<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>Organization
  and Nature of Business</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 align="JUSTIFY"><font size="2">CoActive
  Marketing Group, Inc. (the “Company”), through its wholly-owned subsidiaries
  Inmark Services LLC, Optimum Group LLC, U. S. Concepts LLC and Digital
  Intelligence Group LLC, is an integrated sales promotional and marketing
  services agency. The Company develops, manages and executes promotional
  programs at both national and local levels. These programs help the Company’s
  clients effectively promote their goods and services directly to retailers
  and consumers and are intended to assist them in achieving a maximum impact
  and return on their marketing investment. The Company’s activities reinforce
  brand awareness, provide incentives to retailers to order and display its
  clients’ products, and motivate consumers to purchase those products. </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 align="JUSTIFY"><font size="2">The
  Company’s services include experiential marketing, event marketing,
  interactive marketing, multicultural and urban marketing, and all elements of
  consumer and trade promotion, and are marketed directly to clients through
  sales forces operating out of offices located in New York, New York;
  Cincinnati, Ohio; Chicago, Illinois and San Francisco, California.</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 align="JUSTIFY"><font size="2">The
  consolidated financial statements include the financial statements of the
  Company and its wholly-owned subsidiaries. In addition, through May 22, 2006,
  the consolidated financial statements included the accounts of a variable
  interest entity, Garcia Baldwin, Inc. d/b/a MarketVision (“MarketVision”), an
  affiliate that provided ethnically oriented marketing and promotional
  services. The Company owned 49% of the common stock of MarketVision. A third
  party owned the remaining 51%. The third party owned portion of MarketVision
  was accounted for as a minority interest in the Company’s consolidated
  financial statements. As disclosed in Note 9, the Company sold its 49% interest
  in MarketVision in May 2006, and all amounts relating to MarketVision have
  been reclassified as discontinued operations in the Company’s financial
  statements for the 2007 year. 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 align="JUSTIFY"><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 align="JUSTIFY"><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>
</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>Organization
  and Nature of Business</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>CoActive
  Marketing Group, Inc. (the “Company”), through its wholly-owned subsidiaries
  Inmark Services LLC, Optimum Group LLC, U. S. Concepts LLC and Digital
  Intelligence Group LLC, is an integrated sales promotional and marketing
  services agency. The Company develops, manages and executes promotional
  programs at both national and local levels. These programs help the Company’s
  clients effectively promote their goods and services directly to retailers
  and consumers and are intended to assist them in achieving a maximum impact
  and return on their marketing investment. The Company’s activities reinforce
  brand awareness, provide incentives to retailers to order and display its
  clients’ products, and motivate consumers to purchase those products. </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
  Company’s services include experiential marketing, event marketing,
  interactive marketing, multicultural and urban marketing, and all elements of
  consumer and trade promotion, and are marketed directly to clients through
  sales forces operating out of offices located in New York, New York;
  Cincinnati, Ohio; Chicago, Illinois and San Francisco, California.</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. In addition, through May 22, 2006,
  the consolidated financial statements included the accounts of a variable
  interest entity, Garcia Baldwin, Inc. d/b/a MarketVision (“MarketVision”), an
  affiliate that provided ethnically oriented marketing and promotional
  services. The Company owned 49% of the common stock of MarketVision. A third
  party owned the remaining 51%. The third party owned portion of MarketVision
  was accounted for as a minority interest in the Company’s consolidated
  financial statements. As disclosed in Note 9, the Company sold its 49% interest
  in MarketVision in May 2006, and all amounts relating to MarketVision have
  been reclassified as discontinued operations in the Company’s financial
  statements for the 2007 year. 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>
</tbody></table>