UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý x Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

of for the ~~Securities~~quarterly ~~Exchange~~period ~~Act~~ended ofMarch ~~1934~~31, 2007

for the quarterly period ended June 30, 2005

o Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

of the Securities Exchange Act of 1934

for the transition period from to

Commission File Number 0-7282

COMPUTER HORIZONS CORP. (Exact name of registrant as specified in its charter)

(Exact name of registrant as specified in its charter)

New York		13-2638902
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

New York		13-2638902
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
49 Old Bloomfield Avenue, Mountain Lakes, New Jersey 07046-1495
(Address of principal executive offices) (Zip code)

49 Old Bloomfield Avenue, Mountain Lakes, New Jersey 07046-1495
(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code (973) 299-4000

Not Applicable (Former name, former address and former fiscal year, if changed since last report)

(Former name, former address and former fiscal year, if

changed since last report)

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 twelve 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.

ýx ~~Yes~~ o Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer ~~(as~~or ~~defined~~a innon-accelerated ~~Rule~~filer. ~~12b-2~~See definitions of ~~the~~“accelerated ~~Exchange~~filer ~~Act)~~and large accelerated filer”.

ýo ~~Yes~~Large Accelerated Filer x Accelerated Filer o NoNon-accelerated Filer

AsIndicate ofby ~~August 5,~~check ~~2005~~mark whether the ~~issuer~~registrant ~~had~~is ~~31,332,390~~a ~~shares~~shell company (as defined in Rule 12b-2 of ~~common~~the ~~stock~~Exchange ~~outstanding~~Act).

		o		x
		Yes		No

As of June 1, 2007 the issuer had 33,837,284 shares of common stock outstanding.

COMPUTER HORIZONS CORP. AND SUBSIDIARIES

Index

Part I Financial Information
Part I	Financial Information
Item 1	~~Consolidated Balance Sheets June 30, 2005 (unaudited) and December 31, 2004~~	Financial Statements:
	Consolidated Statements of Operations Three and Six Months Ended June 30, 2005 and June 30, 2004 (unaudited)
		Condensed Statement of Net Assets March 31, 2007 (Liquidation Basis- Unaudited) and Consolidated Condensed Balance Sheet (Going Concern Basis- Audited) December 31, 2006
	Consolidated Statements of Cash Flows Six Months Ended June 30, 2005 and June 30, 2004 (unaudited)
		Condensed Statement of Changes in Net Assets in Liquidation — Period from February 17- March 31, 2007 (Unaudited)
	Notes to Consolidated Financial Statements
		Consolidated Condensed Statements of Operations- Period Ended February 16, 2007 (unaudited) andThree Months Ended March 31, 2006 (unaudited)
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations
		Consolidated Condensed Statements of Cash Flows Period Ended February 16, 2007 (unaudited) andThree Months Ended March 31, 2006 (unaudited)
Item 4	Controls and Procedures
		Notes to Condensed Financial Statements
Part II Other Information
Item 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 4	Submission of Matters to a Vote of Security Holders
Item 3		Quantitative and Qualitative Disclosures about Market Risk
Item 6	Exhibits and Reports on Form 8-K
Item 4		Controls and Procedures
	Signatures
Part II	Other Information
Item 1A		Risk Factors
Item 4		Submission of Matters to a Vote of Security Holders
Item 6		Exhibits
Signatures
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I. Financial Information

Item 1.

~~COMPUTER HORIZONS~~Computer ~~CORP.~~Horizons ~~AND~~Corp ~~SUBSIDIARIES~~and Subsidiaries

~~CONSOLIDATED~~Condensed Statement of Net Assets as of March 31, 2007 ~~BALANCE~~(Liquidation ~~SHEETS~~Basis)

Consolidated Condensed Balance Sheet as of December 31, 2006 (~~dollars~~Going ~~in thousands~~Concern Basis)

	June 30, 2005			December 31, 2004
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	35,854		$	33,649
Accounts receivable, less allowance for doubtful accounts of $3,650 and $5,914 at June 30, 2005 and December 31, 2004, respectively	51,109			51,322
Deferred income taxes	603			1,868
Refundable income taxes	4,878			4,088
Other	3,590			5,550
TOTAL CURRENT ASSETS	96,034			96,477
PROPERTY AND EQUIPMENT	44,280			42,810
Less accumulated depreciation	(38,809		)	(36,815		)
TOTAL PROPERTY AND EQUIPMENT, NET	5,471			5,995
OTHER ASSETS - NET:
Goodwill	27,625			27,625
Deferred merger costs	2,426			—
Intangibles	2,403			3,253
Deferred income taxes	18,887			17,698
Other	8,077			8,036
TOTAL OTHER ASSETS	59,418			56,612
TOTAL ASSETS	$	160,923		$	159,084
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	15,208		$	7,615
Accrued payroll, payroll taxes and benefits	8,743			8,489
Income taxes payable	1,484			1,377
Restructuring reserve	837			3,351
RGII contingency payment	—			1,851
Other accrued expenses	2,923			4,912
TOTAL CURRENT LIABILITIES	29,195			27,595
OTHER LIABILITIES:
Deferred compensation	2,617			2,633
Supplemental executive retirement plan	2,205			2,162
Other	784			913
TOTAL LIABILITIES	34,801			33,303
SHAREHOLDERS’ EQUITY:
Preferred stock, $.10 par; authorized and unissued 200,000 shares, including 50,000 Series A
Common stock, $.10 par; authorized 100,000,000 shares; issued 33,158,105 and 33,153,805 shares at June 30, 2005 and December 31, 2004, respectively	3,315			3,315
Additional paid in capital	151,043			151,281
Accumulated other comprehensive loss	(2,764		)	(2,200		)
Accumulated deficit	(13,699		)	(14,072		)
	137,895			138,324
Less shares held in treasury, at cost; 1,886,307 and 2,060,011 shares at June 30, 2005 and December 31, 2004, respectively	(11,773		)	(12,543		)
TOTAL SHAREHOLDERS’ EQUITY	126,122			125,781
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	160,923		$	159,084

($ in thousands)

	March 31, 2007		December 31, 2006*
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	30,803	$	71,790
Cash held in escrow	2,653		1,000
Accounts receivable,	900		34,517
Refundable tax credit	8,962		8,547
Prepaid expenses and other	966		4,741
TOTAL CURRENT ASSETS	44,284		120,595

PROPERTY AND EQUIPMENT	12		44,267
Less accumulated depreciation	—		(41,521		)
TOTAL PROPERTY AND EQUIPMENT, NET	12		2,746

OTHER ASSETS - NET:
Deferred income taxes	—		1,491
Other	—		940
TOTAL OTHER ASSETS	—		2,431

TOTAL ASSETS	$	44,296	$	125,772

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Accounts payable	$	93	$	28,126
Accrued payroll, payroll taxes and benefits	—		9,431
Net working capital adjustment	1,904		—
Income taxes payable	2,977		1,150
Restructuring reserve	—		61
Other accrued expenses	8,573		4,212
Change of control payable	563		2,316
Deferred Tax	—		1,491
Deferred compensation	—		1,847
TOTAL CURRENT LIABILITIES	14,109		48,634

OTHER LIABILITIES:
Other	—		443
TOTAL OTHER LIABILITIES	—		443

TOTAL LIABILITIES	$	14,109	$	49,077

TOTAL SHAREHOLDERS EQUITY	—		76,697

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY			$	125,772

NET ASSETS IN LIQUIDATION	$	30,187

* Derived from audited financial statements

The accompanying notes are an integral part of these statements.

Computer Horizons Corp and Subsidiaries

Condensed Statement of Net Assets as of March 31, 2007 (Liquidation Basis)

($ in thousands)

(Unaudited)

	For the period from February 16 to March 31, 2007
Shareholders’ Equity at February 16, 2007	$	176,624
Liquidation basis adjustments:
Adjust assets and liabilities to fair value	(973		)
Accrued cost of liquidation	(9,010		)

Net Assets in Liquidation February 16, 2007	166,641

Cash distribution to shareholders	(135,349		)
Transition Services Billing	930
Surrender program payment - stock options	(395		)
Adjustments to Liquidation accruals	121
Investment income from February 17, 2007 to March 31, 2007	672
Costs incurred from February 17, 2007 to March 31, 2007	(2,433		)
Net Assets in Liquidation March 31, 2007	$	30,187

~~COMPUTER HORIZONS~~Computer ~~CORP.~~Horizons ~~AND~~Corp ~~SUBSIDIARIES~~and Subsidiaries

~~CONSOLIDATED~~Consolidated Condensed Statement of Operations and Comprehensive Income ~~STATEMENTS~~(Going OFConcern ~~OPERATIONS~~Basis)

($ in thousands except per share data)

(Unaudited)

(dollars in thousands, except per share data)

	For the period from January 1 to February 16, 2007			Three Months Ended March 31, 2006
REVENUES:
Commercial	$	24,995		$	45,839
Chimes	4,671			7,441
Total	29,666			53,280

COSTS AND EXPENSES:
Direct costs	23,086			36,383
Selling, general & administrative	10,761			17,226
Restructuring charges	14			—
Special charges	—			(6		)
Total Costs	33,861			53,603

INCOME/(LOSS) FROM OPERATIONS	(4,195		)	(323		)

OTHER INCOME/(EXPENSE):
Interest income	881			398
Interest expense	(1		)	(63		)
	880			335

INCOME/(LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(3,315		)	12

GAIN ON SALE	102,686			—
INCOME FROM EXTRAORDINARY ITEMS	102,686			—

INCOME (TAXES)/BENEFIT:
Current	—			(34		)
	—			(34		)
NET INCOME/(LOSS) FROM CONTINUING OPERATIONS	$	99,371		$	(22	)
INCOME/(LOSS) FROM DISCONTINUED OPERATIONS				$	780
NET INCOME	99,371			758

EARNINGS/(LOSS) PER SHARE FROM CONTINUING OPERATIONS - BASIC	$	2.94		$	(0.00	)
EARNINGS/(LOSS) PER SHARE FROM DISCONTINUED OPERATIONS - BASIC	$	—		$	0.02
EARNINGS/(LOSS) PER SHARE - BASIC	$	2.94		$	0.02

EARNINGS/(LOSS) PER SHARE FROM CONTINUING OPERATIONS - DILUTED	$	2.94		$	(0.00	)
EARNINGS/(LOSS) PER SHARE FROM DISCONTINUED OPERATIONS - DILUTED	$	2.94		$	0.02
EARNINGS/(LOSS) PER SHARE - DILUTED	$	2.94		$	0.02

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC	33,837,284			32,067,905

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED	33,837,284			32,355,667

	THREE MONTHS ENDED										SIX MONTHS ENDED
	June 30, 2005					June 30, 2004					June 30, 2005					June 30, 2004
				% of revenue					% of revenue					% of revenue					% of revenue
REVENUES:
Commercial	$	50,650		73.3	%	$	46,006		69.9	%	$	99,321		73.2	%	$	90,789		72.3	%
Federal	11,404			16.5	%	13,855			21.1	%	22,943			16.9	%	23,425			18.7	%
Chimes	7,012			10.2	%	5,929			9.0	%	13,375			9.9	%	11,282			9.0	%
Total	69,066			100.0	%	65,790			100.0	%	135,639			100.0	%	125,496			100.0	%
COSTS AND EXPENSES:
Direct costs	47,763			69.2	%	44,507			67.7	%	93,351			68.8	%	85,312			68.0	%
Selling, general & administrative	21,208			30.7	%	21,554			32.8	%	42,185			31.1	%	41,142			32.8	%
Amortization of intangibles	264			0.4	%	520			0.8	%	614			0.5	%	728			0.6	%
Special charges / (credits)	(115		)	-0.2	%	(939		)	-1.4	%	(790		)	-0.6	%	(939		)	-0.7	%
	69,120			100.1	%	65,642			99.8	%	135,360			99.8	%	126,243			100.6	%
INCOME/(LOSS) FROM OPERATIONS	(54		)	-0.1	%	148			0.2	%	279			0.2	%	(747		)	-0.6	%
OTHER INCOME/(EXPENSE):
Interest income	134			0.2	%	47			0.1	%	314			0.2	%	140			0.1	%
Interest expense	(14		)	0.0	%	(18		)	0.0	%	(19		)	0.0	%	(28		)	0.0	%
	120			0.2	%	29			0.0	%	295			0.2	%	112			0.1	%
INCOME/(LOSS) BEFORE INCOME TAXES	66			0.1	%	177			0.3	%	574			0.4	%	(635		)	-0.5	%
INCOME (TAXES)/BENEFIT:
Current	—			0.0	%	(186		)	-0.3	%	(124		)	-0.1	%	(311		)	-0.2	%
Deferred	(22		)	0.0	%	89			0.1	%	(76		)	-0.1	%	468			0.4	%
	(22		)	0.0	%	(97		)	-0.1	%	(200		)	-0.1	%	157			0.1	%
INCOME/(LOSS) BEFORE MINORITY INTEREST	44			0.1	%	80			0.1	%	374			0.3	%	(478		)	-0.4	%
Minority Interest	—			0.0	%	45			0.1	%	—			0.0	%	36			0.0	%
NET INCOME/(LOSS)	$	44		0.1	%	$	125		0.2	%	$	374		0.3	%	$	(442	)	-0.4	%
EARNINGS/(LOSS) PER SHARE - BASIC:	$	0.00				$	0.00				$	0.01				$	(0.01	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC	31,272,000					30,810,000					31,232,000					30,743,000
EARNINGS/(LOSS) PER SHARE - DILUTED:	$	0.00				$	0.00				$	0.01				$	(0.01	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED	31,451,000					31,215,000					31,488,000					30,743,000

The accompanying notes are an integral part of these statements.

~~COMPUTER~~Computer ~~HORIZONS~~Horizons ~~CORP~~Corp. ~~AND~~and ~~SUBSIDIARIES~~Subsidiaries

~~CONSOLIDATED STATEMENTS~~Consolidated OFCondensed ~~CASH~~Statement ~~FLOWS~~of Cash Flows

($ in thousands)

(Unaudited)

(dollars in thousands)

	For the period from January 1 to February 16, 2007			Three Months Ended March 31, 2006

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income/(Loss)	$	99,371		$	758
Less: Income from discontinued operations				780
Less: Gain on sale of Chimes and Commercial	102,625
Income/(Loss) from continuing operations	(3,254		)	(22		)
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Deferred taxes	(1		)	—
Depreciation	234			569
Provision for bad debts	1,452			180
Restructure expense	14			—
FAS 123R Option Expense	(15		)	283
Changes in assets and liabilities, net of acquisitions	(5,124		)	(32,669		)
NET CASH USED IN OPERATING ACTIVITIES	(6,692		)	(31,659		)
NET CASH PROVIDED BY DISCONTINUED OPERATIONS	104,657			6,396
NET CASH PROVIDED BY/ (USED IN) OPERATING ACTIVITIES	97,965			(25,263		)

CASH FLOWS FROM INVESTING ACTIVITIES
Sale/Purchase of furniture and equipment	1,527			(229		)
NET CASH (USED IN) INVESTING ACTIVITIES	1,527			(229		)
NET CASH PROVIDED BY/(USED IN) DISCONTINUED OPERATIONS	—			—
NET CASH PROVIDED BY/ (USED IN) INVESTING ACTIVITIES	1,527			(229		)

CASH FLOWS FROM FINANCING ACTIVITIES
Stock options exercised	334			1,704
Stock issued on employee stock purchase plan	97			132
NET CASH PROVIDED BY FINANCING ACTIVITIES	431			1,836

Foreign currency gains/(losses)				93
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	99,923			(23,563		)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	72,790			46,365

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	172,713		$	22,802

	Six Months Ended
	June 30, 2005			June 30, 2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss)	$	374		$	(442	)
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Deferred taxes	76			(468		)
Depreciation	2,046			2,591
Amortization of intangibles	614			728
Provision for bad debts	388			745
Gain on sale of assets	(327		)	—
Changes in assets and liabilities, net of acquisitions:
Accounts receivable	(175		)	(3,649		)
Other current assets	1,959			590
Other assets	(40		)	(382		)
Refundable income taxes/benefit reserve	(790		)	—
Accrued payroll, payroll taxes and benefits	254			854
Accounts payable	7,593			1,337
Income taxes payable	107			(897		)
RGII contingency payment	(1,851		)	—
Other accrued expenses and restructuring reserve	(4,502		)	(2,427		)
Deferred compensation	(2		)	185
Supplemental executive retirement plan	(115		)	240
Other liabilities	(131		)	341
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES	5,478			(654		)
CASH FLOWS FROM INVESTING ACTIVITIES
Deferred merger costs	(2,426		)	—
Proceeds from sale of assets	563			—
Purchases of furniture and equipment	(1,523		)	(844		)
Acquisitions, net of cash acquired	—			(14,704		)
NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES	(3,386		)	(15,548		)
CASH FLOWS FROM FINANCING ACTIVITIES
Stock options exercised	175			376
Stock issued on employee stock purchase plan	357			280
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES	532			656
Foreign currency gains/(losses)	(419		)	(364		)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	2,205			(15,910		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	33,649			52,610
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	35,854		$	36,700

Non Cash Activities:

During the first quarter of 2004, the Company recorded a reduction in tax benefit reserves and an increase in additional paid-in capital of $19.9 million.

The accompanying notes are an integral part of these statements.

COMPUTER HORIZONS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Periods June 30, 2005 and June 30, 2004

(unaudited)

1. Basis of Presentation

~~The~~At ~~consolidated~~a ~~balance~~Special ~~sheet~~Meeting asheld on ofFebruary ~~June 30~~14, ~~2005~~2007, the ~~consolidated~~ ~~statements~~shareholders of ~~operations~~Computer ~~for~~Horizons Corp. (the ~~three~~“Company”) approved ~~and~~the ~~six~~sales ~~months~~of ~~ended June 30,~~the ~~2005~~Company’s ~~and June 30~~Chimes, ~~2004,~~Inc. ~~respectively,~~subsidiary ~~and~~to ~~the~~an ~~statement~~affiliate of ~~cash~~Axium ~~flows~~International ~~for~~and the ~~six~~Company’s ~~months~~Commercial ~~ended~~Division ~~June 30,~~to ~~2005~~an ~~and~~affiliate ~~2004 have been~~of ~~prepared~~Allegis byGroup (collectively, the ~~Company~~“Asset ~~without audit~~Sales”). InAt the ~~opinion~~Special ~~of management~~Meeting, ~~all~~the shareholders of ~~adjustments~~the ~~(which~~Company ~~include~~also ~~normal~~approved ~~recurring~~a ~~adjustments)~~proposed ~~necessary~~plan toof ~~present~~complete liquidation and ~~fairly~~dissolution of the ~~financial~~Company ~~position,~~(the ~~results~~“Plan of ~~operations~~Liquidation”). The ~~and~~Company ~~cash~~began ~~flows~~implementing atthe Plan of ~~June 30,~~Liquidation ~~2005~~after ~~(and~~the ~~for~~Asset ~~all~~Sales ~~periods~~were ~~presented)~~completed ~~have~~on ~~been~~February ~~made~~16, 2007.

~~Certain~~The ~~information~~consolidated financial ~~and~~statements ~~note~~have ~~disclosures,~~been ~~normally~~prepared ~~included~~by ~~in financial~~the ~~statements~~Company ~~prepared~~without inaudit in accordance with ~~accounting~~the ~~principles~~rules and regulations of the Securities and Exchange ~~generally~~Commission, ~~accepted~~and should be read in conjunction with the ~~United~~audited ~~States~~Consolidated Financial ofStatements ~~America,~~previously ~~which~~filed ~~are~~on ~~not~~the ~~required~~Company’s ~~for interim~~Form ~~purpose,~~10-K ~~have~~for ~~been~~the ~~condensed~~year ended orDecember ~~omitted~~31, 2006. ItIn isthe ~~suggested that~~opinion ~~these~~of ~~consolidated~~management, ~~financial~~the statements bereflect ~~read~~all inadjustments ~~conjunction~~necessary ~~with~~for a fair presentation of the results of interim periods. ~~financial~~Certain ~~statements~~information and ~~notes~~note ~~thereto~~disclosures, normally included in ~~the~~financial statements ~~Annual~~prepared ~~Report~~in onaccordance ~~Form 10-K~~with ~~for~~accounting principles generally accepted in the ~~year~~United ~~ended~~States ~~December 31~~of America, ~~2004~~which ~~filed~~are bynot ~~the~~required ~~Company~~for interim purpose, have been condensed or omitted. The results ~~of operations~~ for ~~the~~any ~~periods~~interim ~~ended~~period ~~June 30, 2005 and 2004~~ are not necessarily indicative of the ~~operating~~ results ~~for~~to be ~~the~~expected ~~respective~~for a full ~~years~~year.

2The consolidated financial statements for the period January 1, 2007 to February 16, 2007 and for all periods presented for 2006 were prepared on the going concern basis of accounting, which contemplates realization of assets and satisfaction of liabilities in the normal course of business. ~~Recent~~ ~~Accounting~~As ~~Pronouncements~~a result of the shareholders’ approval of the Plan of Liquidation, the Company adopted the liquidation basis of accounting effective February 17, 2007. This basis of accounting is considered appropriate when, among other things, liquidation of a company is probable and the net realizable values of assets are reasonably determinable. Under this basis of accounting, assets are valued at their net realizable values and liabilities are stated at their estimated settlement amounts.

