UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~March 3031, ~~2005~~2009

o¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to _______________

Commission File Number 0-16530

BRANDPARTNERS GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

DELAWARE	13-3236325
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

10 MAIN ST., ROCHESTER, NEW HAMPSHIRE 03839 ~~(Address of Principal Executive Offices) (603) 335-1400 Registrant’s Telephone number, Including Area Code~~

(Address of Principal Executive Offices)

(603) 335-1400

Registrant’s Telephone number, Including Area Code

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 12 months (or 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.

Yes x No oNo ¨

Indicate by check mark whether the registrant ishas ansubmitted ~~accelerated~~electronically ~~filer~~and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

~~Yes~~Indicate ~~o No~~by check mark whether the registrant is a large accelerated filer, an xaccelerated filer, a non-accelerated filer, or a smaller reporting company.

~~The number~~Large ofaccelerated ~~shares~~filer of¨ ~~common~~Accelerated ~~stock~~filer ~~outstanding~~¨ onNon-accelerated ~~August~~filer 1,x ~~2005~~Smaller ~~was 34,214,326.~~reporting company ¨

~~-1-~~Indicate by check mark whether the registrant is a shell company. Yes ¨ No x

The number of shares of the Company’s common stock outstanding as of May 15, 2009 was 43,823,359.

BRANDPARTNERS GROUP, INC.

TABLE OF CONTENTS

Part I	Financial Statements
Part I Financial Statements
	Item 1 Financial Statements
	Item 1	Financial Statements
	Consolidated Balance Sheets
	June 30, 2005 (unaudited) and December 31, 2004			3
	March 31, 2009 (unaudited) and December 31, 2008		3
	Consolidated Statements of Operations (unaudited) for the
	Six and Three Months Ended June 30, 2005 and 2004			4
	Three Months Ended March 31, 2009 and 2008		4
	Consolidated Statements of Cash Flows (unaudited) for the Six
	Consolidated Statements of Cash Flows (unaudited) for the Three
	Months Ended June 30, 2005 and 2004			5
	Months Ended March 31, 2009 and 2008		5
	Notes to Consolidated Financial Statements (unaudited)		6	6
	Item 2 Management’s Discussion and Analysis of Financial
	Item 2	Management’s Discussion and Analysis of Financial
	~~Condition and Results of Operations~~	Condition and Results of Operations	13	15
	Item 3 Quantitative and Qualitative Disclosures about
	Item 3	Quantitative and Qualitative Disclosures about
	~~Market Risk~~	Market Risk	19	22
	Item 4 Controls and Procedures			22
	Item 4	Controls and Procedures	19
Part II	Other Information
Part II Other Information
	Item 4 Submissions of Matters to a Vote of Security Holders			23
	Item 1A	Risk Factors	19
	Item 5 Other Information			23
	Item 5	Other Information	20
	Item 6 Exhibits			25
	Item 6	Exhibits	20
	Signatures		21

