OTCPicks.com

FEATURED COMPANY

MARINE EXPLORATION INCORPORATED (OTC: MEXP)
"Up 100.00% in morning trading"

Detailed Quote: www.otcpicks.com/quotes/MEXP.php

Company Profile:
www.otcpicks.com/marine-exploration/marine-exploration-2.htm

Marine Exploration, Inc., a development stage company, engages in marine treasure hunting expeditions. It involves in the exploration and recovery of deep-ocean shipwrecks, including the marketing, sale, and distribution of recovered artifacts, replicas, merchandise, and books through various retail and wholesale sales channels. The company was incorporated in 1996 as Jenkon International, Inc. and changed its name to Multimedia K.I.D., Inc. in 1999. Later, it changed its name to SYCO, Inc. in 2006; and to Marine Exploration, Inc. in 2007. The company is based in Denver, Colorado.

MEXP News:

August 5 - Marine Exploration Inc. Acquires Ship

Marine Exploration, Inc. (OTC: MEXP) announced that it has executed a bill of sale acquiring the Ocean Lady, a 128 foot, 252 ton research vessel. The Ocean Lady, outfitted to the specifications of Burt Webber of Hispaniola Ventures, Marine's joint venture partner, is docked at Jones Boatyard Miami.

FEATURED COMPANY

COPPER KING MINING CORPORATION (OTC: CPRK)

Detailed Quote: www.otcpicks.com/quotes/CPRK.php

Company Profile:
www.otcpicks.com/copper-king-mining/copper-king-mining.htm

Copper King Mining Corporation currently owns approximately 1200 acres in the Drum Mountains of Utah, which are patent deeded mining claims which contain gold, silver and copper. The company recently added to its holdings by filing six more claims on land which was inside their holdings, but not patent deeded. Contiguous to that acreage is approximately 1100 acres of claims filed by Western Utah Copper Company. As the companies explored the concept of a joint venture on the Drum Mountain properties, it was decided that a very viable consideration was to join the total assets of both companies.

CPRK News:

August 5 - Copper King Mining Corporation Provides Project Updates

Copper King Mining Corporation (OTC: CPRK), an ore mining, processing and exploration company located in southern Utah, provided the following updates and a correction to a prior press release, concerning its mining and processing operations near Milford, Utah.

In response to several inquiries concerning a press release issued on March 24, 2008 by the company’s former investor relations firm without the company’s participation, Copper King’s management believes a correction to this press release is appropriate at this time.

Two power lines supply the power supply to the Copper King mill. One is approximately 3 ½ miles long and originates directly from the substation that will supply the mill concentrator with power. This supply line was rebuilt and upgraded by a local power utility, requiring new poles and other equipment. This utility upgrade now provides a connection point from which the company’s power line is now hooked south of the Ely Milford Highway. The company was assessed a substantial portion of the costs as its share of this improvement.

The company’s prior investor relations firm inadvertently confused pictures of this utility upgrade for the actual power line to the mill’s concentrator and issued a press release that included incorrect information about these two electrical connections.

In reality, nearly seven miles of new 46KV line has recently been built from the utility connection point to the company’s mill concentrator by the company’s contractor, Probst Electric of Heber, Utah, which construction should be completed this week. The company avers that the work performed by Probst Electric is unparalleled in light of cost, construction time and the quality work product. The company will issue more construction updates in the following weeks.

FEATURED COMPANY

U.S. MINE MAKERS INCORPORATED (OTC: USMM)

Detailed Quote: http://www.otcpicks.com/quotes/USMM.php

Company Profile:
http://www.otcpicks.com/us-mine-makers/us-mine-makers-2.htm

U.S. Mine Makers, Inc. is a US-based company engaged in "eco friendly" mining and processing of precious metals in Idaho, Nevada and Canada. The Company processes ore concentrate and hard rock ore to recover residual gold, platinum, rhodium and other precious metals from waste rocks of old abandoned mines. The Company`s goal is to process ore in a safe and economical manner, with little or no environmental impact.

