX-10.14

EXHIBIT 10.14

AGREEMENT OF LEASE, made as of this 13^th day of April, 2005, by and between FIFTH AVENUE PARTNERS, L.P., 13 East 16^th Street, Suite #400, New York, NY 10003, party of the first part, hereinafter referred to as OWNER, and INTERACTIVE THERAPY GROUP, INC., 4615 North Street, Jamesville, NY 13078, party of the second part, hereinafter referred to as TENANT, WITNESSETH: Owner hereby leases to Tenant and Tenant hereby hires from Owner Suite #701 (the “Demised Premises”), as per the attached “Exhibit A”in the building known as 19 West 21^st Street (“Building” or “building”) in the Borough of Manhattan, City of New York, for the term of five (5) years and two (2) months (or until such term shall sooner cease and expire as hereinafter provided), to commence on the

1^st day of May, two thousand and five (“Commencement Date”)
and to end on the
31^st day of July, two thousand and ten (“Expiration Date”),          

both dates inclusive, at an annual rental rate set forth in Article 41 (“Rent”, “rent”, or “Fixed Rent”), together with all other sums of money as shall become due and payable by Tenant under this Lease (collectively, “Additional Rent” or “additional rent”), which Tenant agrees to pay in lawful money of the United States which shall be legal tender in payment of all debts and dues, public and private, at the time of payment, in equal monthly installments in advance on the first day of each month during said term, at the office of Owner or such other place as Owner may designate, without any set off or deduction whatsoever, except that Tenant shall pay the first monthly installment(s) on the execution hereof (unless this Lease be a renewal).

     In the event that, at the commencement of the term of this Lease, or thereafter, Tenant shall be in default in the payment of Rent to Owner pursuant to the terms of another lease with Owner or with Owner’s predecessor in interest, Owner may at Owner’s option and without notice to Tenant add the amount of such arrears to any monthly installment of Rent payable hereunder and the same shall be payable to Owner as Additional Rent.

     The parties hereto, for themselves, their heirs, distributees, executors, administrators, legal representatives, successors and assigns, hereby covenant as follows:

Rent: 1. Tenant shall pay the Rent as above and hereinafter provided.

Occupancy, Use: 2. Tenant shall use and occupy the Demised Premises for executive offices, provided such use is in accordance with t he Certificate of Occupancy for the Building, if any, and for no other purpose.

Alterations: 3. Tenant shall make no changes in or to the Demised Premises of any nature without Owner’s prior written consent. Subject to the prior written consent of Owner, and to the provisions of this Article, Tenant at Tenant’s expense, may make alterations, installations, additions or improvements which are nonstructural and which do not affect utility services or plumbing and electrical lines, in or to the interior of the Demised Premises using contractors or mechanics first approved by Owner. Tenant shall, at its expense, before making any alterations, additions, installations or improvements obtain all permits, approval and certificates required by any governmental or quasi-governmental bodies and (upon completion) certificates of final approval thereof and shall deliver promptly duplicates of all such permits, approvals and certificates to Owner. Tenant agrees to carry and will cause Tenant’s contractors and sub-contractors to carry such worker’s compensation, general liability, personal and property damage insurance as Owner may require. If any mechanic’s lien is filed against the Demised Premises, or the building of which the same forms a part, for work claimed to have been done for, or materials furnished to, Tenant, whether or not done pursuant to this Article, the same shall be discharged by Tenant within thirty (30) days thereafter, at Tenant’s expense, by filing the bond required by law or otherwise. All fixtures and all paneling, partitions, railings and like installations, installed in the premises at any time, either by Tenant or by Owner on Tenant’s behalf, shall, upon installation, become the property of Owner and shall remain upon and be surrendered with the Demised Premises unless Owner, by notice to Tenant no later than twenty (20) days prior to the date fixed as the termination of this Lease, elects to relinquish Owner’s right thereto and to have them removed by Tenant, in which event the same shall be removed from the Demised Premises by Tenant prior to the expiration of the Lease, at Tenant’s expense. Nothing in this Article shall be construed to give Owner title to or to prevent Tenant’s removal of trade fixtures, moveable office furniture and equipment, but upon removal of any such from the premises or upon removal of other installations as may be required by Owner, Tenant shall immediately and at its expense, repair and restore the premises to the condition existing prior to installation and repair any damage to the Demised Premises or

the building due to such removal. All property permitted or required to be removed, by Tenant at the end of the term remaining in the premises after Tenant’s removal shall be deemed abandoned and may, at the election of Owner, either be retained as Owner’s property or removed from the premises by Owner, at Tenant’s expense.

Repairs: 4. Owner shall maintain and repair the exterior of and the public portions of the Building. Tenant shall, throughout the term of this Lease, take good care of the Demised Premises including the bathrooms and lavatory facilities (if the Demised Premises encompass the entire floor of the Building) and the windows and window frames and, the fixtures and appurtenances therein and at Tenant’s sole cost and expense promptly make all repairs thereto and to the Building, whether structural or non-structural in nature, caused by or resulting from the carelessness, omission, neglect or improper conduct of Tenant, Tenant’s servants, employees, invitees or licensees, and whether or not arising from such Tenant conduct or omission, when required by other provisions of this Lease, including Article 6, Tenant shall also repair all damage to the Building and the Demised Premises caused by the moving of Tenant’s fixtures, furniture or equipment. All the aforesaid repairs shall be of quality or class equal to the original work or construction. If Tenant fails, after ten (10) days notice, to proceed with due diligence to make repairs required to be made by Tenant, the same may be made by the Owner at the expense of Tenant, and the expenses thereof incurred by Owner shall be collectible, as Additional Rent, after rendition of a bill or statement therefor. If the Demised Premises be or become infested with vermin, Tenant shall, at its expense, cause the same to be exterminated. Tenant shall give Owner prompt notice of any defective condition in any plumbing, heating system or electrical lines located in the Demised Premises and following such notice, Owner shall remedy the condition with due diligence, but at the expense of Tenant, if repairs are necessitated by damage or injury attributable to Tenant, Tenant’s servants, agents, employees, invitees or licensees as aforesaid. Except as specifically provided in Article 9 or elsewhere in this Lease, there shall be no allowance to the Tenant for a diminution of rental value and no liability on the part of Owner by reason of inconvenience, annoyance or injury to business arising from Owner, Tenant or others making or failing to make any repairs, alterations, additions or improvements in or to any portion of the Building or the Demised Premises or in and to the fixtures, appurtenances or equipment thereof. The provisions of this Article 4 with respect to the making of repairs shall not apply in the case of fire or other casualty with regard to which Article 9 hereof shall apply.

Window Cleaning: 5. Tenant will not clean nor require, permit, suffer or allow any window in the Demised Premises to be cleaned from the outside in violation of Section 202 of the New York State Labor Law or any other applicable law or of the Rules of the Board of Standards and Appeals, or of any other Board or body having or asserting jurisdiction.

Requirements of Law, Fire Insurance, Floor Loads: 6. Prior to the commencement of the Lease term, if Tenant is then in possession, and at all times thereafter, Tenant shall, at Tenant’s sole cost and expense, promptly comply with all present and future laws, orders and regulations of all state, federal, municipal and local governments, departments, commissions and boards and any direction of any public officer pursuant to law, and all orders, rules and regulations of the New York Board of Fire Underwriters, or the Insurance Services Office, or any similar body which shall impose any violation, order or duty upon Owner or Tenant with respect to the Demised Premises, whether or not arising out of Tenant’s use or manner of use thereof, or, with respect to the Building, if arising out of Tenant’s use or manner of use of the Demised Premises or the Building (including the use permitted under the Lease). Except as provided in Article 30 hereof, nothing herein shall require Tenant to make structural repairs or alterations unless Tenant has, by its manner of use of the Demised Premises or method of operation therein, violated any such laws, ordinances, orders, rules, regulations or requirements with respect thereto. Tenant shall not do or permit any act or thing to be done in or to the Demised Premises which is contrary to law, or which will invalidate or be in conflict with public liability, fire or other policies of insurance at any time carried by or for the benefit of Owner. Tenant shall not keep anything in the Demised Premises except as now or hereafter permitted by the Fire Department, Board of Fire Underwriters, Fire Insurance Rating Organization and other authority having jurisdiction, and then only in such manner and such quantity so as not to increase the rate for fire insurance applicable to the Building, nor use the premises in a manner which will increase the insurance rate for the Building or any property located therein over that in effect prior to the commencement of Tenant’s occupancy. If by reason of failure to comply with the foregoing the fire insurance rate shall, at the beginning of this Lease or at any time thereafter, be higher than it otherwise would be, then Tenant shall reimburse Owner, as Additional Rent hereunder, for that portion of all fire insurance premiums thereafter paid by Owner which shall have been charged because of such failure by Tenant. In any action or proceeding wherein

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Owner and Tenant are parties, a schedule or “make-up” or rate for the Building or Demised Premises issued by a body making fire insurance rates applicable to said premises shall be conclusive evidence of the facts therein stated and of the several items and charges in the fire insurance rates then applicable to said premises. Tenant shall not place a load upon any floor of the Demised Premises exceeding the floor load per square foot area which it was designed to carry and which is allowed by law. Owner reserves the right to prescribe the weight and position of all safes, business machines and mechanical equipment. Such installations shall be placed and maintained by Tenant, at Tenant’s expense, in settings sufficient, in Owner’s judgment, to absorb and prevent vibration, noise and annoyance.

Subordination: 7. This Lease is subject and subordinate to all ground or underlying leases and to all mortgages which may now or hereafter affect such leases or the real property of which the Demised Premises are a part and to all renewals, modifications, consolidations, replacements and extensions of any such underlying leases and mortgages. This clause shall be self-operative and no further instrument or subordination shall be required by any ground or underlying lessor or by any mortgagee, affecting any lease or the real property of which the Demised Premises are a part. In confirmation of such subordination, Tenant shall execute promptly any certificate that Owner may request.

Property – Loss, Damage, Reimbursement, Indemnity: 8. Owner or its agents shall not be liable for any damage to property of Tenant or of others entrusted to employees of the Building, nor for loss of or damage to any property of Tenant by theft or otherwise, nor for any injury or damage to persons or property resulting from any cause of whatsoever nature, unless caused by or due to the negligence of Owner, its agents, servants or employees; Owner or its agents shall not be liable for any damage caused by other tenants or persons in, upon or about said building or caused by operations in connection of any private, public or quasi public work. If at any time any windows of the Demised Premises are temporarily closed, darkened or bricked up (or permanently closed, darkened or bricked up, if required by law) for any reason whatsoever including, but not limited to Owner’s own acts, Owner shall not be liable for any damage Tenant may sustain thereby and Tenant shall not be entitled to any compensation therefor nor abatement or diminution of rent nor shall the same release Tenant from its obligations hereunder nor constitute an eviction. Tenant shall indemnify and save harmless Owner against and from all liabilities, obligations, damages, penalties, claims, costs and expenses for which Owner shall not be reimbursed by insurance, including reasonable attorney’s fees, paid, suffered or incurred as a result of any breach by Tenant, Tenant’s contractors, employees, invitees, or licensees, of any covenant or condition of this Lease, or the carelessness, negligence or improper conduct of the Tenant, Tenant’s agents, contractors, employees, invitees, or licensees. Tenant’s liability under this Lease extends to the acts and omissions of any subtenant, and any contractor, employee, invitee or licensee of any subtenant. In case any action or proceeding is brought against Owner by reason of any such claim, Tenant, upon written notice from Owner, will, at Tenant’s expense, resist or defend such action or proceeding by counsel approved by Owner in writing, such approval not to be unreasonably withheld.

Destruction, Fire and Other Casualty: 9. (a) If the Demised Premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give immediate notice thereof to Owner and this Lease shall continue in full force and effect except as hereinafter set forth. (b) If the Demised Premises are partially damaged or rendered partially unusable by fire or other casualty, the damages thereto shall be repaired by and at the expense of Owner and the Rent, until such repair shall be substantially completed, shall be apportioned from the day following the casualty according to the part of the premises which is usable. (c) If the Demised Premises are totally damaged or rendered wholly unusable by fire or other casualty, then the Rent shall be proportionately paid up to the time of the casualty and thenceforth shall cease until the date when the premises shall have been repaired and restored by Owner, subject to Owner’s right to elect not to restore the same as hereinafter provided. (d) If the Demised Premises are rendered wholly unusable or (whether or not the Demised Premises are damaged in whole or in part) if the Building shall be so damaged that Owner shall decide to demolish it or to rebuild it, then, in any of such events, Owner may elect to terminate this Lease by written notice to Tenant, given within 90 days after such fire or casualty, specifying a date for the expiration of the Lease, which date shall not be more than 60 days after the giving of such notice, and upon the date specified in such notice the term of this Lease shall expire as fully and completely as if such date were the date set forth above for the termination of this Lease and Tenant shall forthwith quit, surrender and vacate the

3

premises without prejudice however, to Owner’s rights and remedies against Tenant under the lease provisions in effect prior to such termination, and any rent owing shall be paid up to such date and any payments of rent made by Tenant which were on account of any period subsequent to such date shall be returned to Tenant. Unless Owner shall serve a termination notice as provided for herein, Owner shall make the repairs and restorations under the conditions of (b) and (c) hereof, with all reasonable expedition, subject to delays due to adjustment of insurance claims, labor troubles and causes beyond Owner’s control. After any such casualty, Tenant shall cooperate with Owner’s restoration by removing from the premises as promptly as reasonably possible, all of Tenant’s salvageable inventory and movable equipment, furniture, and other property. Tenant’s liability for rent shall resume five (5) days after written notice from Owner that the premises are substantially ready for Tenant’s occupancy. (e) Nothing contained hereinabove shall relieve Tenant from liability that may exist as a result of damage from fire or other casualty. Notwithstanding the foregoing, each party shall look first to any insurance in its favor before making any claim against the other party for recovery for loss or damage resulting from fire or other casualty, and to the extent that such insurance is in force and collectible and to the extent permitted by law, Owner and Tenant each hereby releases and waives all right of recovery against the other or any one claiming through or under each of them by way of subrogation or otherwise. The foregoing release and waiver shall be in force only if both releasors’ insurance policies contain a clause providing that such a release or waiver shall not invalidate the insurance. If, and to the extent, that such waiver can be obtained only by the payment of additional premiums, then the party benefiting from the waiver shall pay such premium within ten (10) days after written demand or shall be deemed to have agreed that the party obtaining insurance coverage shall be free of any further obligation under the provisions hereof with respect to waiver of subrogation. Tenant acknowledges that Owner will not carry insurance on Tenant’s furniture and or furnishings or any fixtures or equipment, improvements, or appurtenances removable by Tenant and agrees that Owner will not be obligated to repair any damage thereto or replace the same. (f) Tenant hereby waives the provisions of Section 227 of the Real Property Law and agrees that the provisions of this Article shall govern and control in lieu thereof.

Eminent Domain: 10. If the whole or any part of the Demised Premises shall be acquired or condemned by Eminent Domain for any public or quasi public use or purpose, then and in that event, the term of this Lease shall cease and terminate from the date of title vesting in such proceeding and Tenant shall have no claim for the value of any unexpired term of said Lease.

Assignment, Mortgage, Etc. 11. Tenant, for itself, its heirs, distributees, executors, administrators, legal representatives, successors and assigns, expressly covenants that it shall not assign, mortgage or encumber this agreement, nor underlet, or suffer or permit the Demised Premises or any part thereof to be used by others, without the prior written consent of Owner in each instance. Transfer of the majority of the stock of a corporate Tenant shall be deemed an assignment. If this Lease be assigned, or if the Demised Premises or any part thereof be underlet or occupied by anybody other than Tenant, Owner may, after default by Tenant, collect rent from the assignee, undertenant or occupant, and apply the net amount collected to the Rent herein reserved, but no such assignment, underletting, occupancy or collection shall be deemed a waiver of this covenant, or the acceptance of the assignee, undertenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained. The consent by Owner to an assignment or underletting shall not in any wise be construed to relieve Tenant from obtaining the express consent in writing of Owner to any further assignment or underletting.

Electric Current: 12. Rates and conditions in respect to submetering or rent inclusion, as the case may be, to be added in RIDER attached hereto. Tenant covenants and agrees that at all times its use of electric current shall not exceed the capacity of existing feeders to the Building or the risers or wiring installation and Tenant may not use any electrical equipment which, in Owner’s opinion, reasonably exercised, will overload such installations or interfere with the use thereof by other tenants of the Building. The change at any time of the character of electric service shall in no wise make Owner liable or responsible to Tenant, for any loss, damage or expenses which Tenant may sustain.

Access to Premises: 13. Owner or Owner’s agents shall have the right (but shall not be obligated) to enter the Demised Premises in any emergency at any time, and, at other reasonable times, to examine the same and to make such repairs, replacements and improvements as Owner may deem necessary and reasonably desirable to any

4

portion of the Building or which Owner may elect to perform in the premises after Tenant’s failure to make repairs or perform any work which Tenant is obligated to perform under this Lease, or for the purpose of complying with laws, regulations and other directions of governmental authorities. Tenant shall permit Owner to use and maintain and replace pipes and conduits in and through the Demised Premises and to erect new pipes and conduits therein provided, wherever possible, they are within walls or otherwise concealed. Owner may, during the progress of any work in the Demised Premises, take all necessary materials and equipment into said premises without the same constituting an eviction nor shall the Tenant be entitled to any abatement of rent while such work is in progress nor to any damages by reason of loss or interruption of business or otherwise. Throughout the term hereof Owner shall have the right to enter the Demised Premises at reasonable hours for the purpose of showing the same to prospective purchasers or mortgagees of the Building, and during the last six months of the term for the purpose of showing the same to prospective tenants and may, during said six months period, place upon the premises the usual notices “To Let” and “For Sale”, which notices Tenant shall permit to remain thereon without molestation. If Tenant is not present to open and permit an entry into the premises, Owner or Owner’s agents may enter the same whenever such entry may be necessary or permissible by master key or forcibly and provided reasonable care is exercised to safeguard Tenant’s property, such entry shall not render Owner or its agents liable therefor, nor in any event shall the obligations of Tenant hereunder be affected. If during the last month of the term Tenant shall have removed all or substantially all of Tenant’s property therefrom, Owner may immediately enter, alter, renovate or redecorate the Demised Premises without limitation or abatement of rent, or incurring liability to Tenant for any compensation and such act shall have no effect on this Lease or Tenant’s obligations hereunder.

Vault, Vault Space, Area: 14. No vaults, vault space or area, whether or not enclosed or covered, not within the property line of the Building is leased hereunder, anything contained in or indicated on any sketch, blueprint or plan, or anything contained elsewhere in this Lease to the contrary notwithstanding. Owner makes no representation as to the location of the property line of the Building. All vaults and vault space and all such areas not within the property line of the Building, which Tenant may be permitted to use and/or occupy, is to be used and/or occupied under a revocable license, and if any such license be revoked, or if the amount of such space or area be diminished or required by any federal, state or municipal authority or public utility, Owner shall not be subject to any liability nor shall Tenant be entitled to any compensation or diminution or abatement of rent, nor shall such revocation, diminution or requisition be deemed constructive or actual eviction. Any tax, fee or charge of municipal authorities for such vault or area shall be paid by Tenant, if used by Tenant, whether or not specifically leased hereunder.