InThe ~~March 2004,~~conversion ~~the~~from ~~Financial Accounting Standards Board (FASB)~~the ~~Emerging~~going ~~Issues~~concern ~~Task~~to ~~Force~~liquidation ~~(EITF)~~basis ~~released~~of ~~Issue~~accounting ~~No. 03-1,~~required ~~“The~~management ~~Meaning~~to ofmake ~~Other-Than-Temporary~~significant ~~Impairment~~estimates and ~~Its Application to Certain Investments (EITF 03-1)~~judgments. ~~EITF~~In order ~~03-1~~to ~~provides~~record ~~guidance~~assets ~~for determining~~at ~~whether~~estimated ~~impairment~~net ~~for~~realizable ~~certain~~value ~~debt~~ and ~~equity~~liabilities ~~investments~~at isestimated ~~other-than-temporary~~settlement ~~and~~amounts under the ~~measurement~~liquidation basis of anaccounting, ~~impaired~~the ~~loss.~~Company recorded ~~The~~the ~~recognition and~~following ~~measurement~~adjustments ~~requirements~~to ofrecord ~~EITF~~its ~~03-1~~assets ~~were~~and ~~initially~~liabilities ~~effective~~at ~~for~~fair ~~reporting~~value ~~periods~~as ~~beginning~~of ~~after~~February ~~June 15~~17, ~~2004. In September 2004~~2007, ~~the~~ ~~FASB Staff issued FASB Staff Position (FSP) EITF 03-1-1 that delayed~~ the ~~effective~~ date ~~for~~of ~~certain~~adoption measurement and recognition guidance contained in EITF 03-1. The FSP requires that entities continue to apply previously existing “other-than-temporary” guidance until a final consensus is reached. Management does not anticipate that issuance of ~~a final consensus will materially impact~~ the ~~Company’s~~liquidation ~~financial~~basis ~~condition or results~~ of ~~operations.~~ accounting:

In December 2004, the FASB issued Statement of Financial Accounting Standard No. 123 (revised 2004), “Share-Based Payment” (FAS 123R). FAS 123R requires that compensation cost be recognized for new awards of equity instruments and unvested awards on the adoption date. The SEC amended the effective dates of FAS 123R for public companies in April 2005, which allows registrants to implement FAS 123R at the beginning of their next fiscal year, instead of the next interim period, that begins after June 15, 2005. The SEC also issued Staff Accounting Bulletin (SAB) 107, “Share-Based Payment”, in April 2005, which provides the views of the SEC staff regarding certain aspects of the application of FAS 123R. SAB 107 assists issuers in their initial implementation of FAS 123R and indicates that the staff’s understanding that, particularly in the period of initial implementation, issuers may reasonably arrive at different estimates and option valuations in applying FAS 123R. We expect the adoption of this statement will have a material effect on the Company’s financial statements, but we cannot reasonably estimate the impact of the adoption because certain assumptions used in the calculation of the value of share-based payments may change in 2005.

	($ in thousands)
Adjust assets and liabilities to fair value:
Write down of Fixed Assets	119
Write off of Advances to India	698
Write down of Other Assets	156
Total	$	973

InAccrued ~~December 2004~~Cost ~~the FASB issued Statement 153, Exchanges~~ of ~~Nonmonetary~~ Assets- an amendment of APB Opinion No. 29. The guidance in Opinion 29, Accounting for Nonmonetary Transactions is based on the underlying principle that the measurement of exchanges of nonmonetary assets should be based on the fair value of the assets exchanged. However, Opinion 29 included certain exceptions to that principle, including a requirement that exchanges of similar productive assets should be recorded at the carrying amount of the asset relinquished. Statement 153 eliminates that exception and replaces it with a general exception for exchanges of nonmonetary assets that lack commercial substance. Only nonmonetary exchanges in which an entity’s future cash flows are expected to significantly change as a result of the exchange will be considered to have commercial substance. Statement 153 must be applied to nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not anticipate that the adoption of this statement will have a material impact on the Company’s financial statements.Liquidation

InUnder ~~May 2005~~ the ~~FASB~~liquidation ~~issued~~basis Statement 154, Accounting Changes and Error Corrections, which changes the accounting and reporting requirements for the change in an accounting principle. Opinion 20, Accounting Changes, which is superseded by Statement 154, required that most voluntary changes in accounting principle be recognized by including the cumulative effect of ~~changing to the new~~ accounting principle as a component of net income in the period of the change. Statement 154 instead requires retrospective application to prior periods’ financial statements of changes in an accounting principle, ~~unless it is impracticable to do so. Statement 154 differentiates between retrospective application and restatement. Retrospective application is defined as~~ the ~~application~~Company ofhas aaccrued different accounting principle to prior accounting periods as if that principle had always been used or as the adjustment of previously issued financial statements to reflect a change in the reporting entity. In contrast, restatement is defined as the revising of previously issued financial statements to reflect the correction of an error. If it is impracticable to determine the period-specific effects of an accounting change on one or more individual prior periods presented, but the cumulative effect to all prior periods can be determined, the new accounting principle should be applied to assets and liabilities balances as of the beginning of the earliest period for ~~which retrospective application is practicable. In addition, a corresponding adjustment should be made to~~ the ~~opening balance~~known ofcosts retained earnings (or other appropriate components of equity or net assets in the statement of financial position) for that period rather than being reported in an income statement. If it is impracticable to ~~determine the cumulative effect of applying a change in accounting principle to any prior period, the new accounting principle should~~ be ~~applied as if it were adopted prospectively from the~~incurred ~~earliest date practicable. Statement 154 also requires retrospective application to changes required by a new accounting pronouncement~~ in ~~the unusual instance that the pronouncement does not include specific transition provisions. If a pronouncement includes specific transition provisions~~liquidation, those provisions should be followed. Statement 154 limits the retrospective application of a change in accounting principle to the direct effects of the change. Indirect effects of a change in accounting principle, such as a change in nondiscretionary profit-sharing payments resulting from an accounting change, should be recognized in the period of the change. The Statement also requires that a change in depreciation, amortization, or depletion method for long-lived, nonfinancial assets be accounted for as a change in accounting estimate effected by a change in accounting principle. The guidance contained in Opinion 20 for reporting the corrections of errors in previously issued financial statements, and changes in accounting estimates is carried forward to Statement 154 without change. Additionally, the Statement carries forward the guidance in Opinion 20 requiring justification of a change in accounting principle on the basis of preferability. Statement 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company has not completed the impact of this pronouncement on its financial statements.follows:

3. Accounting for Stock-Based Compensation

	($ in thousands)
Lease Obligation	$	1,324
Professional Fees	1,927
Legal and Insurance	560
Human Resources	3,480
Systems-related	819
Misc.	900

Total Liquidation Reserves	$	9,010

In December 2002, the FASB approved the issuance of Statement of Financial Accounting Standard No. 148, “Accounting for Stock-Based Compensation – Translation and Disclosure” (FAS 148). This statement amends Statement of Financial Accounting Standard No. 123, “Accounting for Stock-Based Compensation”, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this FAS 148 amended the disclosure requirements of FAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based compensation and the effect of the methods used on reported results. The Company adopted disclosure provisions as of December 31, 2002.

The exercise price per share on all options granted may not be less than the fair value at the date of the option grant. The Company applies Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), as modified by FASB Interpretations 44 , “Accounting for Certain Transactions Involving Stock Compensation”, (FIN 44) in accounting for stock-based employee compensation, whereby no compensation cost had been recognized for the plans. The Company expects to continue following the guidance under APB 25 for stock-based compensation to employees. Had compensation cost for the plans been determined based on the fair value of the options at the grant dates and been consistent with the method of FAS 123, the Company’s net income/(loss) and earnings/(loss) per share would have been increased to the pro forma amounts indicated below:

		Three Months Ended						Six Months Ended
(in thousands, except per share data)		June 30, 2005			June 30, 2004			June 30, 2005			June 30, 2004
Net income/(loss)	As reported	$	44		$	125		$	374		$	(442	)
	Deduct : Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	(197		)	(555		)	(529		)	(1,257		)
	Pro forma	$	(153	)	$	(430	)	$	(155	)	$	(1,699	)
Earnings per share
Basic	As reported	$	0.00		$	0.00		$	0.01		$	(0.01	)
	Pro forma	(0.00		)	(0.01		)	(0.00		)	(0.06		)
Diluted	As reported	$	0.00		$	0.00		$	0.01		$	(0.01	)
	Pro forma	(0.00		)	(0.01		)	(0.00		)	(0.06		)

The Company will continue to incur operating costs and receive income on its investments throughout the liquidation period. On a regular basis, we evaluate our assumptions, judgments and estimates that can have a significant impact on our reported net assets in liquidation based on the most recent information available to us, and when necessary make changes accordingly. Actual costs and income may differ from our estimates, which might reduce net assets available in liquidation to be distributed to shareholders.

4The Company expects to make further distributions to its shareholders of its remaining cash, less any amount applied to or reserved for actual or contingent liabilities (which will be deposited in a liquidating trust). ~~Restricted~~ ~~Cash~~The amounts reserved will be based on a determination by the board of directors, derived from consultation with management and outside experts, if the board of directors determines that it is advisable to retain such experts, and a review of, among other things, our estimated contingent liabilities and our estimated ongoing expenses, including, but not limited to, payroll, legal expenses, regulatory filings and other miscellaneous expenses. To the extent that assets deposited in the liquidating trust are not applied to or reserved for payment of the Company’s liabilities, these assets will be distributed to holders of beneficial interests in the liquidating trust at one or more later dates. Each shareholder will receive his or her pro rata share of each distribution based on the number of shares held on the record date for such distribution.

~~Included in cash and cash equivalents at June 30, 2005 and~~Sale ~~December 31, 2004 is restricted cash~~ of nil and $191,000, respectively. Restricted cash represents funds received by Chimes and held in client-specific bank accounts, to be used to make payments to vendors of the applicable client. Cash and cash equivalents at June 30, 2005 and December 31, 2004 also includes approximately $9.0 million and $2.1 million, respectively, of cash to be disbursed to Chimes vendors in accordance with the client payment terms.RGII

5On September 29, 2006, the Company sold its subsidiary, RGII Technologies, Inc. ~~Earnings~~, to Netstar-1, Inc. ~~Per~~for ~~Share~~$15.3 million in cash, less an estimated net asset adjustment of $1.2 million, subject to an escrow of $1 million of the purchase price. In addition, CHC retained all cash and cash equivalents of RGII, in the amount of $6.3 million. The amount of the estimated net asset adjustment is subject to a final review, and may be further adjusted. To the extent that the final net asset amount sold to NetStar-1 is greater than the estimated asset amount at closing, the Stock Purchase Agreement provides that the excess will be paid to CHC together with interest thereon at the prime rate from the closing date to the date of payment. If the final net asset amount sold to NetStar-1 is less than the estimated asset amount at closing, the Stock Purchase Agreement provides that the deficiency will be paid by CHC to NetStar-1, together with interest thereon at the prime rate from the closing date to the date of payment. Subsequent to the end of the reporting period, the parties reached agreement on the final net asset amount, resulting in a payment to the Buyer in the amount of $215 thousand. The remainder of the amount in escrow of $885 thousand, together with interest on the escrowed amount, was released from escrow to CHC. The sale of RGII resulted in a net book loss on disposal of $4.8 million, including approximately $969 thousand in transaction costs as reported September 30, 2006.

~~Basic Earnings Per Share (“EPS”) is based on the weighted average~~Sale ~~number~~ of common shares outstanding without consideration of common stock equivalents. Diluted earnings per share is based on the weighted average number of common and common equivalent shares outstanding, except the six-month period ended June 30, 2004, where the effect would have been antidilutive. The calculation takes into account the shares that may be issued upon exercise of stock options, reduced by the shares that may be repurchased with the funds received from the exercise, based on the average price during the year.Commercial

InOn ~~accordance~~November ~~with~~7, ~~Statement~~2006, the Company entered into an asset purchase agreement (the “Commercial Services Asset Purchase Agreement”) by and among TEKsystems, Inc., a Maryland corporation (“TEKsystems”), TEKsystems EF&I Solutions, LLC, a Maryland limited liability company, Allegis Group Canada Corporation, a Nova Scotia unlimited liability corporation, the Company, GBS Holdings Private Limited, a corporation organized under the laws of ~~Financial~~Mauritius, ~~Accounting~~CHC ~~Standard~~Healthcare NoSolutions, LLC, a Delaware limited liability company, and Allegis Group, Inc., ~~128~~a Maryland corporation. Pursuant to the Commercial Services Asset Purchase Agreement, ~~“Earnings~~on February 16, 2007, the Company sold to TEKsystems ~~per~~substantially ~~Share”~~all of the assets of its Commercial Services Business (~~SFAS~~as ~~128~~defined in the Commercial Services Asset Purchase Agreement), for a purchase price of $57 million in cash subject to a potential post-closing working capital adjustment, estimated at $(1.9) million using data as of the ~~table~~date ~~below~~of ~~presents~~sale ~~both~~(the ~~basic~~“Commercial Services Asset Sale”). The sale was also subject to an escrow of $1.7 million of the purchase price pending receipt of tax certificates in connection with the Taxation Act — Quebec; the certificates were subsequently received and ~~diluted~~the ~~earnings~~escrow released on April 24, 2007. Subsequent to the end of the quarter ~~per~~TEKsystems ~~share:~~submitted their revised calculation of the net working capital adjustment, asserting a claim for $6 million payable to TEKsystems. The Company continues to believe that its estimate of $1.9 million is appropriate, and is working with TEKsystems to resolve the discrepancies. In the event that agreement cannot be reached, under the Commercial Services Asset Purchase Agreement, the parties are required to submit the matter to an independent accounting firm for determination.

	Three Months Ended				Six Months Ended
	June 30, 2005		June 30, 2004		June 30, 2005		June 30, 2004
Numerator:
Net income/(loss) - in thousands	$	44	$	125	$	374	$	(442	)
Denominator:
Denominator for basic earnings per share - weighted average shares outstanding	31,272,000		30,810,000		31,232,000		30,743,000
Effect of stock options	179,000		405,000		256,000		—
Diluted earnings/(loss) per share:
Denominator for diluted earnings per share - adjusted weighted average shares outstanding and assumed conversions	31,451,000		31,215,000		31,488,000		30,743,000
Basic earnings/(loss) per share	$	0.00	$	0.00	$	0.01	$	(0.01	)
Diluted earnings/(loss) per share	$	0.00	$	0.00	$	0.01	$	(0.01	)

Assets not included in the Commercial Services Asset Sale include a refundable tax credit of $8.9 million, and the unit’s operating cash as of the date of the sale. The Company recorded an estimated gain of $29.1 million as a result of the sale of the Commercial Services Business. The maximum liability of the Company for indemnification claims under the Commercial Services Asset Purchase Agreement is $10 million and is contingent upon assertion of a claim for indemnity within nine months after the closing date.

The Commercial Services Asset Sale is a taxable transaction with respect to the Company to the extent of the gain that was realized. The Company will realize gain or loss measured by the difference between the proceeds

~~The~~received ~~computation~~by ofit ~~diluted~~and ~~earnings~~its affiliates ~~per~~on ~~share~~such ~~excludes~~sale ~~options~~and ~~with exercise~~the ~~prices~~Company’s ~~greater~~(or ~~than~~an ~~the~~affiliate’s) ~~average~~tax ~~market~~basis ~~price~~in the assets. AsFor purposes of ~~June~~calculating 30gain or loss, ~~2005~~the proceeds received by the Company and its affiliates will include ~~there~~the ~~were~~cash received 2by them,~~410~~ the amount of their indebtedness that is cancelled or assumed,~~409~~ and ~~2,247,909~~any ~~excluded~~other ~~options,~~consideration ~~respectively,~~received by them for ~~the~~their assets. It is anticipated ~~second~~that ~~quarter~~the ~~and~~Company will have sufficient current losses to offset most of the ~~first~~gain expected ~~six~~to ~~months~~be ~~ended~~realized ~~June~~from ~~30,~~the ~~2005,~~Commercial ~~with~~Services ~~exercise~~Business asset sale for ~~prices~~regular ~~between~~Federal ~~$3.21~~income ~~and~~tax ~~$16.375~~purposes and otherwise incur approximately $3134 thousand in alternative minimum taxes.65 The Company and/or ~~$16.375~~its ~~respectively~~affiliates may be subject to state income taxes to the extent that gains exceed losses for state tax law purposes, ~~per~~but ~~share~~does not anticipate that such taxes, if any, will be significant.

~~There were 1,021,084 and 268,472 excluded options, respectively, for~~Sale ~~the~~of ~~second quarter and first six months ended June 30, 2004, with exercise prices between $3.89 and $26.63 and $4.40 and $26.63 respectively, per share.~~Chimes

On October 18, 2006, the Company signed a definitive asset purchase agreement (the “Chimes Asset Purchase Agreement”) by and among Axium International, Inc., a Delaware corporation, Diversity MSP, Inc., a California corporation (“Diversity MSP”) and Chimes, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (subsequently known as Chimes, LLC; a Delaware limited liability company, and referred to herein as “Chimes”). Pursuant to the Chimes Asset Purchase Agreement, on February 16, 2007, the Company sold to Diversity MSP substantially all of the assets of Chimes, excluding cash and marketable securities, for a purchase price of $80.0 million in cash (the “Chimes Asset Sale”), with a gain of $73.6 million. ~~Segment~~ The maximum liability of the Company for ~~Information~~indemnification claims under the Chimes Asset Purchase Agreement is $8 million and is contingent upon assertion of a claim for indemnity within six months after the closing date.

~~During~~The ~~the~~Chimes ~~fourth~~Asset ~~quarter~~Sale ofis a ~~2004,~~taxable ~~the~~transaction ~~Company~~with ~~completed~~respect ~~a restructuring~~to ~~initiative whereby~~ the Company’s ~~business~~to ~~model~~the ~~has~~extent ~~been realigned,~~of ~~effective~~the ~~January 1, 2005, around its three distinct segments~~gain ofthat ~~clients~~was :realized. The ~~Commercial,~~Company ~~Federal Government and Vendor Management Services (Chimes).~~ will Asrealize again ~~result~~measured ofby the ~~business~~difference ~~realignment,~~between the ~~Company~~proceeds ~~has~~received ~~reclassified~~by ~~the~~it ~~prior~~and ~~year~~its ~~amounts~~affiliates inon ~~order~~such tosale ~~provide~~and athe ~~basis~~Company’s ~~for~~(or ~~comparison,~~an ~~conforming~~affiliate’s) totax ~~our~~basis ~~new~~in ~~lines~~the ~~of business~~assets. ~~Income/(loss)~~For ~~before~~purposes ~~income taxes/ (benefit) consists~~ of calculating ~~income/(loss)~~the ~~before income taxes~~gain, ~~excluding~~the ~~interest~~proceeds ~~income,~~received ~~interest~~by ~~expense, special~~the ~~charges/(credits),~~Company ~~minority~~and ~~interest,~~its ~~and~~affiliates ~~amortization~~will ofinclude ~~intangibles. These~~the ~~exclusions~~cash ~~total~~received ~~expense~~by ~~of $29~~them,~~000~~ ~~and~~the ~~income~~amount of ~~$448,000 for~~their ~~the~~indebtedness ~~quarter~~that ~~ended~~is ~~June~~cancelled or 30assumed, ~~2005~~ and ~~2004,~~any ~~respectively,~~other ~~and~~consideration ~~income~~received ~~of $471,000~~by ~~and~~them ~~$323,000~~ for ~~the~~their ~~six~~assets. It ~~months~~is ofanticipated ~~June~~that ~~30,~~the ~~2005~~Company ~~and~~will ~~2004,~~have ~~respectively~~sufficient ~~(see~~NOL ~~reconciliation~~carry-forwards ~~of segment income/(loss) before income taxes/(benefit)~~ to ~~consolidated~~offset ~~income/(loss)~~most ~~before income taxes/(benefit)). Corporate services, consisting~~ of ~~general~~the ~~and administrative~~gain ~~services,~~realized ~~are~~from ~~provided to~~ the Chimes ~~segments~~Transaction ~~from~~for aregular ~~centralized location. Such~~Federal ~~costs~~income ~~are~~tax ~~allocated~~purposes toand ~~the~~otherwise ~~applicable~~incur approximately ~~segments~~$1.46 ~~receiving~~million ~~corporate services~~in ~~based~~alternative onminimum ~~revenue~~taxes.

	THREE MONTHS ENDED						SIX MONTHS ENDED
(dollars in thousands)	June 30, 2005			June 30, 2004			June 30, 2005			June 30, 2004
Revenues :
Commercial	$	50,650		$	46,006		$	99,321		$	90,789
Federal	11,404			13,855			22,943			23,425
Chimes	7,012			5,929			13,375			11,282
Total revenues	$	69,066		$	65,790		$	135,639		$	125,496
Gross Profit :
Commercial	$	9,208		$	9,353		$	18,726		$	19,043
Federal	5,279			6,368			10,694			10,518
Chimes	6,816			5,562			12,868			10,623
Total Gross Profit	$	21,303		$	21,283		$	42,288		$	40,184
%	30.8		%	32.3		%	31.2		%	32.0		%
Operating Income :
Commercial	$	2,306		$	2,222		$	4,912		$	5,332
Federal	1,133			2,272			2,456			3,240
Chimes	1,607			728			2,796			822
Total Operating Income	$	5,046		$	5,222		$	10,164		$	9,394
%	7.3		%	7.9		%	7.5		%	7.5		%
Corporate Allocation :
Commercial	$	3,930		$	4,310		$	8,003		$	8,270
Federal	409			578			852			967
Chimes	612			605			1,206			1,115
Total Corporate Allocation	$	4,951		$	5,493		$	10,061		$	10,352
%	7.2		%	8.3		%	7.4		%	8.2		%
Total Income / (Loss) before Income Taxes / (benefit) :
Commercial	$	(1,624	)	$	(2,088	)	$	(3,091	)	$	(2,938	)
Federal	724			1,694			1,604			2,273
Chimes	995			123			1,590			(293		)
Total Income / (Loss) before Income Taxes / (Benefit)	$	95		$	(271	)	$	103		$	(958	)
%	0.1		%	-0.4		%	0.1		%	-0.8		%

The Company and/or its affiliates may be subject to state income taxes to the extent that gains exceed losses for state tax law purposes, but does not anticipate that such taxes, if any, will be significant. Based upon current projections, such state taxes are estimated to be approximately $1 million after taking into account the availability of state losses to offset the gain, and have been accrued.

2. Contingencies and Estimates

The Company will continue to incur costs through the liquidation. Note 1 sets forth the current (initial) estimate of these costs. The Company will evaluate the assumptions, judgments and estimates that can have a significant impact during liquidation and make changes accordingly. In addition, the following contingencies should be noted:

	($ in thousands)
Sale of the Commercial Services Business Unit, maximum contingent liability under asset purchase agreement, upon assertion of a claim within nine months after the closing date	$	10,000
Sale of the Commercial Services Business Unit, claim filed for Net Working Capital Adjustment as provided in asset purchase agreement less $1.9 million accrual	$	4,100
Sale of Chimes, maximum contingent liability under asset purchase agreement, upon assertion of a claim within six months after the closing date	$	8,000

The details of the above are described more fully elsewhere in this filing.