-2-

Part I Financial Statements

Item 1 Financial Information

BrandPartners Group, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

ASSETS	June 30, 2005			December 31, 2004
	March 31, 2009				December 31, 2008
	(unaudited)
Cash	$	546,755		$	2,845,573
ASSETS
Accounts receivable, net of allowance for
Cash	$	1,692,569			$	1,348,271
doubtful accounts of $213,103 and $141,339		7,156,952			5,079,667
Accounts receivable, net of allowance for doubtful accounts of $31,924 and $87,064		4,647,886				7,555,631
Costs and estimated earnings in excess of billings		2696,~~882,244~~450			~~1,079,515~~	986,616
Inventories		738,458			1,326,942
Inventories, net		461,534				640,112
Prepaid expenses and other current assets		~~299~~255,~~703~~352			~~691,158~~	300,416
Total current assets		117,~~624~~753,~~112~~791			~~11,022,855~~	10,831,046
Property and equipment, net		1591,~~672,283~~142			~~1,515,237~~	670,039
Goodwill		24,271,969			24,271,969
Goodwill, net		10,271,969				10,271,969
Deferred financing costs, net		236,029			202,057
Other assets		31,432				31,532
Other assets		300,083			293,818
Total assets	$	18,648,334			$	21,804,586
Total assets	$	38,104,476		$	37,305,936
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current liabilities
Accounts payable and accrued expenses	$	3,136,556			$	4,601,753
Accounts payable and accrued expenses	$	4,611,201		$	5,959,252
Billings in excess of costs and estimated earnings		5,304,930				7,790,590
Billings in excess of cost and estimated earnings		2,384,987			4,729,661
Short term debt		24,803				32,903
Short term debt		4,045,811			3,972,708
Total current liabilities		8,466,289				12,425,246
Total current liabilities		11,041,999			14,661,621
Long term debt, net of current maturities		6,709,137				6,648,041
Long term debt, net of current maturities		7,235,047			5,784,193
Stockholders' equity
Stockholders' equity
Preferred stock, $.01 par value; 20,000,000 shares authorized; none outstanding.		-				-
Preferred stock, $.01 par value; 20,000,000 shares
Common stock, $.01 par value; 100,000,000 shares authorized; issued 38,823,359		388,234				388,234
authorized; none outstanding.		-			-
Additional paid in capital		45,205,677				45,181,302
Common stock, $.01 par value; 100,000,000 shares
Accumulated deficit		(41,855,920	)			(42,573,154	)
authorized; issued 33,651,597 and 31,063,554		336,516			324,976
Accumulated other comprehensive income
Additional paid in capital		44,925,848			44,463,181
Foreign currency adjustment		47,417				47,417
Accumulated deficit		(25,122,434	)		(27,615,535	)
Treasury stock, 100,000 shares at cost		(312,500	)			(312,500	)
Treasury stock, 100,000 shares at cost		(312,500	)		(312,500	)
Total stockholders' equity		3,472,908				2,731,299
Total stockholders' equity		19,827,430			16,860,122
Total liabilities and stockholders' equity	$	18,648,334			$	21,804,586
Total liabilities and stockholders' equity	$	38,104,476		$	37,305,936
The accompanying notes are an integral part of these financial statements.

~~-3-~~The accompanying notes are an integral part of these financial statements.

BrandPartners Group, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

	6 Months Ended			6 Months Ended			3 Months Ended			3 Months Ended
	June 30			June 30			June 30			June 30
	2005			2004			2005			2004
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenues	$	27,120,209		$	26,970,476		$	12,552,178		$	11,294,246
Costs and expenses
Cost of revenues		18,424,801			18,949,880			8,893,051			7,682,761
Selling, general and administrative		5,557,700			4,889,761			2,656,962			2,366,423
Total expenses		23,982,501			23,839,641			11,550,013			10,049,184
Operating income		3,137,708			3,130,835			1,002,165			1,245,062
Other income (expense)
Interest expense, net		(644,601	)		(388,903	)		(318,962	)		(214,364	)
Gain on forgiveness of debt		-			8,326,051			-			-
Total other income (expense)		(644,601	)		7,937,148			(318,962	)		(214,364	)
NET INCOME	$	2,493,107		$	11,067,983		$	683,203		$	1,030,698
Basic and diluted earnings per share
Basic	$	0.07		$	0.39		$	0.02		$	0.03
Diluted	$	0.07		$	0.32		$	0.02		$	0.03
Weighted - average shares outstanding
Basic		33,444,365			28,455,733			33,775,982			31,826,796
Diluted		38,249,362			34,454,547			39,098,928			37,825,610
The accompanying notes are an integral part of these statements.

(unaudited)

-4-

	3 Months Ended			3 Months Ended
	March 31			March 31
	2009			2008

Revenues	$	11,457,636		$	9,247,317

Costs and expenses
Cost of revenues		8,163,442			6,476,887
Selling, general and administrative		2,283,805			1,924,911

Total expenses		10,447,247			8,401,798

Operating income		1,010,389			845,519

Interest expense, net		(274,655	)		(299,073	)

INCOME BEFORE INCOME TAXES		735,734			546,446

Provision for Income Taxes		18,500			10,126

NET INCOME	$	717,234		$	546,446

Basic and diluted earnings per share
Basic	$	0.02		$	0.01
Diluted	$	0.02		$	0.01

Weighted - average shares outstanding
Basic		38,723,359			37,351,930
Diluted		38,993,359			37,675,930

The accompanying notes are an integral part of these financial statements.