Occupancy: 15. Tenant will not at any time use or occupy the Demised Premises in violation of the certificate of occupancy issued for the building of which the Demised Premises are a part. Tenant has inspected the premises and accepts them as is, subject to the riders annexed hereto with respect to Owner’s work, if any. In any event, Owner makes no representation as to the condition of the premises and Tenant agrees to accept the same subject to violations, whether or not of record. If any governmental license or permit shall be required for the proper and lawful conduct of Tenant’s business, Tenant shall be responsible for and shall procure and maintain such license or permit.

Bankruptcy: 16. (a) Anything elsewhere in this Lease to the contrary notwithstanding, this Lease may be cancelled by Owner by sending of a written notice to Tenant within a reasonable time after the happening of any one or more of the following events: (1) the commencement of a case in bankruptcy or under the laws of any state naming Tenant as the debtor; or (2) the making by Tenant of an assignment or any other arrangements for the benefit of creditors under any state statute. Neither Tenant nor any person claiming through or under Tenant, or by reason of any statute or order of court, shall thereafter be entitled to possession of the premises demised but shall forthwith quit and surrender the premises. If this Lease shall be assigned in accordance with its terms, the provisions of this Article 16 shall be applicable only to the party then owning Tenant’s interest in this Lease.

                            (b) It is stipulated and agreed that in the event of the termination of this Lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any other provisions of this Lease to the contrary, be entitled to recover from Tenant as and for liquidated damages an amount equal to the difference between the rental reserved hereunder for the unexpired portion of the term demised and the fair and reasonable rental value of the Demised Premises for the same period. In the computation of such damages the difference between any installment of Rent becoming due hereunder after the date of termination and the fair and reasonable rental value of the

5

Demised Premises for the period for which such installment was payable shall be discounted to the date of termination at the rate of four percent (4%) per annum. If such premises or any part thereof be relet by the Owner for the unexpired term of said lease, or any part thereof, before presentation of proof of such liquidated damages to any court, commission or tribunal, the amount of rent reserved upon such reletting shall be deemed to be the fair and reasonable rental value for the part or the whole of the premises so relet during the term of the reletting. Nothing herein contained shall limit or prejudice the right of the Owner to prove for and obtain as liquidated damages by reason of such termination, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, such damages are to be proved, whether or not such amount be greater, equal to, or less than the amount of the difference referred to above.

Default: 17. (1) If Tenant defaults in fulfilling any of the covenants of this Lease other than the covenants for the payment of Rent or Additional Rent; or if the Demised Premises becomes vacant or deserted, “or if this Lease be rejected under §235 of Title 11 of the U.S. Code (bankruptcy code)”, or if any execution or attachment shall be issued against Tenant or any of Tenant’s property whereupon the Demised Premises shall be taken or occupied by someone other than Tenant; or if Tenant shall make default with respect to any other lease between Owner and Tenant; or if Tenant shall have failed, after five (5) days written notice, to redeposit with Owner any portion of the security deposited hereunder which Owner has applied to the payment of any Rent and Additional Rent due and payable hereunder or failed to move into or take possession of the premises within fifteen (15) days after the commencement of the term of this Lease, of which fact Owner shall be the sole judge; then in any one or more of such events, upon Owner serving a written five (5) days notice upon Tenant specifying the nature of said default and upon the expiration of said five (5) days, if Tenant shall have failed to comply with or remedy such default, or if the said default or omission complained of shall be of a nature that the same cannot be completely cured or remedied within said five (5) day period, and if Tenant shall not have diligently commenced curing such default within such five (5) day period, and shall not thereafter with reasonable diligence and in good faith, proceed to remedy or cure such default, then Owner may serve a written three (3) days’ notice of cancellation of this Lease upon Tenant, and upon the expiration of said three (3) days this Lease and the term thereunder shall end and expire as fully and completely as if the expiration of such three (3) day period were the day definitely fixed for the end and expiration of this Lease and the term thereof and Tenant shall then quit and surrender the Demised Premises to Owner but Tenant shall remain liable as hereinafter provided.

                    (2) If the notice provided for in (1) hereof shall have been given, and the term shall expire as aforesaid; or if Tenant shall make default in the payment of the Rent reserved herein or any item of Additional Rent herein mentioned or any part of either or in making any other payment herein required; then and in any of such events Owner may without notice, reenter the Demised Premises either by force or otherwise and dispossess Tenant by summary proceedings or otherwise, and the legal representative of Tenant or other occupant of the Demised Premises and remove their effects and hold the premises as if this Lease had not been made, and Tenant hereby waives the service of notice of intention to reenter or to institute legal proceedings to that end. If Tenant shall make default hereunder prior to the date fixed as the commencement of any renewal or extension of this Lease, Owner may cancel and terminate such renewal or extension agreement by written notice.

Remedies of Owner and Waiver Of Redemption: 18. In case of any such default, reentry, expiration and/or dispossess by summary proceedings or otherwise, (a) the Rent, and Additional Rent, shall become due thereupon and be paid up to the time of such reentry, dispossess and/or expiration, (b) Owner may relet the premises or any part or parts thereof, either in the name of Owner or otherwise, for a term or terms, which may at Owner’s option be less than or exceed the period which would otherwise have constituted the balance of the term of this Lease and may grant concessions or free rent or charge a higher rental than that in this Lease, (c) Tenant or the legal representatives of Tenant shall also pay Owner as liquidated damages for the failure of Tenant to observe and perform said Tenant’s covenants herein contained, any deficiency between the rent hereby reserved and/or covenanted to be paid and the net amount, if any, of the rents collected on account of the subsequent lease or leases of the Demised Premises for each month of the period which would otherwise have constituted the balance of the term of this Lease. The failure of Owner to relet the premises or any part or parts thereof shall not release or affect Tenant’s liability for damages. In computing such liquidated damages there shall be added to the said deficiency such expenses as Owner may incur in connection with reletting, such as legal expenses, attorneys’ fees, brokerage, advertising and for keeping the Demised Premises in good order or for preparing the same for reletting. Any such liquidated damages shall be paid in monthly

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installments by Tenant on the rent day specified in this Lease and any suit brought to collect the amount of the deficiency for any month shall not prejudice in any way the rights of Owner to collect the deficiency for any subsequent month by a similar proceeding. Owner, in putting the Demised Premises in good order or preparing the same for re-rental may, at Owner’s option, make such alterations, repairs, replacements and/or decorations in the Demised Premises as Owner, in Owner’s sole judgment, considers advisable and necessary for the purpose of reletting the Demised Premises, and the making of such alterations, repairs, replacements and/or decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid. Owner shall in no event be liable in any way whatsoever for failure to relet the Demised Premises, or in the event that the Demised Premises are relet, for failure to collect the rent thereof under such reletting, and in no event shall Tenant be entitled to receive any excess, if any, of such net rents collected over the sums payable by Tenant to Owner hereunder. In the event of a breach or threatened breach by Tenant of any of the covenants or provisions hereof, Owner shall have the right of injunction and the right to invoke any remedy allowed at law or in equity as if reentry, summary proceedings and other remedies were not herein provided for. Mention in this Lease of any particular remedy, shall not preclude Owner from any other remedy, in law or in equity. Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws.

Fees and Expenses: 19. If Tenant shall default in the observance or performance of any term or covenant on Tenant’s part to be observed or performed under or by virtue of any of the terms or provisions in any article of this Lease, then, unless otherwise provided elsewhere in this Lease, Owner may immediately or at any time thereafter and without notice perform the obligation of Tenant thereunder. If Owner, in connection with the foregoing or in connection with any default by Tenant in the covenant to pay Rent hereunder, makes any expenditures or incurs any obligations for the payment of money, including but not limited to attorney’s fees, in instituting, prosecuting or defending any action or proceedings, then Tenant will reimburse Owner for such sums so paid or obligations incurred with interest and costs. The foregoing expenses incurred by reason of Tenant’s default shall be deemed to be Additional Rent hereunder and shall be paid by Tenant to Owner within five (5) days of rendition of any bill or statement to Tenant therefor. If Tenant’s lease term shall have expired at the time of making such expenditures or incurring such obligations, such sums shall be recoverable by Owner as damages.

Building Alterations and Management: 20. Owner shall have the right at any time without the same constituting an eviction and without incurring liability to Tenant therefor to change the arrangement and/or location of public entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets or other public parts of the Building and to change the name, number or designation by which the Building may be known. There shall be no allowance to Tenant for diminution of rental value and no liability on the part of Owner by reason of inconvenience, annoyance or injury to business arising from Owner or other Tenant making any repairs in the Building or any such alterations, additions and improvements. Furthermore, Tenant shall not have any claim against Owner by reason of Owner’s imposition of any controls of the manner of access to the Building by Tenant’s social or business visitors as the Owner may deem necessary for the security of the Building and its occupants.

No Representations by Owner: 21. Neither Owner nor Owner’s agents have made any representations or promises with respect to the physical condition of the Building, the land upon which it is erected or the Demised Premises, the rents, leases, expenses of operation or any other matter or thing affecting or related to the Demised Premises or the Building except as herein expressly set forth and no rights, easements or licenses are acquired by Tenant by implication or otherwise except as expressly set forth in the provisions of this Lease. Tenant has inspected the Building and the Demised Premises and is thoroughly acquainted with their condition and agrees to take the same “as is” on the date possession is tendered and acknowledges that the taking of possession of the Demised Premises by Tenant shall be conclusive evidence that the said premises and the Building of which the same form a part were in good and satisfactory condition at the time such possession was so taken, except as to latent defects. All understandings and agreements heretofore made between the parties hereto are merged in this contract, which alone fully and completely expresses the agreement between Owner and Tenant and any executory agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of it in whole or in part, unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought.

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End of Term: 22. Upon the expiration or other termination of the term of this Lease, Tenant shall quit and surrender to Owner the Demised Premises, broom clean, in good order and condition, ordinary wear and damages which Tenant is not required to repair as provided elsewhere in this Lease excepted, and Tenant shall remove all its property from the Demised Premises. Tenant’s obligation to observe or perform this covenant shall survive the expiration or other termination of this Lease. If the last day of the term of this Lease or any renewal thereof, falls on Sunday, this Lease shall expire at noon on the preceding Saturday unless it be a legal holiday in which case it shall expire at noon on the preceding business day.

Quiet Enjoyment: 23. Owner covenants and agrees with Tenant that upon Tenant paying the Rent and Additional Rent and observing and performing all the terms, covenants and conditions, on Tenant’s part to be observed and performed, Tenant may peaceably and quietly enjoy the premises hereby demised, subject, nevertheless, to the terms and conditions of this Lease including, but not limited to, Article 34 hereof and to the ground leases, underlying leases and mortgages hereinbefore mentioned.

Failure to Give Possession: 24. If Owner is unable to give possession of the Demised Premises on the date of the commencement of the term hereof, because of the holding-over or retention of possession of any tenant, undertenant or occupants or if the Demised Premises are located in a building being constructed, because such building has not been sufficiently completed to make the premises ready for occupancy or because of the fact that a certificate of occupancy has not been procured or if Owner has not completed any work required to be performed by Owner, or for any other reason, Owner shall not be subject to any liability for failure to give possession on said date and the validity of the Lease shall not be impaired under such circumstances, nor shall the same be construed in any wise to extend the term of this Lease, but the Rent payable hereunder shall be abated (provided Tenant is not responsible for Owner’s inability to obtain possession or complete any work required) until after Owner shall have given Tenant notice that the premises are substantially ready for Tenant’s occupancy. If permission is given to Tenant to enter into the possession or to occupy premises other than the Demised Premises prior to the date specified as the commencement of the term of this Lease, Tenant covenants and agrees that such occupancy shall be deemed to be under all the terms, covenants and provisions of this Lease, except as to the covenant to pay Rent. The provisions of this Article are intended to constitute “an express provision to the contrary” within the meaning of Section 223-a of the New York Real Property Law.

No Waiver: 25. The failure of Owner to seek redress for violation of, or to insist upon the strict performance of any covenant or condition of this Lease or of any of the Rules or Regulations, set forth or hereafter adopted by Owner, shall not prevent a subsequent act which would have originally constituted a violation from having all the force and effect of an original violation. The receipt by Owner of rent with knowledge of the breach of any covenant of this Lease shall not be deemed a waiver of such breach and no provision of this Lease shall be deemed to have been waived by Owner unless such waiver be in writing signed by Owner. No payment by Tenant or receipt by Owner of a lesser amount than the monthly Rent herein stipulated shall be deemed to be other than on account of the earliest stipulated Rent, nor shall any endorsement or statement of any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and Owner may accept such check or payment without prejudice to Owner’s right to recover the balance of such Rent or pursue any other remedy in this Lease provided. All checks tendered to Owner as and for the rent of the Demised Premises shall be deemed payments for the account of Tenant. Acceptance by Owner of rent from anyone other than Tenant shall not be deemed to operate as an attornment to Owner by the payor of such rent or as a consent by Owner to an assignment or subletting by Tenant of the Demised Premises to such payor, or as a modification of the provisions of this Lease. No act or thing done by Owner or Owner’s agents during the term hereby demised shall be deemed an acceptance of a surrender of said premises and no agreement to accept such surrender shall be valid unless in writing signed by Owner. No employee of Owner or Owner’s agent shall have any power to accept the keys of said premises prior to the termination of the Lease and the delivery of keys to any such agent or employee shall not operate as a termination of the Lease or a surrender of the premises.

Waiver of Trial by Jury: 26. It is mutually agreed by and between Owner and Tenant that the respective parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other (except for personal injury or property damage) on any matters whatsoever arising out of or in any way connected with this Lease, the relationship of Owner and Tenant, Tenant’s use of or occupancy

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of said premises, and any emergency statutory or any other statutory remedy. It is further mutually agreed that in the event Owner commences any summary proceeding for possession of the premises, Tenant will not interpose any counterclaim of whatever nature or description in any such proceeding.

Inability to Perform: 27. This Lease and the obligation of Tenant to pay Rent hereunder and perform all of the other covenants and agreements hereunder on the part of Tenant to be performed shall in no wise be affected, impaired or excused because Owner is unable to fulfill any of its obligations under this Lease or to supply or is delayed in supplying any service expressly or impliedly to be supplied or is unable to make, or is delayed in making any repair, additions, alterations or decorations or is unable to supply or is delayed in supplying any equipment or fixtures if Owner is prevented from so doing by reason of strike or labor troubles or any cause whatsoever beyond Owner’s sole control including, but not limited to, government preemption in connection with a National Emergency or by reason of any rule, order or regulation of any department or subdivision thereof of any government agency or by reason of the conditions of supply and demand which have been or are affected by war or other emergency.

Bills and Notices: 28. Except as otherwise in this Lease provided, a bill, statement, notice or communication which Owner may desire or be required to give to Tenant, shall be deemed sufficiently given or rendered if, in writing, delivered to Tenant personally or sent by registered or certified mail addressed to Tenant at the Building of which the Demised Premises form a part or at the last known residence address or business address of Tenant or left at any of the aforesaid premises addressed to Tenant, and the time of the rendition of such bill or statement and of the giving of such notice or communication shall be deemed to be the time when the same is delivered to Tenant, mailed, or left at the premises as herein provided. Any notice by Tenant to Owner must be served by registered or certified mail addressed to Owner at the address first hereinabove given or at such other address as Owner shall designate by written notice.

Water Charges: 29. If Tenant requires, uses or consumes water for any purpose in addition to ordinary lavatory purposes (of which fact Tenant constitutes Owner to be the sole judge) Owner may install a water meter and thereby measure Tenant’s water consumption for all purposes. Tenant shall pay Owner for the cost of the meter and the cost of the installation thereof and throughout the duration of Tenant’s occupancy Tenant shall keep said meter and installation equipment in good working order and repair at Tenant’s own cost and expense in default of which Owner may cause such meter and equipment to be replaced or repaired and collect the cost thereof from Tenant, as Additional Rent. Tenant agrees to pay for water consumed, as shown on said meter at and when bills are rendered, and on default in making such payment Owner may pay such charges and collect the same from Tenant, as Additional Rent. Tenant covenants and agrees to pay, as Additional Rent, the sewer rent, charge or any other tax, rent, levy or charge which now or hereafter is assessed, imposed or a lien upon the Demised Premises or the realty of which they are part pursuant to law, order or regulation made or issued in connection with the use, consumption, maintenance or supply of water, water system or sewage or sewage connection or system. If the Building or the Demised Premises or any part thereof is supplied with water through a meter through which water is also supplied to other premises Tenant shall pay to Owner, as Additional Rent, on the first day of each month, $25.00 of the total meter charges as Tenant’s portion. Independently of and in addition to any of the remedies reserved to Owner hereinabove or elsewhere in this Lease, Owner may sue for and collect any monies to be paid by Tenant or paid by Owner for any of the reasons or purposes hereinabove set forth.

Sprinklers: 30. Anything elsewhere in this Lease to the contrary notwithstanding, if the New York Board of Fire Underwriters or the New York Fire Insurance Exchange or any bureau, department or official of the federal, state or city government recommend or require the installation of a sprinkler system or that any changes, modifications, alterations, or additional sprinkler heads or other equipment be made or supplied in an existing sprinkler system by reason of Tenant’s business, or the location of partitions, trade fixtures, or other contents of the Demised Premises, or for any other reason, or if any such sprinkler system installations, modifications, alterations, additional sprinkler heads or other such equipment, become necessary to prevent the imposition of a penalty or charge against the full allowance for a sprinkler system in the fire insurance rate set by any said Exchange or by any fire insurance company, Tenant shall, at Tenant’s expense, promptly make such sprinkler system installations, changes, modifications, alterations, and supply additional sprinkler heads or other equipment as required whether the work involved shall be structural or nonstructural in nature. Tenant shall pay to Owner as Additional Rent the sum

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of $25.00 on the first day of each month during the term of this Lease, as Tenant’s portion of the contract price for sprinkler supervisory service.

Elevators, Heat, Cleaning: 31. As long as Tenant is not in default under any of the covenants of this Lease Owner shall: (a) provide necessary passenger elevator facilities on business days from 8:00 AM to 6:00 PM and on Saturdays from 8:00 AM to 1:00 PM; (b) if freight elevator service is provided, same shall be provided only on regular business days Monday through Friday inclusive, and on those days only between the hours of 9:00 AM and 12:00 noon and between 1:00 PM and 5:00 PM; (c) furnish heat, water and other services supplied by Owner to the Demised Premises, when and as required by law, on business days from 8:00 AM to 6:00 PM and on Saturdays from 8:00 AM to 1:00 PM; (d) clean the public halls and public portions of the Building which are used in common by all tenants. Tenant shall, at Tenant’s expense, keep the Demised Premises, including the windows, clean and in order, to the satisfaction of Owner, and for that purpose shall employ the person or persons, or corporation approved by Owner. Tenant at Tenant’s sole cost and expense shall make arrangements directly with Owner’s designated carting company for removal from the Building of all refuse and rubbish generated by Tenant’s operations. Tenant shall enclose such refuse and rubbish in secured garbage bags and place it for collection in the freight area of the floor on which the Demised Premises is located. Owner at Owner’s sole option may at any time elect to contract for the removal of Tenant’s refuse and rubbish and bill Tenant for same as Additional Rent. Owner reserves the right to stop service of the heating, elevator, plumbing and electric systems, when necessary, by reason of accident, of emergency, or for repairs, alterations, replacements or improvements, in the judgment of Owner desirable or necessary to be made, until said repairs, alterations, replacements or improvements shall have been completed. If the Building of which the Demised Premises are a part supplies manually operated elevator service, Owner may proceed with alterations necessary to substitute automatic control elevator service upon ten (10) day written notice to Tenant without in any way affecting the obligations of Tenant hereunder, provided that the same shall be done with the minimum amount of inconvenience to Tenant, and Owner pursues with due diligence the completion of the alterations.