~~Reconciliation of Segment Income /~~Legal ~~(Loss) before Income Taxes / (Benefit) to Consolidated Income / (Loss) Before Income Taxes / (Benefit):~~Matters

	THREE MONTHS ENDED						SIX MONTHS ENDED
(dollars in thousands)	June 30, 2005			June 30, 2004			June 30, 2005			June 30, 2004
Total segment income/(loss) before income taxes/(benefit) :	$	95		$	(271	)	$	103		$	(958	)
Adjustments :
Special (charges) / credits	115			939			790			939
Amortization of intangibles	(264		)	(520		)	(614		)	(728		)
Net interest income	120			29			295			112
Total adjustments	(29		)	448			471			323
Consolidated income/(loss) before income taxes/(benefit)	$	66		$	177		$	574		$	(635	)

The Company is involved in various and routine litigation matters, which arise through the normal course of business. Management believes that the resolution of these matters will not have a material adverse effect on the final liquidation of the Company. While it firmly maintains that all pending claims are meritless, the Company will, however, continue to expend costs as it vigorously defends against these claims.

73. ~~Restructuring Charges~~ Initial Liquidating Distribution

~~During~~On March 5, 2007, the Company ~~fourth~~announced ~~quarter~~that its Board of ~~2004~~Directors had declared an initial liquidating distribution of $4.00 per share, inor ~~connection~~$135.3 ~~with~~million, ~~the~~to ~~Company’s~~its common ~~business~~shareholders ~~model~~and ~~realignment,~~certain ~~the~~former ~~Company~~option ~~recorded~~holders aunder ~~restructuring~~the ~~charge~~provisions of the ~~approximately~~surrender $2plan as described below.9 The initial ~~million~~liquidating ~~comprised~~distribution represented a partial distribution to shareholders of ~~approximately~~the ~~$2.8~~proceeds ~~million~~received inby ~~severance~~the Company from the sales of RGII, ~~costs~~Chimes and $0the Commercial Services Business Unit.1 In ~~million~~determining inthe ~~lease~~amount ~~obligation~~of ~~costs~~the initial distribution, the Company considered wind down and transition expenses and the exposure for contingent claims under the asset purchase agreements. The ~~lease~~distribution ~~obligation~~was payable on March 27, 2007 to shareholders of record as of the close of business on March 16, $02007.1 The ~~million~~initial isliquidating distribution ~~calculated~~was ~~based~~the onfirst ~~current~~of ~~rent~~what ~~commitments~~is ~~less~~expected to be a ~~calculated~~series of liquidating ~~sublease~~distributions ~~amount~~pursuant ~~based~~to onthe ~~current~~Plan ~~market~~of ~~conditions~~Liquidation.

	Remaining at					Currency			Remaining at
(dollars in thousands)	December 31, 2004		Paid			Translation *			June 30, 2005
Severance :
Canada	$	535	$	(346	)	$	(9	)	$	180
United States	1,902		(1,750		)	—			$	152
Total Severance	$	2,437	$	(2,096	)	$	(9	)	$	332
Lease Obligations :
United States	$	110	$	(54	)	$	—		$	56
Total	$	2,547	$	(2,150	)	$	(9	)	$	388

The aggregate amount of distributions to our shareholders is expected to be in the range of $4.68 to $4.81 per share of Common Stock. However, uncertainties as to the ultimate amount of our liabilities make it impossible to predict with certainty the actual aggregate net amounts that will ultimately be available for distribution to shareholders or the timing of any such distribution. Such amount and timing will depend on a number of factors, several of which cannot be determined at this time, including:

~~During~~· The ~~2003, the Company recorded restructuring charges of~~ultimate ~~approximately~~amount ~~$3.3 million relating to the closing~~ of ~~several~~our ~~offices in the United States~~known, ~~Canada~~unknown and ~~the~~contingent ~~United~~debts ~~Kingdom, including the related severance costs. The severance costs approximated $1.5 million~~ and ~~the future lease obligation costs (less a calculated sublease amount), including office closure expenses, approximated $1.8 million.~~liabilities;

	Remaining at					Currency			Remaining at
(dollars in thousands)	December 31, 2004		Paid			Translation *			June 30, 2005
Severance :
United Kingdom	$	50	$	0		$	(3	)	$	47
Total Severance	$	50	$	0		$	(3	)	$	47
Lease Obligations :
United Kingdom	$	123	$	(13	)	$	(7	)	103
Canada	319		(73		)	(12		)	234
Total Lease Obligations	$	442	$	(86	)	$	(19	)	$	337
General Office Closure :
United Kingdom	$	45	$	(12	)	$	(2	)	$	31
Total	$	537	$	(98	)	$	(24	)	$	415

· The fees and expenses incurred by us in the liquidation of our assets and the dissolution of the Company;

*As ~~Recorded~~a result, the amount ~~balances~~of ~~change~~cash ~~due~~remaining tofollowing ~~fluctuations~~completion inof ~~exchange~~our ~~rates~~liquidation and dissolution could vary significantly from our current estimates.

Election to Surrender Options

In order to facilitate the participation in any liquidating distributions by the holders of Company options, the board of directors granted to each option holder the right to surrender their options in exchange for the right to receive the amount(s) that such option holder would have been entitled to receive in each distribution as if they held the number of shares of Common Stock issuable upon exercise of the surrendered options. The amount so distributed to each option holder will be reduced by the exercise price of his or her options, which will be applied to reduce the amounts that would otherwise be payable to the option holder until the exercise price has been applied in full. A total of 1,162,820 options were surrendered under the plan. The average exercise price for such options was $2.97 per share. The initial distribution to holders of surrendered options was $394,569.

4. Voluntary withdrawal from NASDAQ

On March 9, 2007, the Board of Directors of the Company approved a plan to voluntarily withdraw its common stock from trading on The NASDAQ Stock Market (“NASDAQ”) effective after the close of trading on March 30, 2007.

On March 12, 2007, the Company received a letter from NASDAQ stating that, based on the NASDAQ staff’s review of the Company’s public announcements concerning its shareholders’ approval of a plan of complete liquidation and dissolution of the Company and the declaration of an initial distribution (and anticipated subsequent distributions) in connection therewith and pursuant to Marketplace Rule 4300, the NASDAQ staff believes that the Company is a “public shell” and as such no longer meets NASDAQ’s continued listing requirements, but that in view of the Company’s plan to voluntarily withdraw its common stock from listing on NASDAQ and pursuant to

~~During~~Marketplace ~~2002,~~Rule 4450(f) the ~~Company~~staff ~~recorded~~has ~~restructuring~~determined ~~charges approximating $2.8 million, primarily pertaining~~ to ~~office~~grant ~~closings. In~~an ~~the~~extension ~~second quarter~~ of ~~2005,~~time permitting the Company’s ~~recorded~~common anstock ~~additional~~to ~~charge~~continue ~~pertaining~~ to ~~sublease~~trade ~~income~~on ~~which~~NASDAQ ~~did~~through ~~not materialize~~March ~~as estimated in the initial 2002 restructuring charge. Amounts remaining from this restructuring~~30, ~~and~~ ~~previous restructurings, pertain to future lease obligation costs~~2007.

	Remaining at									Remaining at
(dollars in thousands)	December 31, 2004		Recorded		Paid			Adjusted		June 30, 2005
Lease Obligations :
United States	$	267	$	142	$	(375	)	$	—	$	34

On March 13, 2007, the Company announced that it had notified NASDAQ of its intention to voluntarily withdraw its common stock from listing on NASDAQ effective immediately prior to the opening of trading on April 2, 2007, with the effect that the last day of trading on NASDAQ would be March 30, 2007. The company’s stock began trading in the Pink Sheets effective at the opening of trading on Monday, April 2, 2007.

85. ~~Shareholders’ Equity~~ Recent Accounting Pronouncements

	Six Months Ended
	June 30, 2005
	Amount			Shares
	(dollars in thousands)
Balance at beginning of period	$	125,781		31,093,794
Net income	374
Proceeds upon exercise of stock options and ESPP	532			178,004
Other comprehensive loss	(564		)
	$	126,122		31,271,798

In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 (FIN 48), which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

~~9. Comprehensive~~On January 1, 2007, the Company adopted the provisions of FASB Interpretation 48, Accounting for Uncertainty in Income~~/(Loss)~~ Taxes, in regards to our accounting and disclosure of uncertain tax positions. The Company has reviewed its accounting for income taxes in light of the provisions of FIN 48 and does not expect that adoption will materially affect our consolidated financial statements. Upon the adoption of FIN 48, a tax contingency reserve of approximately $350 thousand was established related to various Federal, Foreign and State income tax matters. An additional amount was accrued for interest and penalties.

~~Statement of Financial~~ 6. Accounting ~~Standards~~for No. 130, “Reporting Comprehensive Income” (SFAS 130), requires that items defined as other comprehensive income/ (loss), such as foreign currency translation adjustments and unrealized gains and losses, be separately classified in the financial statements and that the accumulated balance of other comprehensive income/ (loss) be reported separately from retained earnings and additional paidStock-~~in capital in~~Based ~~the equity section of the balance sheet. The components of comprehensive loss for the three and six months ended June 30, 2005 and June 30, 2004 are as follows:~~Compensation

	Three Months Ended						Six Months Ended
(dollars in thousands)	June 30, 2005			June 30, 2004			June 30, 2005			June 30, 2004
Comprehensive income/(loss) :
Net income/(loss)	$	44		$	125		$	374		$	(442	)
Other comprehensive income/(loss) -
Foreign currency adjustment	(187		)	(213		)	(419		)	(365		)
Unrealized gain/(loss) on SERP investments	25			(24		)	(145		)	50
Comprehensive income/(loss)	$	(118	)	$	(112	)	$	(190	)	$	(757	)

Accounting for Stock-Based Compensation

The ~~accumulated~~Company ~~balances~~issues ~~related~~common stock options to ~~each~~certain ~~component~~employees and certain of ~~other~~its board members. In January 2006, the Company adopted ~~comprehensive~~Financial ~~income/~~Accounting Standards Board Statement No. 123 (~~loss~~revised 2004) ~~for~~(“FAS 123R”) - “Share-Based Payments”. FAS 123R requires all entities to recognize compensation expense in an amount equal to the ~~six~~fair ~~months~~value ~~ended~~of ~~June~~share-based 30payments, ~~2005~~such ~~and~~as ~~June~~stock 30options granted to employees. The Company elected to apply FAS 123R under a modified prospective method. Under this method, the Company is required to record compensation ~~2004~~expense ~~were~~for newly granted options and (as ~~follows:~~previous awards continue to vest) for the unvested portion of previously granted awards that remain outstanding at the date of adoption. The financial statements for prior interim periods and fiscal years do not reflect any adjusted amounts.

(dollars in thousands)	Foreign Currency Translation			Unrealized Gain/(Loss) on Investments			Accumulated Other Comprehensive Loss
Balance at December 31, 2004	$	(936	)	$	(1,264	)	$	(2,200	)
Accumulated comprehensive income/(loss)	(419		)	(145		)	(564		)
Balance at June 30, 2005	$	(1,355	)	$	(1,409	)	$	(2,764	)
Balance at December 31, 2003	$	(1,200	)	$	(1,589	)	$	(2,789	)
Accumulated comprehensive income/(loss)	(365		)	50			(315		)
Balance at June 30, 2004	$	(1,565	)	$	(1,539	)	$	(3,104	)

A summary of the status of all the Company’s stock option plans as of March 31, 2007 and the changes during the three months ended on that date is presented below:

	Three months ended March 31, 2007
			Weighted
			Average
			Exercise
Options (Three Months)	Shares		Price
	(000’s)

Outstanding January 1, 2007	1,287		$	3.72
Granted	0		$	0.00
Exercised	(99	)	$	3.37
Canceled/forfeited/expired	(1,163	)	$	3.76
Outstanding March 31	25		$	3.31
Options exercisable March 31, 2007	25		$	3.31
Weighted average fair value of options granted during the three months ended March 31, 2007			$	0.00

Cash received from option exercise under all share-based payment arrangements for the three months ended March 31, 2007 was $431,000. There are no tax benefits realized for the tax deductions from option exercise

10of the share-based payment arrangements for the same period due to the full valuation allowance position. ~~Purchase~~ As the Company currently has a full valuation allowance with respect to its deferred tax assets, no tax benefit from the options are recognized at this time. If the Company determines that it is more likely than not that it will recognize a tax benefit from the exercise of ~~Treasury~~the ~~Stock~~options, then this amount would generally reflect the overall tax benefit.

~~In April of 2001, the Board of Directors approved the repurchase~~FAS in123R the open market of up to 10% of its common shares outstanding, or approximately 3.2 million shares. The Company did not repurchase shares of its common stock during the six months ended June 30, 2005 and June 30, 2004, respectively. As of June 30, 2005, the remaining authorization for repurchase is approximately 93,000 shares.Calculations

11FAS 123R provides procedures for the estimation of employee compensation by forecasting the future stock price at an estimated point in time. ~~Asset-Based~~ Following the sale of Chimes and Commercial, ~~Lending~~the ~~Facility~~Company can more accurately estimate the ending share price based on the aggregate amount of distribution range per share as well as the expected term. Using the midpoint of the liquidating distribution range, the FAS123R estimated compensation expense for stock option plans in 2007 was estimated at $16 thousand.

The Company has a $40 million line of credit facility with availability based primarily on eligible customer receivables. The interest rate is LIBOR plus 2.75% based on unpaid principal. The borrowing base less outstanding loans must equal or exceed $5.0 million. As of June 30, 2005, the Company had no outstanding loan balance against the facility. Based on the Company’s eligible client receivables and cash balances, $16.9 million was available for borrowing as of June 30, 2005. The fee for the unused portion of the line of credit is 0.375% per annum charged to the Company monthly. This charge was approximately $64,000 and $52,000 for the six month periods ended June 30, 2005 and 2004, respectively. This line of credit includes covenants relating to the maintenance of cash balances and providing for limitations on incurring obligations and spending limits on capital expenditures. The Company did not satisfy this covenant for the quarter ended March ~~31,~~ ~~2004. A waiver was received from the lending institution for the quarter ended March~~ 31, ~~2004 along with an amendment to the loan agreement lowering the three-month average minimum collections covenant to $10 million. At June 30~~2007, ~~2005, the Company is in~~ ~~compliance~~there ~~with the covenant. The facility~~ was ~~scheduled~~no tototal ~~expire~~unrecognized ~~in July 2005.~~compensation ~~However,~~cost onrelated ~~July 1,~~to ~~2005, the Company signed a one~~non-~~year~~vested ~~extension~~share-based ofcompensation ~~the~~arrangements ~~facility,~~granted ~~which~~under ~~will~~these ~~remain in effect until July 2006~~plans.

12In addition to the three share-based compensation plans detailed above, the Company also maintained an Employee Stock Purchase Plan (“ESPP”). ~~Income~~ ~~Taxes~~The ESPP purchased shares quarterly at a 15% discount from the lower of the opening and closing stock prices for the period. The shares were purchased at a fixed discount and therefore gave rise to a liability under FAS 123R. The Company discontinued the ESPP as of the end of fourth quarter 2006. The last contributions were accepted through December 31, 2006 and the final purchase for ESPP was made on January 3, 2007.

~~Tax Benefit Reserve~~7. Cash

OnIncluded ~~March 9,~~in ~~2002~~cash and cash equivalents at December 31, ~~the~~2006 ~~Job~~was ~~Creation~~restricted cash of $1.2 million. Restricted cash pertains to funds received by Chimes and ~~Worker~~held ~~Assistance~~in ~~Act~~client-specific ofbank accounts to be used to make payments to ~~2002~~vendors (of the ~~“Act”)~~applicable client. At March 31, 2007 there was ~~enacted~~cash ~~into~~held ~~law~~in escrow of $1. ~~This~~7 ~~Act~~million ~~contains~~from ~~many~~the ~~economic~~sale of ~~and~~the ~~tax~~Company’s ~~incentives~~commercial business, ~~including~~$100 thousand in cash held in escrow by CIT in connection with the ~~extension~~termination ofby the ~~carryback~~Company ~~period~~of ~~for~~its ~~losses arising~~credit infacility ~~years~~with CIT ~~ending~~(which ~~during~~amount ~~2001~~was ~~and~~returned ~~2002~~in full to ~~five~~CHC ~~years~~subsequent ~~from~~to the ~~previous~~end of the ~~two~~reporting ~~year~~period) ~~carryback~~and ~~rule~~$1 million of cash held in escrow in connection with the sale of RGII. As(Subsequent ato ~~result~~the end of the reporting period, the ~~Act~~parties to the RGII sale reached agreement on the final net asset amount sold, resulting in a payment to the ~~Company’s~~Buyer ~~tax~~in ~~refund~~the amount ~~claim~~of $215 thousand; the remainder of ~~approximately~~the ~~$10~~amount ~~million~~held atin ~~December 31,~~escrow ~~2001,~~of ~~which~~$885 ~~was~~thousand, ~~received~~plus ininterest ~~April 2002~~on the escrowed amount, was ~~increased~~released tofrom ~~approximately~~escrow ~~$30 million~~to CHC.) ~~The~~Cash ~~additional~~and ~~refund~~cash ~~amount~~equivalents ofat December 31, 2006 also included approximately $2023.3 million of cash which was ~~received~~fully disbursed to Chimes vendors in ~~January 2003~~ accordance with the client payment terms.

~~During~~On ~~1998~~March 5, ~~the~~2007, the Company ~~completed~~announced athat ~~business~~its ~~combination~~Board ~~which,~~of ~~for financial~~Directors ~~statement~~had ~~purposes,~~declared ~~was~~an ~~accounted~~initial liquidating ~~for~~distribution ~~as a pooling-~~of~~-interests~~ $4. ~~For~~00 ~~income~~per ~~tax purposes~~share, ~~the~~or ~~transaction~~$135.3 ~~was~~million, ~~treated~~to asits ~~a taxable~~common ~~purchase~~shareholders ~~that~~and ~~gave~~certain ~~rise~~former tooption ~~future~~holders ~~tax~~under ~~deductions. Upon~~ the ~~sale~~provisions of the ~~acquired~~surrender ~~business~~plan described in ~~2001,~~Note ~~these~~3. The distribution ~~deductions~~was ~~were~~payable ~~recognized~~March ~~for~~27, ~~tax purposes. The~~2007 ~~tax~~to ~~benefit~~shareholders of ~~$19.6~~record ~~million~~as ~~relating~~of to the ~~part~~ close of ~~these~~business on March 16, 2007. The ~~deductions~~initial ~~that~~liquidating distribution was ~~carried~~the ~~back~~first toof ~~prior~~what ~~years~~is ~~was~~expected ~~included~~to inbe ~~refundable~~a ~~income~~series ~~taxes~~of inliquidating ~~2002. Since~~distributions ~~the~~pursuant ~~tax~~to ~~structure~~the plan of ~~the~~liquidation ~~transaction was~~and ~~subject~~dissolution toapproved ~~review~~ by the ~~tax~~Company’s ~~authorities~~shareholders on February 14, ~~the~~2007. The ~~Company~~liquidating ~~recorded~~distribution represents a partial ~~reserve~~distribution ~~for~~ to shareholders of the ~~tax~~proceeds ~~benefits~~received ~~resulting~~by the Company from the ~~carryback~~sale ~~and~~of ~~did~~its ~~not~~RGII ~~record~~Technologies ~~deferred~~subsidiary ~~tax~~and substantially all of the non-cash assets ~~for~~of ~~the~~its ~~tax~~Chimes, ~~benefits~~Inc. ~~being~~subsidiary ~~carried~~and ~~forward~~its Commercial division.

In December 2003, the Internal Revenue Service examined the Company’s Federal income tax returns for the years ended December 31, 2001 and 2000, along with its Federal refund claims for the calendar years 1996 through 19998. ~~The~~ Comprehensive additional refund amount received in January 2003 was shown as a liability until the audit was completed. During the first quarter of 2004, the Internal Revenue Service and the Joint Committee on Taxation completed their examination of the Company’s Federal income tax returns and Federal refund claims, and accepted them without change. Accordingly, the tax benefit was recorded as a decrease in tax benefit reserves of $19.6 million, a decrease in other tax reserves of $0.3 million, and an increase in additional paid-in capital of $19.9 million. There was no charge or credit to income. The Company did not record deferred tax assets for the tax benefits being carried forward due to remaining uncertainties. It is anticipated that a deferred tax asset, net of an appropriate valuation allowance, will be recorded when it is probable that the tax benefit will be realized. The tax benefit will be reflected as an increase in additional paid-in capital.Income/(Loss)

~~Deferred~~Statement ~~Tax~~of ~~Asset~~Financial Accounting Standards No. 130, “Reporting Comprehensive Income” (FAS 130), requires that items defined as other comprehensive income/ (loss), such as foreign currency translation adjustments and unrealized gains and losses, be separately classified in the financial statements and that the accumulated balance of other comprehensive income/ (loss) be reported separately from retained earnings and additional paid-in capital in the equity section of the balance sheet. The components of comprehensive loss for the period from January 1, 2007 to February 16, 2007 and the three month period ended March 31, 2006 are as follows:

The Company records deferred tax assets for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and their respective tax bases, and net operating loss carryforwards. Deferred tax assets are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. In assessing the realizability of deferred tax assets, management considers the scheduled reversal periods of the deferred tax assets as well as projected future taxable income and tax planning strategies.

The Company has significant deferred tax assets resulting from net operating loss carryforwards, capital loss carryforwards, and deductible temporary differences that may reduce taxable income in future periods. The Company has provided full valuation allowances on the future tax benefits related to capital losses, foreign net operating losses, and most state net operating losses. The Company believes that the valuation allowance is appropriate because these deferred tax assets have relatively short carryforward periods or relate to taxing jurisdictions which do not allow the filing of consolidated tax returns. The Company expects to continue to maintain a valuation allowance on these deferred tax assets until an appropriate level of profitability is sustained in the applicable taxing jurisdictions, or strategies are developed that would enable the Company to conclude that it is more likely than not that a portion of these deferred tax assets will be realized.

