<table>
<tbody><tr style="font-size:1px">
<td width="5%" valign="TOP">
<p>&nbsp;</p>
</td>
<td width="5%" valign="TOP">
<p>&nbsp;</p>
</td>
<td width="90%" valign="TOP">
<p>&nbsp;</p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="2">(1)</font></p>
</td>
<td colspan="2" valign="TOP">
<p><font size="2"><u>Basis of
 Presentation</u></font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td colspan="2" valign="TOP">
<p><font size="2">The interim
 financial statements of CoActive Marketing Group, Inc. (the “Company”) for
 the three months ended June 30, 2008 and 2007 have been prepared without
 audit. In the opinion of management, such consolidated financial statements
 reflect all adjustments, consisting of normal recurring adjustments,
 necessary to present fairly the Company’s results for the interim periods
 presented. Certain amounts in prior periods have been reclassified to conform
 to the current period’s presentation. The results of operations for the three
 months ended June 30, 2008 are not necessarily indicative of the results for
 a full year. </font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td colspan="2" valign="TOP">
<p><font size="2">Certain
 information and footnote disclosures normally included in financial
 statements prepared in accordance with generally accepted accounting
 principles have been condensed or omitted. These consolidated financial
 statements should be read in conjunction with the consolidated financial
 statements and notes thereto included in the Company’s Annual Report on Form
 10-K for the year ended March 31, 2008. </font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="2">(2)</font></p>
</td>
<td colspan="2" valign="TOP">
<p><font size="2"><u>Summary of
 Significant Accounting Policies</u></font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="2">(a)</font></p>
</td>
<td valign="TOP">
<p><font size="2"><u>Principles
 of Consolidation </u></font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="2">The
 consolidated financial statements include the financial statements of the
 Company and its wholly-owned subsidiaries. All significant intercompany
 balances and transactions have been eliminated in consolidation.</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="2">(b)</font></p>
</td>
<td valign="TOP">
<p><font size="2"><u>Use of Estimates
 </u></font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="2">The
 preparation of the financial statements in conformity with accounting
 principles generally accepted in the United States of America requires
 management to make estimates and assumptions that affect the reported amounts
 of assets and liabilities and disclosure of the contingent assets and
 liabilities at the date of the financial statements and the reported amounts
 of revenues and expenses during the reporting period. Management bases its
 estimates on certain assumptions, which it believes are reasonable in the
 circumstances, and does not believe that any change in those assumptions
 would have a significant effect on the financial position or results of
 operations of the Company. Actual results could differ from those estimates</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="2">(c)</font></p>
</td>
<td valign="TOP">
<p><font size="2"><u>Fair Value
 of Financial Instruments </u></font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="2">The carrying
 value of all financial instruments classified as a current asset or liability
 is deemed to approximate fair value due to the short maturity of these
 instruments and interest rates that approximate current market rates.</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="2">(d)</font></p>
</td>
<td valign="TOP">
<p><font size="2"><u>Cash and
 Cash Equivalents </u></font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="2">Investments
 with original maturities of three months or less at the time of purchase are
 considered cash equivalents. Due to the short-term nature of the cash
 equivalents, the carrying value approximates fair value.</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="2">(e)</font></p>
</td>
<td valign="TOP">
<p><font size="2"><u>Accounts
 Receivable and Credit Policies </u></font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="2">The carrying
 amount of accounts receivable is reduced by a valuation allowance that
 reflects management’s best estimate of the amounts that will not be
 collected. In addition to reviewing delinquent accounts receivable,
 management considers many factors in estimating its general allowance,
 including historical data, experience, customer types, credit worthiness, and
 economic trends. From time to time, management may adjust its assumptions for
 anticipated changes in any of those or other factors expected to affect
 collectability.</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="2">(f)</font></p>
</td>
<td valign="TOP">
<p><font size="2"><u>Unbilled
 Contracts in Progress/Accrued Job Costs </u></font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
</tr>
<tr>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="1">&nbsp;</font></p>
</td>
<td valign="TOP">
<p><font size="2">Unbilled