USMM News:

August 4 - U.S. Mine Makers Goes 'Green' With Their Gold Recovery Process

U.S. Mine Makers, Inc. (OTC: USMM) prides itself as “eco-friendly,” and this company model is evident in the gold and platinum recovery process they have developed and are implementing in their new pilot plant. The company's new pilot plant and their future full-scale production plant are being designed to be much more environmentally friendly than gold processing plants that have traditionally used highly toxic forms of Cyanide to leach the gold from the ore. USMM has developed and tested a process that uses Sodium Bromide in place of Sodium Cyanide resulting in much more “eco-friendly” waste byproducts in their recovery process.

For years, mining and ore processing companies have been recovering gold and other precious metals using a Sodium Cyanide leaching process. The vast majority of gold mining companies have used this environmentally damaging process. Milling and heap leaching require cycling of millions of liters of alkaline water containing high concentrations of potentially toxic NaCN, free cyanide, and metal cyanide complexes that are frequently accessible and hazardous to wildlife. Some countries such as Argentina are starting to outlaw the use of Cyanide in gold and precious metal processing and the environmental impact is being investigated by other countries and environmental agencies as well.

The leach process that USMM is using utilizes Sodium Bromide (NaBR). Sodium Bromide and other waste byproducts in USMM's recovery process present a very low environmental hazard, and USMM's research has proven Sodium Bromide to be an effective and efficient catalyst in their metal leaching process.

U.S. Mine Makers CEO Ronald Bell stated, “Since our company's inception we have been committed to the use of environmentally friendly business practices and processes. For years we have been involved in the remediation and restoration of toxic mine sites, and now we are extending our 'eco-friendly' and 'Green' philosophy to our gold and platinum metals recovery process. We are committed to creating value for our shareholder in everything we do, but we also want to create that value in a sustainable and 'eco-friendly' way.”

FEATURED COMPANY

PURIO INCORPORATED (OTCBB: PURO)

Detailed Quote: http://www.otcpicks.com/quotes/PURO.php

Company Profile: http://www.otcpicks.com/purio/purio.htm

Purio Inc. owns proprietary water clarification technology suitable to a broad number of applications including the clarification of surface water, industrial process water and sewage. Purio intends to apply its technology initially to industrial and commercial applications to reclaim water and reduce the need for fresh water in such applications. Purio further intends to use its proprietary technology to produce potable water for commercial and residential use. Purio will commercialize its technology via a number of channels, namely licensing strategic partners to build and sell and/or operate units outside of North America, outright sale of their second generation (patent pending) units to end users and will build, own and operate on a fee for service basis their larger permanent installation units in North America. Purio is based in Blaine, Washington.

PURO News:

July 31 - Purio Inc. Completes Move of Compact Mobile Water Treatment System to Its First Demonstration Location

Purio Inc. (OTCBB: PURO) announced that it has completed the move of its compact mobile water treatment system to its first demonstration location.

"Our preliminary mechanical testing of the new unit was completed to our total satisfaction with all systems functioning superbly," says Earl Switenky, spokesmen for Purio.

"As planned, our first demonstration is designed to produce drinking water. The unit will be drawing water from a stagnant and polluted pond formerly used to water livestock," says Leonard Girard chief science officer for Purio. "This water certainly is unsuitable for human consumption as is, and this demonstration is designed to prove our unit's ability to produce safe drinking water from such sources economically."

Purio will be submitting water samples to recognized testing laboratories and reporting the results.

In the coming weeks the unit will be moved to a municipal location that will provide an ideal demonstration of the unit's capability to clarify and sanitize residential waste water for recycling purposes.

FEATURED COMPANY

MONOGRAM ENERGY INCORPORATED (OTC: MGRN)

Detailed Quote: www.otcpicks.com/quotes/MGRN.php

Company Profile:
www.otcpicks.com/monogram-energy/monogram-energy.htm

Monogram Energy, Inc. is an independent energy company engaged in the acquisition, development, and exploitation of oil and gas properties. The company specializes in acquiring oil & gas leases with proven reserves that have the potential for increased production.