The Company believes that it is more likely than not that the net remaining deferred tax assets of $19.5 million at June 30, 2005 will be realized, principally based upon forecasted taxable income. Although the Company has experienced operating losses in past years, the Company experienced improved operational performance in the first six months of 2005 resulting from the Company’s realignment initiatives completed in the fourth quarter of 2004, and continued improvement in the operating results of its Chimes subsidiary. This operating improvement is expected to continue in 2005. The minimum average annual taxable income required to realize the deferred tax assets over the 20-year net operating loss carryforward period is approximately $2.8 million.

	Period Ended
	February 16,		March 31,
(dollars in thousands)	2007		2006
Comprehensive income/(loss) :

Net income/(loss)	$	99,371	$	758
Foreign currency adjustment	9		93
Comprehensive income/(loss)	$	99,380	$	851

~~Current~~The ~~Federal~~accumulated ~~and~~balances related ~~state~~to ~~tax~~each ~~laws~~component ~~impose restrictions on the utilization~~ of ~~net operating loss carryforwards and~~ other ~~deferred~~comprehensive ~~tax~~income ~~assets following~~(loss) anfor ~~ownership change as provided in Section 382 of~~ the ~~Internal~~period ~~Revenue~~from ~~Code. If~~January ~~the~~1, ~~Company~~2007 ~~were~~through toFebruary ~~undergo~~16, a2007 ~~Section 382~~and ~~ownership change,~~ the ~~deferred~~three ~~tax~~months ~~assets~~ended ~~may be subject to an annual limitation which~~March ~~may~~31, ~~limit~~2006 ~~the~~were ~~Company’s~~as ~~ability to utilize the deferred tax assets.~~follows:

13. Rescission Offer

(dollars in thousands)	Foreign Currency Translation			Unrealized Gain/(Loss) on Investments		Accumulated Other Comprehensive Loss
Balance at December 31, 2006	$	(652	)	$	—	$	(652	)
Accumulated comprehensive income/(loss)	9			—		9
Balance at February 16, 2007	$	(643	)	$	—	$	(643	)

Balance at December 31, 2005	$	(643	)	$	—	$	(643	)
Accumulated comprehensive income/(loss)	93			—		93
Balance at March 31, 2006	$	(550	)	$	—	$	(550	)

~~From April 2001 through January 2003, the sale of shares of the Company’s common stock pursuant to the Employee Stock~~ 9. Purchase ~~Plan were not exempt from registration or qualification under Federal securities laws. As a result, the Company may have failed to comply with the registration or qualification requirements~~ of ~~Federal~~Treasury ~~and applicable state securities laws because the Company did not register or qualify these stock issuances under either Federal or applicable state securities laws.~~Stock

AsIn aApril ~~result,~~of ~~the Company made a rescission offer~~2001, ~~effective~~the ~~July 27,~~Board ~~2004, to all those persons who purchased shares~~ of ~~common~~Directors ~~stock pursuant~~approved to the ~~Employee~~repurchase ~~Stock~~in ~~Purchase Plan during~~ the ~~affected~~open ~~periods. The~~market ~~rescission~~of ~~offer~~up ~~was made pursuant~~ to a10% ~~registration statement filed under~~of ~~the~~its ~~Securities~~common ~~Act~~shares ~~and~~outstanding, ~~pursuant~~or toapproximately ~~applicable~~3.2 ~~state~~million ~~securities laws~~shares. ~~In this~~The ~~rescission offer, the~~ Company ~~offered~~did tonot repurchase ~~the~~ shares, ~~subject~~of toits ~~our~~common ~~rescission~~stock ~~offer,~~during ~~for~~ the ~~price~~three ~~paid~~months ~~per~~ended ~~share~~March ~~plus~~31, ~~interest~~2007 ~~from~~and ~~the~~March ~~date~~31, 2006. As of ~~purchase~~January ~~until~~2007 ~~the~~all ~~rescission offer expires, at the current statutory rate~~Treasury ~~per~~Shares ~~year mandated by the state in which the shares~~ were ~~purchased~~fully depleted. ~~The rescission~~No ~~offer expired on August 27, 2004, with no individuals accepting~~further ~~the~~purchases ~~rescission~~are ~~offer~~contemplated.

1410. ~~Special Items~~ Asset-Based Lending Facility

~~Income~~The ~~from~~Company’s ~~operations~~credit facility ~~for~~with CIT was cancelled by the ~~second~~Company ~~quarter~~effective ~~and~~February ~~six~~12, 2007. CIT ~~months~~held of$100 ~~2005~~thousand in escrow ~~includes~~for 90 days after the ~~following~~effective ~~special~~date ~~charges/(credits),~~of ~~which~~cancellation. Subsequent ~~have~~to ~~been~~the ~~combined~~end onof athe first quarter ~~separate~~2007, ~~line~~such ~~for~~funds ~~presentation~~were ~~purposes~~released from escrow and returned to the Company.

	Three months ended						Six months ended
	June 30, 2005			June 30, 2004			June 30, 2005			June 30, 2004
Bad debt recovery	$	—		$	—		$	(675	)	$	—
Restructuring charges	142			—			142			—
Gain on sale of assets	(327		)	—			(327		)	—
Merger related expenses	70			—			70			—
Insurance refund	—			(939		)	—			(939		)
	$	(115	)	$	(939	)	$	(790	)	$	(939	)

11. Income Taxes

15Similar to the prior year, the Company is not in a position to determine its projected annual effective tax rate. ~~Legal~~ For the year ended ~~Matters~~December 31, 2006, the Company could not estimate the rate due to the large net operating loss carryforward and corresponding valuation allowance.

InIncome ~~July~~tax ~~2005,~~expense ~~the Company received notification that a former financial~~has ~~advisor~~been toprovided for the ~~Company~~quarter ~~has~~ended ~~asserted~~March a31, ~~claim~~2006 ~~for~~ at ~~least~~an ~~$1.75~~effective ~~million~~tax ~~in amounts~~rate ~~allegedly owed to it in connection with the proposed merger with~~of ~~Analysts International Corporation~~8.6%. ~~The former~~As ~~advisor claims that~~mentioned, ~~pursuant~~for to the ~~terms of its engagement arrangement~~quarter ~~with~~ended ~~the~~March ~~Company~~31, ~~which is expired~~2007, itliquidation ~~had~~accounting ~~the~~has ~~right~~been toadopted ~~act~~and as ~~exclusive~~the result ~~financial~~of ~~advisor~~operational tolosses, ~~the~~there ~~Company~~is ~~with~~no ~~respect~~provision tofrom ~~certain~~continuing ~~transactions~~operations. Taxes ~~involving the~~have ~~Company~~been ~~such~~provided as ~~the~~a ~~proposed~~result ~~merger,~~of ~~notwithstanding~~ the sale ~~expiration~~ of ~~its engagement~~the business operations. The Company ~~believes it~~ has ~~meritorious~~ ~~defenses~~accrued ~~and~~$617 ~~potential~~thousand ~~counterclaims~~for ~~pertaining~~state toand ~~this matter. The~~local ~~Company~~taxes ~~is involved in other various~~ and ~~routine litigation matters, which arise through the normal course of business~~$1. ~~Management~~3 ~~believes that the resolution of these matters~~million ~~will~~for ~~not~~federal ~~have~~alternative aminimum ~~material adverse effect on the Company’s financial position or results of operations~~taxes.

Deferred Tax Asset and Valuation Allowance

The Company records deferred tax assets for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and their respective tax bases, and operating loss carryforwards. Deferred tax assets are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. In assessing the realizability of deferred tax assets, management considers the scheduled reversal periods of the deferred tax assets, whether sustained profitability has been achieved and tax planning strategies.

16The Company has significant deferred tax assets resulting from net operating loss carryforwards, capital loss carryforwards, and deductible temporary differences that may reduce taxable income in future periods. ~~Proposed~~ The ~~Merger~~Company has provided full valuation allowances on the future tax benefits related to capital losses, foreign net operating losses, and ~~Deferred~~all ~~Merger~~state ~~Costs~~net operating losses. The Company believes that the valuation allowance is appropriate because these deferred tax assets have relatively short carryforward periods or relate to taxing jurisdictions which do not allow the filing of consolidated tax returns. Also, as a result of adopting liquidation accounting, the Company does not expect to utilize its deferred tax asset due to the sale of the remaining operations.

OnThe ~~April 12, 2005, the~~ Company, JVadopted ~~Merger Corp., a Minnesota~~FASB ~~corporation~~Interpretation ~~and a wholly-owned subsidiary of the Company (the “Sub”)~~48, ~~and~~Accounting ~~Analysts International~~for ~~Corporation,~~Uncertainty ain ~~Minnesota~~Income ~~corporation~~Taxes (“~~Analysts”),~~FIN ~~entered into an Agreement and Plan of Merger (the “Merger Agreement~~48”), ~~pursuant to which,~~at ~~subject to satisfaction or waiver of applicable conditions, Sub will be merged with and into Analysts (~~the ~~“Merger”)~~beginning ~~and each issued and outstanding share~~ of ~~common~~ ~~stock,~~fiscal ~~par~~year ~~value $~~2007.10 As ~~per~~a result ~~share,~~ of ~~Analysts~~the ~~(other~~implementation ~~than shares held of record by~~ the Company, ~~Sub,~~recognized ~~Analysts~~a ~~and~~$150 ~~any~~thousand ~~of their subsidiaries) shall be~~net ~~converted~~increase ~~into the right~~ to ~~receive~~reserves ~~1.15~~for ~~fully~~uncertain ~~paid~~tax ~~and non-assessable shares of the Company’s common stock, par value $~~positions.10 This ~~per~~change ~~share~~has ~~(the~~two ~~“Merger Consideration”). In~~components ~~addition, upon completion~~ of ~~the Merger, the Company~~which ~~will~~amounts ~~assume~~related ~~all~~to ~~options~~a ~~then~~re-class ~~outstanding~~to ~~under~~a ~~Analysts’~~non ~~existing~~income ~~equity incentive~~tax ~~plans,~~reserve ~~each~~balance of ~~which~~$200 thousand ~~will be exercisable~~ for asales ~~number~~and ofuse ~~shares~~tax ~~of Company common stock (~~and ata an$350 ~~exercise~~thousand ~~price)~~increase ~~adjusted~~ to ~~reflect~~ the ~~Merger~~income tax ~~Consideration~~reserve. ~~Upon~~The ~~completion~~$350 ofthousand ~~the~~increase ~~merger,~~was accounted ~~based~~for ~~upon~~as ~~the~~an ~~number~~adjustment ~~of shares~~to ~~outstanding on~~ the ~~record~~beginning ~~date~~balance ~~and after giving effect to restricted shares~~ of ~~Analysts~~retained ~~common~~earnings ~~stock, Analysts shareholders will own approximately~~on ~~48% of~~ the ~~outstanding~~Balance ~~shares of the combined company~~Sheet. ~~Completion~~Including of the ~~Merger is subject to~~ ~~several~~cumulative ~~conditions,~~effect ~~including~~for ~~approval by~~ the ~~shareholders~~adoption of ~~each~~FIN ~~company~~48, ~~effectiveness~~ ofat athe ~~Form S-4~~beginning ~~registration~~of ~~statement~~2007, ~~filed with~~ the ~~Securities~~Company ~~and~~had ~~Exchange~~approximately ~~Commission,~~$1.3 ~~and~~million ~~other~~of ~~customary~~total ~~closing~~gross unrecognized tax ~~conditions~~benefits. ~~The~~Of ~~transaction~~this istotal, ~~intended~~$845 ~~to qualify as a tax-free reorganization~~thousand ~~under Section 368~~(a) net of the ~~Internal~~federal ~~Revenue~~benefit ~~Code~~on ofstate ~~1986,~~issues) ~~as amended. Additionally,~~represents the ~~Merger~~amount ~~Agreement may be terminated by the~~of ~~Company~~unrecognized ortax ~~Analysts~~benefits ~~upon~~that, ~~the~~if ~~occurrence or failure to occur of certain events~~recognized, ~~including~~ awould ~~failure~~favorably ofaffect the effective ~~Merger~~income totax berate ~~consummated~~in byany ~~November 30,~~future ~~2005~~periods.

The ~~Merger~~Company ~~Agreement~~and ~~provides~~its subsidiaries ~~that~~are ~~the~~subject ~~board~~to ofU.S. ~~directors~~federal income tax as well as income tax of multiple ~~the~~state jurisdictions. The Company ~~following~~has ~~the~~substantially ~~Merger~~concluded ~~will~~all ~~consist~~U.S. offederal ~~ten~~income ~~directors,~~tax ~~including~~matters ~~five~~for years ofthrough 2002. Substantially all ~~whom~~material ~~who~~state, ~~shall~~local beand ~~selected~~foreign ~~from~~income ~~the~~tax ~~current~~matters ~~Company~~have ~~board~~been ~~and~~concluded ~~five~~for years ofthrough ~~whom~~2001. There ~~who~~are ~~shall~~no bematerial ~~selected~~audits ~~from~~in ~~the~~process ~~current~~at ~~Analysts~~this ~~board~~time.

~~During~~The ~~the six months ended June 30, 2005, the~~ Company’s ~~has recorded~~continuing ~~deferred~~practice ~~merger~~is ~~costs~~to ofrecognize ~~approximately~~interest ~~$2.4~~and/or ~~million~~penalties ~~primarily~~related ~~for~~to ~~legal~~income ~~and~~tax ~~financial~~matters ~~advisory~~in ~~services~~income tax expense. ~~Such costs~~The ~~will~~Company behad ~~capitalized~~an asimmaterial ~~part~~amount of ~~the~~accrued ~~purchase~~interest ~~price~~and ifpenalties ~~the~~during ~~merger is consummated,~~the orfirst ~~expensed~~quarter ifof ~~consummation~~2007 ~~does~~and ~~not~~at ~~occur~~December 2006.

~~On July 22, 2005, a group comprised of Crescendo Partners II, L~~12.~~P.,~~ Change Series R, Crescendo Investments II, LLC, Eric Rosenfeld, F. Annette Scott Florida Trust, Richard L. Scott Florida Trust, Scott Family Florida Partnership Trust, Richard L. Scott , Stephen T. Braun and The Computer Horizons Full Value Committee (collectively, the “Crescendo Group”), filed a Statement on Schedule 13D (the “Schedule 13D”) with the Securities and Exchange Commission (the “SEC”) disclosing their opposition to the merger and their intention to solicit the Company’s shareholders to vote against the Company’s proposals in furtherance of ~~the~~Control proposed merger. The Schedule 13D further discloses the Crescendo Group’s intention to call a special meeting of the Company’s shareholders in order to remove up to all of the Company’s existing directors and toother ~~replace them with the Crescendo Group’s own slate of director nominees. In furtherance of its stated intentions, also~~Special onCharges ~~July 22, 2005, the Crescendo Group filed a preliminary proxy statement with the SEC opposing the merger~~ and ~~soliciting~~Contingency votes of the Company’s shareholders in opposition to the proposals intended to consummate the merger, in particular, the proposal to approve the issuance of shares of the Company’s common stock in connection with the merger. Also on July 22, 2005, the Crescendo Group filed solicitation material with the SEC containing the text of a press release issued on that date in which it identified itself and announced its position regarding the merger and its intentions to solicit opposition to the merger. At the time of the filing of this Quarterly Report on Form 10-Q, the Crescendo Group’s preliminary proxy statement had not become definitive.Payments

OnThe ~~July~~balance ~~27,~~of ~~2005,~~ the $2.3 ~~Company~~million ~~received~~in ~~from~~change ~~counsel~~of tocontrol ~~the~~payments ~~Crescendo~~to ~~Group~~employees ahas ~~request~~been ~~that~~re-classed ato ~~special~~the ~~meeting~~short-term ofliability ~~the~~section ~~shareholders~~ of the ~~Company~~2006 bebalance ~~called~~sheet ~~for~~due to the ~~following~~future ~~purposes:~~liquidation ~~(i) to remove all~~ of the ~~existing directors serving on the~~ Company’s. The ~~board~~remaining ofliability ~~directors~~for ~~without~~change ~~cause, (ii) to fix the number~~ of ~~members~~control ~~comprising the~~was ~~board~~$563 thousand at ~~five~~March 31, ~~and (iii) to elect five director nominees to be selected by the Crescendo Group~~2007. These ~~This~~liabilities ~~request~~have ~~was~~been ~~for~~paid ~~a second special meeting~~ in ~~addition to~~full ~~the special meeting contemplated by the Company in connection with the~~as ~~approval~~ of ~~proposals relating to~~ the ~~proposed~~end ~~merger.~~of ~~After advising~~ the ~~Crescendo~~ ~~Group’s counsel that the request was improper under the Company’s by-laws, the Company received a~~ second ~~request~~quarter onof ~~August 2, 2005, which request was proper~~2007.

~~The~~13. Refundable ~~Company’s registration~~Income ~~statement containing its joint proxy statement/prospectus was declared effective by the SEC on August 4, 2005 and the joint proxy statement has been mailed out to the Company’s shareholders.~~Tax

The Quebec Government through Invest Quebec has granted the Company’s Montreal Outsourcing Centre (“MOC”) a refundable tax credit on certain qualifying job positions in Information Technology. This program has been available to MOC since 2002. The outstanding receivable as of March 31, 2007 and December 31, 2006 includes credits relating to 2005, 2006 and the period from January 1 through February 16, 2007, and 2005 and 2006, respectively.

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the Periods Ended March 31, 2007 and March 31, 2006

~~FINANCIAL~~The following detailed ~~CONDITION~~discussion ~~AND~~and ~~RESULTS~~analysis OFof ~~OPERATIONS~~the financial condition and results of operations of Computer Horizons Corp. (the “Company”) should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, and the financial statements and notes included elsewhere in this Report on Form 10-Q.

~~For the Periods Ended~~FORWARD-LOOKING ~~June 30, 2005 and June 30, 2004~~STATEMENTS

~~The~~This ~~following~~report ~~detailed~~contains forward-looking ~~discussion~~statements ~~and~~within ~~analysis~~the meaning of the ~~Company’s~~safe harbor provisions of ~~financial~~the ~~condition~~Private ~~and~~Securities ~~results~~Litigation Reform Act of ~~operations~~1995. In ~~should~~some cases, forward-looking statements can be ~~read~~identified by words such as “believe,” “expect,” “anticipate,” “plan,” “potential,” “continue” or similar expressions. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements. Such forward-looking statements are based upon current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in ~~conjunction~~the forward-looking statements including, but not limited to, risks associated with unforeseen technical difficulties, the ~~December 31~~ability to meet customer requirements, market ~~2004~~acceptance ~~financial~~of ~~statements~~service offerings, changes in technology and ~~related~~standards, the ~~notes~~ability ~~included~~to complete cost reduction initiatives, dependencies on certain technologies, delays, market acceptance and competition, as well as other risks described from time to time in the ~~Companies~~Company’s ~~Form~~filings ~~10-K~~with the Securities and Exchange ~~the~~Commission, ~~financial~~press ~~statements~~releases and ~~notes~~other communications. All forward-looking statements included in this report are based on information ~~elsewhere~~available to the Company on the date hereof. The Company undertakes no obligation (and expressly disclaims any such obligation) to update forward-looking statements made in this ~~Form~~report 10to reflect events or circumstances after the date of this report or to update reasons why actual results would differ from those anticipated in such forward-Qlooking statements.

Overview

~~Computer~~At ~~Horizons~~a ~~Corp.~~Special Meeting held on February 14, ~~(“CHC”~~2007, orthe shareholders of the “Company approved the sales of the Company’s Chimes, Inc. subsidiary to an affiliate of Axium International and the Company’s Commercial Division to Allegis Group (collectively, the “Asset Sales”),. At isthe aSpecial ~~strategic~~Meeting, the ~~solutions~~shareholders ~~and~~of ~~human~~the ~~capital~~Company ~~management~~also ~~company~~approved ~~with~~a ~~more~~proposed ~~than~~plan ~~thirty-seven~~of complete ~~years~~liquidation and dissolution of ~~experience,~~the ~~specifically~~Company in(the ~~information~~“Plan ~~technology~~of Liquidation”). The Company’s began implementing the Plan of ~~clients~~Liquidation ~~are~~after ~~primarily~~the ~~Global~~Asset ~~2000~~Sales ~~companies,~~were ~~serviced~~completed byon ~~over~~February 2016, ~~offices~~2007. Prior into the ~~United~~ ~~States,~~Asset ~~Canada~~Sales, the Company provided information technology staffing and ~~India~~project-based services to private companies and the United States government.

~~Effective~~The ~~January~~Company 1,had ~~2005,~~revenues for the ~~Company~~period isfrom ~~reporting~~January by1, ~~its~~2007 ~~realigned operating~~through ~~segments~~February ~~: Commercial~~16, ~~Federal~~2007 ~~Government~~of ~~and~~$29.7 million. Net ~~Vendor~~loss ~~Management~~before ~~Services~~extraordinary ~~(Chimes). As~~items aand ~~result~~income oftaxes for the ~~business~~first ~~realignment,~~quarter ~~the~~of ~~Company~~2006 ~~has~~totaled $(3.3) ~~reclassified~~million. Due to the ~~prior~~shortened ~~year~~time periods ~~amounts~~as ina ~~order~~result toof ~~provide~~the aliquidation basis ~~for~~of ~~comparison~~accounting, ~~conforming~~ tothese ~~our~~numbers ~~new~~are not ~~lines~~comparable ofto ~~business~~the prior year.