 contracts in progress represent revenue recognized in advance of billings rendered
 based on work performed to date on certain contracts. Accrued job costs are
 also recorded for such contracts to properly match costs and revenue.</font></p>
</td>
</tr>
</tbody></table>
<table>
<tbody><tr>
<td>
<p> </p>
</td>
<td>
<p> </p>
</td>
<td>
<p> </p>
</td>
</tr>
<tr>
<td>
<p><font>(1)</font></p>
</td>
<td>
<p><font><u>Basis of
 Presentation</u></font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>The interim
 financial statements of CoActive Marketing Group, Inc. (the “Company”) for
 the three months ended June 30, 2008 and 2007 have been prepared without
 audit. In the opinion of management, such consolidated financial statements
 reflect all adjustments, consisting of normal recurring adjustments,
 necessary to present fairly the Company’s results for the interim periods
 presented. Certain amounts in prior periods have been reclassified to conform
 to the current period’s presentation. The results of operations for the three
 months ended June 30, 2008 are not necessarily indicative of the results for
 a full year. </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>Certain
 information and footnote disclosures normally included in financial
 statements prepared in accordance with generally accepted accounting
 principles have been condensed or omitted. These consolidated financial
 statements should be read in conjunction with the consolidated financial
 statements and notes thereto included in the Company’s Annual Report on Form
 10-K for the year ended March 31, 2008. </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font>(2)</font></p>
</td>
<td>
<p><font><u>Summary of
 Significant Accounting Policies</u></font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>(a)</font></p>
</td>
<td>
<p><font><u>Principles
 of Consolidation </u></font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>The
 consolidated financial statements include the financial statements of the
 Company and its wholly-owned subsidiaries. All significant intercompany
 balances and transactions have been eliminated in consolidation.</font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>(b)</font></p>
</td>
<td>
<p><font><u>Use of Estimates
 </u></font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>The
 preparation of the financial statements in conformity with accounting
 principles generally accepted in the United States of America requires
 management to make estimates and assumptions that affect the reported amounts
 of assets and liabilities and disclosure of the contingent assets and
 liabilities at the date of the financial statements and the reported amounts
 of revenues and expenses during the reporting period. Management bases its
 estimates on certain assumptions, which it believes are reasonable in the
 circumstances, and does not believe that any change in those assumptions
 would have a significant effect on the financial position or results of
 operations of the Company. Actual results could differ from those estimates</font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>(c)</font></p>
</td>
<td>
<p><font><u>Fair Value
 of Financial Instruments </u></font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>The carrying
 value of all financial instruments classified as a current asset or liability
 is deemed to approximate fair value due to the short maturity of these
 instruments and interest rates that approximate current market rates.</font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>(d)</font></p>
</td>
<td>
<p><font><u>Cash and
 Cash Equivalents </u></font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>Investments
 with original maturities of three months or less at the time of purchase are
 considered cash equivalents. Due to the short-term nature of the cash
 equivalents, the carrying value approximates fair value.</font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>(e)</font></p>
</td>
<td>
<p><font><u>Accounts
 Receivable and Credit Policies </u></font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>The carrying
 amount of accounts receivable is reduced by a valuation allowance that
 reflects management’s best estimate of the amounts that will not be
 collected. In addition to reviewing delinquent accounts receivable,
 management considers many factors in estimating its general allowance,
 including historical data, experience, customer types, credit worthiness, and
 economic trends. From time to time, management may adjust its assumptions for
 anticipated changes in any of those or other factors expected to affect
 collectability.</font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>(f)</font></p>
</td>
<td>
<p><font><u>Unbilled
 Contracts in Progress/Accrued Job Costs </u></font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
</tr>
<tr>
<td>
<p><font> </font></p>
</td>
<td>
<p><font> </font></p>
</td>
<td>
<p><font>Unbilled
 contracts in progress represent revenue recognized in advance of billings rendered
 based on work performed to date on certain contracts. Accrued job costs are
 also recorded for such contracts to properly match costs and revenue.</font></p>
</td>
</tr>
</tbody></table>