Security: 32. Security shall at all times be equal to no less than two months Fixed and Additional Rent. Tenant has deposited with Owner the sum of $10,998.66 as security for the faithful performance and observance by Tenant of the terms, provisions and conditions of this Lease; it is agreed that in the event Tenant defaults in respect of any of the terms, provisions and conditions of this Lease, including, but not limited to, the payment of Rent and Additional Rent, Owner may use, apply or retain the whole or any part of the security so deposited to the extent required for the payment of any Rent and Additional Rent or any other sum as to which Tenant is in default or for any sum which Owner may expend or may be required to expend by reason of Tenant’s default in respect of any of the terms, covenants and conditions of this Lease, including but not limited to, any damages or deficiency in the reletting of the premises, whether such damages or deficiency accrued before or after summary proceedings or other reentry by Owner. In the event that Tenant shall fully and faithfully comply with all of the terms, provisions, covenants and conditions of this Lease, the security shall be returned to Tenant after the date fixed as the end of the Lease and after delivery of entire possession of the Demised Premises to Owner. In the event of a sale of the land and Building or leasing of the Building, of which the Demised Premises form a part, Owner shall have the right to transfer the security to the vendee or lessee and Owner shall thereupon be released by Tenant from all liability for the return of such security; and Tenant agrees to look to the new Owner solely for the return of said security, and it is agreed that the provisions hereof shall apply to every transfer or assignment made of the security to a new Owner. Tenant further covenants that it will not assign or encumber or attempt to assign or encumber the monies deposited herein as security and that neither Owner nor its successors or assigns shall be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance.

Captions: 33. The Captions are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Lease nor the intent of any provision thereof.

Definitions: 34. The term “Owner” as used in this Lease means only the owner of the fee or of the leasehold of the Building, or the mortgagee in possession, for the time being of the land and Building (or the owner of a lease of the building or of the land and building) of which the Demised Premises form a part, so that in the event of any sale or sales of said land and Building or of said Lease, or in the event of a lease of said Building, or of the land and Building, the said Owner shall be and hereby is entirely freed and relieved of all covenants and obligations of Owner hereunder, and it shall be deemed and construed without further agreement between the parties or their

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successors in interest, or between the parties and the purchaser, at any such sale, or the said lessee of the Building, or of the land and Building, that the purchaser or the lessee of the Building has assumed and agreed to carry out any and all covenants and obligations of Owner hereunder. The words “reenter” and “reentry” as used in this Lease are not restricted to their technical legal meaning. The term “Rent” (or “Fixed Rent” or “rent”) includes the annual rental rate whether so expressed or expressed in monthly installments, and “Additional Rent” (or “additional rent”). “Additional Rent” means all sums which shall be due to new Owner from Tenant under this Lease, in addition to the annual rental rate. The term “business days” as used in this Lease, shall exclude Saturdays (except such portion thereof as it is covered by specific hours in Article 31 hereof), Sundays and all days observed by the State or Federal Government as legal holidays and those designated as holidays by the applicable building service union employees service contract or by the applicable Operating Engineers contract with regard to HVAC service.

Adjacent Excavation, Shoring: 35. If an excavation shall be made upon land adjacent to the Demised Premises, or shall be authorized to be made, Tenant shall afford to the person causing or authorized to cause such excavation, license to enter upon the Demised Premises for the purpose of doing such work as said person shall deem necessary to preserve the wall or the Building of which the Demised Premises form a part from injury or damage and to support the same by proper foundations without any claim for damages or indemnity against Owner, or diminution or abatement of Rent.

Rules and Regulations: 36. Tenant and Tenant’s servants, employees, agents, visitors, and licensees shall observe faithfully, and comply strictly with, the Rules and Regulations annexed hereto and such other and further reasonable Rules and Regulations as Owner or Owner’s agents may from time to time adopt. Notice of any additional rules or regulations shall be given in such manner as Owner may elect. In case Tenant disputes the reasonableness of any additional Rule or Regulation hereafter made or adopted by Owner or Owner’s agents, the parties hereto agree to submit the question of the reasonableness of such Rule or Regulation for decision to the New York office of the American Arbitration Association, whose determination shall be final and conclusive upon the parties hereto. The right to dispute the reasonableness of any additional Rule or Regulation upon Tenant’s part shall be deemed waived unless the same shall be asserted by service of a notice in writing upon Owner within ten (10) days after the giving of notice thereof. Nothing in this Lease contained shall be construed to impose upon Owner any duty or obligation to enforce the Rules and Regulations or terms, covenants or conditions in any other lease, as against any other tenant and Owner shall not be liable to Tenant for violation of the same by any other tenant, its servants, employees, agents, visitors or licensees.

Glass: 37. Owner shall replace, at the expense of the Tenant, any and all plate and other glass damaged or broken from any cause whatsoever in and about the Demised Premises. Owner may insure, and keep insured, at Tenant’s expense, all plate and other glass in the Demised Premises for and in the name of Owner. Bills for the premiums therefor shall be rendered by Owner to Tenant at such times as Owner may elect, and shall be due from, and payable by, Tenant when rendered, and the amount thereof shall be deemed to be, and be paid, as Additional Rent.

Estoppel Certificate: 38. Tenant, at any time, and from time to time, upon at least ten (10) days prior notice by Owner, shall execute, acknowledge and deliver to Owner, and/or to any other person, firm or corporation specified by Owner, a statement certifying that this Lease is unmodified in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and stating the modifications), stating the dates to which the Rent and Additional Rent have been paid, and stating whether or not there exists any default by Owner under this Lease, and, if so, specifying each such default.

Directory Board Listing: 39. If, at the request of and as an accommodation to Tenant, Owner shall place upon the directory board in the lobby of the Building, one or more names of persons other than Tenant, such directory board listing shall not be construed as the consent by Owner to an assignment or subletting by Tenant to such person or persons.

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Successors and Assigns: 40. The covenants, conditions and agreements contained in this Lease shall bind and inure to the benefit of Owner and Tenant and their respective heirs, distributees, executors, administrators, successors, and except as otherwise provided in this Lease, their assigns.

In Witness Whereof, Owner and Tenant have respectively signed and sealed this Lease as of the day and year first above written.

/s/ Steven Albert  

FIFTH AVENUE PARTNERS, L.P. 

By Steven Albert, General Partner 

/s/ John M. Torrens  

INTERACTIVE THERAPY GROUP, INC. 

By John M. Torrens, President Date: 

Date: April 13, 2005 

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RIDER OF AGREEMENT OF LEASE (“LEASE”)
MADE AS OF APRIL 13^TH, 2005
BY AND BETWEEN
FIFTH AVENUE PARTNERS, L.P., AS OWNER
AND
INTERACTIVE THERAPY GROUP, INC., AS TENANT

THIS RIDER IS INTENDED TO BE AFFIXED TO THE LEASE. IN THE EVENT OF ANY INCONSISTENCY BETWEEN THE PROVISIONS OF THIS RIDER AND THE PRINTED PORTION OF THE LEASE, THE PROVISIONS OF THIS RIDER SHALL CONTROL.

ARTICLE 41 — FIXED RENT AND ADDITIONAL RENT

          Tenant shall pay to Owner Fixed Rent during the first twelve (12) months of the term an amount of $64,792.00 per year, payable in equal monthly installments of $5,399.33 in advance on the first business day of each and every calendar month.

          For the purpose of this lease the Fixed Rent shall be as follows, payable in equal monthly installments:

May 1^st, 2005 until April 30^th, 2006 — $64,792.00
May 1^st, 2006 until April 30^th, 2007 — $66,735.76
May 1^st, 2007 until April 30^th, 2008 — $68,737.83
May 1^st, 2008 until April 30^th, 2009 — $70,799.96
May 1^st, 2009 until April 30^th, 2010 — $72,923.95
May 1^st, 2010 until June 30^th, 2010 — $12,518.61

          Provided no default exists under this Lease, Fixed Rent for the month of May 2005 shall be reduced to 0 to give effect to the fact a full month’s rent was received by the Owner at the signing of this Lease. Fixed Rent for the months of June 2005 and July 2005 shall be further reduced to 0 to give effect to a Rent Abatement. No part of the Rent Abatement shall be granted unless no default exists under the Lease.

ARTICLE 42 — NOTICES

          Any notice, request, consent, approval, demand or other communication permitted or required to be given pursuant to the terms, covenants and conditions of this Lease, or pursuant to any law or governmental regulation (collectively, “Notices”), shall be in writing and, unless otherwise required by such law or regulation, shall be sent by registered or certified mail, return receipt requested, to the parties at the addresses set forth in this Lease.

ARTICLE 43 — EXCULPATION

          If Owner or any successor in interest is an individual, joint venture, tenancy-in-common, general or limited partnership, unincorporated association or other unincorporated aggregate of individuals (collectively, “unincorporated Owner”) and shall at any time have any liability under, pursuant to or in connection with this Lease, neither Tenant nor any other party shall seek any personal or money judgment against unincorporated Owner or in any other way under or pursuant to this Lease. Any attempt by Tenant or others to seek any such personal liability or monetary obligation shall, in addition to and not in limitation of unincorporated Owner’s other rights, powers, privileges and remedies under this Lease, immediately vest unincorporated Owner with the unconditional right to cancel this Lease on three (3) days’ notice to Tenant.

ARTICLE 44 — BROKER

          Tenant represents and warrants that it has not dealt with any broker or brokers other than OLMSTEAD PROPERTIES INC. and HUDSON REALTY ENTERPRISES, LTD. in the negotiation of this Lease. Tenant shall indemnify and hold Owner harmless from and against any and all loss, liability, claims or expenses (including, without limitation, attorneys’ fees) that Owner may incur by reason of the breach of the foregoing

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representation or by reason of the claims of any brokers in connection with this transaction or arising out of any assignment of this Lease or sublease of all or a part of the Demised Premises by Tenant.

ARTICLE 45 — LATE CHARGES

          If Tenant fails to pay any installment of Fixed Rent or Additional Rent by the fifth (5th) day of each month, Tenant shall be required to pay a late charge of eight (8) cents for each dollar unpaid. Such charge is to be computed retroactively to the date on which Fixed Rent or Additional Rent became due and payable. The late charge is intended to compensate Owner for additional expenses incurred in processing such late payments and is not intended to prevent Owner from exercising any other available remedies against Tenant.

ARTICLE 46 — TENANT COVENANTS

          46.1 Tenant shall not make any claim against Owner for any injury or damage to Tenant or to any other person or for any damage (by water, malicious mischief or otherwise) to, or loss of, or loss of use of (by theft, mysterious disappearance or otherwise) any property of Tenant or of any other person, or property irrespective of the cause of such injury, damage or loss, unless caused by the negligence of Owner, its agents, servants or employees in connection with the operation or maintenance of the Demised Premises or the Building. No property other than such as might normally be brought upon or kept in the Demised Premises as an incident to the reasonable use of the Demised Premises for the purposes herein specified shall be brought upon or kept in the Demised Premises.

       46.2 Tenant shall, at its sole cost and expense:

          46.2.1 Maintain the Demised Premises in a clean and sanitary manner. If tenant uses a cleaning service in the evening after 6:00 PM or on weekends, that service shall be an approved service designated by the Owner and used substantially in the Building.

          46.2.2 Remove all rubbish and other debris from the Demised Premises to such locations in the Building as may be reasonably specified by Owner from time to time and under conditions approved by Owner.

          46.2.3 If necessary, obtain and maintain a service contract (or contracts) with a person or company reasonably acceptable to Owner for the extermination of vermin, rats, mice, flies and other insects in the Demised Premises, and use all reasonable diligence in accordance with the best prevailing methods for doing so in the Borough of Manhattan to prevent and exterminate vermin, rats, mice, flies and other insects in, on or about the Demised Premises.

       46.3 Obtain and maintain an annual service contract for the air conditioning unit(s), if any, within the Demised Premises, and pay directly for individual repairs not covered by said contract. In addition, Tenant agrees to obtain and pay directly for any and all permits and/or licenses associated with the operation of the air conditioning unit(s).

          Unless specified or defined in this Lease or otherwise agreed upon between Owner and Tenant, any and all air conditioning equipment existing or installed by either Owner or Tenant in the Demised Premises at the time or during the term of this Lease shall remain in the Demised Premises and shall be considered leasehold improvements at the expiration of this Lease or upon vacating of the Demised Premises by Tenant, either willfully or under any other terms or conditions of this Lease.

          46.4 Tenant shall, at its sole cost and expense, place and maintain machines and mechanical equipment located in the Demised Premises that cause noise or vibration that may be transmitted to the structure of the Building (to such a degree as to be reasonably objectionable to Owner or any occupant of the Building) in settings of cork, rubber or spring type vibration eliminators sufficient to eliminate noise or vibration.

          46.5 Tenant shall not permit any cooking on the Demised Premises, whether hot or cold, except that a microwave, coffeemaker and small refrigerator for use by Tenant’s employees shall be permitted.

          46.6 Tenant has inspected the Demised Premises and agrees to take them as they are in “as is” condition, and agrees to bear all expenses of making nonstructural repairs to the Demised Premises, including without limitation, plumbing, electrical work, fixtures and all interior repairs, in a manner consistent with section 3.

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          46.7 Tenant agrees that it shall not permit its employees and/or visitors to congregate in the Building lobby, the public corridors or in front of the Building. Tenant expressly agrees that any violation of this Article shall constitute a material default under this Lease.

          46.8 Tenant shall not bring any pets into the Demised Premises or permit any pets to be brought into or kept within the Demised Premises.

ARTICLE 47 — INSURANCE

          Tenant shall, at its sole cost and expense, obtain and at all times during the Term maintain with responsible insurance carriers acceptable to Owner licensed to do business in the State of New York, insurance covering the Demised Premises for the mutual benefit of Owner and Tenant as follows:

          47.1 Fire Insurance with broad form extended coverage endorsement from time to time available, for an amount not less than the full replacement value of Tenant’s Improvements and Tenant’s personal property located in the Demised Premises. “Full replacement value” shall be determined at the request of Owner by an architect, appraiser, appraisal company or one of the insurer’s selected by Owner and paid for by Tenant, but such determination shall not be required to be made more frequently than once every two (2) years. No omission on the part of Owner to request any such determination shall relieve Tenant of any of its obligations under this Article.

          47.2 Comprehensive General Liability Insurance, with such limits as may be reasonably requested by Owner from time to time, but not less than a combined single limit of $1,500,000.00.

          47.3 All required insurance policies shall name Owner as an additional insured or loss payee, as the case may be, and shall include a provision that they shall not be canceled without thirty (30) days’ prior written notice to Owner. Tenant shall deliver copies of all required insurance policies or certificates evidencing such coverage prior to the Commencement Date and renewal policies prior to the expiration of the existing policies together with evidence of the payment of premiums therefor.

          47.4 Tenant shall pay to Owner as Additional Rent an amount equal to any additional insurance premium charged to Owner by Owner’s insurers as a direct or indirect result of Tenant’s tenancy in the Building.

          47.5 Tenant can only deliver to or remove from the Demised Premises any freight, furniture, business equipment, merchandise and bulky matter of any description, on the freight elevators and/or through the service entrances and corridors of the Building and only during the hours and in the manner approved by Owner from time to time. Tenant can only be permitted to deliver to or remove from the Demised Premises any of the items described in this article after Tenant has given Owner three (3) days prior written notice of Tenant’s intention to make such delivery or removal, and provides Owner with written evidence that such delivery or removal is being made by an individual or an entity who possesses general liability and workers compensation insurance or other insurance as may be required by Owner in an amount which Owner deems to be sufficient.

ARTICLE 48 — ADDITIONAL REMEDIES

          48.1 If the Term shall terminate pursuant to Article 17 or otherwise, then:

          48.1.1 Tenant shall pay to Owner all Fixed Rent and Additional Rent required to be paid by Tenant to the date upon which the Term shall have terminated or to the date of re-entry upon the Demised Premises by Owner, as the case may be;

          48.1.2 Owner shall be entitled to retain all moneys, if any, paid by Tenant to Owner, whether as advance Rent, security or otherwise;

          48.1.3 Tenant shall be liable for and shall pay to Owner, as damages, any deficiency between the Fixed Rent and Additional Rent payable for the period which otherwise would have constituted the unexpired portion of

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the Term (conclusively presuming the Additional Rent to be the same as was payable for the twelve (12) month period immediately preceding such termination or re-entry) and the net amount, if any, of rents collected under any reletting effected pursuant to the provisions of this Article for any part of such period (first deducting from the rents collected under any such reletting all of Owner’s expenses in connection with the termination of this Lease or Owner’s re-entry upon the Demised Premises and, in connection with such reletting, all repossession costs, brokerage commissions, legal expenses, attorneys’ fees, alteration costs and other expenses); and

          48.1.4 Any such deficiency shall be paid in monthly installments by Tenant on the days specified in this Lease for the payment of installments of Fixed Rent. Owner shall be entitled to recover from Tenant each monthly deficiency as the same shall arise and no suit to collect the amount of the deficiency for any month shall prejudice Owner’s right to collect the deficiency for any subsequent month by a similar proceeding. Alternatively, a suit or suits for the recovery of such deficiencies may be brought by Owner from time to time at its election.

          48.1.5 Notwithstanding anything herein to the contrary, the premises herein mentioned are demised for the whole term with a whole amount of the Rent herein reserved due and payable at the time of the making of this Lease, and the payment of rent in installments as above provided is for the convenience of Tenant only, and if in default of any installment of Rent, then the whole of the Rent reserved for the whole of the period then remaining unpaid, shall at the Owner’s option at once become due and payable without notice or demand.

ARTICLE 49 — CERTIFICATES BY TENANTS

          At any time and from time to time, Tenant, for the benefit of Owner and the lessor under any ground lease or underlying lease or the holder of any leasehold mortgage affecting any ground lease or underlying lease, or of any fee mortgage covering the land or the land and Building containing the Demised Premises, on at least five (5) days prior written request by Owner, will deliver to Owner a statement certifying that this Lease is not modified and is in full force and effect (or if there shall have been modifications, the same is in full force and effect as modified, and stating the modifications), the commencement and expiration dates hereof, the dates to which the Fixed Rent, Additional Rent and other charges have been paid, and whether or not, to the best knowledge of the signer of such statement, there are any then existing defaults on the part of either Owner or Tenant in the performance of the terms, covenants and conditions of this Lease, and if so, specifying the default of which the signer of such statement has knowledge.