BrandPartners Group, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

	June 30,			June 30,
	2005			2004*
	(unaudited)			(unaudited)
Cash flows provided by (used in) operating activities
Net income	$	2,493,107		$	11,067,983
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation and amortization		324,556			294,694
Forgiveness of long term debt		-			(8,326,051	)
Provision for doubtful accounts		30,000			(27,140	)
Non-cash compensation		167,167			73,470
Allowance for obsolete inventory		2,500			-
-
Changes in operating assets and liabilities
Accounts receivable		(2,107,285	)		(2,952,631	)
Costs and estimated earnings in excess of billings		(1,802,729	)		(498,072	)
Inventories		585,984			(1,014,316	)
Prepaid expenses and other current assets		391,455			(168,270	)
Other assets		(6,265	)		5,866
Accounts payable and accrued expenses		(1,191,893	)		2,735,198
Other liabilities		-			(134,942	)
Billings in excess of costs and estimated earnings		(2,344,674	)		(2,485,320	)
Net cash (used in) operating activities		(3,458,077	)		(1,429,531	)
Cash flows (used by) investing activities
Acquisition of equipment		(418,051	)		(172,473	)
Cash flows from financing activities
Net borrowings (payments) on short term debt		580			(1,781,942	)
Net borrowings (payments) on long term debt		1,269,690			-
Proceeds from exercise of options		307,040			75,000
Proceeds from private placement of equity, net of costs		-			2,895,000
Net cash provided by financing activities		1,577,310			1,188,058
NET INCREASE (DECREASE) IN CASH		(2,298,818	)		(413,946	)
Cash, beginning of period		2,845,573			413,946
Cash, end of period	$	546,755		$	-
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	246,942		$	253,239
The accompanying notes are an integral part of the financial statements.
* Reclassified for comparative purposes

(unaudited)

-5-

	3 Months Ended			3 Months Ended
	March 31,			March 31,
	2009			2008

Cash flows provided by (used in) operating activities
Net income	$	717,234		$	536,320

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation		88,694			106,226
Amortization of deferred financing costs		-			19,198
Provision for doubtful accounts		1,000			(32,083	)
Allowance for obsolete inventory		34,797			55,839
Stock-based compensation		24,375			-

Changes in operating assets and liabilities

Accounts receivable		2,906,745			(825,527	)
Costs and estimated earnings in excess of billings		290,166			366,222
Inventories		143,781			(36,474	)
Prepaid expenses and other assets		45,164			120,463
Accounts payable and accrued expenses		(1,465,197	)		(254,350	)
Billings in excess of costs and estimated earnings		(2,485,660	)		(909,001	)

Net cash provided by (used in) operating activities		301,099			(853,167	)

Cash flows (used in) investing activities
Acquisition of equipment		(9,797	)		(31,147	)

Cash flows provided by (used in) financing activities
Net borrowings on short term debt		-			1,225,052
Proceeds from long term debt		66,158			64,241
Payments on long term debt		(13,162	)		(171,182	)

Net cash provided by financing activities		52,996			1,118,111

NET INCREASE IN CASH		344,298			233,797
Effect of exchange rates on cash and equivalents		-			(1,915	)

Cash, beginning of periods		1,348,271			184,504

Cash, end of periods	$	1,692,569		$	416,386

Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	209,405		$	218,260
Cash paid during the period for income taxes	$	29,039		$	64,494

The accompanying notes are an integral part of these financial statements.

BrandPartners Group, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~NOTE A - NATURE OF BUSINESS AND BASIS OF PRESENTATION~~(unaudited)

~~The accompanying~~NOTE ~~unaudited~~A ~~consolidated financial statements of BrandPartners Group,~~– ~~Inc.~~NATURE ~~(“BrandPartners”)~~OF ~~and~~BUSINESS ~~Subsidiaries~~AND ~~(the~~BASIS ~~“Company”)~~OF have been prepared by the Company pursuant to the rules of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America for annual financial statements and should be read in conjunction with our consolidated financial statements and notes for the fiscal year ended December 31, 2004 and filed with the SEC on Form 10-K. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of financial position, results of operations and cash flows. The consolidated statements of operations for the six and three months ended June 30, 2005 are not necessarily indicative of the results expected for the full year.PRESENTATION