MGRN News:

July 29 - Monogram Energy, Inc. Addresses Shareholders

Monogram Energy, Inc. (OTC: MGRN) would like to update its shareholders on recent corporate events, in particular the activity relating to the Company’s common stock. Monogram Energy wants to assure its stockholders that the Company shares their concerns regarding the recent price drop of the stock, and is doing everything in its power to halt the slide. Monogram’s management is continuing to try and create shareholder value by acquiring wells, delivering oil produced by existing wells, and recognizing revenue. The Company continues its commitment to increase the production of existing and newly acquired wells.

Monogram's management realizes that not every stockholder is a long-term holder, but for those who are we ask that you request your shares in certificate form from your broker. Mr. Billy King, Chief Executive Officer of Monogram Energy, Inc. stated, "We feel it's important that our shareholders know that we are reviewing and analyzing all available sources to try and pinpoint the causes of the price decline of our stock, and that we are taking whatever steps we can to find a solution."

Mr. King became interested in the production of oil & gas during his ten years of employment as an attorney for the Halliburton Company, and with his representation of independent oil companies during his years as a private practitioner. Monogram Energy's goal is to maintain a high risk/reward profile, thereby enabling them to return the most value to its shareholders.

STOCKS TO WATCH

BEACON REDEVELOPMENT INDUSTRIAL CORP. (OTC: BCND)
"Up 100.00% in morning trading"

Detailed Quote: http://www.otcpicks.com/quotes/BCND.php

Beacon specializes in acquiring undervalued deteriorating properties that offer the potential for above average return on investment, the properties must offer recyclable/salvageable materials along with the potential for redevelopment; the company also seeks along with the above for mentioned, properties that have the possibility for governmental grants, tax rebates or deferments as part of their criteria for acquisition. Visit www.beaconredevelopment.com for all the latest information and updates.

BCND News:

August 5 - Beacon Redevelopment Industrial Corporation Agrees to Acquire a 125 Acre Tract of Land in West Virginia

Beacon Redevelopment Industrial Corporation (OTC: BCND) announced it has agreed to acquire a 125 acre tract of land in Lewis County, West Virginia.

The tract of land includes two parcels that include natural gas wells and vast timber; the company intends to capitalize on these assets as well as developing an industrial park or another commercial project on the properties. The properties are located about ten miles from interstate 79 and are right off US 119/33 and have easy access to all major highways.

Beacon Redevelopment in keeping with its business model (multiple assets with development ability at distressed prices) will pay approximately $5,500.00 dollars per acre, the company estimates that the current value in today's real estate market at $8,500.00 to $9,000.00 per acre. The company has received very favorable financing terms and conditions for this acquisition and expects a better then average return on this investment.

"We are very pleased to have been able to acquire these two pieces of land at the price that our representatives negotiated. We will continue to locate and acquire properties that have more then one profit center at very below or distressed market prices," said Adam Marek, President.

Mr. Marek also added "That he would like to thank the attorney's, engineer's, appraisers and company representatives that worked so very diligently to bring this deal to fruition."

MEDQUIST INCORPORATED (NASDAQ: MEDQ)
"Up 38.40% in morning trading"

Detailed Quote: http://www.otcpicks.com/quotes/MEDQ.php

MedQuist, Inc. provides medical transcription technology and services in the United States. It also offers digital dictation, speech recognition, and electronic signature technologies. The company offers DocQment Enterprise Platform, a Web-based dictation and transcription management system, which integrates dictation capture, workflow management, speech recognition, medical transcription, and document distribution. Its maintenance services include onsite maintenance and remote "break-fix" services, as well as application, hardware, and software technical support for its products. In addition, the company offers SpeechQ for Radiology, a front-end speech recognition software application that allows radiologists to dictate, edit, and sign their reports in a single session or send them to an editor following dictation. Further, it offers DocQment Ovation, a Web-based enterprise digital voice capture and transport solution. The company serves health systems, hospitals, and large group medical practices. It also has a collaboration agreement with Philips Medical Systems for product development. The company was founded in 1984 and is headquartered in Mount Laurel, New Jersey. MedQuist, Inc. is a subsidiary of Koninklijke Philips Electronics N.V.