          Owner shall from time to time provide upon ten (10) days prior written request by Tenant a statement certifying as to status of Rent and Additional Rent payments due under this Lease and/or that the Lease has not been modified and remains in full force and effect.

ARTICLE 50 — LEGAL REQUIREMENTS

          If at any time during the term of this Lease, the fire safety law requirements of the City of New York pursuant to Local Law #5 of 1973 or otherwise (“Fire Requirements”), masonry or exterior wall requirements of the City of New York pursuant to Local Law #10 of 1980 or otherwise (“Masonry Requirements”) or life safety requirements of the City of New York pursuant to Local Law #16 of 1984 or otherwise (“Safety Requirements”) or any other laws or requirements of the City of New York or any agency having jurisdiction (“Other Requirements”) impose any obligations or requirements upon Owner to perform any alteration, changes, installations or improvements (collectively “changes”) to the Building hereof and/or the Demised Premises, then Tenant shall pay to Owner as Additional Rent two point five (2.5%) percent (“Tenant’s Payment”) of all costs and expenses incurred by Owner in complying with such Fire Requirements, Masonry Requirements, Safety Requirements or Other Requirements. Tenant’s Payment shall be due and payable to Owner within thirty (30) days after rendition of a bill therefor, accompanied by a statement setting forth the changes performed by Owner. The obligation of Tenant in respect of such Additional Rent shall survive the expiration of this Lease. Notwithstanding anything to the contrary in this Paragraph, should Tenant’s use, occupancy, or installation require specific compliance under such Requirements above, then Tenant shall be responsible for 100% of the cost of said charges.

ARTICLE 51 — ALTERATIONS

          Anything in Article 3 to the contrary notwithstanding, Owner shall not unreasonably withhold or delay approval of written requests of Tenant to make non-structural interior alterations, decorations, additions and

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improvements (herein referred to as “alterations”) in the Demised Premises, provided that such alterations do not affect utility services or plumbing and electrical lines or other systems of the Building, and provided that all such alterations shall be performed in accordance with the following conditions:

          51.1 All such alterations shall be performed in accordance with architect’s plans and specifications first submitted to Owner for its prior written approval.

          51.2 All alterations shall be performed in a good and workmanlike manner, in compliance with all other applicable provisions of this Lease and with all governmental authorities having jurisdiction, and Tenant shall, prior to the commencement of any such alterations, at its sole cost and expense obtain and exhibit to Owner any governmental permit required in connection with such alterations.

          51.3 All work in connection with alterations shall be performed with union labor having the proper jurisdictional qualifications.

          51.4 Tenant shall keep the Building and the Demised Premises free and clear of all liens for any work or material claimed to have been furnished to or for Tenant or to the Demised Premises.

          51.5 Prior to the commencement of any work by or for Tenant, Tenant shall furnish to Owner certificates of insurance evidencing the existence of the following insurance:

          51.5.1 Worker’s compensation insurance covering all persons employed for such work and with respect to whom death or bodily injury claims could be asserted against Owner, Tenant or the Demised Premises;

          51.5.2 General liability insurance naming Owner, its designees, and Tenant as additional insured, with limits of not less than $1,000,000 in the event of bodily injury to one person and not less than $1,000,000, in the event of bodily injury to any number of persons in any one occurrence, and with limits of not less than $500,000 for property damage. Tenant at its sole cost and expense shall cause all such insurance to be maintained at all times when work to be performed for or by Tenant is in progress. All such insurance shall be issued by a company authorized to do business in New York and all policies or certificates therefor, issued by the insurer and bearing notations evidencing the payment of premiums, shall be delivered to Owner.

          51.6 All work to be performed by Tenant shall be done in a manner which will not unreasonably interfere with or disturb other tenants and occupants of the Building.

          51.7 Any alterations to be made by Tenant (other than plumbing and electrical work) may be performed by any reputable contractor or mechanic (collectively, “Contractor”) selected by Tenant and approved by Owner, which approval Owner agrees it will not unreasonably withhold or delay, provided the Contractor’s performance of the alterations would not result in any labor discord in the Building.

          51.8 Tenant may not, at any time during the Term, remove any alterations made by Tenant, without the written approval of Owner.

          51.9 Any restoration or repair which Tenant is required to make (whether structural or non-structural) shall be of a quality or class equal to the then Building Standard.

          51.10 Tenant shall pay to Owner the sum of Two Hundred Fifty Dollars ($250.00) in connection with any Tenant’s changes or alterations, which must be approved by Owner in accordance with the terms of this Article.

          51.11 The time during which Owner may make Owner’s elections pursuant to Article 3 hereof shall be extended to include a period commencing thirty (30) days prior to the expiration or other termination of this Lease or any renewal or extension thereof and terminating ninety (90) days thereafter. Tenant agrees that Owner’s rights hereunder shall survive the expiration of this Lease or any renewal or extension thereof.

          51.12 Nothing in this Lease shall be construed in any way as constituting the permission, consent or request of Owner, express or implied, through act or omission, to act by inference or otherwise, to any contractor,

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subcontractor, laborer, or materialman for the performance of any labor or the furnishing of any materials for any specific improvement, installation, addition, decoration, alteration, or repair of the Demised Premises or as giving Tenant the right, power, or authority to contract for or permit the rendering of any service or the furnishing of any material that would give rise to the filing of any mechanic’s lien against the fee of the Demised Premises.

ARTICLE 52 — CONTRACTORS

          When in this Lease the Tenant shall take or be required to take any action which may affect or alter the plumbing or electrical facilities or services furnished by Owner in the Building, the Demised Premises, or any portion thereof, Tenant shall only be entitled to have such work performed by the building contractor designated from time to time by Owner, in its sole and absolute discretion, to perform such alteration. Owner shall not be required to permit and Tenant shall not be entitled to use any contractors not designated as Owner’s selected contractors, provided, however, that such contractors’ bids do not exceed by more than 15% the bids for work of comparable quality, workmanship and specifications for performing such alterations submitted by Tenant’s contractors. If Tenant’s contractor’s bids are more than 15% below the bids of Owner’s contractors, Owner agrees not to unreasonably withhold or delay approval of Tenant’s performance of such alteration. Notwithstanding the foregoing, Tenant’s contractors must be properly licensed.

ARTICLE 53 — TENANT’S CONDEMNATION CLAIM

          Notwithstanding anything in Article 10 to the contrary, Tenant shall have the right to make a claim against the condemning authority for the value of its trade fixtures and business machines and equipment taken in a condemnation, and for reimbursement of its resultant moving expenses.

ARTICLE 54 — ACCESS TO THE DEMISED PREMISES

          Supplementing the provisions of Article 13, Owner’s right to enter the Demised Premises and its access thereto to make repairs and alterations and to erect and maintain pipes and conduits (except in the event of an emergency, in which event that right shall be unrestricted) shall be subject to the following conditions:

          54.1 Owner shall give Tenant reasonable notice of proposed entry or access;

          54.2 Owner shall not be obligated to perform work other than during normal business hours.

ARTICLE 55 — SQUARE FOOTAGE

          Tenant acknowledges that no representations have been made by the Owner as to the amount of square footage in the Demised Premises, irrespective of any reference in this Lease to square footage for any computation. The Tenant has inspected the Demised Premises and relies upon its own judgment in computing the square footage.

ARTICLE 56 — PLATE GLASS

          Tenant at its own cost and expense shall replace all damaged or broken plate glass or other windows in or about the Demised Premises.

ARTICLE 57 — ADDITIONAL RENT

          All payments other than the Fixed Rent to be made by Tenant pursuant to this Lease shall be deemed Additional Rent and, in the event of any non-payment, Owner shall have all rights and remedies provided for herein or by law for non-payment of Rent.

ARTICLE 58 — CONDITIONAL LIMITATION

          If Tenant defaults in the payment of Fixed or Additional Rent, or in making any other payment required for a total of two (2) months, whether or not consecutive, in any twelve (12) month period, and Owner shall have served upon Tenant a petition and notice of petition to dispossess Tenant by summary proceedings for any one or

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both of those months, then, notwithstanding that those defaults shall have been cured prior to the entry of a judgment against Tenant, any further similar default shall be deemed to be deliberate and Owner may require Tenant to deposit two additional months security deposit, and/or at Owner’s option Owner may serve a written three (3) days’ notice of cancellation of this Lease upon the Tenant, and upon the expiration of that three (3) days, whether or not Tenant has paid its Rent within that period, this Lease shall end and expire as fully and completely as if the expiration of such three (3) day period was the day herein definitely fixed for the end and expiration of this Lease and the Term, and Tenant shall remain liable as elsewhere provided in the Lease.

ARTICLE 59 — UTILITY INCREASE

Intentionally Omitted

ARTICLE 60 — GAS AND WATER

          Tenant shall make its own arrangements with the public utility company or companies or such New York City agencies servicing the Demised Premises for the furnishing of and payment of charges for gas and water. In no event shall Owner be responsible for charges for any such service. If gas or water is used in the Demised Premises, Tenant covenants to install the appropriate gas cutoff devices (manual and automatic) and meters for each service at Tenant’s own cost and expense. Anything to the contrary in Article 29 of this Lease notwithstanding, water charges contained in Article 29 of this Lease are for the use of existing lavatories and Tenant must install a meter for any other use of water in or about the Demised Premises.

ARTICLE 61 — NOISE

          Tenant shall not permit noise to emanate from the Demised Premises at a sound level which shall in any way disturb other tenants of the Building, or at a level that exceeds the level of sound emanating from other floors of the Building. This Article shall directly bind any successors in interest to Tenant. Tenant agrees that if at any time Tenant violates any of the provisions of this Article, such violation shall be deemed a breach of a substantial obligation of the terms of this Lease.

ARTICLE 62 — PORNOGRAPHY

          Tenant agrees that the value of the Demised Premises will be substantially diminished and the reputation of Owner and the partners of the Owner will be seriously injured if the premises are used for any obscene or pornographic purposes or any sort of commercial sex establishment. Tenant agrees that Tenant will not bring or permit any obscene or pornographic material on the premises, and shall not conduct or permit any obscene, nude or semi-nude live performances on the premises, nor permit use of the premises for nude modeling, rap sessions, or as a massage parlor. Tenant also agrees that it will not permit the production or processing of any videotape, film or photograph on the premises which depicts explicit sexual acts. Tenant agrees further that it will not permit any of the herein mentioned uses by any sublessee or assignee of the premises. This Paragraph shall bind successors in interest to Tenant. Tenant agrees that any violation of the term of this Paragraph shall be deemed a breach of a substantial obligation of Tenant under this Lease. Pornographic material, for purposes of this Paragraph, is defined as any written or pictorial matter with prurient appeal or any object or instrument primarily used for lewd or prurient sexual activity.

ARTICLE 63 — ODORS

          Tenant shall not cause or permit any unusual or objectionable odors, by-products or waste material to emanate from the Demised Premises. Tenant covenants that it will hold Owner harmless against all claims, damages or causes of action for damages arising after the commencement of the term of this Lease and will indemnify the Owner from any suits, orders or decrees and judgments entered therein, brought on account of any such emanation from the Demised Premises of unusual or objectionable odors, by-products or waste material. Tenant covenants to pay any attorney’s fees and other legal expenses incurred by Owner in connection with any claim or suit as described in this Paragraph.

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ARTICLE 64 — OWNER’S COSTS BY TENANT’S DEFAULTS

          If Owner, as a result of a default by Tenant of any of the provisions of this Lease, including the covenants to pay Rent and/or Additional Rent, makes any expenditure or incurs any obligations for the payment of money, including but not limited to attorney’s fees, in instituting, prosecuting or defending any action or proceeding, such sums so paid or obligations so incurred with interest and costs shall be deemed to be Additional Rent hereunder and shall be paid by Tenant to Owner within five (5) days of rendition of any bill or statement to Tenant therefor, and if any expenditure is incurred in collecting such obligations, such sum shall be recoverable by Owner as additional damages.

ARTICLE 65 — HOLDING OVER

          If Tenant holds over in possession after the expiration or sooner termination of the original term or of any extended term of this Lease, such holding over shall not be deemed to extend the term or renew the Lease, but such holding over thereafter shall continue upon the covenants and conditions herein set forth, except that the charge for use and occupancy of such holding over, for each calendar month or part thereof (even if such part shall be a small fraction of a calendar month), shall be the sum of:

          65.1 One-twelfth (1/12) of the highest annual Rent rate set forth on Page One of this Lease, times two point five (2.5), plus

          65.2 One-twelfth (1/12) of annual Additional Rent, which annual Additional Rent would have been payable pursuant to this Lease had this Lease not expired, plus

          65.3 Those other items of Additional Rent (not annual Additional Rent) which would have been payable monthly pursuant to this Lease had this Lease not expired, which total sum Tenant agrees to pay to Owner promptly upon demand, in full, without set-off or deduction. Neither the billing nor the collection of use and occupancy charges shall be deemed a waiver of any right of Owner to collect damages for Tenant’s failure to vacate the Demised Premises after the expiration or sooner termination of this Lease. The aforesaid provisions of this Article shall survive the expiration of this Lease.

ARTICLE 66 — DEPOSIT OF CHECKS

          Owner’s deposit of any checks delivered by Tenant simultaneously with Tenant’s execution and delivery of this Lease shall not constitute Owner’s execution and delivery of this Lease.

ARTICLE 67 — PARTIAL PAYMENT

          If Owner receives from Tenant any payment (“Partial Payment”) of less than the sum of the Fixed Rent, Additional Rent and other charges then due and owing pursuant to the terms of this Lease, Owner in its sole discretion may allocate such Partial Payment in whole or in part to any Fixed annual Rent, any annual Rent and/or any other charges, or to any combination thereof.

ARTICLE 68 — PORTERS WAGE RATE

Intentionally Omitted

ARTICLE 69 – SUBLEASING AND ASSIGNMENT

          Tenant may sublet all or a portion of the Demised Premises or assign this Lease with Owner’s prior written consent which shall not be unreasonably withheld, provided that:

          (a) Tenant shall furnish Owner with the name and business address of the proposed subtenant or assignee, a counterpart of the proposed sublease or assignment agreement, and satisfactory information with respect to the nature and character of the business of the proposed subtenant or assignee, together with current financial information and references reasonably satisfactory to Owner.

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          (b) In the reasonable judgment of Owner the proposed subtenant or assignee is financially responsible with respect to its proposed obligations under the proposed agreement and is of a character engaged in a business which is in keeping with the standards of the Building and the floor or floors in which the Demised Premises are located.

          (c) An executed duplicate original in a form satisfactory to Owner for review by Owner’s counsel of such sublease or assignment agreement shall be delivered to Owner at least five (5) days prior to the effective date thereof. In the event of any assignment, Tenant will deliver to Owner at least five (5) days prior to the effective date thereof, an assumption agreement wherein the assignee agrees to assume all of the terms, covenants and conditions of this Lease to be performed by Tenant hereunder and which provides that Tenant named herein and such assignee shall after the effective date of such assignment be jointly and severally liable for the performance of all of the terms, covenants and conditions of this Lease.

          (d) Tenant, at Tenant’s expense, shall provide and permit reasonably appropriate means of ingress to and egress from space sublet by Tenant.

          (e) Except for any subletting or assignment by Tenant to Owner, each subletting or assignment shall be subject to all the covenants, agreements, terms, provisions and conditions contained in this Lease.

          (f) Tenant covenants and agrees that notwithstanding any subletting or assignment to Owner, or to any other subtenant or assignee, and/or acceptance of Rent or Additional Rent by Owner from any subtenant or assignee, Tenant shall and will remain fully liable for the payment of the annual Rent and Additional Rent due and to become due hereunder and for the performance of all the covenants, agreements, terms, provisions and conditions contained in this Lease on the part of the Tenant to be performed.

          (g) Tenant further agrees that it shall not at any time publicly advertise at a rental rate less than the Fixed annual Rent plus any Additional Rent then payable hereunder, for assignment or sublease of all of the space demised herein, or for sublease of any portion of the space demised herein, but nothing herein contained shall be deemed to be Owner’s consent to any assignment or subletting.

          (h) Notwithstanding anything contained herein to the contrary, Tenant shall have no right to assign this Lease or to sublet the whole of the Demised Premises prior to or during the initial six (6) months following the Commencement Date hereof.

          (i) Tenant shall have no right to assign this Lease or sublet the whole or any part of the Demised Premises to any party who is dealing with or has dealt with Owner or Owner’s agent with respect to space then still available for rent in the Building within the 12 months immediately preceding Owner’s receipt of Tenant’s notice pursuant to item II of this Article.

          (j) Such subletting or assignment shall not cause Owner any cost.

          (k) Tenant shall have complied and shall comply with each of the provisions in this Article and Owner shall not have made any election as provided in item II hereof.

II

          If Tenant shall desire to sublet all or a portion of the Demised Premises or to assign this Lease, Tenant shall send to Owner a written notice by registered or certified mail at least ninety (90) days prior to the date such assignment or subletting is to commence stating (w) that the intention is to assign the Lease, (x) the portion of the premises that the Tenant desires to sublet, and if the portion intended to be sublet shall be less than the entire Demised Premises and other than an entire floor or multiple thereof, such notice shall be accompanied by a reasonably accurate floor plan of the premises to be sublet, (y) the term of such proposed subletting and (z) the proposed commencement date of such subletting or assignment.

          (a) If Tenant desires to sublet all of the Demised Premises or to assign this Lease, then within sixty (60) days after receipt of the aforesaid notice Owner may notify Tenant that Owner elects (1) to cancel this

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Lease, in which event such cancellation shall become effective on the date set forth pursuant to (z) above and this Lease shall thereupon terminate on said date with the same force and effect as if said date were the expiration date of this Lease: or (2) to require Tenant to assign this Lease to Owner effective from the date set forth pursuant to (z) above. In either event Tenant shall be obligated to surrender possession of the Demised Premises in the same condition as Tenant is obliged to surrender possession at the end of the term as provided in this Lease. Such assignment to Owner shall provide that the parties to such assignment expressly negate any intention that any estate created under such assignment be merged with any other estate held by either of said parties.

          (b) If Tenant desires to sublet less than all of the Demised Premises then within sixty (60) days after receipt of the aforesaid notice, Owner may notify Tenant that Owner elects to require Tenant to sublease to Owner as subtenant of Tenant, the portion of the Demised Premises that Tenant had specified in its notice to Owner, for the term, and from the commencement date specified in said notice. The annual Rent and Additional Rent which Owner shall pay to Tenant shall be a pro rata apportionment of the annual Rent and Additional Rent payable hereunder, and it is hereby expressly agreed that such sublease to Owner shall be upon all the covenants, agreements, terms, provisions and conditions contained in this Lease except for such thereof which are inapplicable, and such sublease shall give Owner the unqualified and unrestricted right without Tenant’s permission to assign such sublease or any interest therein and/or to sublet the space covered by such sublease or any part or parts of such space and to make or cause to have made or permit to be made any and all changes, alterations, decorations, additions, and improvements in the space covered by such sublease, and that such may be removed, in whole or part, at Owner’s option, prior to or upon the expiration or other termination of such sublease, provided that any damages or injury caused by such removal shall be repaired. Such sublease to Owner shall also provide that the parties to such sublease expressly negate any intention that any estate created under such sublease be merged with any other estate held by either of said parties.