The ~~Company~~accompanying ~~currently~~consolidated ~~operates~~financial ~~through~~statements ~~its~~of ~~subsidiaries:~~ BrandPartners ~~Retail~~Group, Inc., (“~~Brand Retail~~BrandPartners”) ~~which~~and ~~was~~Subsidiaries ~~formerly~~(the ~~known~~“Company”) ashave ~~Willey~~been ~~Brothers,~~prepared ~~Inc.;~~by the ~~BrandPartners~~Company ~~Europe,~~pursuant ~~Ltd.~~to ~~(“Brand~~the ~~Europe”);~~rules of the Securities and ~~Grafico~~Exchange ~~Incorporated~~ Commission (“~~Grafico~~SEC”). for ~~The~~quarterly ~~Company~~reports ~~provides~~on ~~services~~Form 10-Q and ~~products~~do tonot include all of the ~~retail~~information ~~financial~~and ~~services~~note ~~industry~~disclosures ~~and~~required ~~other~~by ~~service~~accounting ~~and~~principles ~~traditional~~generally ~~retail~~accepted ~~industries,~~in the ~~consisting~~United States of ~~strategic~~America ~~retail~~for ~~positioning~~annual ~~and~~financial ~~branding,~~statements ~~environmental design~~ and ~~store~~should ~~construction~~be ~~services,~~read ~~retail~~in conjunction ~~merchandising~~with ~~analysis,~~our ~~display~~consolidated ~~systems and~~financial ~~signage,~~statements and ~~point-of-sale~~notes ~~communications~~for ~~and~~the ~~marketing~~fiscal year ~~programs.~~ended ~~Brand Retail~~December ~~provides~~31, ~~these~~2008 ~~services~~filed inwith the ~~United~~SEC ~~States~~on ~~and~~Form ~~Canada~~10-K. The accompanying toconsolidated financial ~~institutions~~ ~~and~~statements ~~retail~~have ~~companies.~~been ~~Brand~~prepared ~~Europe was incorporated~~ in ~~England~~accordance ~~in January~~with ~~2005~~accounting ~~and~~principles ~~has~~generally ~~just~~accepted ~~begun~~in ~~operations.~~the ItUnited ~~provides~~States ~~similar~~of ~~services to~~America ~~the European~~and ~~marketplace.~~include ~~Grafico~~all ~~Incorporated~~adjustments (aconsisting ~~Delaware~~of ~~corporation)~~normal isrecurring aadjustments), ~~new~~which ~~wholly-owned~~are, ~~subsidiary.~~in Onthe ~~May~~opinion 9,of ~~2005~~management, ~~Grafico~~necessary ~~purchased~~for ~~certain~~a ~~assets,~~fair presentation of ~~namely~~financial ~~furniture~~position, results of operations and ~~office~~cash ~~equipment,~~flows. The consolidated statements of aoperations ~~design~~for ~~company.~~the ~~Grafico~~three ~~provides design~~months ended March 31, ~~branding~~2009 are ~~and~~not ~~consulting~~necessarily ~~services~~indicative toof athe ~~specific~~results ~~segment~~expected offor the ~~financial~~entire ~~industry~~year.

~~The~~BrandPartners ~~consolidated~~operates ~~financial~~through ~~statements for the six months and three months ended June 30, 2005 and 2004 include the accounts of BrandPartners and~~ its wholly -owned subsidiaries: ~~Brand Retail, Brand Europe, and Grafico. All significant intercompany accounts and transactions have been eliminated in consolidation.~~

~~The accounting~~BrandPartners ~~policies~~Retail, ~~followed~~Inc. by“Brand ~~the~~Retail” ~~Company~~Building ~~are~~Partners, ~~set~~Inc. ~~forth~~“Build ~~in Note B to the Company’s consolidated financial statements in the Form 10-K for December 31, 2004.~~Partners”