MEDQ News:

August 4 - MedQuist Announces Payment of $2.75 per share Dividend on Common Stock

MedQuist Inc. (Nasdaq: MEDQ) announced the payment of a dividend of $2.75 per share of MedQuist common stock to shareholders of record as of the close of business on July 25, 2008.

As previously announced, certain MedQuist shareholders filed a derivative lawsuit in New Jersey state court seeking to enjoin the payment of the dividend and the closing of the sale by Koninklijke Philips Electronics, N.V. of its approximately 69.5% ownership interest in MedQuist to CBay Systems Holdings, Limited, among other things. On August 1, 2008, the court denied the motion for preliminary injunctive relief in its entirety.

THE DIXIE GROUP INCORPORATED (NASDAQ: DXYN)
"Up 15.79% in morning trading"

Detailed Quote: http://www.otcpicks.com/quotes/DXYN.php

The Dixie Group (www.thedixiegroup.com) is a leading marketer and manufacturer of carpet and rugs to higher-end residential and commercial customers through the Fabrica International, Masland Carpets and Dixie Home brands.

DXYN News:

August 5 - The Dixie Group Reports Second Quarter 2008 Results

The Dixie Group, Inc. (Nasdaq: DXYN) reported financial results for the second quarter and six months ended June 28, 2008. For the second quarter, income from continuing operations was $1,283,000, or $0.10 per diluted share, compared with income from continuing operations of $2,556,000, or $0.20 per diluted share, for the second quarter of 2007. Sales for the second quarter of 2008 were $77,155,000, down 9% from sales of $84,403,000 in the year-earlier quarter.

For the first six months ended June 28, 2008, income from continuing operations was $1,365,000, or $0.11 per diluted share, compared with income from continuing operations of $2,793,000, or $0.21 per diluted share, for the first half of 2007. Sales for the year-to-date period in 2008 were $147,877,000, down 7% from $158,893,000 reported in the prior-year period.

Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, "Declining home sales, difficult credit conditions, contracting consumer confidence, and rapidly rising raw material and energy costs continued to have a negative impact on the carpet industry and on our business. Compared with the prior year’s second quarter, our sales of carpet products declined 6.9%, which was 1.1 percentage point less than the industry’s reported sales decline. Sales of our residential products were down 8.2% while sales of our commercial products declined 4.7%. Our second quarter commercial product sales comparison reflected the effect of an unusually large sale to one customer in the year-earlier quarter. Our commercial product sales rose 2.2%, year-over-year, for the first six months of this year – well ahead of the industry’s commercial sales growth, and grew nicely in the month of July. We continue to expect our commercial product sales to increase for the full year.

“Rapidly rising raw material and energy-related costs compressed our gross margins this year. These costs increased more than 8% in the first half of this year and rose significantly again in July. Lower sales volume also had a negative impact on fixed-cost leverage. We addressed the higher expenses and lower volume by increasing selling prices and implementing cost-reduction initiatives. We increased our selling prices in February, June and again in July of this year to fully recoup the higher expenses experienced to date; however, the higher raw material and energy costs will continue to pressure our margins until all the new selling prices are fully implemented in the fourth quarter of this year. The cost-cutting initiatives reduced our associate headcount by approximately 9% and improved labor productivity. Better material utilization and quality also improved operating performance.

“Because of continuing economic uncertainty, the outlook for the industry and our business remains difficult to predict. Depressed housing sales and tight credit conditions are expected to continue to affect demand for residential carpet products throughout the remainder of this year. Although we believe our commercial product sales will grow this year, we expect their rate of growth to slow by year-end. The new residential and commercial products we have introduced are well positioned and have been well received in the marketplace. We are extremely pleased with our wool collections – their growth and profitability, at both Masland and Fabrica, have exceeded our expectations. Our carpet tile products continue to grow in line with our projections. We expect to continue increasing our market share in 2008 and believe that our business is well positioned to be stronger when industry conditions improve,” Frierson concluded.