          (c) Tenant covenants and agrees that any such assignment or subletting to Owner or further assignment or subletting by Owner or Owner’s assignee or sublessee may be for any purpose or purposes that Owner, in Owner’s uncontrolled discretion, shall deem suitable or appropriate.

          (d) If Owner should fail to exercise any of the elections granted to it pursuant to the provisions of sub-paragraphs “(a)” or “(b)” of Item II of this Article and if Tenant should sublet all or a portion of the Demised Premises for a rental in excess of the sum of annual Rent stipulated herein and Additional Rent arising hereunder, then Tenant shall pay to Owner as Additional Rent 50% of such excess amount. In computing such excess amount appropriate pro-rata adjustments shall be made with respect to a subletting of less than all of the Demised Premises.

          (e) Tenant hereby waives any claim against Owner for money damages which it may have based upon any assertion that Owner has unreasonably withheld or unreasonably delayed any consent to an assignment or a subletting pursuant to this Article. Tenant agrees that its sole remedy shall be an action or proceeding to enforce such provision or for specific performance.

          (f) For the purposes of this Article, assignment and subletting shall include any sale, exchange or disposition of more than fifty percent (50%) of seller’s shares, partnership or ownership interests or any change of more than fifty percent (50%) of ownership, if Tenant is not an individual.

          (g) If this Lease is assigned, sublet or if the Demised Premises or any part thereof be underlet or occupied by any party other than Tenant without Owner’s written permission, Owner may, in addition to any other remedy provided to Owner under this Lease or by law, after default by Tenant, collect Rent from the assignee, sublessee, undertenant or occupant, and apply the net amount collected to the Rent herein reserved. No assignment, subletting, underletting, occupancy or collection shall be deemed a waiver of the provisions hereof, the acceptance of the assignee, sublessee, undertenant or occupant as Tenant, or a release of Tenant from the further performance by or enforcement upon Tenant of covenants herein contained, and shall not prevent Owner from commencing an action or proceeding to terminate the prime Tenant’s Lease and evict the prime Tenant from the subject premises. Such a termination and eviction action or proceeding shall be based upon the illegal assignment, subletting or occupancy by someone other than the Tenant. The acceptance of Rent or other payments to Owner from the assignee, sublessee, undertenant or occupant shall not in any way be construed to relieve Tenant from obtaining the express written consent of Owner for such assignment, sublet or underletting and shall in no way be construed as acceptance and/or acknowledgment of such action or person, nor shall it confer any rights upon such person.

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          (h) Notwithstanding anything herein to the contrary contained in this Article or in this Lease, Tenant expressly acknowledges and agrees that any proposed subleases to different individuals and/or entities for portions of the Demised Premises, which portions together would constitute the entirety of the Demised Premises shall not be considered a request to sublet the entire Demised Premises and that Owner shall, for each such proposed sublease, have all the rights and remedies provided for in this Lease. By way of example, but in no way limiting any of Owner’s rights hereunder, should Tenant propose to sublease a portion of the Demised Premises to an individual or entity (Sublease #1) and should Tenant, simultaneously or shortly thereafter, propose to sublease the remainder of the Demised Premises to Owner (Sublease #2), then, with respect to Sublease #1 and Sublease #2, Owner shall have the right to (i) cancel this Lease in accordance with II(a)(1) hereof; (ii) notify Tenant, in accordance with II(b), of Owner’s election to require Tenant to sublease either or both of the portions of the Demised Premises desired to be sublet under Sublease #1 or Sublease #2 to Owner; or (iii) approve one of the proposed subleases without any obligation to approve the other sublease.

          (i) In the event of such subletting or assignment, Tenant shall pay to Owner Five Hundred Dollars ($500.00) as a fee for same, as well as all reasonable attorneys costs.

III

          If this Lease is assigned and Owner consents to such assignment, Tenant covenants and agrees that the term, covenants and conditions of this Lease may be changed, altered or modified in any manner whatsoever by Owner and the assignee without prior written consent of Tenant, that no such change, alteration or modification shall release Tenant from the performance by it of any of the terms, covenant and conditions on its part to be performed under this Lease. Any such change, alteration or modification which would have the effect of increasing or enlarging Tenant’s obligations or liabilities under this Lease shall not, to the extent only such increase or enlargement, be binding upon Tenant.

ARTICLE 70 — INTERCOM

          During the term of this Lease, Tenant shall pay as Additional Rent the sum of $10.00 per month for maintenance of the exterior buzzer and intercom system. If the system remains out of order for an unreasonable period of time, Tenant shall not be responsible for intercom charges during such time.

ARTICLE 71 — REAL ESTATE TAX ESCALATION

          71.1 As used herein:

          71.1.1 The term “Escalation Year” shall mean each calendar year which shall include any part of the term.

          71.1.2 The term “Taxes” shall mean all real estate taxes, assessments (special or otherwise), sewer rents, rates and charges, county taxes or any other governmental charge of a similar or dissimilar nature, whether general, special, ordinary or extraordinary, foreseen or unforeseen, which may be levied, assessed or imposed upon or with respect to all or any part of the land (“Land”) upon which the Building is constructed or the Building by the City or County of New York or any other taxing authority. If by law any assessment may be divided and paid in annual installments, then, for the purposes of this Article (a) such assessment shall be deemed to have been so divided upon application made thirty (30) days after the date of entry, whether before or after the date hereof, (b) such assessment shall be deemed payable in the maximum number of annual installments permitted by law, and (c) there shall be deemed included in Taxes for each Escalation Year the annual installment of such assessment becoming payable during such Escalation Year, together with interest payable during such Escalation Year on such annual installment and on all installments thereafter becoming due as provided by law, all as if such assessment had been so divided. If at any time during the Term the methods of taxation prevailing on the date hereof shall be altered so that in lieu of or as an addition to or as a substitute for the whole or any part of the Taxes now levied, assessed or imposed (a) a tax, assessment, levy, imposition or charge based on the rents received therefrom whether or not wholly or partially as a capital levy or otherwise, or (b) a tax, assessment, levy, imposition or charges measured by or based in whole or in part upon all or any part of the Land or the Building and imposed on Owner, or (c) a license fee measured by the Rent payable by Tenant to

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Owner, or (d) any other tax, levy, imposition, charge or license fee, however described or imposed, then all such taxes, assessments, levies, impositions, charges or license fees or the part thereof so measured or based, shall be deemed to be Taxes.

     71.1.3 The term “Owner’s Basic Tax Liability” shall mean the Taxes attributable to the Land and the Building for the New York City fiscal year 2005/2006, and “Owner’s Base Year” shall mean the New York City fiscal year 2005/2006, commencing on July 1^st, 2005.

          71.1.4 The term “Tenant’s Proportionate Share” shall mean two point five (2.5%) percent.

          71.2 If Taxes payable in any Escalation Year falling wholly or partially within the Term shall be in an amount constituting an increase above Owner’s Basic Tax Liability, Tenant shall pay as Additional Rent for such Escalation Year a sum equal to the Tenant’s Proportionate Share of the amount by which Taxes for such Escalation Year exceed Owner’s Basic Tax Liability. Tenant shall, if Owner so elects, pay its proportionate share of taxes in advance as Additional Rent.

          71.3 If by any reason of any law, statute, regulation or agreement with a taxing or other governmental authority (including, without limitation, a “J-51 Program”) any part of the Taxes shall be reduced, i.e., suspended or abated, then there shall be subtracted from Taxes for purposes of determining the Additional Rent payable hereunder, an amount equal to the decrease in such taxes due to such suspension or abatement.

          71.4 If, as a result of any application or proceeding brought by or on behalf of Owner for reduction in the assessed valuation of the Real Property affecting any Escalation Year commencing after Owner’s Base Year, there shall be a decrease in Taxes for any such Escalation Year with respect to which Owner shall have previously rendered an Owner’s Statement, the Owner’s Statement next following such decrease shall include an adjustment for such Escalation Year reflecting such decrease in Taxes, less all costs and expenses, including without limitation, any attorneys’ fees incurred by Owner in connection with such application or proceeding with respect to any Escalation Year occurring after Owner’s Base Year.

ARTICLE 72 — MISCELLANEOUS

          This Lease embodies the entire agreement between Owner and Tenant. Any change, addition, waiver, release or discharge of this Lease shall be ineffective unless signed by the party against whom such change, addition, waiver, release or discharge is sought to be enforced. Each right, power and remedy of Owner provided for in this Lease or now or hereafter existing at law, in equity, by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power or remedy provided for herein or now or hereafter existing at law, in equity, by statute or otherwise, and the exercise or beginning of the exercise by Owner of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise by Owner of any or all such other rights, power or remedies.

          73. Tenant shall be allowed (4) four listings in the Building standard lobby directory and three (3) listings in the Building standard hallway directory, for which Tenant agrees to reimburse Owner. All signs must conform to the Building standard. In no event shall Tenant permit any sign to be affixed directly to the entrance door to the Demised Premises.

          74. If electric current being supplied to Tenant is by the public utility corporation serving the part of the city where the Building is located, Tenant agrees to purchase same from such public utility corporation. If electric current is supplied by Owner, Tenant covenants and agrees to purchase same from Owner or Owner’s designated agent at charges, terms and rates set, from time to time, during the term of this Lease by Owner but not more than those specified in the service classification in effect on January 1, 1970 pursuant to which Owner then purchased electric current from the public utility corporation serving the part of the city where the Building is located. Said charges may be revised by Owner in order to maintain the return to Owner produced under the foregoing in the event that the Public Service Commission approves changes in service classifications, terms, rates or charges for such public utility during the term hereof. Where more than one meter measures the service of Tenant in the Building, the service rendered through each meter may be computed and billed separately in accordance with the rates herein. Bills therefor shall be rendered at such times as Owner may elect. In the event that such bills are not paid within five (5) days

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after the same are rendered, Owner may without further notice discontinue the service of electric current to the Demised Premises without releasing Tenant from any liability under this Lease and without Owner or Owner’s agent incurring any liability for any damage or loss sustained by Tenant by such discontinuance of service. Owner shall not be liable or responsible to Tenant for any loss or damage or expense which Tenant may sustain or incur if either the quantity or character of electric services is changed or is no longer available or suitable for Tenant’s requirements. Any riser or risers to supply Tenant’s electrical requirements, upon written request of Tenant, will be installed by Owner, at the sole cost and expense of Tenant, if in Owner’s sole judgment the same are necessary and will not cause permanent damage or injury to the Building or the Demised Premises or cause or create a dangerous or hazardous condition or entail excessive or unreasonable alterations, repairs or expense or interfere with or disturb other tenants or occupants. In addition to the installation of such riser or risers, Owner will also, at the sole cost and expense of Tenant, install all other equipment proper and necessary in connection therewith subject to the aforesaid terms and conditions. Tenant covenants and agrees that at all times its use of electric current shall never exceed the capacity of existing feeders to the Building or the risers or wiring installations. It is further covenanted and agreed by Tenant that all the aforesaid costs and expenses shall be paid by Tenant to Owner within five (5) days after rendition of any bill or statement to Tenant therefor. Owner may discontinue any of the aforesaid services upon thirty (30) days notice to Tenant without being liable to Tenant therefor or without in any way affecting this Lease or the liability of Tenant hereunder or causing a diminution of Rent, and the same shall not be deemed to be a lessening or diminution of services within the meaning of any law, rule or regulation now or hereafter enacted, promulgated or issued. In the event Owner gives such notice of discontinuance, Owner shall permit Tenant to receive such service direct from said public utility corporation, in which event, Tenant will at its own cost and expense furnish and install all risers, service wiring, and switches that may be necessary for such installation and required by the public utility company, and will at its own cost and expense maintain and keep in good repair all such risers, wiring and switches. Tenant shall make no alterations or additions to the electric equipment and/or appliances without the prior written consent of Owner in each instance. Rigid conduit only will be allowed. If any tax is imposed upon Owner’s receipts from the sale or resale of electric energy or gas or telephone service to Tenant by any Federal, State or Municipal Authority, Tenant covenants and agrees that where permitted by law, Tenant’s pro rata share of such taxes shall be passed on to and included in the bill of and paid by Tenant to Owner. Any sums due and payable to Owner under this Article shall be collectible as Additional Rent.

          75. Tenant agrees to pay a Building Security charge of $40.00 per month.

          76. Owner’s Work within the Demised Premises shall consist of the following:

a.	Construct three (3) offices, one conference room with glass and sheetrock walls, one reception area enclosure and one mechanical/storage room, including Building standard interior doors, as indicated on the attached “Exhibit B”;
b.	Provide and install Building standard lighting and electrical outlets throughout the Demised Premises;
c.	Paint newly constructed offices, rooms and enclosure, Building standard white; and
d.	Provide and install three (3) window air conditioning units to cool the Demised Premises as indicated on the attached “Exhibit B”, which units shall remain in the Demised Premises and shall be considered leasehold improvements at the expiration of this Lease or upon vacating of the Demised Premises by Tenant.

               If Owner’s Work has not been substantially completed by May 1^st, 2005, Tenant shall receive one day of credit for each day until Owner’s Work has been substantially completed and Owner has notified Tenant of same. In the event Owner is unable to complete its work due to delays caused by Tenant or its agents or contractors, then the date of completion of Owner’s Work shall be adjusted by deducting one day for each day of such delay.

ARTICLE 77 — MITIGATION OF DAMAGES

          Owner shall use reasonable efforts to mitigate its damages in the event of Tenant’s default and a termination of this Lease, provided however, it is agreed that (i) Tenant shall reasonably cooperate with Owner in any such efforts, (ii) Owner shall have no obligation to lease or relet the Demised Premises at less than a market

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Rent for a term of less than five (5) years, pursuant to Owner’s standard Lease form, and (iii) in no event shall Owner be required to lease or relet the Demised Premises before any other available space or unit in the Building.

ARTICLE 78 — “GOOD GUY” GUARANTEE OF LEASE

     In order to induce the aforesaid Owner to enter into this Lease and for other valuable considerations, the receipt of which is hereby acknowledged, JOHN M. TORRENS, an individual residing at 6368 Seneca Turnpike, Jamestown, NY 13078, whose Social Security number is ####-##-#### (“Guarantor”), hereby makes the following guarantee and agreement with and in favor of Owner and its respective legal representations and assigns. The following personal guarantee is the only provision of the Lease to which the Guarantor is personally liable, unless provided for elsewhere in the Lease, as all other provisions, clauses and terms of this Lease are binding upon the Tenant.

       A. The undersigned guarantees to Owner, its successors and assigns, that he will advise Owner of Tenant’s intention to vacate the Demised Premises a minimum of four (4) months in advance and that he will pay to Owner all Minimum Rent, Additional Rent and any and all other charges that have accrued or may accrue under the terms of the Lease (hereinafter collectively referred to as “Accrued Rent”), to the latest date that Tenant and its assigns and sublessees, if any, will have completely performed the following:

          1. Vacated and surrendered the Demised Premises in broom clean condition to Owner pursuant to the terms of the Lease, and

          2. Delivered the keys to the Demised Premises to Owner, and

          3. Paid to Owner all Accrued Rent to and including the date which is the later of (a) the actual receipt by Owner of said Accrued Rent, (b) the surrender of the Demised Premises, or (c) receipt by Owner of the keys to the Demised Premises.

     B. The undersigned guarantees to Owner, its successors and assigns that he will pay to Owner any damages, including legal fees, suffered or incurred by Owner as a result of Tenant holding over in the Demised Premises after the expiration or sooner termination of the term of this Lease.

     C. It is agreed that any security deposited under Article 32 of the Lease shall not be computed as a deduction from any amount payable by Tenant or Guarantor under the terms of this Guarantee of Lease.

     D. This Guarantee is absolute and unconditional and is a Guarantee of payment and not of collection. The parties hereto waive all notice of nonpayment, nonperformance, nonobservance or proof, or notice, or demand, whereby to charge the undersigned therefor, all of which the undersigned expressly waives, and expressly agrees that the validity of this Guarantee, and the obligation of the Guarantor hereto shall in no wise be terminated, affected or impaired by reason of the assertion by Owner against Tenant of any of the rights or remedies reserved to Owner pursuant to the performance of the within Lease. The undersigned further covenants and agrees that this Guarantee shall remain and continue in full force and effect as to any renewal, modification or extension of this Lease and during any period when Tenant is occupying the premises as a “statutory tenant” (including, but not limited to a month-to-month tenancy). As a further inducement to Owner to make this Lease and in consideration thereof, Owner and the undersigned covenant and agree that in any action or proceeding brought by either Owner or the undersigned against the other on any matters whatsoever arising out of, under, or by virtue of the terms of this Lease or of this Guarantee, that Owner and the undersigned shall and do hereby waive trial by jury.

     E. This Guarantee shall be construed in accordance with the Laws of the State of New York.

     IN WITNESS WHEREOF the undersigned has set his hand this 13th day of April, 2005.

/s/ John M. Torrens  

JOHN M. TORRENS 

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EX-10.15

EXHIBIT 10.15

This agreement made this 4 day of January, 2008 between
Oliva Holding, LLC
6724 Thompson Road
Syracuse, NY 13211

of the first part, (hereinafter referred to as Landlord) and

INTERACTIVE THERAPY GROUP
500 East Brighton Avenue
Syracuse, NY 13210

of the second part, (hereinafter referred to as Tenant)

AGREEMENT

First: Premises. That the Landlord hereby lets to the Tenant and the Tenant hereby hires from the Landlord the following Premises: Approximately 5,010 square feet of office/therapy space (the “Premises”) in the northern wing of a 16,500 square foot building located at 1 Adler Drive, East Syracuse, NY 13057 (the “Building”). A floor plan of the space is attached hereto and labeled Exhibit A.

Second: Term, Rental and Use. With the appurtenances for a term of five (5) years and two (2) months to commence on the 1^st day of March 2008 (the “Lease Commencement Date”) and to end on the 30^th day of April 2013; provided however, such Lease Commencement Date may not precede the completion of the improvements as agreed upon by Landlord and Tenant in the Addendum attached to this Lease. After Landlord has completed said improvements and Tenant has approved such improvements, Tenant shall certify in writing that the improvements are complete and Landlord and Tenant shall certify in writing a new Lease Commencement Date if the improvements were completed subsequent to the date provided above. Said written certifications shall be included as attachments to this Lease. The ANNUAL RENT of this Lease is $55,110.00, which shall be due and payable on the Lease Commencement Date and annually thereafter on the anniversary date of the Lease Commencement Date. Notwithstanding the foregoing, provided that the TENANT shall not be in default hereunder, the ANNUAL RENT shall be paid in equal monthly installments of $4,592.50 in advance on the first day of each month at the principal office of the Landlord, without diminution, deduction or set-off whatsoever and without prior notice or demand. Tenant, upon signing of this Lease, will pay the Landlord the first months rent of ANNUAL RENT as well as a deposit equal to one (1) monthly installment of ANNUAL RENT, totaling $9,185.00. Regular rental payments of ANNUAL RENT will commence on May 1, 2008. The premises are to be occupied by the Tenant for the following purposes: General offices and children’s therapy for the purpose of conducting Tenant’s daily operations and for no other purpose whatsoever.