~~NOTE~~BRAND ~~B - GOODWILL AND OTHER INTANGIBLE ASSETS~~RETAIL

~~Goodwill~~Brand ~~represents~~Retail ~~the~~was ~~excess~~formerly ofknown ~~the~~as ~~purchase~~Willey ~~price over the fair value of the net assets acquired and has been amortized on the straight-line basis over a ten year period through December 31~~Brothers, ~~2001~~Inc. On January 116, ~~2002~~ 2001, the Company ~~adopted Statement~~acquired ofthe ~~Financial~~stock ~~Accounting~~of ~~Standards~~Brand ~~(“SFAS”)~~Retail ~~No.~~for ~~142,~~a ~~Goodwill and~~combination ~~Other~~of ~~Intangible Assets and accordingly ceased amortizing its goodwill. In conformance with the standard~~cash, ~~the~~common ~~Company~~stock ~~conducts periodic reviews~~ of the ~~value~~Company, ofoptions ~~its~~to ~~goodwill~~purchase ~~for potential impairment. For~~ the ~~six~~Company’s ~~months ended June 30~~stock, ~~2005~~ and ~~2004, no impairments~~notes ~~were present~~payable. The ~~and~~total nopurchase ~~indications~~price ofwas ~~impairment~~approximately ~~were identified~~$33.1 million.

~~-6-~~BUILD PARTNERS

Build Partners was incorporated in Delaware in January of 2006 and provides general contracting services.

Through its subsidiaries, the Company provides integrated products and services to the financial services industry and other retail markets. Those products and services include:

Strategic retail positioning and branding

Environmental design and constructions services

Retail merchandising analysis, display systems and signage

Point-of-sale communications and marketing programs

These products and services are offered as a complete turnkey package or as individual offerings, based upon the client’s needs.

RISK

We cannot determine at the present time when or if any of these subsidiaries will remain or be profitable in the future. We have relied and continue to rely upon cash payments from our operating subsidiaries to, among other things, pay creditors, maintain capital and meet our operating requirements. Regulations, legal restrictions, and contractual agreements could restrict any needed payments from our subsidiaries. If we were unable to receive cash from our subsidiaries, or from any operating subsidiaries that we may acquire in the future, our operations and financial condition would be materially and adversely affected.

BrandPartners Group, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~NOTE C - RECENT ACCOUNTING PRONOUNCEMENTS~~(unaudited)

InThe ~~November~~accounting ~~2004,~~policies ~~the~~followed ~~Financial~~by ~~Accounting~~the ~~Standards~~Company ~~Board~~are ~~(“FASB”)~~set ~~issued Financial~~forth ~~Accounting Standards (“FAS”) No. 151, Inventory Costs - an amendment of ARB No. 43, Chapter 4. FAS 151 amends the guidance~~ in ~~ARB~~Note ~~No.~~B ~~43, Chapter 4, “Inventory Pricing,”~~ to ~~clarify~~ the ~~accounting for abnormal amounts of idle facility expense, freight, handling~~ ~~costs,~~Company’s ~~and~~consolidated ~~wasted~~financial ~~material~~statements ~~(spoilage).~~in ~~FAS~~its ~~151~~Form ~~requires~~10-K ~~that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of FAS 151 are effective~~ for ~~inventory~~December ~~costs incurred during fiscal years beginning after June 15~~31, ~~2005.~~ ~~The Company has decided to implement FAS 151 on January 1, 2006, and believes that its adoption will not have a material effect on the Company’s results of operations~~2008.

~~In December~~NOTE ~~2004,~~B ~~FASB issued Statement of FAS No. 123(R), Share-Based~~– ~~Payment. FAS 123(R) is a revision of FAS 123~~INVENTORIES, Accounting for Stock-Based Compensation. This statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. This Statement establishes standards for the accounting of transactions in which an entity exchanges its equity instruments for goods or services. The statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. On April 14, 2005, the Securities and Exchange Commission announced a new rule, which amended the compliance dates for FAS 123(R). The new rule allows companies to implement FAS 123(R) at the beginning of their next fiscal year after June 15, 2005. The Company has decided to implement FAS 123(R) on January 1, 2006. If the Company were to continue its present policy for the awarding of stock options, it believes that the adoption of FAS 123(R) may have a material effect on the Company’s financial position or results of operations.NET

~~NOTE~~Inventories Dare priced at the lower of cost (determined by the weighted-average method, ~~SHORT~~which ~~TERM~~approximates ~~DEBT~~first-in, first-out) or market. Inventories consist of the following at:

Short-Term Debt consists of the following:

	March 31, 2009			December 31, 2008
	(unaudited)

Finished goods	$	385,047		$	351,931
Raw materials		186,832			341,058
Work in process		4,889			32,314
	$	576,768		$	725,303
Less - Reserves		(115,234	)		(85,191	)
Total Inventories, Net	$	461,534		$	640,112