During the second quarter of this year, the Company purchased 112,672 shares of its Common Stock at an average price of $7.39 per share, pursuant to the Company’s previously authorized stock repurchase program. In July, the Company purchased an additional 191,508 shares of its Common Stock at an average price of $5.55 per share. Additional repurchases of the Company's Common Stock may be made based on management's review of developing economic conditions and other opportunities. Pending such review, the Company is not making additional repurchases of our Common Stock. The Company's intent is to maintain a relatively conservative capital structure during this period of uncertainty.

The Company’s income from discontinued operations was $3,000, or $0.00 per diluted share, for the second quarter of 2008, compared with a loss of $118,000, or $0.01 per diluted share, for the second quarter of 2007. Including discontinued operations, the Company reported net income of $1,286,000, or $0.10 per diluted share, for the second quarter of 2008 compared with net income of $2,438,000, or $0.19 per diluted share, for the second quarter of 2007. For the first half of 2008, the Company's loss from discontinued operations was $66,000, or $0.01 per diluted share, compared with a loss of $184,000, or $0.01 per diluted share, in the prior-year period. Including discontinued operations, the Company reported net income of $1,299,000, or $0.10 per diluted share, for the first six months of fiscal 2008 compared with net income of $2,609,000, or $0.20 per diluted share, for the year-earlier period.

NEOMEDIA TECHNOLOGIES INCORPORATED (OTCBB: NEOM)
"Up 33.80% in morning trading"

Detailed Quote: http://www.otcpicks.com/quotes/NEOM.php

NeoMedia Technologies, Inc. is the global leader in optically initiated wireless transactions, bridging the physical and mobile world with innovative direct to web technology solutions. To provide a robust high-performance infrastructure for the processing of optical codes NeoMedia extends their offering with award winning Gavitec technology. Located in Germany, Gavitec AG - mobile digit is a leader in development and distribution of mobile scanners and software for mobile applications. In addition, Gavitec provides standardized and individual solutions for mobile marketing, couponing, ticketing and payment systems. To learn more, visit www.neom.com, www.neoreader.com, and www.mobiledigit.de.

NEOM News:

August 4 - NeoMedia Secures $8.7 Million Financing Commitment to Accelerate Implementation Plans

NeoMedia Technologies, Inc. (OTCBB: NEOM), the global leader in mobile barcode scanning, announced that it has received an $8.7 million financing commitment from YA Global Investments, LP — a private investment firm that specializes in structured finance and direct investments, subject to NeoMedia achieving certain agreed upon milestones over the next six months.

The funds will accelerate implementation of NeoMedia's aggressive go-to-market plans under new CEO, Iain McCready. These plans will focus on providing mobile barcode scanning infrastructure to carriers, NeoReader scanning software to handset manufacturers and code implementation products to the advertising community. NeoMedia also offers flexible and creative IP licensing models to enable each of these constituents to develop solutions that enrich the mobile barcode ecosystem.

"We have great confidence in Iain and believe he will be a successful steward of our investment by leveraging NeoMedia's expertise and technology to bring barcode scanning technology into the mainstream. Iain understands the importance of interoperability and standardization in enabling a global ecosystem. More importantly, he understands the path to revenue realization is predicated on disciplined product strategy and operational precision," stated Jerry Eicke, partner at Yorkville Advisors.

"Obviously, we are pleased by Yorkville's continued investment in our business. They have been supportive partners in NeoMedia's efforts to establish a business system the world can embrace. The time is now for NeoMedia to leverage our strong intellectual property, technology solutions and industry expertise to mobilize this mobile barcode ecosystem," stated Iain McCready, CEO of NeoMedia. "It's taken a lot of time and effort to get the vision and relationships in place. Now we are well positioned to execute our product roadmap and provide best-in-class experiences for our customers, partners and consumers."

"By providing access to NeoMedia's IP and championing interoperability, global adoption of mobile barcode scanning can be achieved. Our funding provides NeoMedia with the support needed to develop next generation products and enable global support of its IP licensing efforts," added Jerry Eicke, partner at Yorkville Advisors.