~~The~~As ~~Company~~of ~~had~~March ~~revenues for the quarter ended June 30~~31, ~~2005 of $69.1 million~~2007, ~~a five percent increase from~~ the ~~comparable period in 2004. For~~ ~~the~~Company ~~six~~had ~~months~~approximately ~~ended June 30, 2005, revenues totaled~~ $~~135~~33.~~6 million, compared to $125.~~5 million in ~~the~~cash ~~comparable~~and ~~period~~cash ofequivalents 2004. Net income for the second quarter of 2005 totaled $44,000, or breakeven per share, compared with a net income of $125,000, or breakeven per share, in the comparable period of 2004. Net income for the six months ended June 30, 2005 totaled $374,000, or $0.01 per share, compared with a net loss of $(~~442,000),~~which ~~or $(0.01) per share, in the comparable six month period of~~no ~~2004. Net~~longer ~~income for the six months ended June 30, 2005~~ includes ~~special credits~~Chimes ofvendor ~~$1,002,000~~cash) ~~relating to a bad debt recovery~~ and ~~a gain on sale of assets, which are partially offset by merger-related and restructuring expenses totaling~~ $~~212,000, and a $614,000 charge pertaining to the amortization of intangibles~~30. ~~The~~2 ~~net~~million ~~loss~~in ~~for~~working ~~the~~capital ~~first six months of 2004 includes a one-time credit of $939,000 relating to an insurance refund,~~ and ~~a $728,000~~no ~~charge~~debt ~~pertaining to the amortization of intangibles~~outstanding.

~~Management continues to focus on maintaining a strong balance sheet,~~Background ~~with~~of ~~approximately $35.9 million in cash and cash equivalents at June 30, 2005, along with $66.8 million in working capital and no debt outstanding.~~Liquidation

~~On April 1, 2004, the Company’s subsidiary RGII acquired Automated~~Sale ~~Information Management, Inc. (AIM), a Federal government IT services company, for approximately $15.8 million in cash. The acquisition~~ of ~~AIM is directly linked to the Company’s strategy of expanding its presence in the Federal government IT market and pursuing bolt-on expansions to its~~ RGII ~~subsidiary.~~

~~Recent~~On ~~Developments~~September 29, 2006, the Company sold its subsidiary, RGII Technologies, Inc., to Netstar-1, Inc. for $15.3 million in cash, less an estimated net asset adjustment of $1.2 million, subject to an escrow of $1 million of the purchase price. In addition, CHC retained all cash and cash equivalents of RGII, in the amount of $6.3 million. The amount of the estimated net asset adjustment is subject to a final review, and may be further adjusted. To the extent that the final net asset amount sold to NetStar-1 is greater than the estimated asset amount at closing, the Stock Purchase Agreement provides that the excess will be paid to CHC together with interest thereon at the prime rate from the closing date to the date of payment. If the final net asset amount sold to NetStar-1 is less than the estimated asset amount at closing, the Stock Purchase Agreement provides that the deficiency will be paid by CHC to NetStar-1, together with interest thereon at the prime rate from the closing date to the date of payment. Subsequent to the end of the reporting period, the parties reached agreement on the final net asset amount, resulting in a payment to the Buyer in the amount of $215 thousand. The remainder of the amount in escrow of $885 thousand, together with interest on the escrowed amount, was released from escrow to CHC. The sale of RGII resulted in a net book loss on disposal of $4.8 million, including approximately $969 thousand in transaction costs as reported September 30, 2006.

On April 12, 2005, the Company, JV Merger Corp., a Minnesota corporation and a wholly-owned subsidiary of the Company (the “Sub”), and Analysts International Corporation, a Minnesota corporation (“Analysts”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, subject to satisfaction or waiver of applicable conditions, Sub will be merged with and into Analysts (the “Merger”) and each issued and outstanding share of common stock, par value $.10 per share, of Analysts (other than shares held of record by the Company, Sub, Analysts and any of their subsidiaries) shall be converted into the right to receive 1.15 fully paid and nonassessable shares of the Company’s common stock, par value $.10 per share (the “Merger Consideration”). In addition, upon completion of the Merger, the Company will assume all options then outstanding under Analysts’ existing equity incentive plans, each of which will be exercisable for a number of shares of Company common stock (and at an exercise price) adjusted to reflect the Merger Consideration. Upon completion of the merger, based upon the number of shares outstanding on the record date and after giving effect to restricted shares of Analysts common stock, Analysts shareholders will own approximately 48% of the outstanding shares of the combined company. Completion of the Merger is subject to several conditions, including approval by the shareholders of each company, effectiveness of a Form S-4 registration statement filed with the Securities and Exchange Commission, and other customary closing conditions. The transaction is intended to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended. Additionally, the Merger Agreement may be terminated by the Company or Analysts upon the occurrence or failure to occur of certain events, including a failure of the Merger to be consummated by November 30, 2005.14

~~The Merger Agreement provides that the board of directors of the~~Sale ~~Company following the Merger will consist~~ of ~~ten directors, including five of whom who shall be selected from the current Company board and five of whom who shall be selected from the current Analysts board.~~Commercial

On ~~July~~November 227, ~~2005~~2006, ~~a group~~the ~~comprised~~Company ofentered ~~Crescendo~~into ~~Partners~~an ~~II,~~asset ~~L.P.,~~purchase ~~Series~~agreement R,(the ~~Crescendo~~“Commercial ~~Investments II,~~Services ~~LLC,~~Asset ~~Eric~~Purchase ~~Rosenfeld,~~Agreement”) F.by ~~Annette~~and ~~Scott~~among ~~Florida Trust~~TEKsystems, ~~Richard L~~Inc., ~~Scott~~a ~~Florida~~Maryland ~~Trust~~corporation (“TEKsystems”), ~~Scott~~TEKsystems ~~Family~~EF&I ~~Florida~~Solutions, ~~Partnership Trust~~LLC, ~~Richard~~a L.Maryland limited ~~Scott~~liability company, ~~Stephen~~Allegis ~~T. Braun~~Group ~~and~~Canada ~~The~~Corporation, ~~Computer~~a ~~Horizons~~Nova ~~Full~~Scotia unlimited ~~Value~~liability ~~Committee (collectively~~corporation, the ~~“Crescendo Group”)~~Company, ~~filed~~GBS aHoldings ~~Statement~~Private onLimited, ~~Schedule~~a corporation ~~13D~~organized (under the ~~“Schedule~~laws ~~13D”)~~of ~~with~~Mauritius, ~~the Securities~~CHC ~~and~~Healthcare ~~Exchange~~Solutions, LLC, ~~Commission~~a ~~(the~~Delaware ~~“SEC”)~~limited ~~disclosing~~liability ~~their~~company, ~~opposition~~and ~~to the~~Allegis ~~merger~~Group, ~~and~~Inc., ~~their~~a ~~intention~~Maryland corporation. Pursuant to ~~solicit~~ the ~~Company’s shareholders to vote~~Commercial ~~against~~Services ~~the~~Asset ~~Company’s~~Purchase ~~proposals~~Agreement, inon ~~furtherance~~February of16, 2007, the ~~proposed~~Company ~~merger. The~~sold ~~Schedule~~to TEKsystems ~~13D~~substantially ~~further~~all ~~discloses~~of the ~~Crescendo~~ ~~Group’s~~assets ~~intention~~of toits ~~call~~Commercial aServices ~~special~~Business (as ~~meeting~~defined ofin the ~~Company’s shareholders~~Commercial inServices ~~order~~Asset toPurchase ~~remove~~Agreement), upfor toa purchase ~~all~~price of ~~the~~$57 ~~Company’s~~million ~~existing~~in ~~directors and~~cash subject to ~~replace~~a ~~them~~potential ~~with~~post-closing working ~~the~~capital ~~Crescendo~~adjustment, ~~Group’s~~estimated ~~own~~at ~~slate~~$(1.9) ofmillion ~~director~~using ~~nominees. In~~data ~~furtherance~~as of ~~its~~the date ~~stated~~of ~~intentions,~~sale ~~also on~~(the ~~July~~“Commercial ~~22,~~Services ~~2005,~~Asset ~~the~~Sale”). The ~~Crescendo~~sale ~~Group~~was ~~filed~~also asubject ~~preliminary~~to ~~proxy~~an ~~statement~~escrow ~~with~~of ~~the~~$1.7 ~~SEC~~million ~~opposing~~of the ~~merger~~purchase ~~and~~price ~~soliciting~~pending ~~votes~~receipt of ~~the~~tax ~~Company’s~~certificates ~~shareholders~~ in connection ~~opposition~~with to the ~~proposals~~Taxation ~~intended~~Act to— ~~consummate~~Quebec; the ~~merger,~~certificates inwere subsequently ~~particular,~~received and the ~~proposal~~escrow toreleased ~~approve~~on ~~the~~April ~~issuance~~24, of2007. Subsequent ~~shares~~to of the ~~Company’s common~~end ~~stock~~of ~~in connection with~~ the ~~merger.~~ quarter ~~Also~~TEKsystems onsubmitted ~~July~~their ~~22,~~revised ~~2005,~~calculation of the ~~Crescendo~~net ~~Group~~working ~~filed solicitation material~~capital ~~with~~adjustment, ~~the~~asserting ~~SEC containing the text of~~ a ~~press~~claim ~~release~~for ~~issued~~$6 onmillion ~~that~~payable ~~date~~to ~~in which~~TEKsystems. The itCompany ~~identified~~continues ~~itself~~to ~~and~~believe ~~announced~~that its estimate ~~position~~of ~~regarding~~$1.9 ~~the~~million ~~merger~~is appropriate, and ~~its~~ ~~intentions~~is toworking ~~solicit~~with ~~opposition~~TEKsystems to resolve the ~~merger~~discrepancies. AtIn the ~~time~~event that ofagreement ~~the~~cannot ~~filing~~be ofreached, ~~this~~under ~~Quarterly Report~~the onCommercial ~~Form~~Services ~~10-Q~~Asset Purchase Agreement, the ~~Crescendo~~parties ~~Group’s~~are ~~preliminary~~required ~~proxy~~to ~~statement~~submit ~~had~~the ~~not~~matter to an independent ~~become~~accounting ~~definitive~~firm for determination.

14Assets not included in the Commercial Services Asset Sale include a refundable tax credit of $8.9 million, and the unit’s operating cash as of the date of the sale. The Company recorded an estimated gain of $29.1 million as a result of the sale of the Commercial Services Business. The maximum liability of the Company for indemnification claims under the Commercial Services Asset Purchase Agreement is $10 million and is contingent upon assertion of a claim for indemnity within nine months after the closing date.

OnThe ~~July~~Commercial ~~27,~~Services Asset ~~2005,~~Sale ~~the Company~~is ~~received~~a ~~from~~taxable ~~counsel~~transaction with respect to the ~~Crescendo~~Company ~~Group~~to athe ~~request~~extent of the gain that awas ~~special~~realized. The ~~meeting~~Company ofwill ~~the~~realize ~~shareholders~~a ofgain ~~the~~measured ~~Company~~by bethe ~~called~~difference ~~for~~between the ~~following~~proceeds ~~purposes:~~received ~~(i)~~by toit ~~remove~~and ~~all~~its ofaffiliates ~~the~~on ~~existing~~such ~~directors~~sale ~~serving~~and on the Company’s (or an ~~board~~affiliate’s) tax basis in the assets. For purposes of ~~directors~~calculating ~~without~~gain ~~cause~~or loss, ~~(ii)~~the toproceeds ~~fix~~received by the Company ~~number~~and ofits ~~members~~affiliates ~~comprising~~ will include the ~~board~~cash received atby ~~five~~them, ~~and~~the ~~(iii)~~amount toof ~~elect~~their indebtedness ~~five~~that ~~director~~is ~~nominees~~cancelled toor beassumed, ~~selected~~and byany other consideration received ~~the~~by ~~Crescendo~~them ~~Group~~for their assets. It ~~This~~is anticipated ~~request~~that ~~was~~the ~~for~~Company awill ~~second~~have ~~special~~sufficient ~~meeting~~current inlosses ~~addition~~ to offset most of the ~~special~~gain ~~meeting~~expected ~~contemplated~~to bybe ~~the~~realized ~~Company~~from inthe ~~connection~~Commercial ~~with~~Services ~~the~~Business asset ~~approval~~sale offor ~~proposals~~regular ~~relating~~Federal toincome ~~the~~tax ~~proposed~~purposes ~~merger.~~and ~~After~~otherwise ~~advising~~incur ~~the~~approximately ~~Crescendo~~$430 ~~Group’s~~thousand ~~counsel~~in ~~that~~alternative ~~the~~minimum ~~request~~taxes. The ~~was~~Company ~~improper~~and/or ~~under~~its ~~the~~affiliates ~~Company’s~~may be subject to state income taxes ~~by-laws,~~to the ~~Company~~extent ~~received~~that agains ~~second~~exceed ~~request~~losses onfor ~~August~~state 2,tax ~~2005~~law purposes, ~~which~~but ~~request~~does not ~~was~~anticipate ~~proper~~that such taxes, if any, will be significant.

~~The Company’s~~Sale ~~registration~~of ~~statement containing its joint proxy statement/prospectus was declared effective by the SEC on August 4, 2005 and the joint proxy statement has been mailed out to the Company’s shareholders.~~Chimes

~~FORWARD~~On October 18, 2006, the Company signed a definitive asset purchase agreement (the “Chimes Asset Purchase Agreement”) by and among Axium International, Inc., a Delaware corporation, Diversity MSP, Inc., a California corporation (“Diversity MSP”) and Chimes, Inc., a Delaware corporation and wholly-~~LOOKING~~owned ~~STATEMENTS~~subsidiary of the Company (subsequently known as Chimes, LLC; a Delaware limited liability company, and referred to herein as “Chimes”). Pursuant to the Chimes Asset Purchase Agreement, on February 16, 2007, the Company sold to Diversity MSP substantially all of the assets of Chimes, excluding cash and marketable securities, for a purchase price of $80.0 million in cash (the “Chimes Asset Sale”), with a gain of $73.6 million. The maximum liability of the Company for indemnification claims under the Chimes Asset Purchase Agreement is $8 million and is contingent upon assertion of a claim for indemnity within six months after the closing date.

~~This~~The ~~Report~~Chimes ~~contains~~Asset ~~forward-looking~~Sale ~~statements within the meaning of~~is ~~the~~a ~~safe~~taxable ~~harbor~~transaction ~~provisions~~with ofrespect ~~the~~to Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by words such as “believe,” “expect,” “anticipate,” “plan,” “potential,” “continue” or similar expressions. Forward-looking statements also include the ~~assumptions~~ ~~underlying~~Company ~~or relating~~ to ~~any of~~ the ~~foregoing~~extent ~~statements. Such forward-looking statements are based upon current expectations and beliefs and are subject to a number~~ of ~~factors~~the ~~and uncertainties~~ gain that ~~could~~was ~~cause actual results to differ materially from those described in the forward-looking statements~~realized. The ~~forward-looking~~Company ~~statements contained in this Report may~~will ~~include~~realize ~~statements~~gain ~~about~~measured ~~future~~by ~~financial~~the ~~and~~difference ~~operating~~between ~~results and about~~ the ~~proposed~~ ~~merger~~proceeds ofreceived ~~Computer~~by ~~Horizons~~it and ~~Analysts International. These statements are not guarantees of future~~ ~~performance,~~its ~~involve~~affiliates ~~certain~~on ~~risks,~~such ~~uncertainties~~sale and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. For example, if either of the ~~companies~~ ~~does~~Company’s ~~not receive required shareholder approval~~ (or ~~fails to satisfy other conditions to closing, the transaction will not be consummated. In any forward-looking statement in which Computer Horizons or Analysts International expresses~~ an ~~expectation~~affiliate’s) ortax ~~belief~~basis ~~as to future results, such expectation or belief is expressed~~ in ~~good faith and believed to have a~~ ~~reasonable basis, but there can be no assurance that~~ the ~~statement or expectation or belief will result or be achieved or accomplished~~assets. ~~The following~~For ~~factors,~~purposes ~~among~~of ~~others, could cause actual results to differ~~calculating ~~materially~~the ~~from~~gain, ~~those described in~~ the ~~forward-looking~~proceeds ~~statements:~~received ~~(i) the risk~~by ~~that~~ the ~~Computer~~Company ~~Horizons’~~ and ~~Analysts’~~its ~~businesses~~affiliates will ~~not be~~include ~~integrated successfully to yield~~ the ~~anticipated~~cash ~~cost~~received ~~savings~~by ~~and~~them, ~~financial results; (ii) costs related to~~ the ~~proposed~~amount ~~merger may be higher due to delays in obtaining regulatory approval; (iii) failure~~ of ~~the~~their ~~Computer Horizons~~indebtedness ~~and~~that ~~Analysts~~is ~~shareholders to approve the proposed merger; and (iv) other~~cancelled ~~economic, business, competitive and/~~or ~~regulatory factors affecting Computer Horizons’ and Analysts’ businesses generally~~assumed, ~~including those set forth in Computer Horizons’~~ and ~~Analysts’~~any ~~filings~~other ~~with~~consideration ~~the~~received ~~SEC,~~by ~~including~~them infor their ~~respective~~ Annual Reports on Form 10-K for the most recent fiscal years, especially in the Management’s Discussion and Analysis section, the most recent Quarterly Reports on Form 10-Q and the Current Reports on Form 8-Kassets. ~~All~~It ~~forward-looking~~is ~~statements~~anticipated ~~included~~that ~~in this Report are based on information available to Computer Horizons and Analysts on~~ the ~~date hereof. Computer~~Company ~~Horizons~~will ~~and Analysts undertake no obligation (and~~have ~~expressly~~sufficient ~~disclaim~~NOL ~~any such obligation) to update forward~~carry-~~looking~~forwards ~~statements made in this Report~~ to ~~reflect~~offset ~~events~~most orof ~~circumstances after~~ the ~~date~~gain ofrealized ~~this Report or to update reasons why actual results would differ~~ from ~~those anticipated in such forward-looking statements.~~the

~~Additional Information and Where to Find It~~15

~~Computer~~Chimes ~~Horizons~~Transaction ~~Corp. has filed with the Securities and Exchange~~for ~~Commission~~regular aFederal ~~registration~~income ~~statement~~tax onpurposes ~~Form S-4~~ and ~~Computer~~otherwise ~~Horizons Corp.~~incur ~~and~~approximately ~~Analysts International Corporation have filed with the Commission a~~$1.46 ~~related~~million ~~joint proxy statement/prospectus~~ in ~~connection~~alternative ~~with~~minimum ~~the merger transaction involving Computer Horizons and Analysts International~~taxes. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND RELATED JOINT PROXY STATEMENT/ PROSPECTUS REGARDING THE PROPOSED MERGER BECAUSE IT CONTAINS IMPORTANT INFORMATION ABOUT THE MERGER TRANSACTION. Investors and security holders may obtain a free copy of the joint proxy statement/prospectus and other documents filed by Computer Horizons Corp. and Analysts International Corporation with the Securities and Exchange Commission at the Securities and Exchange Commission’s web site at http://www.sec.gov. Free copies of the joint proxy statement/prospectus and other documents may also be obtained for free from Computer Horizons Corp.’s and Analysts International Corporation’s respective investor relations at dreingold@computerhorizons.com and Analysts International Corporation investor relations at pquist@analysts.com.

15The Company and/or its affiliates may be subject to state income taxes to the extent that gains exceed losses for state tax law purposes, but does not anticipate that such taxes, if any, will be significant. Based upon current projections, such state taxes are estimated to be approximately $617 thousand after taking into account the availability of state losses to offset the gain.

~~Computer~~Liquidation ~~Horizons~~Basis ~~Corp. and Analysts International Corporation and their respective directors, officers and other employees and proxy solicitors may be deemed to be participants in the solicitation~~ of ~~proxies from the~~ shareholders of Computer Horizons and Analysts International with respect to the transactions contemplated by the merger agreement. Information regarding Computer Horizons’ officers and directors is included in Computer Horizons’ Proxy Statement for its 2005 Annual Meeting of Shareholders filed with the Securities and Exchange Commission on April 12, 2005. Information regarding Analysts International’s officers and directors is included in Analysts International’s Proxy Statement for its 2005 Annual Meeting of Shareholders filed with the Securities and Exchange Commission on April 22, 2005. These documents are or will be available free of charge at the Securities and Exchange Commission’s web site at http://www.sec.gov and from Computer Horizons Corp.’s investor relations at dreingold@computerhorizons.com and Analysts International Corporation investor relations at pquist@analysts.com.Accounting

The ~~Management’s~~consolidated financial ~~Discussion~~statements for the period January 1, 2007 to February 16, 2007 and for ~~Analysis~~all periods presented for 2006 were prepared on the going concern basis of accounting, ~~Financial~~which ~~Condition~~contemplates realization of assets and satisfaction of ~~Results~~liabilities in the normal course of ~~Operations~~business. As ~~set~~a ~~forth~~result inof ~~this~~the ~~Item~~shareholders’ 2approval ~~has~~of ~~been~~the ~~changed~~Plan, tothe ~~reflect~~Company adopted the liquidation basis of accounting effective February 17, 2007. This basis of accounting is considered ~~realigned~~appropriate ~~operating~~when, ~~segments~~among :other ~~Commercial~~things, ~~Federal~~liquidation ~~Government~~of a company is probable and ~~Vendor~~the ~~Management~~net ~~Services~~realizable ~~(Chimes)~~values ~~for~~of ~~2004~~assets are reasonably determinable. Under this basis of accounting, asassets ~~previously~~are valued ~~reported~~at intheir ~~the~~net ~~Company’s~~realizable values and liabilities are stated at their ~~Form 10-Q/A~~estimated ~~for~~settlement amounts. The conversion from the ~~quarter~~going ~~ended~~concern ~~June~~to ~~30,~~liquidation ~~2004~~basis of accounting required management to make significant estimates and judgments to record assets at estimated net realizable value and liabilities at estimated settlement amounts.

~~Revenue~~Critical ~~Generating~~Accounting Policies ~~Activities~~and Estimates

~~The~~Our ~~majority~~discussion and analysis of ~~the~~financial ~~Company’s~~condition ~~revenues~~and results of operations are ~~derived~~based ~~from~~upon ~~professional~~our ~~services~~consolidated ~~rendered~~financial statements, which have been prepared by the Company without audit in accordance with the ~~information~~rules ~~technology~~and ~~sector~~regulations of the Securities and Exchange Commission. ~~Effective~~The ~~January 1~~preparation of our financial statements requires us to make estimates that affect the reported amounts of assets, ~~2005~~liabilities, ~~the~~revenue ~~Company~~and expense, and related ~~realigned~~disclosure ~~its~~of ~~business~~contingent ~~operations~~assets ~~into~~and ~~three~~liabilities. Accounting ~~segments~~estimates :are ~~Commercial,~~based ~~Federal~~on ~~Government~~historical experience and ~~Vendor~~other ~~Management~~factors ~~Services~~that ~~(Chimes)~~are believed to be reasonable under the circumstances. However, actual results may vary from these estimates under different assumptions or conditions.