	June 30, 2005		December 31, 2004
	(unaudited)
Revolving credit facility (1)	$	3,434,700	$	-
Current maturities of bank term loan (1)		611,111		3,300,000
Note Payable (2)		-		672,708
Total Short Term Debt	$	4,045,811	$	3,972,708

NOTE C – GOODWILL AND DEFERRED FINANCING COSTS

~~(1)~~Goodwill represents Onthe ~~May~~excess 5,of ~~2005,~~the purchase price over the ~~Company~~fair ~~negotiated~~value aof ~~new~~the ~~credit~~net assets ~~facility~~acquired. We (evaluate the ~~“New~~recoverability ~~Facility~~and measure the potential impairment of goodwill under the Financial Accounting Standards (“SFAS”) ~~with~~No. a142 ~~commercial~~Goodwill ~~lender~~and Other Intangible Assets. SFAS ~~The~~No. ~~New~~142 ~~Facility~~requires ~~provides~~that the Company analyze goodwill for impairment on at least an annual basis or if such an event or change in circumstances occur. In assessing the recoverability ~~following:~~of our goodwill, management must make certain assumptions regarding estimated future cash flows and other factors to determine its fair value. If the calculated fair value of the goodwill is less than its carrying value, an impairment loss is recognized in an amount equal to the difference. For the three months ended March 31, 2009 and 2008, no impairment loss was recognized.

·Deferred financing ~~$2,000,000~~costs ~~Term~~are ~~Loan~~being amortized on a straight-line basis over three to seven years, ~~requiring~~which 36represents ~~equal~~the ~~monthly~~life ~~principal~~of ~~payments~~the related debt.

~~· $5,000,000 Revolving Line of Credit Loan~~7

-7-

BrandPartners Group, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~NOTE D - SHORT TERM DEBT~~ (~~continued~~unaudited)

·NOTE D – ~~Prime~~SHORT ~~Rate~~TERM ~~interest on Revolving Line of Credit Loan principal not subject to the LIBOR rate~~DEBT

· LIBOR rate on all of the Term Loan and all or a portion of the outstanding principal on the Revolving Line of Credit Loan. LIBOR rate equals LIBOR plus 250 basis points.

	March 31, 2009		December 31, 2008
	(unaudited)

Capital lease, current portion		20,753	$	20,753
Put warrant (1)		4,050	$	12,150

Total Short Term Debt	$	24,803	$	32,903

~~The New Facility~~On ~~expires on~~ May 5, ~~2008. On June 30,~~ 2005, the ~~LIBOR~~Company ~~rate~~negotiated ~~was~~a ~~5.65% and the~~credit ~~prime~~facility ~~rate~~(the ~~was~~“Facility”) ~~6.25%.~~with a commercial

lender. The ~~prior~~ Facility ~~had~~provides ~~been renegotiated on December 28, 2004 with the Tenth Amendment, which provided~~ for the following:

· ~~Extension~~$2,000,000 ofTerm Loan, ~~Agreement~~which torequired ~~December~~36 ~~31,~~equal ~~2005~~monthly payments

· ~~Monthly principal payments on the term loan of~~ $~~100~~5,000 ~~from January 1~~,000 ~~2005~~Revolving toLine ~~June~~of ~~30, 2005~~Credit

· ~~Reduction~~Prime ofInterest ~~revolving~~Rate ~~credit facility from $2,000,000 to $1,750,000~~ on ~~January~~Term 1,Loan ~~2005,~~principal ~~and~~not ~~further~~subject ~~decrease~~ to ~~$1,500,000 on April 1, 2005.~~LIBOR

· ~~Monthly~~Prime ~~payments~~Rate ofinterest $plus 25~~,000~~ onbasis ~~the~~points ~~previously~~(0.25%) ~~accrued~~on ~~amendment~~Revolving ~~fee~~Line ~~from~~of ~~January~~Credit 1,Loan ~~2005~~principal tonot ~~June~~subject ~~30,~~to ~~2005.~~LIBOR

~~As a~~· ~~part of~~LIBOR ~~the~~equals ~~Amendment,~~LIBOR ~~Brand Retail paid an amendment fee of 0.5% of the obligations on January 3, 2005. Interest was calculated at the bank’s Base Rate~~ plus ~~an applicable~~275 ~~margin.~~basis ~~The~~points ~~interest rate in effect on May 5, 2005 was 9~~(2.2575%~~. The Facility was replaced on May 5, 2005.~~)