ZYNEX INCORPORATED (OTCBB: ZYXI)
"Up 18.77% in morning trading"

Detailed Quote: http://www.otcpicks.com/quotes/ZYXI.php

Zynex (founded in 1996) engineers, manufactures, markets and sells its own design of electrotherapy medical devices in two distinct markets: standard digital electrotherapy products for pain relief and pain management; and the NeuroMoveTM for stroke and spinal cord injury (SCI) rehabilitation. Zynex's product lines are fully developed, FDA-cleared, commercially sold, and have been developed to uphold the Company's mission of improving the quality of life for patients suffering from impaired mobility due to stroke, spinal cord injury, or debilitating and chronic pain.

ZYXI News:

August 5 - Zynex Announces Increased Orders in July

Zynex, Inc. (OTCBB: ZYXI), a provider of pain management systems and electrotherapy products for medical patients with functional disability, announces an increase in its orders of 185 percent for July of 2008 compared to the same month last year.

Thomas Sandgaard, CEO, commented, "We are excited to see yet another all-time record for orders in a month, especially since July is traditionally a month where many physicians are taking time off for vacation.”

Zynex received 2,041 orders in July 2008 versus 715 orders twelve months ago and 1,930 orders in June 2008. Zynex has not yet finalized its results for the third quarter of 2008, including the impact of increased orders. Zynex will state these results in the Form 10-Q for the quarter.

YOUBET.COM INCORPORATED (NASDAQ: UBET)
"Up 16.13% in morning trading"

Detailed Quote: http://www.otcpicks.com/quotes/UBET.php

Youbet.com is a diversified provider of technology and pari-mutuel horse racing content for consumers through Internet and telephone platforms and is a leading supplier of totalizator systems, terminals and other pari-mutuel wagering services and systems to the pari-mutuel industry through its United Tote subsidiary. Youbet.com's website offers members the ability to watch and, in most states, wager on the widest variety of horse racing content available worldwide. Through this platform, Youbet offers members commingled track pools, live audio/video, up-to-the-minute track information, real-time wagering information, phone wagering, race replays, simultaneous multi-race viewing and value-added handicapping products.

UBET News:

August 4 - Youbet.com Reports Results for the Three and Six-Month Periods Ended June 30, 2008

Reports Income of $2.3 Million from Continuing Operations Before Income Taxes

Youbet.com, Inc. (Nasdaq: UBET) announced results for the three-month and six-month periods ended June 30, 2008. For the three-month period ended June 30, 2008, income from continuing operations before income taxes was $2.3 million, versus a loss of $0.4 million in the prior-year period. Adjusted income from continuing operations before income taxes — which excludes a one-time severance payment — for the three-month period was $3.0 million, compared to an adjusted loss before income taxes of $0.4 million for the prior-year period.

The company is finalizing its evaluation of the impact, if any, of the provisions of the Tax Reform Act of 1986 on the utilization of the company’s net operating loss and tax credit carryforwards for federal tax purposes that may be limited in the three months ended June 30, 2008 and in future periods in the event of changes in ownership, as defined under the relevant federal tax rules. While we expect the evaluation will be completed prior to the filing of the Form 10-Q for the three and six month periods ended June 30, 2008, we are unable to reasonably determine and report net income and earnings per share at this time.

Total revenue at Youbet Express for the three-month period ended June 30, 2008 fell 14% year-over-year to $22.6 million. Despite the decline in revenue, gross profit increased 10% from the same period in 2007 as a result of the company’s efforts to shift handle to higher-yielding content as well as a reduction in network costs. The improvement in gross profit, along with reduced operating expenses, resulted in income from operations before other income (expense) and income taxes of $2.6 million.

For the second quarter of 2008, total revenue at United Tote declined 5%, primarily as a result of a track closing, contract losses and lower handle on existing contracts. As a result of the decrease in revenues and a year-over-year increase in operating expenses, United Tote income from operations before other income (expense) and income taxes for the second quarter of 2008 was essentially breakeven compared to $0.2 million of income from operations in 2007.

Total revenue from continuing operations was $29.2 million, a decrease of 12% from the prior-year period.