~~The~~Pursuant ~~Commercial~~to ~~business~~the ~~consists~~Plan of ~~providing technology consultants to~~ ~~large~~Liquidation, ~~organizations~~since onFebruary a16, ~~temporary hire basis and is classified in two general categories~~2007, ~~staff~~our ~~augmentation~~operations ~~and~~have ~~solutions~~been ~~work. For~~limited ~~the~~to ~~quarter ended~~wind ~~June~~down ~~30,~~of ~~2005,~~our ~~this~~business ~~segment~~and ~~represented approximately 73% of total revenues~~affairs, ~~including~~ ~~$36.5~~selling ~~million~~our ofremaining ~~staff~~assets ~~augmentation revenue~~ and ~~$14.2 million of~~discharging ~~commercial~~our ~~solutions~~known ~~revenue~~liabilities. ~~For~~We ~~the~~plan ~~six months ended June 30, 2005,~~to ~~this~~distribute ~~segment~~our ~~represented~~remaining ~~approximately~~assets ~~73%~~to ofour ~~total revenues~~stockholders, ~~including~~in ~~$72.0 million~~accordance ofwith ~~staff~~the Plan ~~augmentation revenue and $27.4 million~~ of ~~commercial solutions revenue~~Liquidation.

~~For~~Accrued ~~staff~~Costs augmentation assignments, the consultant work is supervised and managed by the customer. Staff augmentation tends to be a lower risk, lower gross margin business with very competitive pricing. The Company’s solutions work tends to be higher margin, higher risk business, due to the fact that the Company is responsible for project deliverables and other conditions contained in statements of ~~work and/or contracts with clients. Virtually~~ all projects performed by the commercial solutions group are IT related and consist of practices such as application development, outsourcing arrangements, government services, Health Insurance Portability and Accountability Act (“HIPAA”) services, technology training and managed services.Liquidation

~~The~~Under ~~Company’s customer relationships are memorialized in master agreements which address~~ the ~~terms and conditions which define the client~~liquidation ~~engagement. Depending~~basis ~~on the service to be performed for the client, either a task order (in the case~~ of ~~a Staffing engagement) or a Statement of Work (“SOW”) (in the case of a Solutions engagement) is generated. The SOW is signed by both the Company and the customer. In general~~accounting, noaccruals ~~Solutions work~~were ismade done unless there is a SOW because the SOW provides the technical details of the work to be done. The SOW, although falling under the corresponding master agreement, is a stand-alone binding contractual document, typically outlining the project objectives, describing the personnel who will work on the project, describing phases of the project, the timeframes for ~~work performance, and~~ the ~~rate~~known ofcosts ~~compensation, on a time and materials basis. In the event that the parameters of the project expand or otherwise change, a Project Change Request is implemented~~ to memorialize whatever change has occurred to the deliverables, personnel and/or time/materials. The master agreements, in conjunction with the SOWs, are written to define, with as much detail as possible, the client relationship and all aspects of the work to be ~~performed~~ ~~for~~incurred ~~the client. With regard to revenues expected~~ in ~~future~~ ~~periods~~liquidation, ~~each~~as SOW has a defined term or sets forth the anticipated length of a project. Where a client engagement is on-going, like certain “Help Desk” type services, the master agreements would still have a term length, but would recite that the agreement was renewable. Generally, commercial solutions engagements are for a year or less. Staff augmentation engagements can and do last for more than a year, with variations in the number of consultants being provided at any given time. Staffing engagements are generally cancelable by clients with a two to four week notice period.follows:

The Federal Government segment consists primarily of solutions type assignments, whereby the Company is responsible for project deliverables and other conditions contained in SOWs and/or contracts with the Federal Government. Federal Government engagements generally have a duration of several years, contingent upon the Federal Government exercising annual options to continue work. For the quarter and six months ended June 30, 2005, the Federal Government segment accounted for approximately 17% of consolidated revenues.

	($ in thousands)
Lease Obligation	$	1,324
Professional Fees	1,927
Legal and Insurance	560
Human Resources	3,480
Systems-related	819
Misc.	900

Total Liquidation Reserves	$	9,010

~~Chimes, Inc.~~The isCompany awill ~~human~~continue to ~~capital~~incur ~~management~~operating ~~solution~~costs ~~that,~~and ~~through~~ receive income on its investments throughout the liquidation ~~use~~period. On ofa ~~proprietary~~regular ~~software~~basis, we ~~and~~evaluate ~~processes~~our assumptions, ~~manages~~judgments ~~the~~and ~~temporary~~estimates ~~workforce~~that can have a ofsignificant ~~large~~impact ~~organizations.~~on ~~For~~our reported net assets in liquidation based on the ~~quarter~~most recent information available to us, and ~~six~~when ~~months~~necessary ~~ended~~make ~~June~~changes accordingly. Actual ~~30,~~costs ~~2005,~~and income may ~~Chimes~~differ ~~accounted~~from ~~for~~our ~~approximately~~estimates, ~~10%~~which ofmight ~~total~~reduce ~~revenues~~net assets available in liquidation to be distributed to shareholders.

~~Critical~~The ~~Accounting~~Company ~~Policies~~expects to make further distributions to its shareholders of its remaining cash, less any amount applied to or reserved for actual or contingent liabilities (which will be deposited in a liquidating trust). The amounts reserved will be based on a determination by the board of directors, derived from consultation with management and outside experts, if the board of directors determines that it is advisable to retain such experts, and a review of, among other things, our estimated contingent liabilities and our estimated ongoing expenses, including, but not limited to, payroll, legal expenses, regulatory filings and other miscellaneous expenses. To the extent that assets deposited in the liquidating trust are not applied to or reserved for payment of the Company’s liabilities, these

The most critical accounting policies used in the preparation of the Company’s financial statements are related to revenue recognition, the evaluation of the bad debt reserve, the valuation of goodwill, and the valuation of deferred tax assets.16

16assets will be distributed to holders of beneficial interests in the liquidating trust at one or more later dates. Each shareholder will receive his or her pro rata share of each distribution based on the number of shares held at the time of the record date for such distribution.

~~Revenue Recognition~~Recent Developments

~~Approximately 95% of consolidated revenue in the quarter ended June 30,~~Special ~~2005~~Shareholders ~~and June 30, 2004 was derived from time-and-material contracts.~~Meeting

~~The~~As ~~Company~~noted ~~recognizes~~above, ~~revenues~~at ~~either on~~ a Special ~~time-and-materials~~Meeting ~~basis~~held or on aFebruary ~~fixed~~14, ~~fee~~2007, ~~basis. Under~~the ashareholders ~~typical~~of ~~time-and-materials~~the ~~billing~~Company ~~arrangement,~~approved ~~our~~the ~~customers~~Asset ~~are~~Sales ~~billed~~and onthe aPlan ~~regularly~~of ~~scheduled basis, such as biweekly or monthly~~Liquidation. AtThe ~~the~~Company ~~end~~began ofimplementing ~~each~~the ~~accounting~~Plan ~~period, revenue is~~of ~~estimated~~Liquidation ~~and~~after ~~accrued for services performed since~~ the ~~last~~Asset ~~billing cycle. These~~Sales ~~unbilled~~were ~~amounts~~completed ~~are~~on ~~billed~~February ~~the~~16, ~~following month~~2007.

~~For fixed fee contracts, revenue is recognized on the basis of the~~Change ~~estimated percentage~~ of ~~completion. Each~~Control ~~fixed~~Charges ~~fee contract has different terms, milestones~~ and ~~deliverables. The~~Special milestones and deliverables primarily relate to the work to be performed and the timing of the billing. At the end of each reporting period an assessment of revenue recognized on the percentage of completion and milestones achieved criteria is made. If it becomes apparent that estimated cost will be exceeded or required milestones or deliverables will not have been obtained, an adjustment to revenue and/or costs will be made. The cumulative effect of revisions in estimated revenues and costs are recognized in the period in which the facts that give rise to the impact of any revisions become known.Charges

~~Unbilled~~The ~~accounts~~balance ~~receivable~~of ~~represent~~the ~~amounts recognized as revenue~~$2.3 ~~based~~million ~~on services performed~~ in ~~advance~~change of ~~customer~~control ~~billings,~~payments ~~principally~~to onemployees ~~a time~~has been re-~~and-materials~~classed ~~basis. At~~to the short-term ~~end~~liability section of ~~each~~the ~~accounting~~2006 ~~period,~~balance ~~revenue is~~sheet ~~accrued~~due ~~for~~to ~~services performed since~~ the ~~last billing cycle. These~~liquidation ~~unbilled~~of ~~amounts are billed~~ the ~~following month~~Company. ~~Costs~~The ~~and~~remaining ~~estimated~~liability ~~earnings~~for inchange ~~excess~~ of ~~billings~~control onpayments ~~fixed~~was ~~fee~~$563 ~~contracts~~thousand ~~arise when percentage of completion accounting is used. Such amounts are billed~~ at ~~specific~~March ~~dates or~~31, ~~at contract completion~~2007.

~~The Company’s Chimes subsidiary recognizes revenue on a transaction fee~~Evaluation ~~basis. The Chimes service offering aggregates the suppliers~~ of ~~temporary workers~~Bad toDebt the customer and renders one invoice to the customer. Upon payment from the customer, Chimes deducts a transaction fee and remits the balance of the client payment to the applicable vendor. Chimes recognizes only their fee for the service, not the aggregate billing to the customer. The gross amount of the customer invoicing is not considered revenue or a receivable to Chimes because there is no earnings process for the gross amount and by contract terms, Chimes is not obligated to pay the vendor until paid by the customer.Reserve

~~Evaluation~~Historically, the Company determined its allowance for doubtful accounts by considering a number of factors, ~~Bad~~including ~~Debt~~the ~~Reserve~~length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligations to the Company and the condition of the general economy and the industry as a whole. The Company wrote off accounts receivable when they became uncollectible, and payments subsequently received on such receivables were credited to the allowance for doubtful accounts.

~~The~~In ~~Company~~connection ~~determines~~with ~~its~~the sale ~~allowance~~of bythe ~~considering~~Commercial aServices ~~number~~Business ~~of factors~~Unit, ~~including~~ the ~~length~~allowance offor ~~time trade~~ doubtful accounts ~~receivable~~was ~~are~~increased ~~past~~by ~~due, the~~$1.3 ~~Company’s~~million ~~previous~~as ~~loss~~of ~~history~~February 16, ~~the~~2007. This ~~customer’s~~recalculation ~~current~~was ~~ability~~done toutilizing ~~pay its~~the ~~obligation~~formula toprescribed ~~the~~in ~~Company and~~ the ~~condition~~Commercial ofServices ~~the~~Asset ~~general~~Purchase ~~economy~~Agreement, and ~~the~~not ~~industry~~ as a ~~whole. The~~result ~~Company~~of ~~writes~~any ~~off~~deterioration ~~accounts~~in ~~receivable when they become uncollectible, and payments subsequently received on such receivables are credited to~~ the ~~allowance~~Commercial ~~for doubtful~~ accounts receivable.

~~Goodwill~~Valuation of Deferred Tax Assets

AsThe ofCompany ~~December 31,~~records deferred ~~2004~~tax ~~and~~assets ~~2003,~~for the ~~fair~~future ~~value~~tax ofconsequences ~~each~~attributable ofto ~~the~~differences ~~reporting~~between ~~units~~the ~~was~~financial ~~calculated~~statement ~~using~~carrying ~~the~~amounts ~~following~~of ~~approaches~~existing ~~(i) market approach~~assets and ~~(ii) income~~their respective ~~approach. The~~tax ~~reporting units are equal to~~bases, or ~~one~~and ~~level~~operating ~~below,~~loss ~~reportable segments~~carryforwards. ~~Under~~Deferred ~~the~~tax ~~market~~assets ~~approach,~~are ~~value is~~reduced ~~estimated~~ by ~~comparing~~a valuation ~~the~~allowance ~~performance~~if, ~~fundamentals~~based ~~relating~~on toavailable ~~similar public~~evidence, ~~companies’~~it ~~stock~~is ~~prices. Multiples~~more ~~are~~likely ~~then~~than ~~developed of the value~~not ofthat ~~the~~some ~~publicly~~portion ~~traded~~or ~~stock~~all toof ~~various~~the ~~measures~~deferred ~~and~~tax ~~are~~assets ~~then~~will ~~applied~~not tobe ~~each reporting~~realized. In ~~unit~~assessing ~~to estimate~~ the ~~value~~realizability of ~~its equity. Under the income~~deferred ~~approach~~tax assets, ~~value~~management ~~was~~considers ~~determined using~~ the ~~present~~scheduled ~~value~~reversal periods of the ~~projected future~~deferred ~~cash~~tax ~~flows~~assets, towhether besustained ~~generated~~profitability byhas ~~the~~been ~~reporting~~achieved ~~unit~~and tax planning strategies.

The ~~fair~~Company ~~value~~has significant ~~conclusion~~deferred oftax ~~the~~assets ~~reporting~~resulting ~~units~~from ~~reflects~~net anoperating loss ~~appropriately~~carryforwards, ~~weighted~~capital ~~value~~loss ofcarryforwards, ~~the~~and ~~market~~deductible ~~multiple~~temporary ~~approach~~differences that ~~and~~may ~~the~~reduce taxable income ~~approach~~ ~~discussed~~in ~~above~~future periods. AnThe ~~asset~~Company ~~approach~~has ~~was~~provided ~~not~~full ~~used~~valuation allowances ~~because~~on the ~~asset~~ ~~approach~~future istax ~~most~~benefits ~~relevant~~related ~~for~~to ~~liquidation~~capital ~~approaches~~losses, ~~investment~~foreign ~~company~~net ~~valuations~~operating losses, and ~~asset~~all ~~rich~~state ~~company~~net ~~valuations~~operating (ilosses.e. The ~~real~~Company ~~estate~~believes ~~entities)~~that ~~and~~the valuation ~~was~~allowance is appropriate because these deferred tax assets have relatively short carryforward periods or relate to taxing jurisdictions which do not ~~deemed~~allow the ~~relevant~~filing ~~for~~of ~~manufacturing~~consolidated ~~and~~tax ~~service~~returns. Also, ~~company~~as ~~going-concern~~a result of adopting liquidation accounting, the Company does ~~valuations~~not expect to utilize its deferred tax asset due to the sale of the remaining operations.

~~For~~The ~~the~~Company ~~year~~adopted ~~ended~~FASB Interpretation ~~December 31~~48, ~~2004,~~Accounting ~~using~~for anUncertainty ~~evaluation~~in ~~prepared by~~Income anTaxes ~~independent~~(“FIN ~~appraisal firm~~48”), at the ~~Company~~beginning ~~reassessed the carrying value~~ of ~~goodwill~~ ~~associated~~fiscal ~~with~~year ~~its Solutions Group~~2007. ~~Because~~As of a ~~reduction in~~result ~~projected~~of ~~future~~the ~~cash~~implementation ~~flows in~~ the ~~Commercial~~Company ~~Solutions~~recognized ~~business~~a ~~unit~~$150,000 net increase to ~~primarily~~reserves ~~resulting~~for ~~from~~uncertain ~~significant~~tax ~~revenue~~positions. This ~~declines~~change inhas ~~2004,~~two ~~the~~components ~~Company determined~~of ~~that~~which ~~goodwill~~amounts ~~was~~related ~~impaired~~to ~~and~~a ~~recorded~~reclass to a non~~-cash~~ ~~charge~~income tax reserve balance of $~~20.3 million,~~200 ~~related~~thousand tofor ~~the~~sales ~~write-off~~and ofuse ~~the~~tax ~~Commercial~~and ~~Solutions goodwill.~~ a ~~There~~$350 ~~was~~thousand noincrease to the income tax ~~effect~~reserve. The on$350 ~~the~~thousand ~~impairment~~increase ~~charge~~was asaccounted ~~the related goodwill~~for ~~was~~as ~~primarily~~an ~~attributable~~adjustment to ~~acquisitions~~the ~~which~~beginning ~~yielded~~balance noof ~~tax~~retained ~~basis~~earnings ~~for~~on the Balance ~~Company~~Sheet. Including ~~The~~the ~~remaining~~cumulative ~~Solutions~~effect for ~~goodwill~~the adoption of ~~$27.6~~FIN ~~million~~48, asat the beginning of ~~December 31,~~ ~~2004~~2007, ~~is associated with~~ the Company’s ~~Federal Government~~had ~~practice~~approximately $1. As3 million of ~~December 31,~~total ~~2004,~~gross ~~the~~unrecognized ~~indicated~~tax ~~fair~~benefits. Of ~~value~~this total, $845 thousand (net of the ~~Federal~~ ~~Government~~federal ~~reporting~~benefit ~~unit~~on ~~exceeded~~state issues) represents the ~~carrying~~amount ~~value. As~~of aunrecognized ~~result~~tax benefits that, ~~the Company~~if ~~concluded~~recognized, ~~that~~would favorably affect the ~~goodwill~~effective ofincome ~~approximately~~tax rate ~~$27.6~~in ~~million~~any isfuture ~~not impaired~~periods.

17The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The Company has substantially concluded all U.S. federal income tax matters for years through 2002. Substantially all material state and local, and foreign income tax matters have been concluded for years through 2001. There are no material audits in process at this time.

~~Valuation of Deferred Tax Assets~~17

The Company’s ~~records~~continuing practice ~~deferred~~is ~~tax~~to ~~assets~~recognize ~~for~~interest ~~the~~and/or ~~future~~penalties ~~tax~~related ~~consequences attributable~~ to ~~differences~~income ~~between the financial statement carrying amounts of~~tax ~~existing~~matters ~~assets~~in ~~and~~income ~~their respective~~ tax ~~bases, and net operating loss carryforwards~~expense. ~~Deferred tax assets are reduced by a valuation allowance~~The ~~if,~~Company ~~based~~had onan ~~available~~immaterial ~~evidence,~~amount ~~it is more likely than not that some portion or all~~ of ~~the~~accrued ~~deferred~~interest ~~tax~~during ~~assets will not be realized. In assessing~~ the ~~realizability~~ offirst ~~deferred tax assets, management considers the scheduled~~quarter ~~reversal periods~~ of ~~the~~2007 ~~deferred~~and ~~tax~~$0 ~~assets~~accrued asfor ~~well~~penalties asat ~~projected~~December ~~future taxable income and tax planning strategies~~2006.

~~RESULTS~~Results of OFOperations ~~OPERATIONS~~— Period from January 1, 2007 to February 16, 2007 and the three months ended March 31, 2006

Revenues . ~~Consolidated~~ Consolidated revenues ~~increased~~decreased to $6929.17 million in the ~~second~~period ~~quarter of 2005~~ from ~~$65.8~~ ~~million~~January in1, ~~the~~2007 ~~second~~to ~~quarter~~February of16, ~~2004~~2007, andown ~~increase~~from of $353.3 million orin ~~5%.~~ the first ~~Revenues~~quarter ~~increased~~of ~~to $135~~2006.6 Due ~~million~~to in the ~~first~~shortened time ~~six~~period ~~months~~during of2007 ~~2005~~as ~~from~~a ~~$125.5 million~~result inof the ~~first~~adoption ~~six~~of ~~months~~the liquidation basis of accounting ~~2004,~~effective anFebruary ~~increase~~17, of2007, ~~$10~~these ~~million~~numbers orare 8%not comparable.

~~Commercial~~Direct Costs ~~Group~~and ~~revenues~~Gross ~~increased~~Margins. Direct tocosts were $5023.7 1 million inand ~~the second quarter of 2005 from~~ $4636.04 million in the ~~second~~period ~~quarter~~from ofJanuary ~~2004~~1, an2007 ~~increase~~to February 16, of2007 ~~$4.6~~and ~~million~~the orfirst ~~10%. Commercial~~quarter ~~Group revenues~~2006, ~~for~~respectively. Gross ~~the~~margin, ~~first~~revenues ~~six~~less ~~months~~direct ~~of 2005~~costs, ~~increased~~decreased to $996.36 million, ~~from~~or ~~$90~~22.82% ~~million~~ in the first ~~six~~quarter ~~months~~ of ~~2004,~~2007 anfrom ~~increase of $8~~31.~~2 million or 9.4~~7%~~. The~~ ~~year-over-year increase~~ in the ~~Commercial~~ ~~Group~~first ~~revenues~~quarter ~~for~~of ~~the~~2006. Due ~~second~~to ~~quarter~~the ofshortened ~~2005~~time isperiod ~~primarily~~during 2007 ~~attributable~~as toa anresult ~~increase~~of inthe ~~average~~adoption ~~consultant headcount~~ of ~~approximately 5%,~~the ~~along~~liquidation ~~with~~basis ~~improved~~of ~~utilization~~accounting ineffective February ~~comparison~~17, to2007, ~~the~~these ~~second~~numbers ~~quarter~~are ~~of 2004~~not comparable.

~~Federal~~Costs and ~~Government~~Expenses. Selling, ~~Group~~general ~~revenues (comprised of RGII~~ and ~~AIM)~~administrative ~~decreased~~expenses towere $1110.48 million in the ~~second~~first quarter of ~~2005~~2007, ~~from~~compared to $1317.92 million in the ~~second~~ first quarter of ~~2004,~~2006. As a percentage ~~net~~of ~~decrease~~revenue, ofthe ~~approximately~~Company’s ~~$2.5~~SG&A ~~million~~expenses orwere ~~18%~~36. ~~Federal Government~~3% ~~Group~~in ~~revenues, for~~ the first quarter ~~six months~~ of ~~2005~~2007, ~~decreased~~as compared to ~~$22~~32.~~9 million~~3% ~~from $23.4 million~~ in the first ~~six~~quarter ~~months~~ of ~~2004,~~2006. Due ato ~~decrease~~the ~~of $482,000~~shortened ortime ~~2.1%. The~~period ~~year-over-year~~during 2007 ~~decrease~~as isa ~~attributable~~result toof the ~~transition~~adoption of ~~restricted~~the ~~contracts,~~liquidation ~~customer/agency~~basis of accounting effective ~~budget~~February ~~cuts~~17, ~~and~~2007, ~~delays~~these innumbers ~~funding~~are not comparable.