Third: Utilities. The Landlord shall provide and pay for all water, gas, electricity and power (the “Utilities”) used on the Premises. The Base Year cost for Utilities is based upon $2.00 per sq. ft. of the 16,500 sq. ft. Building, which total Base Year cost is $33,000.00. Tenant shall reimburse Landlord for its proportionate share of any increases in the cost of Utilities over the Base Year. It is agreed that the Tenant will be billed on an annual basis for its proportionate share (which is 30.4%) of the increase in the cost of Utilities over the Base Year cost.

Fourth: Services. The Landlord shall provide, at Landlord’s expense snow plowing, (from all sidewalks, lands, drives and parking areas), lawn care and exterior trash and cardboard dumpsters. Landlord shall provide these services in a manner to be expected for the operation of buildings in the same class and location of the Building. Notwithstanding the above, Tenant will be responsible for its own cleaning/janitorial service.

Fifth: Insurance & Taxes. Tenant shall pay as additional rent its proportionate share of any increase in the cost of building insurance (“Insurance”) and real estate taxes (including property tax assessments, water and sewer rents, rates and charges, parking and environmental surcharges and any other governmental charges, general and special, ordinary and extraordinary), (“Taxes”) above the base year amounts paid by Landlord. Currently, the Premises are subject to the following Insurance and Taxes (school taxes and state, town and county taxes). Base Year Insurance is

$1,749.60 for 2007-2008. School taxes are $11,862.12 for the 2007-2008 school year, Base Year State, town and county taxes are $6,604.93 for the year 2008. It is agreed Tenant will be billed in September (for insurance and school tax increases) and January (for county tax increases) for its proportionate share (which is 30.4%) of the increase in the cost of Insurance and Taxes over the Base Year cost.

Sixth: Assignment and Subletting. Tenant shall not have the right and option to assign, sublet, mortgage, or otherwise transfer this Lease, by operation of law or otherwise, in whole or part, or rent desk space in the Premises without the written consent of Landlord, such consent shall not be unreasonably withheld or delayed. An assignment made by Tenant with the written consent of Landlord shall not release, discharge or otherwise affect the liability of Tenant under this Lease, nor shall any such assignment or subletting relieve Tenant from the requirement of obtaining the prior written consent of Landlord to any further assignment or subletting. If Tenant causes an event of default to occur, Tenant shall assign to Landlord the rent due from any subtenant of Tenant and shall authorize each subtenant to pay such rent directly to Landlord. Tenant shall not have the right to sublease the Premises without Landlord’s prior written consent. Such consent will not be unreasonably withheld. Notwithstanding the foregoing, Tenant may freely assign this Lease or sublet the Premises to a parent entity, a subsidiary entity, an affiliate entity with a parent common to Tenant, or an entity acquiring control of Tenant (each a “Related Party”) without Landlord’s consent.

Seventh: Repairs and Maintenance. The Landlord shall make all repairs to the structure, foundation, roof and exterior of the Premises and the Building. The Tenant shall at all times keep the interior of the Premises including but not limited to the walls, doors, plumbing lighting fixtures and electrical equipment in first class condition and repair (which is agreed they now are), shall replace all broken glass, and at the end of the term shall peaceably quit and surrender said Premises in such condition, ordinary wear and tear excepted. It is further understood and agreed that Landlord will be responsible for normal maintenance to heating and air conditioning equipment in the Premises, i.e., filter replacement, belts, motors, etc., and Tenant will be responsible for electrical and plumbing maintenance of the Premises, i.e., light bulb and ballast replacement, plugged toilets, etc.

Eighth: Alterations. The tenant shall not make any alterations or improvements upon the Premises without the prior written consent of the Landlord, which may not be unreasonably withheld, conditioned or delayed. Tenant shall not make or permit any defacement, injury or waste, in, to or about the Premises. Except with respect to Tenant’s trade fixtures, Tenant agrees that any changes alterations, additions or improvements made by the Tenant shall at the Landlord’s option remain in and become a part of the Premises at the expiration of the lease or any renewal thereof, provided Landlord notified Tenant of its option to retain such alterations, additions or improvements prior to their installation. In the event, however, any alterations, additions or improvements are made to the Premises and Landlord has not elected to retain such alterations, additions or improvements as provided in the preceding sentence, Tenant shall, upon expiration of this Lease (as may be extended), restore the Premises to their original condition and remove therefrom any additions, improvements or alterations made thereto. Under no circumstances shall Tenant be prevented from removing its trade fixtures; however, Tenant shall be obligated to restore the Premises to their condition immediately prior to the installation of any such trade fixtures.

Ninth: Rules and Regulations. Tenant and its agents and employees shall comply with and observe all reasonable rules and regulations concerning the use, management, operation, safety and good order of the Premises and the Building which may from the time be promulgated by Landlord. Said Rules are set forth as follows:

a)	The exterior for the Premises must be kept free of all debris not customarily removed by Landlord’s janitorial services. This includes pallets, drums, cardboard, etc.
b)	It is expected that non-biodegradable items will not be flushed or thrown in the toilets. These items include bur are not limited to sanitary napkins, paper towels, plastic cups, etc. Should any of these items be the cause of a plumbing service call, the Tenant will be charged any expense incurred.
c)	Where parking lots have pavement markings, Tenant and its employees are expected to park within the lines.
d)	In the leased areas where utilities are furnished, Landlord requires that each tenant set back the thermostat during times when the outside temperature is below 50° F and set ahead when outside temperatures are above 72° F after 6:00 PM. The purpose of this is to minimize energy consumption during periods of cold and warm weather respectively.

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e)	In the event that Tenant elects to change any locks for the Premises, Tenant must notify the Landlord in writing and forward a duplicate key for any lock changed. At the end of the lease term, Tenant at its own expense will reinstall the original locks.
f)	With the exception of service dogs (for the handicapped persons), animals (i.e., pets) are not permitted in the Buildings or on the grounds.

Tenth: Compliance with the Order of Public Authorities. The Tenant shall comply with all laws, ordinances, rules, regulations, or requirements of all Federal, State or Municipal Governments and every department or bureau thereof applicable to the Premises and shall not do or permit to be done any act upon the Premises whereby the rate of fire insurance upon the Building may be increased or which shall be in violation of the rules of the Board of Fire Underwriters or the provisions of the New York State standard form of fire insurance policies.

Eleventh: Subordination to Mortgages. This lease is and shall be subject and subordinate to any mortgage or mortgages now in force or which shall at any time be placed upon the Premises or any part thereof or the Building. The tenant agrees that it will, within fifteen (15) days written notice, execute and deliver such instruments as reasonably necessary to effect more fully such subordination of this lease to the lien of any such mortgage or mortgages as shall be desired by any mortgagee.

Twelfth: Landlord’s Right to Access.

a)

Tenant shall permit Landlord, or its authorized representatives, to enter the Premises during usual business hours ( or at any time for the purpose of making emergency repairs) for the purpose of (i) inspection; (ii) making repairs to the Premises or the Building; and (iii) repairing, replacing, altering or changing existing connections from any fixtures, pipes, wires, or ducts in the Premises, or making new such connections, provided, however, that in non-emergency situations Landlord shall provide reasonable notice and shall make reasonable efforts not to disrupt Tenant’s business operations during normal business hours.

b)

Landlord may, during the last one hundred twenty (120) days of the lease term, at reasonable times after first notifying Tenant, show the Premises to prospective clients for lease. If Tenant shall vacate the Premises during the last month of the term of this Lease, Landlord shall have the right thereafter to enter the Premises and to commence preparations for the succeeding tenant or for any other purpose whatsoever, without affecting Tenant’s obligation to pay rent for the full term of this Lease.

Thirteenth: Surrender of Premises. Tenant covenants, at the expiration or other termination of the Lease, to remove its property and effects from the Premises and all keys, locks and other fixtures connected therewith and to return the Premises to Landlord, in good repair, order and condition, ordinary wear and tear and damage by fire or other casualty excepted.

Fourteenth: Events of Default and Conditional Limitation.

a) If at any time prior to or during the term any one or more of the following events occurs, each such event shall constitute an “event of default”:

i.	Tenant makes an assignment for the benefit of its creditors;
ii.	Tenant becomes insolvent;
iii.	The leasehold estate hereby created in Tenant is taken on execution or by other process of law;
iv.	Any petition is filed against Tenant in any court whether or not pursuant to any bankruptcy, reorganization, composition, extension, arrangement or insolvency proceedings, and Tenant is thereafter adjudicated bankrupt, or such petition is approved by the Court, or the Court assumes jurisdiction of the subject matter and such proceedings are not dismissed within ninety (90) days after the institution of the same; or any such petition is so filed by Tenant;
v.	In any proceedings, a receiver or trustee is appointed for Tenant’s property and such receivership or trusteeship is not vacated or set aside within ninety (90) days after the appointment of such receiver or trustee;
vi.	There is a transfer or an attempted transfer of this Lease or of Tenant’s interest thereof in violation of the restrictions set forth in the Sixth paragraph of this Lease;
vii.	Tenant abandons the Premises;
viii.	Tenant fails to comply with any local, state or federal law, rule or regulation governing the use, handling and disposal of hazardous materials or is otherwise in violation of the obligations contained in the Thirty-Fourth paragraph of this Lease;

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ix.	Tenant fails to pay any installment of the rent or any portion of any such payment, when the same becomes due and payable, and such failure continues for ten (10) days after the Landlord’s notice that said rent is overdue; or
x.	Tenant fails to perform or observe any other requirement of this Lease (not hereinbefore specifically referred to) on the part of Tenant to be performed or observed and such failure continues for thirty (30) days after receipt of written notice from Landlord to Tenant.

b) This lease and the terms are expressly subject to the conditional limitation that upon the happening of any one or more of the aforementioned events of default, Landlord, in addition to the other rights and remedies it may have, shall have the right to immediately declare this Lease terminated and the term ended, in which event all of the right, title and interest of Tenant hereunder shall wholly cease and expire upon delivery by Landlord to Tenant of a Notice of Termination. Notwithstanding the above language, Landlord will notify Tenant via certified mail of Landlord’s intent to terminate the Lease due to Tenants uncured default and upon three (3) business days from the date of the letter, Tenant will have an additional five (5) business days to cure such default or Tenant shall then quit and surrender the Premises to Landlord in the manner and under the conditions as provided for under this Lease, but Tenant shall remain liable as hereinafter provided.

Fifteenth: Landlord’s Remedies.

a)	If this Lease shall be terminated as provided in the Fourteenth paragraph, Landlord or Landlord’s agents or employees may immediately or at any time thereafter re-enter the Premises and remove therefrom Tenant, its agents, employees, licenses, and any subtenants and other persons, firms or corporations, and all or any of its or their property therefrom, either by summary dispossess proceedings or by any suitable action or proceedings at law or in equity and repossess and enjoy the Premises, together with all alterations, additions and improvements thereto. Landlord, in the event of such re-entry and repossession, may store Tenant’s Personal Property in a public warehouse or elsewhere at the cost of and for the account of Tenant.
b)	In case of any such termination, re-entry of dispossession by summary proceedings or otherwise, the rents and all other charges required to be paid up to the time of such termination, re-entry or dispossession, shall be paid by Tenant, and Tenant also shall pay to Landlord all expenses which Landlord may then or thereafter incur for legal expenses, attorney’s fees, brokerage commissions and all other costs paid or incurred by Landlord as the result of such termination, re-entry or dispossession, and for restoring the Premises to good order and condition and for altering and otherwise preparing the same for reletting and for reletting thereof. Landlord may, at any time and from time to time, relet the Premises, in whole or in part, for any commercially reasonable rental then obtainable either in its own name or as agent of Tenant, for a term or terms which, at Landlord’s option, may be for the remainder of the then current term of this lease or for any longer or shorter period.
c)	If this Lease be terminated as aforesaid, Tenant nevertheless covenants and agrees notwithstanding any entry or re-entry by Landlord whether by summary proceedings, termination or otherwise, to pay and be liable for:

i.

ANNUAL RENT due and payable or that portion of ANNUAL RENT due and payable which remains outstanding at the time of said termination; and

ii.

In the event the Premises be relet by Landlord, Tenant shall be entitled to a credit (but not in excess of the rent, reserved under the terms of this Lease) in the net amount of rent received by Landlord in reletting the Premises after deduction of all expenses and costs incurred or paid as aforesaid in reletting the Premises and in collecting the rent in connection therewith. At any time after the termination of the Lease, in lieu of collecting any deficiencies, or any further deficiencies, as aforesaid, Landlord shall, at Landlord’s option, be entitled to recover from Tenant, in addition to any other relief, such as a sum as at the time of such termination represents the present value of the total rent, and other benefits which would have accrued to Landlord under this Lease for the remainder of the Lease term, as if the Lease had been fully complied with by Tenant, less any monthly deficiencies for such period previously paid to Landlord by Tenant, and less the fair value of the reletting of the Premises. Suit or suits for the recovery of the deficiency or damages referred to in this Fifteenth paragraph or for any installment or installments of rent hereunder, or for a sum equal to any such installment or installments may be brought by Landlord at once or from time to time at Landlord’s election, and nothing in this Lease shall be deemed to require Landlord to await the date whereon this Lease or the term hereof would have naturally expired had there been no such default by Tenant or no such termination. This subsection (ii) shall have no

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force and effect unless Landlord has fulfilled its obligations under the law with respect to mitigation of damages.

d)	Landlord and Tenant, so far as permitted by law, waive and will waive trial by jury in any action, proceeding or counterclaim brought by either of the parities hereto against the other on any matters whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises, or any claim or injury or damage. The terms “enter”, “re-enter”, “entry”, or “re-entry” as used in this Lease are not restricted to their technical legal meaning. In the event Landlord commences any proceedings for the recovery of possession of the Premises or to recover for non-payment of rent, Tenant shall not interpose any compulsory counterclaim in any such proceeding. This may not, however, be construed as a waiver of Tenant’s rights to assert such claim in any separate action or actions initiated by Tenant.
e)	No failure by Landlord to insist upon the strict performance of any covenant, agreement, term or condition of this Lease or to exercise any right or remedy consequent upon a breach thereof, and no acceptance of full or partial rent during the continuance of any such breach, shall constitute a waiver of any such breach or of such covenant, agreement, term and condition, and this Lease shall continue in full force and effect with respect to any other then existing or subsequent breach thereof.
f)	In the event of any breach or threatened breach by Tenant of any of the covenants, agreement, terms or conditions contained in this Lease, Landlord shall be entitled to enjoin such breach or threatened breach and shall have the rights to invoke any right or remedy allowed at law or in equity, by statute or otherwise.
g)	Each right and remedy of Landlord provided for in this Lease shall be cumulative and shall be in addition to every other right or remedy provided for in this Lease or now hereafter existing at law or in equity, by statute or otherwise.

Sixteenth: Mechanic’s Liens.

a)

If any mechanic’s liens are filed against the Premises or any portion of the Building based upon any act of Tenant or anyone claiming through Tenant, Tenant shall hold Landlord harmless from all damages, claims and expenses arising therefrom, and Tenant, after notice from Landlord (or any person in privity of estate with Landlord), shall forthwith commence such action by bonding, deposit, payment or otherwise as will remove or satisfy such lien within fifteen (15) days. In the event Tenant does not remove or satisfy said lien within said fifteen (15) day period, Landlord shall have the right to do so by posting a bond or undertaking, and Tenant agrees to reimburse Landlord for any and all expenses incurred by Landlord in connection therewith five (5) days after receipt by Tenant of Landlord’s invoice therefor. These expenses shall include, but not limited to, filing fees, legal fees and bond premiums.

b)

Nothing in this Sixteenth paragraph shall be deemed or construed as (i) Landlord’s consent to any person, firm or corporation for the performance of any work or services or the supply of any materials to the Premises or any improvements thereon, or (ii) giving Tenant or any other person, firm or corporation any right to contract for or to perform or supply any work, services or materials that would permit or give rise to a lien against the Premises or any part thereof.

Seventeenth: Eminent Domain. If at any time during the Term, the wholly or materially all of the Premises shall be taken for any public or quasi-public purpose by any lawful power of authority by the exercise of the right of condemnation or eminent domain or by agreement between Landlord and those authorized to exercise such right, this Lease, and the Term shall terminate and expire on the date of such taking and the Rental, and other sum or sums of money and other charges herein reserved and provided to be paid by the Tenant shall be apportioned and paid to in the date of such taking. The term “materially all of the Premises” shall be deemed to mean such portion of the Premises, as when so taken, would leave remaining a balance of the Premises which, due to either to the area so taken or the location of the part so taken in relation to the part not so taken, would not under economic conditions, zoning laws or building regulations then existing or prevailing, readily accommodate a new building or buildings of nature similar to the Building at the date of such taking of floor areas sufficient together with buildings not taken in the condemnation, to produce a fair and reasonable return, after payment of all operating expenses thereof. If less than materially all of the premises shall be taken, Landlord shall restore the Premises to Tenant’s reasonable satisfaction and rent shall abate proportionately until such time as the Premises is restored. Landlord’s failure to make such restoration within 180 days of such taking shall grant to Tenant an option to terminate this Lease. Although all damages in the event of any condemnation shall belong to the Landlord whether such damages are awarded as compensation for diminution in value of the leasehold or to the fee of the Premises, Tenant shall have the right to claim and recover from the condemning authority, but not from the Landlord, such compensation as may

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be separately awarded or recoverable by Tenant in Tenant’s own right on account of any and all damage to Tenant’s business by reason of the condemnation and for or on account of any cost or loss to which Tenant might be put in removing Tenant’s merchandise, furniture, fixtures, leasehold improvements and equipment.

Eighteenth: Casualty. It shall be the responsibility of the Landlord to repair all damage to the Building due to fire or other casualty within 120 days of the occurrence of such fire or other casualty; subject to such delays as may be caused by adjustments with insurance carriers or due to excusable delays. Landlord shall not be responsible to repair damage to personal property, equipment or trade fixtures of tenant, it being the sole responsibility of Tenant to procure any insurance it desires for such items. Notwithstanding anything herein contained to the contrary, in the event of damage to the extent of 50% or more to the Premises or Building (as determined and established by Landlord’s appraisal), by fire or other casualty, the Landlord may, at its option, terminate this Lease upon 30 days written notice to the Tenant. Until repairs are completed, Tenant’s obligation with respect to rent shall be abated on the basis of the portion of the Premises, which are available for the ordinary conduct of Tenant’s business. In the event that the Premises are damaged to the extent that the Premises are unavailable, the entire rent shall be abated until after the Premises are rebuilt to a condition where Tenant is able to utilize the Premises for the ordinary conduct of its business. If Landlord has not restored the Premises within 180 days following the occurrence of such casualty, Tenant shall have the option to terminate this Lease.