~~(2)~~Under Onthe terms ~~July~~of 6,the ~~2004~~agreement, the Company ~~negotiated~~is anrequired ~~unsecured~~to ~~subordinated~~maintain ~~promissory~~certain ~~Note~~financial covenants ~~for~~and ~~$1,000,000~~ratios. At ~~The~~March ~~Note was payable on October 4~~31, ~~2004. However~~2009, ~~50% of~~ the ~~Note~~Company ~~could~~was bein compliance ~~extended~~with tothe ~~January~~covenants 3,and ~~2005~~ratios. The ~~stated~~Facility ~~interest~~expires ~~rate~~on April ~~was~~30, ~~12%~~2010, ~~per~~pursuant ~~annum.~~to ~~With~~an ~~the~~extension ~~issuance~~negotiated ofon ~~the~~March ~~Note~~30, 2009. On aMarch ~~three~~31, ~~(3)~~2009, ~~year~~LIBOR ~~Common~~was ~~Stock~~0.50%, ~~Purchase~~and ~~Warrant~~the ~~(“Purchase~~adjusted ~~Warrant”)~~interest rate was ~~issued~~3.50% tofor ~~purchase~~the uprevolving toline ~~500,000 shares~~ of ~~the Company’s common stock~~credit. At ~~The~~March ~~exercise~~31, ~~price~~2009, approximately ~~of the Warrant Shares was~~ $03.~~68,~~7 ~~the~~million ~~closing~~was ~~price~~available ofunder the ~~stock~~line ~~on the date~~ of ~~the issuance of the Note~~credit. On May ~~Based~~5, on2008, ~~a Black-Scholes valuation of~~ the ~~warrants,~~ $~~105~~2,000,000 ofTerm ~~interest~~Loan ~~expense~~ was ~~recognized~~paid in full.

On ~~September~~ 29March 22, ~~2004~~2007, ~~the~~certain ~~Note~~of ~~and~~ the ~~Purchase~~financial ~~Warrants~~covenants were ~~cancelled.~~waived Inand ~~consideration~~adjusted. As ofpart ~~the cancellation~~ of the ~~Original~~waiver ~~Note~~agreement, athe ~~new~~amount ~~unsecured subordinated~~available ~~promissory Note in~~ under the ~~amount~~Revolving Line of ~~$625,000~~Credit was ~~issued,~~adjusted ~~with~~to ~~interest accruing~~be atthe alesser ~~rate~~ of ~~12%~~(1) ~~per~~$5 ~~annum.~~million ~~The~~or (2) ~~Company~~70% ~~also~~of ~~issued~~acceptable ~~750~~accounts receivable,~~000~~ ~~restricted shares~~plus 50% of ~~common~~the ~~stock~~cost ~~for~~in ~~the~~excess ~~sum~~ of billings ~~$375,0000,~~(capped ~~which~~at ~~was~~$1 ~~applied~~million), asless ~~partial payment~~an toavailable ~~the~~reserve ~~Original Note~~of $250,000. The Prime ~~stock~~Rate interest premium was ~~issued~~increased onto ~~September~~50 ~~29,~~basis ~~2004~~points (0.50%) ~~The price~~for of the Revolving ~~stock~~Line onof ~~the~~Credit ~~date~~and ofto ~~issuance~~25 ~~was~~basis $(0.6325%) ~~per~~points ~~share.~~for ~~The~~the ~~New~~Term ~~Note~~Loan ~~matured on January 6, 2005~~principal.

~~-8-~~On July 13, 2007, the Company’s commercial lender consented to the Company exceeding the revolving line of credit limit on a temporary basis. Effective October 3, 2007 the amount outstanding under the revolving line of credit was reduced and was within the limits provided by the March 28, 2007 amendment to the Company’s banking facility.