~~Chimes~~Income / ~~revenues~~(Loss) ~~increased to $7.0 million in the second quarter of 2005~~ from ~~$5.9~~Continuing ~~million in the second quarter of 2004, an increase of $1~~Operations.1 The ~~million,~~Company’s ornet ~~18%. Chimes~~loss ~~revenues,~~from ~~for~~continuing ~~the~~operations ~~first~~totaled ~~six months of 2005, increased to~~ $~~13.~~(4 ~~million from $11~~.32) million in the first ~~six months of 2004, an increase~~quarter of $22007.~~1 million or 18.6%.~~ This ~~increase~~compares into ~~Chimes~~net ~~revenue~~loss ~~for the first half of~~from ~~2005~~continuing isoperations ~~due to an increase~~ of ~~approximately~~ $~~0.7~~(323) ~~million~~thousand in ~~revenue~~the ~~from~~first ~~new customers~~quarter ~~and~~of $12006.~~4 million from existing customers in this segment.~~

~~Direct Costs and Gross Margins~~Other Income/(Expense). ~~Direct~~Other ~~costs~~income ~~were~~(primarily ~~$47.8~~net ~~million~~interest ~~and $93.4 million in the second quarter~~income) ~~and~~totaled ~~first~~approximately ~~half of 2005, respectively, and~~ $~~44.5~~880 ~~million~~thousand ~~and $85.3 million~~ in ~~the~~ ~~second quarter and first half of 2004, respectively. Gross margin, revenues less direct costs, decreased to 30.8% in~~ the ~~second~~period ~~quarter of 2005~~ from ~~32.3%~~January in1, ~~the~~2007 ~~same period of 2004. Gross margin decreased~~ to ~~31.2% in~~ ~~the~~February ~~first six months of 2005 from 32.0% in the same period of 2004. In the Company’s Commercial Group~~16, ~~gross profit totaled $18.7 million~~2007, ~~or 18.9% for the six months ending June 30, 2005~~ compared to ~~$19.0 million, or 21.0% in the comparable prior year period. This decrease is primarily attributable to gross margin reductions in the Staff Augmentation business to~~ approximately ~~17.5%~~$335 ~~in the~~thousand ~~first half of 2005, down from 20.3%~~ in the first ~~half of 2004, which is due~~quarter to continued pressure on average bill rates within this business. The Federal Government Group gross margins for the six months ended June 30, 2005 were $10.7 million, or 46.6%, compared to $10.5 million, or 44.9% for the comparable period of ~~2004~~2006. ~~Chimes gross margins totaled $12.9 million, or 96.2% for the six months ended June 30, 2005, compared to $10.6 million, or 94.2% in 2004, due to improved leveraging of direct costs.~~

~~Costs~~Gain ~~and Expenses.~~ on ~~Selling,~~Sale ~~general~~of ~~and~~Commercial ~~administrative~~Services ~~expenses~~Business ~~were~~Unit: Pursuant ~~$21.2~~to the ~~million~~Commercial ~~and~~Services ~~$42.2 million~~Asset inPurchase Agreement, on February 16, 2007, the Company ~~second~~sold ~~quarter~~to ~~and~~TEKsystems ~~first~~substantially ~~half~~all of ~~2005,~~the ~~respectively,~~assets ~~compared~~of toits Commercial ~~$21.6~~Services ~~million~~Business ~~and~~(as ~~$41.1~~defined ~~million~~ in the ~~comparable~~Commercial ~~periods~~Services ofAsset ~~2004. The~~Purchase ~~increase~~Agreement), for ~~the~~a ~~first~~purchase ~~half~~price of ~~2005~~$57 ~~from~~million ~~first~~in ~~half~~cash ofsubject ~~2004~~to ~~was~~a ~~primarily due~~potential topost-closing ~~the~~working ~~acquisition~~capital ofadjustment, ~~AIM~~estimated inat ~~April 2004~~$(1. As9) amillion ~~percentage~~using data as of ~~revenue,~~ the ~~Company’s~~date ~~SG&A~~of ~~expenses were 30~~sale.7% Assets not ~~and~~included ~~31.1%~~ in the ~~second~~sale ~~quarter~~of ~~and~~the ~~first~~Commercial ~~half~~Services ofBusiness ~~2005,~~include ~~respectively;~~ a ~~decrease~~refundable ~~from~~tax ~~32.8%~~credit ~~and~~of ~~32.~~$8%.9 inmillion, and the ~~comparable~~unit’s ~~periods~~operating ofcash ~~2004. This~~as ~~decrease~~of isthe ~~primarily~~date ~~attributable~~of tothe ~~cost~~sale. The ~~reductions~~Company ~~resulting~~recorded ~~from~~an ~~the~~estimated gain ~~fourth~~of ~~quarter~~$29.1 ~~2004~~million ~~restructuring~~as ~~in connection~~a ~~with~~result of the ~~Company’s~~sale ~~business~~of ~~model~~the ~~realignment~~Commercial Services Business.

~~Income~~Gain ~~/ (Loss) from Operations~~on ~~. The~~Sale ~~Company’s loss from operations totaled $54,000 in the second quarter~~ of ~~2005, including amortization expense totaling $264,000 and special~~Chimes: ~~credits~~Pursuant ~~of $115,000 (primarily from gain on sale of assets, partially offset by restructuring charges and merger related expenses). This compares~~ to ~~income from operations of $148,000 in~~ the ~~second~~Chimes ~~quarter~~Asset ofPurchase ~~2004~~Agreement, ~~which~~on ~~includes~~February ~~amortization expense totaling $520~~16,~~000~~ ~~and a special credit (insurance refund) of $939~~2007,~~000. The~~ ~~composition of~~ the ~~operating profit for~~ ~~the~~Company ~~quarter~~sold ~~ended~~to ~~June 30,~~Diversity ~~2005,~~MSP ~~excluding~~substantially ~~amortization~~all ~~expense~~ of ~~$264,000~~ ~~and~~ the ~~special~~assets ~~credits~~ of ~~$115~~Chimes,~~000, included a loss of $1,624,000 in~~ ~~the~~excluding ~~Commercial~~cash ~~Group,~~and ~~income~~marketable ~~of $724~~securities,~~000~~ infor ~~the~~a ~~Federal~~purchase ~~Government~~price ~~Group and income~~ of $~~995,000 in Chimes~~80. ~~For~~0 ~~the comparable quarter of 2004, the~~million ~~Commercial~~in ~~Group had a loss of $2~~cash,~~088,000,~~ ~~the~~with ~~Federal Group had~~ an ~~income~~estimated ~~of approximately~~gain ~~$1,694,000, and Chimes had an income~~ of $~~123,000~~73.6 million.

~~The~~Provision for ~~Company’s~~Income ~~income~~Taxes: Similar ~~from~~to ~~operations~~the ~~totaled~~prior ~~$279~~year,~~000~~ in the ~~first~~Company ~~half of~~is ~~2005, including amortization expense totaling $614,000 and special credits~~not ofin ~~$790,000 (primarily from~~ a ~~bad~~position ~~debt~~to ~~recovery~~determine ~~and~~its ~~gain~~projected onannual ~~sale~~effective oftax ~~assets, partially offset by restructuring charges and merger related expenses)~~rate. ~~This compares~~ For ~~to a loss from operations of $747,000 in~~ the ~~first~~year ~~half~~ended ofDecember ~~2004~~31, ~~which includes amortization expense totaling $728~~2006,~~000~~ ~~and a special credit (insurance~~the ~~refund)~~Company ofcould ~~$939,000. The~~not ~~composition~~estimate of the ~~operating~~rate ~~profit~~due ~~for~~to the ~~first~~large ~~half~~net ofoperating ~~2005, excluding amortization expense of $614,000 and the special credits of $790,000, included a~~ loss ~~of $3,091,000~~ incarryforward ~~the Commercial Group, income of $1,604,000 in the Federal Government Group~~ and ~~income~~corresponding ofvaluation ~~$1,590,000 in Chimes~~allowance. For ~~the~~all ~~comparable~~periods ~~six~~after ~~month~~February ~~period of 2004~~16, ~~the Commercial Group had a loss of $2~~2007,~~938,000,~~ the ~~Federal Group had~~ anCompany ~~income~~has ofadopted ~~approximately~~liquidation ~~$2,273,000, and Chimes had a loss of $293,000~~accounting.

18Income tax expense has been provided for the quarter ended March 31, 2006 at an effective tax rate of 8.6%. As mentioned, for the quarter ended March 31, 2007, liquidation accounting has been adopted and as the result of operational losses, there is no provision from continuing operations. Taxes have been provided as a result of the sale of the business operations. The Company has accrued $617 thousand for state and local taxes and $1.3 million for federal alternative minimum taxes.

~~Other Income/(Expense)~~Net Income. ~~Other~~The ~~income (primarily~~ net ~~interest~~ income) ~~totaled~~for ~~$120,000 in~~ the ~~second~~ ~~quarter~~period offrom ~~2005~~January 1, 2007 ~~compared~~ to ~~$29~~February 16,~~000~~ in2007 ~~the~~was ~~second quarter of 2004~~$99. ~~Other~~4 ~~income for the first half of 2005 approximated $295~~million,~~000,~~ ~~compared~~or to $~~112,000~~2.94 ~~for~~per ~~the~~basic ~~first~~and ~~half of 2004~~diluted share.

~~Provision for Income Taxes~~Liquidity ~~. The effective tax rates for Federal, state~~ and ~~local~~Capital income taxes were tax expense of 33% for the second quarter of 2005 and 35% for the first six months of 2005, compared with tax expense of 55% for the second quarter of 2004 and a tax benefit of 25% for the first six months of 2004 (due to the losses incurred in this period).Resources

~~Net~~On ~~Income~~February /16, ~~(Loss)~~2007, ~~. Net~~cash ~~income for the second quarter of 2005~~ was ~~$44,000,~~received orin ~~breakeven~~the ~~per basic~~amount ~~and diluted share, compared to net income~~ of $~~125,000,~~80 ormillion ~~breakeven per basic and diluted share~~ for the ~~second~~sale ~~quarter~~ of ~~2004. The~~Chimes ~~effect of special credits~~ and ~~amortization~~ ~~expense amounted to~~ $~~0.01 earnings per share and $(0.01) loss per~~57 ~~share,~~million ~~net~~for ~~of tax, respectively, in~~ the ~~second~~sale ~~quarter~~ of ~~2005. The second~~the ~~quarter~~Commercial ofBusiness ~~2004~~Services ~~net~~Unit ~~income included special credits and amortization expense of $0.02 earnings per share and $~~(~~0.01) loss per share, net~~ of ~~tax~~which, ~~respectively. For~~ ~~the first half of 2005, net income was~~ $~~374,000 or $0~~1.~~01 earnings per basic and diluted share, compared~~7 tomillion aCanadian ~~net~~remained ~~loss~~in ~~of $(442,000), or $(0.01) per share for the first half of 2004.~~escrow

~~Liquidity and Capital Resources~~18

~~Computer~~pending ~~Horizons~~receipt ~~has~~of ~~historically~~tax certificates ~~financed~~in ~~its~~connection ~~operations~~with ~~through~~the ~~cash generated~~Taxation ~~from~~Act ~~operations,~~– ~~borrowings~~Quebec; ~~against~~the ~~bank~~certificates were ~~lines~~subsequently ofreceived ~~credit~~ and the ~~public~~ ~~sale~~escrow ofreleased ~~its~~on ~~common~~April ~~stock~~24, 2007). On AtMarch ~~June 30~~5, ~~2005~~2007, the Company ~~had~~announced that ~~approximately~~its ~~$66.8~~Board ~~million~~of inDirectors ~~working~~had ~~capital,~~declared an initial liquidating distribution of ~~which~~$4.00 per share, or $35135.93 million, ~~was~~to ~~cash and~~its ~~cash~~common ~~equivalents. Cash~~shareholders and ~~cash~~certain former ~~equivalents~~option atholders ~~June~~under ~~30,~~the ~~2005~~provisions ~~and~~of ~~December~~the ~~31,~~surrender ~~2004~~plan ~~includes~~described ~~approximately~~in $9Note 3 to the Company’s Financial Statements included in this Report.0 The liquidating distribution represented a ~~million~~partial distribution to shareholders of the proceeds received by the company from the sales of RGII, Chimes and $2the Commercial Services Business Unit.1 In ~~million~~determining the amount of ~~cash,~~the ~~respectively~~initial distribution, tothe beCompany ~~disbursed~~considered towind ~~Chimes~~down and transition expenses and the ~~vendors~~exposure infor ~~accordance~~contingent ~~with~~claims under the ~~client~~asset ~~payment~~purchase ~~terms~~agreements. At The ~~June 30,~~distribution ~~2005~~was payable on March 27, 2007 to shareholders of record as of the ~~Company~~close ~~had~~of abusiness on March 16, ~~current~~2007. The ~~ratio~~initial ~~position~~liquidating distribution was the first of ~~3.3~~what is expected to 1be a series of liquidating distributions pursuant to the Plan of Liquidation.

~~Net~~The ~~cash~~aggregate ~~provided~~amount byof distributions ~~operating~~to ~~activities~~our inshareholders ~~the~~is ~~first~~expected ~~six~~to ~~months~~be in the range of ~~2005~~ ~~was~~$4.68 to $54.581 ~~million~~per share of Common Stock. However, ~~primarily~~uncertainties ~~attributable~~as to the ultimate amount of our liabilities make it impossible to predict with certainty the actual aggregate net ~~income,~~amounts ~~depreciation,~~that ~~amortization~~will ~~and~~ultimately ~~other~~be ~~non-cash~~available ~~expenses,~~for ~~increases~~distribution into ~~accounts~~shareholders ~~payable~~or the timing of ~~(primarily~~any ~~Chimes~~such ~~vendor~~distribution. Such ~~payments),~~amount ~~partially~~and timing ~~offset~~will bydepend on a ~~reduction~~number inof ~~accrued~~factors, several of which cannot be ~~expenses.~~determined at this time, including:

~~Total~~· The ~~accounts receivable decreased $0.2 million to $51.1 million at~~ultimate ~~June 30,~~amount ~~2005~~of ~~from~~our ~~$51.3 million at December 31~~known, ~~2004. Accounts receivable~~unknown ~~days sales outstanding (“DSO”) were 67 days at June 30, 2005 compared to 74 days at June 30, 2004~~ and 68contingent ~~days~~debts ~~at December 31, 2004. DSO’s are expected to approximate the current level during the remainder of 2005. All client receivable collectibility~~ and ~~billing issues identified by management have been adequately reserved. For the period ended June 30, 2005, there were no significant changes in credit terms, credit policies or collection efforts.~~liabilities;

~~Net~~· The ~~cash~~fees ~~used~~and expenses inincurred ~~investing~~by ~~activities~~us in the ~~first~~liquidation ~~six months~~ of ~~2005 was~~our ~~$3.4~~assets ~~million,~~and ~~consisting~~the ~~primarily~~dissolution of ~~deferred merger costs of $2.4~~ ~~million,~~the ~~capital expenditures totaling $1.5 million partially offset by proceeds from sale of assets of $0.5 million.~~Company;

~~Net~~As ~~cash~~a ~~provided~~result, ~~by financing activities in~~ the ~~first six months of~~amount ~~2005~~of ~~was~~cash ~~$0.5~~remaining ~~million,~~following ~~primarily~~completion ~~consisting~~ of ~~shares~~our ~~issued~~liquidation ~~pursuant~~and todissolution ~~the~~could ~~employee~~vary ~~stock~~significantly ~~option~~from ~~plan~~our ~~and~~current ~~employee stock purchase plan~~estimates.

~~The~~As ~~Company~~of ~~has~~March a31, ~~$40~~2007, ~~million~~the Company ~~line~~had ofapproximately ~~credit~~$30.2 ~~facility~~million ~~with~~in ~~availability based~~working ~~primarily~~capital, onof ~~eligible~~which ~~client receivables~~$33. ~~The~~5 ~~interest~~million was ~~rate~~cash, ~~is LIBOR~~cash ~~plus~~held ~~2.75%~~in ~~based~~escrow, onand ~~unpaid~~cash ~~principal~~equivalents. ~~The~~Included ~~borrowing~~in ~~base~~cash ~~less~~and cash equivalents at ~~outstanding~~December ~~loans~~31, ~~must~~2006 ~~equal~~was orrestricted ~~exceed~~cash of $51.02 million. AsRestricted ofcash ~~June~~pertains ~~30,~~to ~~2005,~~funds received by ~~the~~Chimes ~~Company~~and ~~had~~held noin ~~outstanding~~client-specific ~~loan~~bank ~~balance~~accounts ~~against~~to ~~the~~be ~~facility. Based on~~used ~~the~~to ~~Company’s~~make ~~eligible~~payments ~~client~~to vendors ~~receivables~~of ~~and~~the ~~cash~~applicable ~~balances~~client. At March 31, ~~$16.9~~2007 ~~million~~ there was ~~available~~cash ~~for~~held ~~borrowing~~in asescrow of ~~June 30, 2005~~$1. ~~The~~7 ~~fee~~million ~~for~~from the ~~unused portion~~sale of the ~~line~~Company’s ofcommercial ~~credit~~business, is$100 ~~0.375%~~thousand ~~per~~in ~~annum~~cash ~~charged~~held toin ~~the~~escrow ~~Company~~by CIT ~~monthly. This~~in ~~charge~~connection ~~was~~with ~~approximately~~the ~~$64,000~~termination ~~and~~by ~~$52,000~~the ~~for~~Company ~~the~~of ~~six months~~its ~~ended~~credit ~~June~~facility ~~30,~~with CIT ~~2005~~(which ~~and~~amount ~~2004,~~was ~~respectively. This~~returned ~~line~~in offull ~~credit includes~~to ~~covenants~~CHC ~~relating~~subsequent to the ~~maintenance~~end of ~~cash~~the reporting ~~balances~~period) and ~~providing for~~$1 ~~limitations~~million onof ~~incurring~~cash ~~obligations~~held ~~and~~in ~~spending~~escrow ~~limits~~in onconnection ~~capital~~with the ~~expenditures~~sale of RGII. ~~The~~(Subsequent ~~Company~~to ~~did~~the ~~not~~end ~~satisfy~~of the ~~this~~reporting ~~covenant~~period, ~~for~~ the ~~quarter ended~~parties ~~March 31,~~to ~~2004. A~~the ~~waiver~~RGII ~~was~~sale ~~received~~reached ~~from~~agreement ~~the~~on ~~lending~~the ~~institution~~final ~~for~~net ~~the~~asset ~~quarter~~amount ~~ended March 31~~sold, ~~2004~~resulting ~~along~~in ~~with~~a anpayment ~~amendment~~ to the ~~loan~~Buyer ~~agreement~~in ~~lowering~~ the ~~three-month average minimum collections~~amount ~~covenant~~of to $10215 ~~million. At~~thousand; ~~June~~the ~~30,~~remainder ~~2005,~~of the ~~Company~~amount isheld in ~~compliance~~escrow of $885 thousand, ~~with~~plus interest on the ~~covenant. The~~escrowed ~~facility~~amount, was ~~scheduled~~released tofrom ~~expire~~escrow ~~in July 2005~~to CHC.) Cash ~~However,~~and oncash ~~July 1,~~equivalents ~~2005~~at December 31, 2006 ~~the~~also ~~Company~~included ~~signed~~approximately a$23.3 ~~one-year extension~~million of ~~the~~cash ~~facility,~~ which ~~will~~was ~~remain~~fully disbursed to Chimes vendors in ~~effect~~accordance ~~until~~with ~~July 2006~~the client payment terms.

~~Pursuant~~At toMarch ~~the~~31, ~~terms of the Company’s acquisition of RGII~~2007, the ~~seller~~ of RGII may be entitled to contingent payments based on RGII’s performance against profitability objectives over three years. The contingent payments are evidenced by a contingent note with a face value of $10 million that is payable over three years only ifreceivables ~~certain~~remaining ~~financial performance objectives are met. These financial performance objectives are based~~ on ~~earnings~~ ~~before interest and taxes (“EBIT”) targets totaling $19.8 million over a three-year period. There are no minimum or maximum payment obligations under~~ the ~~terms~~Company’s ofbooks ~~the~~relate ~~contingent~~to ~~note.~~transition ~~The contingent payment will be reduced~~services onprovided a dollar for dollar basis for financial performance below EBIT targets and increased by 29 cents ($0.29) for each dollar exceeding EBIT targets. In February 2004, a payment was made for the first six-month installment of approximately $631,000, pertaining to ~~this contingent note. In February 2005, a payment of approximately $1.8 million was made representing~~ the ~~second~~purchasers ~~installment~~ of ~~the~~Chimes ~~contingent~~and ~~note. Future payments, if~~ the ~~applicable~~ ~~EBIT~~Commercial ~~targets~~Services ~~are~~Business ~~met, will be due as follows: 2005 payment of $3~~Unit.~~3 million and 2006 payment of $4.3 million. These payments will be reduced or increased based on actual EBIT performance over the three-year period.~~

19The balance of the $2.3 million in change of control payments to employees has been re-classed to the short-term liability section of the 2006 balance sheet due to the liquidation of the Company. The remaining liability for change of control payments was $563 thousand at March 31, 2007.

~~During~~Net cash provided by operating activities for the ~~first~~period ~~quarter~~from ofJanuary ~~2004~~1 through February 16, ~~the~~2007 was ~~Company~~$98 ~~recorded~~million aconsisting ~~non-cash~~primarily of net loss of $(3.2) million offset by ~~reduction~~the ingain ~~tax~~on ~~benefit~~sale ~~reserves~~of Chimes and anthe ~~increase~~Commercial inServices ~~additional~~Business ~~paid-in~~Unit ~~capital~~ of $19102.9 6 million.

