The large and growing homeland security industry encompasses a broad array of products and services used for activities ranging from training local law enforcement personnel to protecting national borders. The critical incident response market is a significant part of the homeland security industry and consists of a collection of public and private sector organizations involved in the planning, coordination and provisioning of products and services to protect and preserve public safety and public health.

The U.S. homeland security industry is funded primarily by the federal government, with the balance consisting of funding from state and local governments and private organizations. According to the fiscal year 2006 budget developed by the Office of Management and Budget, or OMB, federal funding for homeland security in the U.S. during 2006 will be $49.9 billion, of which approximately $15.2 billion will be applicable to the critical incident response marketplace. While critical incident response has long been a large and important component of a nation’s infrastructure, the profile of the industry has increased significantly in response to terrorist attacks around the world as well as other catastrophic events, such as the recent natural disasters in the U.S. and Southeast Asia. U.S. and foreign governments have responded to these events by increasing the resources necessary to develop and maintain effective critical incident response capabilities.

Individuals involved in critical incident response include law enforcement officers, firefighters, emergency medical response and public works personnel and public health officials. According to the Department of Homeland Security, or DHS, the non-military first responder community currently comprises an estimated three million individuals. In addition, the Health Resources and Services Administration, or HRSA, estimates that there are more than three million salaried and volunteer public health workers, and the Center for Disease Control, or CDC, reports over 6,000 state and local public health organizations.

The Company’s technology products and services include data management, analysis and dissemination services and software solutions. The Company is the lead subcontractor to DHS of data management, analysis and dissemination services under the BioWatch program. BioWatch is an early warning system funded by DHS that is designed to rapidly detect trace amounts of biological materials in the air and assist public health experts in determining the presence and geographic extent of a biological agent release. The Company is also a leading provider of software solutions focused on public health and safety preparedness, response and recovery. These solutions are used by public health agencies to support real-time emergency notification and communications for epidemiologic, bioterrorist, and other public health threats, as well as daily collaboration and interaction throughout the agency.

The Company provides training and exercises for critical incident response applications and provides hazardous materials management services for the U.S. Navy. The Company provides training to government employees on how to properly use filtered air respirators and SCBAs in various situations. The services the Company provides to the U.S. Navy typically relate to substances such as cleaning and office supplies, paints, solvents, and petroleum products. The Company also provides exercise services in connection with its sale of emergency preparedness and response software and services. Each exercise is tailored to test the user’s preparedness and response plans.

The Company provides personal safety products that protect critical incident responders and industrial users from harmful environmental conditions. These products include a variety of filtered air respirators and SCBAs, and related equipment and accessories. The Company also offers a number of training courses to purchasers of its safety products, enabling the customers to buy both certified products and certified training from a single provider.

The Company offers two lines of respirators: filtered air respirators and SCBAs. The Company’s filtered air respirators include a range of powered and non-powered masks and hoods that implement state-of-the-art filtration technology to protect hospital workers, law enforcement officers and firefighters against environmentally airborne nuclear, biological and chemical agents. The Company’s SCBA equipment is used primarily by firefighters and other emergency personnel who need an onboard supply of air in environments where smoke is present and ambient oxygen content is low or harmful airborne particles clog filtration-based respirators.

Cost of revenues increased 83% from $2.4 million for the nine months ended March 31, 2004 to $4.3 million for the nine months ended March 31, 2005.

Selling, general and administrative expense increased 96% from $2.9 million for the nine months ended March 31, 2004 to $5.7 million for the nine months ended March 31, 2005.

Interest (expense) income, net increased from ($110.0 thousand) for the nine months ended March 31, 2004 to $52.0 thousand for the nine months ended March 31, 2005.