Youbet Express revenue was $22.6 million, down 14% from second quarter 2007 based on handle of $113.8 million, a decrease of 13% from the prior-year period. Youbet Express yield in the second quarter of 2008 was 8.1%, an improvement of 140 basis points from the prior-year period primarily as a result of the shift in handle from lower-yielding TrackNet and TVG-exclusive content to higher-yielding tracks.

The decline in handle and revenue at Youbet Express was primarily attributable to the previously announced loss of TrackNet content in May 2007, as well as the previously announced decision to cease accepting wagers from customers in Arizona and Washington D.C. in September 2007 and Kansas in January 2008. Total handle from these sources and on other tracks in the Youbet platform in the second quarter of 2007, but not available in the second quarter of 2008, was $20.4 million.

Youbet Express same-track and same-state handle increased $0.8 million, or 0.8%, from the second quarter of 2007. Youbet Express handle attributable to new content was $3.1 million.

For the second quarter of 2008, totalizator contract revenue at United Tote of $6.3 million was down 5% from the prior-year period, while equipment sales were down slightly compared with 2007. Contract costs decreased 10% compared to the prior-year period to $3.9 million. This decrease was attributable to lower costs as a result of restructuring initiated during the second half of 2007. Gross profit for the first quarter of 2008 decreased 3% over the prior-year period to $2.9 million. The gross profit margin, however, increased to 44.5% from 43.3% as a result of the expense reductions initiated in late 2007.

Total operating expenses associated with continuing operations for the three months ended June 30, 2008 were $9.0 million, a decrease of $2.0 million from the prior-year period. Excluding one-time severance costs of approximately $0.8 million, total operating expenses decreased $2.8 million year-over-year to $8.2 million. Research and development costs of $0.9 million were up $0.1 million from the same period in 2007, primarily due to lower capitalization of internal software costs at United Tote. Sales and marketing costs of $1.2 million were down $2.4 million, or 68%, from 2007 levels due to management’s implementation of a more targeted marketing strategy. Total general and administrative expense, which includes payroll-related costs, transaction processing fees and professional consulting fees, was $5.0 million, an increase of $0.6 million, or 12.5%, in the second quarter of 2008 compared to the second quarter of 2007. The increase is attributable to an approximate $0.8 million severance charge related to the departure of the company’s former interim CEO and a $0.2 million increase in non-cash compensation expense — partially due to the one-time grant of performance-based stock options to the company’s new CEO and to the CEO and the current Chairman for special advisory committee service — that more than offset reduced payroll costs and lower accounting related expenses due to the company’s improved internal control environment. Total non-cash compensation expense in the second quarter of 2008 was $0.4 million compared to $0.2 million in the prior-year period. Excluding the one-time severance expense of approximately $0.8 million, general and administrative expense was $4.2 million, a decrease of 5% from the prior-year period. Depreciation and amortization was $2.0 million, a decrease of $0.2 million, or 10%, compared to the second quarter of 2007, primarily a result of lower depreciation at both Youbet Express and United Tote.

For the second quarter of 2008, the company’s income from continuing operations before income taxes, which includes Youbet Express and United Tote, was $2.3 million, compared to a loss from continuing operations before income taxes of $0.4 million, in the prior-year quarter. For the three-month period ended June 30, 2008, adjusted income from continuing operations before income taxes — which excludes the one-time severance payment — was $3.0 million, compared to a loss from continuing operations before income taxes of $0.4 million for the prior-year period.

Six Months 2008 Operating Results

Total revenue for the six months ended June 30, 2008 declined 13% to $53.8 million from $61.9 million in the prior-year period.

Youbet Express revenue for the first six months ended June 30, 2008 decreased 16% from the prior-year period to $41.8 million, based on handle of $209.2 million — a 14% drop from the comparable period in 2007. Youbet Express yield for the six months ended June 30, 2008 was 8.2%, an improvement of 90 basis points from the prior-year period.

The decline in handle at Youbet Express was primarily attributable to the previously announced loss of TrackNet content as well as the previously announced decisions to cease accepting wagers from customers in Arizona, Kansas and Washington D.C. Total handle from these sources for the six months ended June 30, 2007 was $44.2 million.