IfNet ~~the~~cash ~~merger~~provided ~~with~~by investing ~~Analysts~~activities ~~International~~for ~~Corporation is consummated,~~ the ~~Company~~period ~~will~~from beJanuary ~~obligated~~1 tothrough ~~pay~~February ~~change of control payments to terminated employees totaling approximately $5.9 million. In addition~~16, ~~approximately $0.7 million will be paid to individuals who~~2007 ~~have~~was ~~waived their rights to receive such change of control payments and a payment of~~ $1.25 million ~~may be made to one individual should he choose to terminate his employment. Also~~, asconsisting ~~a result~~primarily of the ~~consummated~~sale merger, the Company may be obligated to pay $1.75 million to its former financial advisor in connection with an alleged claim relating to the proposed merger. The former advisor claims that, pursuant to the terms of ~~its~~fixed ~~engagement~~assets ~~arrangement with the Company which is expired, it had the right to act~~ as ~~exclusive financial~~a ~~advisor~~part ~~to CHC with respect to certain transactions involving CHC~~of ~~such as~~ the ~~proposed~~sale ~~merger, notwithstanding the expiration~~ of ~~its~~Chimes ~~engagement. The Company believes it has meritorious defenses~~ and ~~potential~~the ~~counterclaims~~Commercial ~~pertaining~~Services toBusiness ~~this matter~~Unit.

~~The~~Net ~~Company~~cash isprovided ~~involved~~by financing inactivities ~~other~~for ~~various~~the ~~and~~period ~~routine~~from ~~litigation matters,~~January ~~which~~1 ~~arise~~ through ~~the~~February ~~normal~~16, ~~course~~2007 was ~~of business~~$.4 ~~Management~~million, ~~believes that~~primarily ~~the~~consisting ~~resolution~~ of ~~these~~shares ~~matters~~issued ~~will~~pursuant ~~not~~to ~~have~~the ~~a material adverse effect on~~employee ~~the~~stock ~~Company’s~~option ~~financial~~plan ~~position~~and oremployee ~~results~~stock ofpurchase ~~operations~~plan.

~~The Company believes that its cash and cash equivalents, available borrowings and internally generated funds will be sufficient to meet its working capital needs through the next year.~~19

~~Contractual Obligations and~~Recent ~~Commercial~~Accounting ~~Commitments~~Pronouncements

~~The~~In ~~Company~~June ~~does~~2006, ~~not~~the Financial ~~utilize~~Accounting ~~off~~Standards ~~balance~~Board ~~sheet~~(FASB) ~~financing~~issued ~~other~~FASB ~~than~~Interpretation No. 48, ~~operating~~Accounting ~~lease~~for ~~arrangements~~Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 (FIN 48), which clarifies the accounting for ~~office~~uncertainty ~~premises~~in ~~and~~income taxes ~~related~~recognized ~~equipment~~in an enterprise’s financial statements. This Interpretation prescribes a recognition ~~The~~threshold ~~following~~and ~~table~~measurement ~~summarizes~~attribute ~~all~~for ~~commitments~~the ~~under~~financial ~~contractual~~statement ~~obligations~~recognition asand measurement of ~~June 30~~a tax position taken or expected to be taken in a tax return. This interpretation also provides guidance on derecognition, ~~2005:~~classification, interest and penalties, accounting in interim periods, disclosure and transition.

	Obligation Due
(dollars in thousands)	Total Amount		1 Year		2-3 Years		4-5 Years		Over 5 Years
Operating Leases	$	8,600	$	5,241	$	3,359	$	—	$	—
RGII Contingent Notes *	7,596		3,300		4,296		—		—
Deferred Compensation	2,617		4		14		437		2,162
Supplemental Retirement Plan	9,750		—		250		1,000		8,500
Other	784		784		—		—		—
Total Cash Obligations	$	29,347	$	9,329	$	7,919	$	1,437	$	10,662

On January 1, 2007, the Company adopted the provisions of FASB Interpretation 48, Accounting for Uncertainty in Income Taxes, in regards to our accounting and disclosure of uncertain tax positions. The Company has reviewed its accounting for income taxes in light of the provisions of FIN 48 and does not expect that adoption will materially affect our consolidated financial statements. Upon the adoption of FIN 48, a tax contingency reserve of approximately $350 thousand was established related to various Federal, Foreign and State income tax matters.

*Item ~~Obligation~~3. Quantitative ifand ~~applicable~~Qualitative ~~EBIT~~Disclosures about ~~targets~~Market ~~are met.~~Risk

20The Company does not ordinarily hold market risk sensitive instruments for trading purposes. However, the Company does recognize market risk from interest rate changes. The Company has financial instruments that are subject to interest rate risk. However, at March 31, 2007, the Company was debt-free. Historically, the Company has not experienced material gains or losses due to interest rate changes. However, a reduction in interest rates would reduce the interest income received by the Company on the cash it holds.

~~Recent~~Item ~~Accounting~~4. Controls ~~Pronouncements~~and Procedures

~~In March 2004, the Financial Accounting Standards Board (FASB)~~Disclosure ~~Emerging~~Controls ~~Issues Task Force (EITF) released Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment~~ and Its Application to Certain Investments (EITF 03-1). EITF 03-1 provides guidance for determining whether impairment for certain debt and equity investments is other-than-temporary and the measurement of an impaired loss. The recognition and measurement requirements of EITF 03-1 were initially effective for reporting periods beginning after June 15, 2004. In September 2004, the FASB Staff issued FASB Staff Position (FSP) EITF 03-1-1 that delayed the effective date for certain measurement and recognition guidance contained in EITF 03-1. The FSP requires that entities continue to apply previously existing “other-than-temporary” guidance until a final consensus is reached. Management does not anticipate that issuance of a final consensus will materially impact the Company’s financial condition or results of operations.Procedures

InThe ~~December 2004,~~Company’s ~~the~~CEO ~~FASB~~and ~~issued~~CFO have ~~Statement~~evaluated ofthe ~~Financial Accounting~~effectiveness ~~Standard~~of ~~No. 123~~the ~~(revised~~Company’s ~~2004),~~disclosure ~~“Share-Based~~controls ~~Payment”~~and procedures (~~FAS 123R). FAS~~as ~~123R~~such ~~requires~~term ~~that~~is ~~compensation~~defined ~~cost~~in beRules ~~recognized~~13a-15(e) ~~for~~under ~~new awards of equity instruments and unvested awards on~~ the ~~adoption date.~~ Securities ~~The~~Exchange ~~SEC~~Act ~~amended the effective dates~~ of ~~FAS~~1934, ~~123R~~as ~~for public companies in April 2005~~amended, ~~which~~referred ~~allows registrants~~ to ~~implement~~herein ~~FAS~~as ~~123R~~the at“Exchange ~~the beginning~~Act”) as of ~~their~~the ~~next~~end ~~fiscal year, instead~~ of the ~~next interim~~ period, ~~that begins~~covered ~~after~~by ~~June 15,~~this ~~2005~~report. ~~The~~Based ~~SEC~~upon ~~also~~such ~~issued~~evaluation, ~~Staff~~the ~~Accounting~~Company’s ~~Bulletin~~Chief ~~(SAB)~~Executive ~~107,~~Officer ~~“Share-Based~~and ~~Payment”,~~Chief inFinancial ~~April 2005~~Officer have concluded that, ~~which~~as ~~provides~~of the ~~views~~end of the ~~SEC~~period, ~~staff~~the ~~regarding~~Company’s ~~certain~~disclosure ~~aspects~~controls ofand ~~the~~procedures ~~application~~are effective ofin ~~FAS 123R. SAB~~recording, ~~107~~processing, ~~assists~~summarizing ~~issuers~~and inreporting ~~their~~information ~~initial~~required ~~implementation~~to ofbe ~~FAS~~disclosed ~~123R~~by ~~and indicates that~~ the ~~staff’s~~Company ~~understanding that, particularly~~ in the ~~period~~reports ofthat ~~initial~~it ~~implementation,~~files ~~issuers~~or ~~may~~submits ~~reasonably~~under ~~arrive~~the atExchange ~~different estimates and option valuations in applying FAS 123R~~Act. WeNonetheless, because ~~expect~~of the ~~adoption~~sale of ~~this statement will have a material effect on~~ the Company’s ~~financial~~two ~~statements,~~primary ~~but~~business weunits ~~cannot~~and ~~reasonably estimate~~ the attendant ~~impact~~conversion ofto ~~the~~liquidation ~~adoption~~basis ~~because~~accounting, ~~certain~~the ~~assumptions~~Company ~~used~~failed ~~in the calculation~~to offile ~~the~~this ~~value~~report ofon ~~share-based~~a ~~payments~~timely ~~may change in 2005~~basis.

~~In December 2004 the FASB issued Statement 153, Exchanges of~~Internal ~~Nonmonetary~~Controls ~~Assets-~~over anFinancial amendment of APB Opinion No. 29. The guidance in Opinion 29, Accounting for Nonmonetary Transactions is based on the underlying principle that the measurement of exchanges of nonmonetary assets should be based on the fair value of the assets exchanged. However, Opinion 29 included certain exceptions to that principle, including a requirement that exchanges of similar productive assets should be recorded at the carrying amount of the asset relinquished. Statement 153 eliminates that exception and replaces it with a general exception for exchanges of nonmonetary assets that lack commercial substance. Only nonmonetary exchanges in which an entity’s future cash flows are expected to significantly change as a result of the exchange will be considered to have commercial substance. Statement 153 must be applied to nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not anticipate that the adoption of this statement will have a material impact on the Company’s financial statementsReporting

InThere ~~May 2005~~have ~~the~~not ~~FASB~~been ~~issued Statement 154, Accounting Changes and Error Corrections,~~any ~~which~~ changes in the ~~accounting~~Company’s ~~and~~internal ~~reporting~~controls ~~requirements~~over ~~for~~financial ~~the~~reporting ~~change~~(as ~~in an~~such ~~accounting~~term ~~principle. Opinion 20, Accounting Changes, which~~ is ~~superseded~~defined ~~by Statement 154, required that most voluntary changes~~ in ~~accounting~~Rules ~~principle~~13a-15(f) ~~be recognized~~and by15d-15e ~~including~~under the ~~cumulative~~Exchange ~~effect~~Act) ~~of changing to the new accounting~~during ~~principle as a component of net income in~~ the period ~~of the change. Statement 154 instead requires retrospective application~~ to ~~prior~~which ~~periods’~~this ~~financial~~report ~~statements~~relates ofthat ~~changes~~have inmaterially ~~an accounting principle~~affected, unless it is impracticable to do so. Statement 154 differentiates between retrospective application and restatement. Retrospective application is defined as the application of a different accounting principle to prior accounting periods as if that principle had always been used or ~~as the~~are ~~adjustment~~reasonably oflikely ~~previously issued financial statements~~ to ~~reflect~~materially ~~a change in the reporting entity. In contrast~~affect, ~~restatement is defined as~~ the ~~revising~~Company’s ~~of previously~~internal ~~issued~~control over financial ~~statements to reflect the correction of an error~~reporting. IfA itcontrol ~~is impracticable to determine the period-specific effects of an accounting change on one or more individual prior periods presented~~system, ~~but the cumulative effect to all prior~~ ~~periods~~no ~~can~~matter behow ~~determined,~~well ~~the~~conceived ~~new accounting principle should be applied to assets~~ and ~~liabilities balances as of the beginning of the earliest period for which retrospective application is practicable. In addition~~operated, acan ~~corresponding~~provide ~~adjustment~~only should be made to the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) for that period rather than being reported in an income statement. If it is impracticable to determine the cumulative effect of applying a change in accounting principle to any prior periodreasonable, the new accounting principle should be applied as if it were adopted prospectively from the earliest date practicable. Statement 154 also requires retrospective application to changes required by a new accounting pronouncement in the unusual instance that the pronouncement does not ~~include~~ ~~specific transition provisions. If a pronouncement includes specific transition provisions~~absolute, ~~those~~assurance ~~provisions~~that ~~should be followed. Statement 154 limits~~ the ~~retrospective~~ ~~application~~objectives of ~~a change in accounting principle to~~ the ~~direct effects~~control ofsystem ~~the~~are ~~change~~met. ~~Indirect~~Because ~~effects~~ of athe ~~change~~inherent inlimitations ~~accounting principle, such as a change~~ in ~~nondiscretionary~~all ~~profit-sharing~~control ~~payments resulting from an accounting change~~systems, ~~should~~no ~~be recognized~~evaluation ~~in the period~~ of ~~the~~controls ~~change. The~~can ~~Statement~~provide ~~also~~absolute ~~requires~~assurance that ~~a change in depreciation, amortization,~~ orall ~~depletion~~control ~~method~~issues ~~for~~and ~~long-lived,~~instances ~~nonfinancial assets be accounted for as a change in accounting estimate effected by a change in accounting principle. The guidance contained in Opinion 20 for reporting the corrections~~ of ~~errors in previously issued financial statements~~fraud, ~~and~~if ~~changes in accounting estimates is carried forward to Statement 154 without change. Additionally~~any, ~~the~~within ~~Statement carries forward the guidance in Opinion 20 requiring justification of~~ a ~~change~~company inhave ~~accounting principle on the basis of~~been ~~preferability~~detected. Statement 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company has not completed its assessment of the impact of this pronouncement on its financial statements.

2120

~~Item~~PART ~~4. Controls~~II ~~and~~- ~~Procedures~~Other Information

~~Disclosure~~Item ~~Controls~~1a. Risk ~~and Procedures~~Factors

~~The Company’s CEO and CFO have evaluated the effectiveness of the~~Forward ~~Company’s~~looking ~~disclosure~~statements controls and procedures (as such term is defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period, the Company’s disclosure controls and procedures are ~~effective~~subject ~~in recording, processing, summarizing and reporting, on a timely basis, information required~~ to ~~be disclosed~~various ~~by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended~~uncertainties.

~~Internal~~Statements ~~Controls~~made ~~over~~in ~~Financial~~this Report ~~Reporting~~regarding the payment of additional liquidating distributions are forward-looking statements. Such forward- looking statements are subject to a number of risks and uncertainties, and there can be no assurance that the expectations reflected in those statements will be realized or achieved. Such risks and uncertainties include, without limitation, possible contingent liabilities and post-closing indemnification and other obligations arising from the sale of the Company’s businesses; and risks associated with the liquidation and dissolution of the Company, including, without limitation, settlement of the Company’s liabilities and obligations, costs incurred in connection with the carrying out of the plan of liquidation and dissolution, the amount of income earned on the Company’s cash and cash equivalents and short-term investments during the liquidation period, and the actual timing of liquidating distributions.

~~There~~ We have ~~not~~indemnification ~~been~~obligations ~~any changes in the Company’s internal controls over financial reporting (as such term is defined in Rules 13a-15(f)~~ under ~~the~~ ~~Securities~~each ~~Exchange Act~~ of ~~1934, as amended) during~~ the ~~period~~Chimes toAsset ~~which~~Purchase ~~this~~Agreement ~~report~~and ~~relates that have materially affected, or are reasonably likely to materially affect,~~ the ~~Company’s~~Commercial ~~internal~~Services ~~control~~Asset ~~over~~Purchase ~~financial reporting.~~Agreement

22Under the Chimes Asset Purchase Agreement, we have agreed to indemnify Axium, Diversity MSP and their affiliates and other related parties among other things, any losses incurred by them arising out of our breach of the Chimes Asset Purchase Agreement, subject to certain dollar and time limitations.

~~PART~~Under IIthe -Commercial Services ~~Other~~Asset ~~Information~~Purchase Agreement, we have agreed to indemnify TEKsystems and its affiliates for, among other things, any losses incurred by them arising out of our breach of the Commercial Services Asset Purchase Agreement, subject to certain dollar and time limitations.

~~Item~~Our Board 4.will ~~Submission~~need to make provision for the satisfaction of all of our known and ~~Matters~~unknown liabilities, which could substantially delay or limit our ability to make adistribution ~~Vote~~in offull ~~Security~~to ~~Holders~~shareholders.

OnOur ~~May~~Board 18of Directors will be required to make adequate provision to satisfy our liabilities, including ~~2005~~known and unknown claims against us, before authorizing any further distribution to shareholders. The process of accounting for our liabilities, including those that are presently unknown, may involve difficult valuation decisions, which could adversely impact the ~~Company~~Board’s ~~held~~ability ~~its~~to ~~Annual~~make ~~Meeting~~distribution in full in a timely manner. Substantial time may be required for us to determine the extent of ~~Stockholders~~our liabilities to known third party creditors and claimants and for us to settle or judicially resolve any claims that are contested. Furthermore, pursuant to the New York Business Corporation Law, we may be subject to claims being commenced against us for liabilities unknown to us for a period of time after dissolution. Assuming we have sufficient remaining cash, a period of time must elapse after dissolution before we would be able to make any distribution in full to shareholders of our assets remaining after satisfying or providing for all our liabilities and obligations, and such distribution may likely be made in more than one installment over an extended period of time.

~~(1) The~~If our ~~following~~contingent ~~directors~~reserves ~~were~~are ~~elected~~insufficient to ~~serve~~satisfy onour ~~the~~liabilities, ~~Company’s~~creditors ~~Board~~could assert claims against us seeking to prevent distributions or against our shareholders to the extent of ~~Directors:~~distributions received.

	For	Against
William M. Duncan	24,476,134	2,644,059
Eric P. Edelstein	24,479,130	2,641,063
William J. Marino	24,477,091	2,643,102
Earl L. Mason	24,475,176	2,645,017
L. White Matthews, III	24,476,351	2,643,842
William J. Murphy	24,475,144	2,645,049
Edward J. Obuchowski	24,476,683	2,643,510

If a court holds at any time that we have failed to make adequate provision for our expenses and liabilities or if the amount ultimately required to be paid in respect of such liabilities exceeds the amount available from the contingency reserve, our creditors could seek an injunction against the making of distributions on the grounds that the amounts to be distributed are needed to provide for the payment of our expenses and liabilities. Any such action could delay or substantially diminish the amount of any cash distributions to shareholders.

~~(2) The~~If ~~appointment~~we fail to create an adequate contingency reserve for payment of ~~Grant~~our ~~Thornton~~expenses ~~LLP~~and asliabilities, creditors ~~independent~~could ~~auditors~~assert claims against each shareholder receiving a distribution for the payment of any shortfall, up to the ~~Company~~amounts ~~for~~previously ~~fiscal~~received ~~year~~by ~~2005~~the shareholder ~~was~~in ~~ratified~~distributions from us.

For:		26,117,253
Against:		615,994
Abstain:		386,946

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

~~Item~~At ~~6. Exhibits~~a special meeting of ~~and~~the ~~Reports~~shareholders of the Company held on ~~Form~~February ~~8-K~~14, 2007, the shareholders voted to approve the Asset Sales and the Plan of Liquidation, casting the following votes:

~~a) Exhibits~~21

31.1 – CEO Certification required by Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.

Proposal	For	Against	Abstain
To approve the Chimes Asset Sale	24,624,078	449,580	42,672

To approve the Commercial Services Asset Sale	24,634,144	434,959	47,227

To approve the Plan of Liquidation	24,612,925	459,227	44,178

To approve one or more adjournments of the meeting if deemed necessary to facilitate approval of the foregoing	23,026,798	2,017,754	71,778

~~31.2 – CFO Certification required by Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.~~22

~~32.1~~Item ~~– CEO Certification pursuant to 18 U~~6.~~S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~ Exhibits

~~32.2 – CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~Exhibits

~~b) Report~~31.1 on– CEO Certification ~~Form~~required 8by Rule 13a-K15(e)/15d-15(e) under the Securities Exchange Act of 1934.

A31.2 ~~report~~– CFO Certification onrequired ~~Form~~by 8Rule 13a-K15(e)/15d-15(e) ~~was~~under ~~filed~~the ~~on April 12, 2005, reporting that Company~~Securities ~~had~~Exchange ~~entered~~Act ~~into~~of ~~an employment agreement with John Ferdinandi as Controller~~1934.

A32.1 ~~report~~– CEO Certification onpursuant ~~Form~~to ~~8-K~~18 ~~was~~U.S.C. ~~filed~~Section ~~on April 13~~1350, ~~2005,~~as ~~reporting~~adopted ~~that~~pursuant to ~~Company~~Section ~~had~~906 ~~entered~~of ~~into~~the anSarbanes-Oxley ~~Agreement~~Act ~~and Plan~~ of ~~Merger with Analysts International Corporation (“Analysts”)~~2002.

A32.2 ~~report~~– CFO Certification onpursuant ~~Form~~to ~~8-K~~18 ~~was~~U.S.C. ~~filed~~Section ~~on April 14~~1350, ~~2005~~as ~~providing~~adopted ~~regulation FD~~pursuant ~~disclosure resulting from the Company’s joint conference call held with~~to ~~Analysts~~Section to906 ~~discuss~~of the ~~Agreement~~Sarbanes-Oxley ~~and~~Act ~~Plan~~ of ~~Merger~~2002.

~~A report on Form 8-K was filed on April 29, 2005, reporting the issuance of a press release regarding the financial results of Computer Horizons for its first quarter, 2005.~~23

23Signatures

~~Signatures~~Pursuant to the requirements 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.

Pursuant to the requirements 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.

		COMPUTER HORIZONS CORP.
		(Registrant)

DATE:	JULY 2, 2007	/s/ Dennis Conroy
		Dennis Conroy, President and CEO
		(Principal Executive Officer)



DATE:	JULY 2, 2007	/s/ Barbara Moss
		Barbara Moss,
		Chief Financial Officer (Principal Financial and Accounting Officer)

		COMPUTER HORIZONS CORP.
		(Registrant)
DATE:	August 8, 2005	/s/ William J. Murphy
		William J. Murphy, President and CEO
		(Principal Executive Officer)
DATE:	August 8, 2005	/s/ Michael J. Shea
		Michael J. Shea,
		Vice President and CFO
		(Principal Financial Officer)
DATE:	August 8, 2005	/s/ John E. Ferdinandi
		John E. Ferdinandi
		Corporate Controller
		(Principal Accounting Officer)

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