Nineteenth: Insurance.

a)

Fire. At all times during the term of this Lease, Landlord shall keep all improvements on the Premises insured against loss or damage by risk now or hereafter embraced by “all risks” and “difference in conditions” coverage, and against such risks as Landlord from time to time reasonably may designate in amounts sufficient to prevent Landlord from becoming a co-insurer.

b)

Liability Insurance. Tenant shall, at its own cost and expense, obtain blanket public liability insurance covering the interest of the Tenant in the Premises, said public liability to be in the sum of $1,000,000.00 in case of bodily injury or death and in the case of property damage in an amount reasonably declared necessary by the Landlord. The Tenant will provide Landlord with a certificate of insurance from an insurance company reasonably acceptable to Landlord stating that the Landlord is named as an additional insured under Tenant’s blanket public liability insurance policy. Tenant shall save Landlord harmless and indemnify from all injury, loss, claims or damage to any person or property which occurs on the Premises and shall pay all of Landlord’s attorneys’ fees incurred in connection with the same, unless the same shall have been caused by the act or negligence of the Landlord, its agents, servants or employees. Upon failure at any time on the part of the Tenant to pay the premiums for the insurance required by this clause, the landlord shall be at liberty from time to time as often as such failure shall occur, to pay premiums therefore, and any and all sums so paid for insurance by the Landlord shall be and become and hereby are declared to be additional rent under this Lease due and payable on the next rent day.

Twentieth: Limitation of Landlord’s Liability. Except if caused by the negligence of Landlord, its agents or employees, Landlord shall not be liable to Tenant for any loss, damage or expense of any kind resulting from, and no claims shall be made against Landlord by Tenant for:

a)	any injury or damage to person or property occurring in, on or about the Premises;
b)	the theft, loss or destruction of any personal property contained in the Premises or any storage rooms provided by Landlord;
c)	the necessity of repairing the Premises or any other portion of the Building, except to the extent Landlord is responsible for such repairs in accordance with the terms of this Lease;
d)	fire or other casualty;
e)	any overflow or leakage upon or into the Premises of water, rain, snow, steam, gas or electricity, or any breakage or bursting of pipes, conduits or other plumbing fixtures or appliances; or
f)	any loss or damage to property of the Tenant entrusted with Landlord’s employees.

All references to Tenant in the proceeding sentence shall be deemed to include Tenant’s employees, agents and other persons claiming the right to be in the Premises or the Building under or through Tenant.

Twenty-First: Indemnification.

a) Tenant’s Indemnity. Tenant covenants to indemnify and save harmless the Landlord from and against any and all liability, damages, expenses, fees (including reasonable attorneys’ fees), penalties, actions, causes of

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action, suits, costs, claims or judgments arising from injury during said lease term to person or property occasioned wholly or in part by any act or omission of Tenant, its employees, customers and invitees. Tenant shall and will, at its own cost and expense defend any and all suits or actions that may be brought against Landlord or in which Landlord may be impleaded with others upon any such above mentioned claim or claims, and in the event of failure of Tenant so to do, Landlord may, at the cost and expense of Tenant and upon prior written notice to Tenant, defend any and all such suits or actions, and Tenant shall and will satisfy, pay and discharge any and all judgments that may be recovered against Landlord in any such suit or actions in which Landlord may be a party or in which Landlord shall become liable as aforesaid, then Landlord may pay the same with any interest costs or other charges which may have accrued thereon and the amount so paid by Landlord, with interest thereon at the current prime interest rate per annum from the date of payment, shall become and be due and payable by Tenant as additional rent with the next installment of rent which shall become due after such payment by Landlord.

b) Landlord’s Indemnity. Landlord covenants to indemnify and save harmless the Tenant from and against any and all liability, damages, expenses, fees (including reasonable attorney’s fees), penalties, actions, causes of action, suits, costs, claims or judgments arising from injury during said lease term to person or property occasioned wholly or in part by any act or omission of Landlord, its employees, customers and invitees. Landlord shall and will, at its own cost and expense defend any and all suits or actions that may be brought against Tenant or in which Tenant may be impleaded with others upon any such above mentioned claim or claims, and in the event of the failure of Landlord so to do, Tenant may, at the cost and expense of Landlord and upon prior written notice to Landlord, defend any and all such suits or actions, and Landlord shall and will satisfy, pay and discharge any and all judgements that may be recovered against Tenant in any such suit or actions in which Tenant may be a party or in which Tenant shall become liable as aforesaid, then Tenant may pay the same with any interest costs or other charges which may have accrued thereon and the amount so paid by Tenant, with interest thereon at current prime interest rate per annum from the date of payment, shall become and be due and payable by Landlord and may be discharged as a credit to Tenant’s remaining rental obligation under the Lease.

Twenty-Second: Subrogation. Landlord and Tenant and all parties claiming under them, mutually release and discharge each other from all claims and liabilities for damage or destruction by fire or any other peril included in the extended coverage form of fire insurance during the term of this Lease and each of the parties hereto agree to have a waiver of subrogation clause attached to and made a part of its insurance policy or policies.

Twenty-Third: Limitation on Personal Liability.

a)

If the Landlord shall be an individual, a partnership or a co-tenancy, so long as such individual or the partners or co-tenants constituting Landlord at the date of execution of this Lease and from time to time thereafter as shown by a partnership certificate then in effect or as shown by the record fee title, or any of them, or members of their immediate family, or trusts for the benefit of any of the foregoing persons, directly or indirectly, own an interest in the premises or in any partnership, or any trust, co-tenancy or other unincorporated entity constituting the Landlord hereunder, Tenant shall look solely to the estate and property of the Landlord in the Premises for the satisfaction of Tenant’s remedies for the collection of a judgment (or other judicial process) requiring the payment of money by the Landlord in the event of any default or breach by the Landlord with respect to any of the terms, covenants and conditions of the Lease to be observed and/or performed by the Landlord and any other obligation of Landlord created by or under this Lease and no other property or assets of the Landlord or its partners, beneficiaries or co-tenants shall be subject to levy, execution or other enforcement for the satisfaction of Tenant’s remedies.

b)

The term “Landlord”, as used in this Lease, so far as covenants and agreements on the part of the Landlord are concerned, shall be limited to mean and include only the owner or owners at the time in question of the Premises and Lease and in the event of any transfer or transfers of the title to the said Lease and/or the Premises, Landlord herein named (and in case of any subsequent transfers or conveyances, the then grantor), including each of its partners shall be automatically freed and relieved from and after the date of such transfer and conveyance of all liability as respects the performance of any covenants and agreements on the part of Landlord contained in this Lease thereafter to be performed, and it shall be deemed and construed without further agreement that such grantee or transferee has assumed and agreed to be bound by all the covenants and agreements in this Lease contained, to be performed on the part of the Landlord, and the Landlord or the grantor shall turn over to the grantee all monies, if any, then held by Landlord, or such

7

grantor on behalf of Tenant and shall assign to such grantee all right, title and interest of Landlord or such grantor in and to the sums held by and deposited under the terms, covenants and conditions of this Lease.

Twenty-Fourth: Governing Law. This Lease shall be construed and enforced in accordance with the laws of the State of New York. If any provisions of this Lease shall, to any extent, be held invalid or unenforceable, the remainder of this Lease shall not be affected thereby and shall continue to be valid and enforceable to the fullest extent permitted by law.

Twenty-Fifth: Entire Agreement. This Lease contains the entire agreement of the parties in regard to the Premises. There are no oral agreements existing between them.

Twenty-Sixth: Notices. All notices required or permitted to be given under this Lease, other than statutory demands, or notices, shall be in writing and shall be deemed to have been duly given if made in person or sent by certified or regular mail, postage prepaid, to respective address of each party set forth at the beginning of the Lease. Service shall be complete upon such personal delivery or mailing except in the case of a notice to change an address in which case service shall be complete when the notice is received by the addressee.

Twenty-Seventh: Right of Landlord to Cure Tenant’s Default. If Tenant defaults in the making of any payment or in doing any act required under this Lease, Landlord may make such payment or do such act and the expense thereof shall be paid by the Tenant with interest at the current prime rate from the date paid and shall constitute additional rent and be payable with the next monthly installment of basic rent. The Landlord shall not be estopped from the pursuit of any remedy to which it would otherwise be entitled.

Twenty-Eighth: Waiver of Jury Trial. Landlord and Tenant covenant and agree that in any action, proceeding or counterclaim brought by either the Landlord or the Tenant against the other on any matter whatsoever arising out of, under, or by virtue of the terms of this Lease or the Tenant’s occupancy, the Landlord and Tenant shall and do hereby waive trial by jury. The Tenant hereby expressly waives any and all right of redemption in the event Tenant shall be dispossessed by judgment or warrant in such form and contents reasonably proposed by Landlord.

Twenty-Ninth: Estoppel Certificates. Tenant agrees, as reasonably requested from time to time and upon not less than fifteen (15) days prior notice by Landlord, to execute, acknowledge and deliver to the Landlord an estoppel certificate.

Thirtieth: Waiver. No waiver by Landlord or Tenant of any breach of any term, covenant or condition contained in this Lease shall operate as a waiver of such term, covenant or condition itself or of any subsequent breach thereof. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly installments of Basic Rent or additional rent stipulated in this Lease shall be deemed to be other than on account of the earliest stipulated rent nor shall any endorsement or statement on any check or letter accompanying a check for payment of rent be deemed an accord and satisfaction, and the Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such rent or to pursue any other remedy provided by this Lease.

Thirty-First: No Representations by Landlord. Neither Landlord nor any agent or employee of Landlord had made any representations or promises with respect to the Premises or the Building except as expressly set forth in this Lease, and no rights, privileges, easements or licenses shall be acquired by Tenant except as expressly set forth in this Lease. Tenant, by taking possession of the Premises, shall accept the same “AS IS”, except for the improvements listed in the addendum, and such taking of possession shall be conclusive evidence that the Premises and the Buildings are in good and satisfactory condition at the time of such taking of possession.

Thirty-Second: Quiet Enjoyment. Tenant, upon paying the rent and additional rent and observing and performing all the terms, covenants and conditions contained in this Lease on Tenant’s part be observed and performed, shall peaceably and quietly enjoy the Premises without hindrance or molestation by Landlord or any party claiming through Landlord.

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Thirty-Third: Miscellaneous.

a)	All covenants in this Lease which are binding upon Tenant shall be construed to be equally applicable to and binding Tenant’s agents, employees and others claiming the right to be in the Premises or in the Building through or under Tenant.
b)	If more than one individual, firm, or corporation shall join as Tenant, the singular context shall be construed to be plural wherever necessary and the covenants of Tenant shall be the joint and several obligations of each party signing as Tenant, and when the parties signing as Tenant are partners, shall be the obligations of the firm and of the individual members thereof.
c)	Feminine or neuter pronouns shall be substituted for those of the masculine form, and the plural shall be substituted for the singular, wherever the context shall require.
d)	This Lease shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns. The words “Landlord” and “Tenant” include and bind and benefit the legal representative, successors and assigns of the Landlord and Tenant, respectively, and if there be more than one tenant, than, all the covenants and agreements binding the Tenant shall be deemed joint and several.

Thirty-Fourth: Environmental Covenants.

a)	“Hazardous Material” shall mean any pollutant, contaminant, hazardous, dangerous or toxic chemical, material, waste or other substance which poses a hazard to the environment or to health and safety, including, without limitation: (i) any solid or hazardous waste, toxic, or hazardous substance, pollutant, contaminant, dangerous or toxic chemical material, or other substance within the meaning of any Environmental Law; (ii) “hazardous substances”, as defined by CERCLA; (iii) “hazardous wastes”, as defined by the Resource Conservation and Recovery Act, P.L. 94-580, and all amendments thereto and reauthorizations thereof (“RCRA”); (iv) petroleum, crude oil or any fraction thereof; (v) natural gas, natural gas liquids, liquefied natural gas (all the foregoing collectively called “Natural Gas Products”), synthetic gas or mixtures of Natural Gas Products and synthetic gas; (vi) any radioactive material, including any source, special nuclear or byproduct material as defined at 42 U.S.C. §2011 et seq. and amendments thereto and reauthorizations thereof; (vii) asbestos-containing materials in any form or condition; and (viii) polychlorinated biphenyls.
b)	“Environmental Laws” shall mean all federal, state and local laws, statutes, regulations, rules, codes, ordinances and policies and all revisions and amendments thereto or reauthorizations thereof during the Term, and the common law, relating to environmental matters or contamination of any type whatsoever, including, without limitation: (i) treatment, storage, disposal, generation or transportation of any Hazardous Material; (ii) air, water, or noise pollution, including, without limitation, discharges to publicly-owned treatment works; (iii) surface or ground water contamination; (iv) spills, discharges, leaks, emissions, escapes, dumping or other releases or threatened releases, including, without limitation, those subject to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, P.L.96-510, as reauthorized and amended from time to time (“CERCLA”), into the environment of any Hazardous Material, whether or not notification or reporting to any federal, state or local agency was or is required; (v) the protection of wildlife, marine sanctuaries or wetlands; (vi) the protection of natural resources; (vii) above-ground or under-ground storage tanks, vessels and related equipment; (viii) abandoned or discarded barrels, containers or other closed receptacles; (ix) reporting or notification to governmental agencies or third parties including, without limitation, notification or reporting of the presence or emission of any Hazardous Material; (x) health and safety of employees or other persons; or (xi) otherwise relating to the manufacture, processing, use, distribution, sale, treatment, storage disposal, transportation or handling of Hazardous Materials.
c)	At all times, Tenant, at its sole cost and expense, shall comply in all material respects with all and not otherwise become subject to liability under Environmental Laws applicable to Tenant, its use, operations or property on or at the Premises including without limitation, obtaining any and all licenses, permits, consents and approvals, making all reports, registrations and notifications, and obtaining all bonds, insurance and financial insurance required under any Environmental Law (“Environmental Filings and Approvals”). Tenant promptly shall provide Landlord copies of all Environmental Filings and Approvals.
d)	Tenant agrees to indemnify, defend (with counsel, experts and consultants reasonably acceptable to Landlord and at Tenant’s sole cost and expense) and hold Landlord and its beneficiaries, partners, shareholders, officers, directors, employees, agents, and their respective executors, administrators,

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personal representatives, heirs, successors and assigns (herein collectively called “Landlord’s Affiliates”) free and harmless from and against Tenant’s failure to comply with subparagraph (c) above.

e)

Landlord agrees to indemnify, defend (with counsel, experts and consultants reasonably acceptable to Tenant and at Landlord’s sole cost and expense) and hold Tenant and its beneficiaries, partners, shareholders, officers, directors, employees, agents and his and their respective executors, administrators, personal representatives, heirs, successors and assigns free and harmless from and against: (i) Landlord’s failure to comply with any Environmental Law or (ii) any environmental condition or Hazardous Materials existing on the Premises on the date hereof (including, without limitation, relating to any underground storage tanks and any asbestos-containing materials, if any).

Thirty-Fifth: Late Charges. The rent specified in this Lease is due and payable as set forth on page two (2) of this Lease. If payment is not received on or before the tenth (10) day following the due date, a late charge of 5% will be assessed against Tenant. Said late charge can be paid separately or will be included in the following months rent. In the event payment is not received within twenty (20) days of the due date, Tenant shall pay, in addition to the late charge, interest on the unpaid amount from the due date of twelve percent per annum. If miscellaneous charges (insurance, tax and utility increases, snow plowing and lawn care, etc.) are not paid within 30 days of the billing date, Tenant will be charged 5% of the total amount of the arrears as a late charge.

Thirty-Six: Parking. Tenant and its employees and visitors may use the parking area annexed to the Building for parking in common with other tenants.

Thirty-Seventh: Signage. Tenant shall have the right to erect signage in a manner that is consistent with signage available to other tenants of the Building, including the right to utilize any central marquis or office directory and to place signage on the doors or windows of the Premises.

Thirty-Eighth: Expiration of Lease Term. Upon expiration or other termination of this Lease, Tenant and Landlord will inspect the Premises and mutually agree to the condition of the Premises with regard to damages versus normal wear and tear. Upon expiration of this Lease without default hereunder, and provided that Tenant, without necessity of any notice from Landlord, surrenders the Premises broom clean and in good order, repair and condition reasonable wear and tear excepted, Landlord shall refund to Tenant the sum of $4,592.50, less deductions for damage.

IN WITNESS WHEREOF, the parties hereto have executed this Lease on the day and year first above written.

Tenant:		Landlord:
Interactive Therapy Group		Olivia Holding, LLC
By:	/s/ John M. Torrens	By:	/s/ Stephen A Oliva, Jr.
Name:	John M Torrens	Name:	Stephen A. Oliva, Jr.
Title:	President	Title:	Manager

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EX-10.16

EXHIBIT 10.16

ALBERTA PROPERTIES LLC STANDARD OFFICE LEASE

THIS AGREEMENT made this 4^th day of February 2009 between Alberta Properties LLC, its principal place of business at 331 Alberta Drive, Amherst, New York 14226 hereinafter referred to as the Owner, and Interactive Therapy Group, 1586 Eggert Road, Amherst, New York 14226 hereinafter referred to as the Tenant:

WITNESSETH:

Premises	That the said Owner has agreed to let, and by these presents does so lease to Tenant the following premises:
	Suite 110 on the ground floor of the building located at 331 Alberta Drive, Amherst, New York containing approximately 1300 square feet per attached Sketch Plan “A”.
TERM

The term of this lease shall be for a period of two (2) years commencing upon April 1, 2009 and terminating upon March 31, 2011. Tenant shall have one (1) option (the “Renewal Option”) to extend the term of the Lease for a two (2) year renewal period (the “Renewal Period”), commencing on April 1, 2011 and terminating on March 31, 2013, upon terms and conditions as set forth below in RENT. The Renewal Option may be exercised only by Tenant giving Owner written notice of such exercise at least six (6) months prior to the expiration date of the Lease.

RENTAL

RENT

The Tenant agrees to pay the Owner at 331 Alberta Drive, Amherst, New York 14226 the annual rent of $19,200.00 to be paid in equal monthly installments of $1,600.00 for the two years of this Lease on the first day of each and every month of this Lease without demand and without offset or deductions of any kind.

If Tenant shall validly exercise the Renewal Option, than the Lease shall be extended for the Renewal Period at an annual rent of $20,400.00 to be paid in equal monthly installments of $1,700.00 on the first day of each and every month of the Renewal Period without demand and without offset or deductions of any kind.