Totalizator service revenue for the six months ended June 30, 2008 declined by 2% to $12.0 million from $12.3 million in the prior year, largely due to the year-over-year revenue decline in the second quarter of 2008, as described above under “Segment Results.”

For the six months ended June 30, 2008, total cost of revenue was $32.5 million, a decrease of 20% compared to the prior-year period. Track fees, licensing fees and network costs experienced favorable year-over-year percentage change reductions of 13%, 47% and 22%, respectively. Contract costs for the six months ended June 30, 2008 decreased to $7.4 million from $8.1 million in the comparable prior-year period. Gross profit for the six months ended June 30, 2008 declined slightly to $21.3 million compared to $21.4 million in the prior year.

Total operating expenses associated with continuing operations for the six months ended June 30, 2008 decreased $3.5 million to $17.2 million, a 17% decline from the prior-year period. This includes a sales and marketing cost decrease of $3.3 million, or 58%, from 2007 levels due to management’s implementation of a more targeted marketing strategy. Total general and administrative expense for the six months ended June 30, 2008, which includes payroll-related costs, transaction processing fees and professional consulting fees, was $9.2 million, a decrease of $0.3 million, or 3%, compared to the prior-year period. The decrease is attributable to a reduction in payroll costs and lower accounting-related expenses due to the company’s improved internal control environment more than offsetting a $0.2 million increase in non-cash compensation expense and $0.8 million severance charge for the company’s former interim CEO taken in the second quarter of 2008. Total non-cash compensation expense for the six months ended June 30, 2008 was $0.6 million compared to $0.4 million in the prior-year period. Excluding the one-time severance cost of approximately $0.8 million, general and administrative costs were $8.4 million in the first half of 2008, representing an 11% year-over-year decline.

For the six months ended June 30, 2008, the company’s income from continuing operations before income taxes, which includes Youbet Express and United Tote, was $3.5 million, compared to $0.2 million in the prior-year period. Adjusted income from continuing operations before income taxes – which excludes the one-time severance payment – for the first six months of 2008 was $4.2 million, versus adjusted income from continuing operations of $0.2 million in the same period in 2007.

Capital Resources

During the second quarter, the company did not repurchase any shares; as of June 30, 2008, the company had repurchased a total of 586,766 shares for approximately $1 million. Youbet’s $10 million repurchase program allows the company to repurchase up to two million common shares in total by March 2009.

Subsequent Event

On July 10, the company announced that it would restate its financial statements as of and for the year ended December 31, 2007 and its balance sheet at March 31, 2008. On July 31, 2008, the company filed a Form 10-K/A for the year ended December 31, 2007 and a Form 10-Q/A for the quarter ended March 31, 2008. For more information regarding the restatement, see Note 2 to the consolidated financial statements in each of the Form 10-K/A and Form 10-Q/A.

Reconciliation of Non-GAAP Financial Measures

This release contains disclosure regarding the following financial measures that are not calculated in accordance with GAAP:

1) Adjusted income (loss) from continuing operations before income taxes, which excludes one-time severance costs;

2) Total operating expenses for the three months ended June 30, 2008, adjusted for one-time severance costs;

3) General and administrative expense for the three months and six months ended June 30, 2008, each adjusted for one-time severance costs.

Information needed to reconcile adjusted total operating expenses and adjusted general and administrative expense with total operating expenses and general and administrative expense to the respective most directly comparable GAAP measures appear in the text of the release under “Second Quarter 2008 Operating Results” and “Six Month 2008 Operating Results.” The following table reconciles adjusted income (loss) for continuing operations before income taxes to the most directly comparable GAAP financial measure.

Management believes that each of these non-GAAP financial measures serves as a useful supplemental measure that reflects core business performance by excluding non-recurring severance costs. Management uses these measures to assess year-over-year business segment performance, as well as overall company performance. These measures should not be considered as an alternative to net income as an indicator of our financial performance and may not be comparable to similarly titled measures used by other companies.