TENANTS COVENANTS

1. The Tenant hereby covenants and agrees as follows:

a)	Not to use said premises or any part thereof for any purposes other than the purpose of its usual business.
b)	Not to let, sell, underlet or assign over the said premises or any part thereof, for the whole or any part of said term, without first requesting cancellation of the lease. If Owner declines to so cancel, Tenant may assign to a successor of equal financial stability acceptable to the Ownler. Consent to such assignment will not be unreasonably withheld.
c)	This item left intentionally blank.
d)	To allow the Owner in person, or by agent, to enter said premises at all reasonable times of the day upon reasonable notice, however, Owner shall not unreasonably interfere with Tenant’s business or Tenant’s use of its premises, and within six months prior to the expiration of the lease, to allow the Owner or his agent to place on or about said premises, notices indicating that the premises are for sale or rent; and to allow the Owner or his agent to enter upon and pass through and over said premises at all reasonable times and upon reasonable notice for the purposes of showing the same to persons wishing to purchase or lease the same.
e)	To obey and carry out all Federal, State, County and Municipal Laws, regulations, rules and ordinances in regard to the premises hereby leased and their use, and subject to Section “6” hereof, to take such care of said premises as may be required by any and all Federal, State, County and

Municipal authorities and departments, or any of them; and to obey all lawful requirements of the New York Fire Insurance Rating Organization, or any similar body, with reference to insurance premium rate upon the building shall be increased, by reason of any act or omission or commission on the part of Tenant or by reason of the nature of the occupancy of the premises, the Tenant agrees to pay the amount of any such increase; and to save the Owner and hold the Owner harmless from any expense, loss or damage by reason of the violation of such laws, regulations, rules, ordinances and by reason of the Tenant’s negligence.

f)	To observe and keep all the rules and regulations of the electric, gas and water companies and the sewer authority, supplying such premises with electricity, gas, water or use of sewer.
g)	Not to erect any signs or to letter windows or doors without express written authority of Owner.
h)	To return the premises broom-clean at the expiration of the lease to the Owner and in the same condition as when taken, reasonable wear and tear thereof excepted.
i)	To observe and keep all reasonable rules and regulations of the Owner regarding the use of the building.

OWNER COVENANTS

2. Owner covenants and agrees as follows:

a)	To provide at the start of the term of this lease the subject premises in first-class condition in its present configuration.
b)	To supply aforesaid premises at its own expense during regular business hours air conditioning, heat, electricity, gas, water and janitorial services, but it shall not be liable for any injury, damage or loss occasioned in the rendering of such services or resulting from any interruption thereof, due to any cause except negligence of Owner or its employees, agents, or servants and except as otherwise provided herein.
c)	To maintain the lavatory, toilets and toilet rooms in good lighted and ventilated.
d)	To keep and maintain the sidewalks, corridors, stairways and all other means of access and egress for the demised premises in good repair and safe condition and well lighted, free and clear of ice, snow and debris.
e)	Owner, at its expense, shall maintain the common areas of the Building, and any areas of the Building under the exclusive control of Owner, in a clean and healthful condition and will comply with all federal, state, county and municipal laws, regulations, rules, and ordinances in regard to the Building and shall save Tenant and hold Tenant harmless from any expense, loss, or damages by reason of the violation of such laws, regulations, rules, ordinances, and requirements or by reason of damages that might be sustained by reason of the acts, omissions, or negligence of Owner or its employees, agents, or servants.

DEFAULTS

3.	If default be made in the payment of the rent or any part thereof the Owner shall give written notice of such default to the Tenant and the Tenant shall have five (5) days after receipt of such notice to cure such default, but upon Tenant’s failure to cure the default within said period then and in such case the owner may terminate the term of this lease without further notice, and all rents will accelerate.
	In the case of a default by either party in the obligation of Tenant to pay rent, the other party may give to the defaulting party written notice thereof describing the default and thereupon unless the defaulting party, within thirty (30) days from the receipt of said notice, shall begin and continue to prompt completion the steps necessary to cure the default, the non-defaulting party may terminate this lease by giving the defaulting party not less than ten (10) days notice of the time of termination.
	The provisions of this Paragraph 3, whether or not any such right of termination is exercised, shall not be a waiver of any right of breach of contract or a waiver of any other provisions of this lease.
4.	If said premises shall at any time become vacant during the said term in consequence of the removal of the Tenant, for nonpayment of rent, by legal process, or any other cause, the Owner may re-enter the same, and use such force for that purpose as the Owner shall think fit, without being liable to any prosecution thereof and may thereupon treat the said lease as terminated, and re-let said premises for their own use; or the Owner may re-let said premises as the agent of the Tenant applying avails thereof to the expenses that may accrue in reentering and then to the payment of the rent due as herein provided, and the balance to pay over to Tenant; or may hold the Tenant for any balance remaining due after so applying the

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proceeds, and the right to hold the Tenant for such balance shall survive the issuance of any warrant of cancellation of this lease.

DAMAGE OR DESTRUCTION

5.	If the leased premises shall be destroyed or damaged by fire or other cause, without or with the fault or negligence of either party all rebuilding, restoration and repairs shall be done by Owner at its expense, as soon as reasonably possible.
	If after any partial damage any portion of the premises shall be usable by Tenant, the rent shall be apportioned according to such usable portion until all restoration and repairs are completed. If the premises shall be totally destroyed, rendered untenantable, the rent shall be wholly abated until the premises including all equipment as originally installed as a part thereof shall be fully replaced or repaired, and until Tenant shall have reasonable time to replace all attachments, installments, and other property installed by it, and to replace its furniture and office equipment.
	If after any such occurrence it is reasonably certain or is found that the building cannot be restored as stated above within (6) months from the date of the occurrence, either party hereto shall have the right as its election to terminate this lease, effective as of the date of such occurrence, by giving written notice to the other as soon as reasonably possible. In the event of such termination Owner shall not be obligated to make any restoration of the premises.
6.	All repairs to the premises and to the plumbing, heating, air conditioning, electric wiring and lighting apparatus and structural repairs to the building and common areas necessary to keep the same in proper order shall be made by the Owner at the Owner’s expense, unless said repairs are made necessary through the carelessness or neglect of the Tenant, its agents, employees or servants.
7.	Any fixture of a removable nature constructed and placed in the demised premises at the expense of the Tenant, shall remain the property of the Tenant and may be removed by the Tenant at the termination of its occupancy of the demised premises; and in case of damage or disfigurement to walls or floors caused by such removal, the cost of reasonable repairs of the damage to them, shall be borne by the Tenant. The Tenant covenants that it will not make any alterations in or to the demised premises without first obtaining the consent of the Owner in writing, which consent shall not be unreasonably withheld.

CONDEMNATION

8.                If the whole or any part of the premises hereby demised shall be taken or condemned by any competent authority for any public use or purpose, than the term hereby granted shall cease from the time when possession of the part so taken shall be required for such public purpose and without apportionment of claim to any such award, the current rent, however, in such case to be apportioned. However, nothing herein shall be deemed to give Owner any interest in or to require Tenant to assign to Owner any award made to Tenant for the taking of personal property or fixtures belonging to Tenant or for the interruption of or damages to Tenants business or for Tenant’s moving expense.

END OF TERM

9.

Should the Tenant continue to occupy the demised premises after the expiration of the term of this lease or any renewal thereof, with the consent of the Owner, such tenancy shall be from month to month and in no event from year to year or from term to term, and such month to month tenancy shall be on the same terms, covenants and conditions of this lease but at the monthly rental fixed by Owner but nothing herein contained shall be deemed to waive any right the Owner may have to recover possession of the demised premises upon the expiration of the term of this lease or any renewal thereof.

10.

Tenant agrees that the sidewalks, entries, passages, staircases, vestibules, hallways and parking lot shall not be obstructed or used for any purpose other than ingress and egress; the Tenant will not make or permit any unseemly, improper, or disturbing noise or otherwise unreasonably interfere with other tenants.

PARKING

11.                In addition to the demised premises, Tenant shall have the right of non-exclusive use in common with others, of automobile parking areas, driveways, serviceways, loading facilities, staircases, vestibules, hallways, elevators, and other facilities as may be designated by Owner from time to time, all subject to the terms and conditions of this lease agreement and to reasonable rules and regulations for the use thereof as prescribed from time to time by Owner. Tenant and his employees, invitees or guests shall not park cars in

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parking lot spaces reserved on property of which demised premises are a part or in driveways or serviceways except in areas which may be designated for Tenant parking.

QUIET ENJOYMENT

12.                Owner covenants that Tenant upon paying the rent reserved herein and performing all the covenants of this lease on its part to be performed shall and may peaceably and quietly have, hold and enjoy the premises for the full term hereof free from molestation, eviction or disturbances by Owner or by any other person or persons lawfully claiming same.

SUCCESSORS AND ASSIGNS

13.                The covenants, conditions and agreements contained in this lease shall bind and inure to the benefit of the Owner and the Tenant and their respective executors, administrators, successors and assigns and may not be changed orally, but only by an agreement in writing and signed by the party against whom enforcement of any waiver, change, modification, or discharge is sought.

SUBORDINATION

14.

This Lease is and shall be subject and subordinate to the indenture and all mortgages which may now or hereafter affect the Leased Premises; and to all renewals, modifications, consolidations, replacements and extensions thereof. Although the subordination provision shall be deemed for all purposes to be automatic and effective without any further instrument on the part of the Tenant, the Tenant shall execute any further instrument reasonably requested by the Landlord to confirm such subordination. The Tenant hereby irrevocably constitutes and appoints the Landlord as the Tenant’s attorney-in-fact to execute any such instrument for and on behalf of the Tenant.

Notwithstanding the foregoing, Tenants right to quiet possession and enjoyment of the premises shall not be disturbed so long as Tenant complies with all of the terms, obligations, and conditions hereunder.

ENTIRE AGREEMENT This lease constitutes the entire understanding between the parties. No variation or modification of this Lease shall be deemed valid unless in writing and signed by the parties hereto.

IN WITNESS WHEREOF, the Owner and Tenant have respectively signed and sealed these presents on the day and year first above written.

	Alberta Properties LLC:
Witness	By	/s/ Stephen S. Obletz
	Interactive Therapy Group
/s/ Gary J Knauer Witness	By	/s/ Gary Gelman Gary Gelman, Chairman

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ESCALATION

A. For the purpose of this Paragraph:

1)	Tax Base Year Year Ending 12/31/2008
2)	Operating Expense Base Year Year Ending 12/31/2008
3)	Computation Year means each Year Beginning 04/01/09
4)	Tenant’s Proportionate Share means the ratio expressed as a percentage of the area of the Premises approximately 1300 square feet to the entire rentable floor space in the Building. Tenant’s proportionate share is 9.6%
5)	Real Estate Taxes means the dollar value of the real estate taxes assessed upon the Building and the land upon which it stands.
6)	Operating Expense means the actual expenses incurred and paid by the Landlord for the operation and maintenance of the Building in accordance with accepted principals of sound management and accounting practices as applied to first-class office buildings, but not limited to:

a)	Janitor labor and supplies
b)	Maintenance and engineering labor and supplies
c)	Insurance applicable solely to the Building and its operation
d)	Water and fuel
e)	Electricity used by Landlord in the operation and maintenance of the Building
f)	Salaries and wages of employees, other than employees above grade of Building Manager
g)	Painting, snow removal and other contract services
h)	Security services

B.

Tenant shall make an additional rent payment equal to the Tenant’s Proportionate Share of any increase in the Real Estate Taxes and/or Operating Expense for each Computation Year of the Tenant’s Lease over the Real Estate Taxes and/or Operating Expense for the Base Year together with a six percent (6%) administrative fee. 1

C.

For each computation Year, Owner shall furnish to Tenant Statements setting forth in reasonable detail the Real Estate Taxes and Operating Expense for the Base Year and the Computation Year, as well as the difference between the two and the Tenant’s Proportionate Share of the difference. Tenant shall pay Tenant’s Proportionate Share as set forth in the Statement within thirty (30) days of receipt of said Statement.

1)	It is hereby agreed that in the event the Owner consents to the subletting of the lease, if the rent shall be more than the rent in this lease, the increases in rent shall be automatically assigned and payable to the Owner.
2)	Tenant shall pay for all electric bulbs, lamps, tubes, ballast’s and starters.
3)	Rents received after the fifth day of the month are subject to a five percent (5%) late charge.
4)	Tenant is required to provide protective pads under each desk and Shepherd casters or equivalent on all chairs and movable office furniture.

INSURANCE REQUIREMENTS

A.

Landlord’s Insurance. At all times during the Term, Landlord will carry and maintain (1) fire and extended coverage Insurance covering the Building and the Demised Premises and the Building’s equipment and common area furnishings and leasehold improvements in the Premises, and (2) public liability and property damage Insurance in such amounts as Landlord determines from time to time in its reasonable discretion.

B.

Tenant’s Insurance. At all times during the Term, Tenant will carry and maintain, at Tenant’s expense, the following insurance in the amounts specified below or such other amounts as Landlord may from time to time reasonably request, with insurance companies on forms satisfactory to Landlord.

¹ The annual increase in Real Estate Tax and/or Operating Expenses is limited to 3.5% on a cumulative basis.

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1)	Public Liability and property damage liability insurance, with a combined single occurrence limit of not less than $1,000,000. All such insurance will specifically include, without limitation, contractual liability coverage for the performance by Tenant of the agreements set forth in this Lease.
2)	Insurance covering all of Tenant’s equipment, trade fixtures, appliances, furniture, furnishings and personal property, from time to time in, on or upon the Premises, in an amount not less than the full replacement cost without deduction for depreciation from time to time during the term of this Lease, providing protection against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, special extended peril (all risk), boiler, flood, glass breakage and sprinkler leakage. All policy proceeds will be used for the repair or replacement of the property damaged or destroyed.
3)	Workman’s compensation insurance insuring against and satisfying Tenant’s obligations and liabilities under the workman’s compensation laws of the state in which the Premises are located.

C.	Forms of the Policies. All policies of liability insurance which Tenant is obligated to maintain according to the Lease (other than any policy of workmen’s compensation insurance) will name Landlord and such other persons or firms as Landlord specifies from time to time as additional insureds. Insurance certificates of original policies (together with copies of the endorsements naming Landlord and any others specified by Landlord as additional insureds) and evidence of the payment of all premiums of such policies will be delivered to Landlord prior to Tenant’s occupancy of the Premises and from time to time at least ten (10) days prior to the expiration of the terms of each such policy. All public liability and property damage liability maintained by Tenant will contain a provision that Landlord and any other insureds will be entitled to recover under such policies for any loss sustained by Landlord and the other additional insureds, its agents and employees as a result of the acts or omissions of Tenant.
	All such policies maintained by Tenant will provide that they may not be terminated or amended except after thirty (30) days prior written notice to Landlord. All public liability, property damage liability and casualty policies maintained by Tenant will be written as primary policies, not contributing with and not supplemental to the coverage that Landlord may carry. Insurance required to be maintained by Tenant may be subject to a deductible up to five hundred dollars ($500.00).
D.	Waiver of Subrogation. Landlord and Tenant each waive any and all rights to recover against each other except to the extent loss or damage is suffered as a result of the acts, omissions, or negligence of Owner or its employees, agents, or servants. Landlord and Tenant, from time to time, will cause their respective insurers to issue an appropriate waiver of subrogation rights endorsements to all policies of insurance carried in connection with the Project or the Premises or the contents of the Project or Premises. Tenant agrees to cause all other occupants of the Premises claiming by, under, or through Tenant to execute and deliver to Landlord such a waiver of claims and to obtain such a waiver of subrogation rights endorsements.
E.	Adequacy of Coverage. Landlord, its agents and employees make no representation that the limits of liability specified to be carried by Tenant are adequate to protect Tenant. If Tenant believes that any of such insurance coverage is inadequate, Tenant will obtain, at Tenant’s expense, such additional insurance coverage as Tenant deems adequate.

RULES AND REGULATIONS

1.	The sidewalks, walks, entries, corridors, concourses, ramps, staircases, and elevators shall not be obstructed or used for any purpose other than ingress and egress to and from the respective premises.
2.	The Landlord shall not be responsible to any Tenant for loss of property from the premises, however occurring, unless caused by the acts, omissions, or gross negligence or willful act of the Landlord, its agents, servants, or employees, including its independent contractors.
3.	No signs or advertisements shall be put in or upon any part of the building except on the doors of the premises and on the Directory Boards, and then only of such color, size, style and material as shall be approved in writing by Landlord. A Directory Board in a conspicuous place will be provided by Landlord.
4.	No awnings or other projections shall be attached to the outside walls of the building without the prior written consent of the Landlord.
5.	No persons shall disturb the occupants of the building by use of any musical instruments, making unseemly noises, or by interference in any way. No dogs or other animals will be allowed in the building.

6

6.	No installations, including, without limitation, telegraph, telephone, television, radio or other wires or instruments, shall be introduced into the building without Landlord’s prior written approval.
7.	No Tenant shall permit or allow any employee or other person to conduct any business enterprises of any kind in or from the premises other than that specifically provided for in the Lease.
8.	Only workmen employed, designated or approved by Landlord may be employed by Tenants for repairs, installations, alterations, painting, material moving or other similar work that may be done on the Premises. Such approval shall not be unreasonably withheld.
9.	Canvassing, soliciting, or peddling in the building are prohibited.
10.	Tenant acknowledges that this is a “smoke free” building and will obey all Owner’s rules and regulations in this regard.
11.	No vending machines of any kind are permitted on the premises.
12.	No Tenant shall, with the exception of hot beverages, permit the sale or service of food or beverages to its employees or to others, or cause or permit any odors of cooking or other processes or any unusual or objectionable odors to emanate from the Premises.
	No Tenant shall install or permit installation or use of any machine dispensing goods for sale, including, without limitation, foods, beverages, cigarettes or candy, without the consent of the Landlord.
13.	Electrical appliances or equipment rated higher than 15 Amperes must have specific authorization for use.

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EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors
American Claims Evaluation, Inc.

We consent to the incorporation by reference in the registration statements (No. 333-147442, No. 333-39071 and No. 333-136319) on Form S-8 of American Claims Evaluation, Inc. and subsidiary of our report dated June 24, 2009 on the consolidated balance sheet of American Claims Evaluation, Inc. and subsidiary as of March 31, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended, which report appears in this March 31, 2009 Annual Report on Form 10-K of American Claims Evaluation, Inc.

/s/ Holtz Rubenstein Reminick LLP

Melville, New York
June 24, 2009

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Gary Gelman, certify that:

1.	I have reviewed this annual report on Form 10-K of American Claims Evaluation, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4.	The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: June 24, 2009

/s/ Gary Gelman

Gary Gelman
Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Gary J. Knauer, certify that:

1.	I have reviewed this annual report on Form 10-K of American Claims Evaluation, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4.	The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: June 24, 2009

/s/ Gary J. Knauer

Gary J. Knauer
Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of American Claims Evaluation, Inc. (the “Company”) on Form 10-K for the year ended March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gary Gelman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

          (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

          (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Gary Gelman

Gary Gelman
Chief Executive Officer
June 24, 2009

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to American Claims Evaluation, Inc. and will be retained by American Claims Evaluation, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of American Claims Evaluation, Inc. (the “Company”) on Form 10-K for the year ended March 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gary J. Knauer, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

          (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

          (2) The information contained in the Report fairly represents, in all material respects, the financial condition and result of operations of the Company.

/s/ Gary J. Knauer

Gary J. Knauer
Chief Financial Officer
June 24, 2009

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to American Claims Evaluation, Inc. and will be retained by American Claims Evaluation, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.