BrandPartners Group, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~NOTE D - SHORT TERM DEBT~~ (~~continued~~unaudited)

On ~~January~~November 512, ~~2005,~~2007 the maturity date of the New Note was extended to May 6, 2005. In consideration of the extension, a total of 200,000 common stock warrants could be issued at an exercise price of $0.85 per share, subject to a pro-rata percentage adjustment reducing the number of warrants to be issued if the Company ~~elected~~received ~~to make prepayment(s) of all or~~ a ~~portion~~waiver ~~of the Promissory Note. Fifty-thousand (50,000) warrants were issued on February 7, 2005~~ and ~~March 7,~~ ~~2005,~~adjustment ~~respectively. Interest expense~~ of ~~$85,000, based on a Black-Scholes~~certain ~~valuation,~~financial ~~was~~covenants ~~recorded~~from inits ~~Quarter~~commercial 1,lender ~~2005. On April 7, 2005, 50,000 warrants were issued~~ and anits ~~additional~~subordinated ~~46,667 warrants were issued on May 5, 2005, when~~promissory ~~payment~~note ~~in full of the Note and all accrued interest was made~~holder. ~~Interest expense of $82,167, based on a Black-Scholes valuation, was recognized during the second quarter of 2005. The proceeds from the Note were used for working capital.~~

~~NOTE E~~(1) ~~- LONG~~The ~~TERM~~put ~~DEBT~~warrant is related to the subordinated promissory note in the principal amount of $5,000,000, which is discussed further in Note E (2).

~~Long-Term~~NOTE E ~~Debt~~– ~~consists~~LONG ofTERM ~~the following:~~DEBT

	June 30, 2005			December 31, 2004
	(unaudited)
Bank Term Loan (1)	$	1,333,333		$	-
Note Payable (2)	$	5,000,000			5,000,000
Discount on Note Payable (2)	$	(232,360	)		(232,360	)
Put Warrant Liability (2)		332,000			272,385
Interest payable (2)		802,074			744,168
	$	7,235,047		$	5,784,193

Long Term Debt consists of the following:

(1) See Note D (1).

	March 31, 2009			December 31, 2008
	(unaudited)

Capital lease (1)		47,897			52,959
Note payable (2)		5,000,000			5,000,000
Interest payable		1,681,993			1,615,835
		6,729,890			6,668,794
Less capital lease current portion (1)		(20,753	)		(20,753	)
Total Long Term Debt	$	6,709,137		$	6,648,041

(21) AThe ~~subordinated~~Company ~~promissory~~leases ~~note in~~ the ~~principal~~telephone ~~amount~~system offor ~~$5,000,000~~its ~~was~~main ~~issued~~location onand ~~October~~other ~~22,~~equipment ~~2001~~under tocapital anleases ~~unrelated~~which ~~third~~commenced ~~party~~in 2006. The ~~note~~leases ~~bears~~expire ~~interest at 16% per annum - 12% payable quarterly~~ in ~~cash~~2009 and ~~4% added to the unpaid principal (“PIK amount”)~~2011. The ~~note~~economic ~~matures~~substance onof ~~October 22, 2008, at which time~~ the ~~principal~~leases ~~and~~is ~~all~~that ~~PIK amounts are due. Under~~ the ~~terms of the note, the~~ Company is ~~required~~financing ~~to maintain certain financial covenants. On January 7, 2004,~~ the ~~Company~~acquisition ~~amended and restructured its subordinated note payable. In exchange for a waiver~~ of certain ~~covenants~~assets through ~~December~~the 31leases, ~~2004~~ and aaccordingly, ~~reduction~~they inare ~~the~~recorded ~~interest~~in ~~rate on~~ the ~~note,~~Company’s ~~the~~assets ~~Company~~and ~~issued~~liabilities. toThe ~~the~~lease ~~note-holder~~agreements contain a ~~common~~bargain ~~stock~~ purchase ~~warrant~~option toat ~~purchase~~the ~~250,000~~end ~~shares~~ of the ~~Company’s~~lease ~~common stock at $0~~term.26 ~~per~~For ~~share. The interest rate reduction is for~~ a ~~period~~complete listing of ~~two~~the ~~years~~Company's ~~commencing~~operating ~~January 1~~leases, ~~2004~~see ~~and reduces~~ the ~~interest~~Company’s ~~rate~~Form ~~from 16% per annum to~~ 10~~% per annum~~ -K 8%as ~~payable~~of inDecember ~~cash~~31, ~~quarterly and 2% added to the PIK amount~~2008.

~~-9-~~(2) A subordinated promissory note (“the Note”) in the principal amount of $5,000,000 was issued on October 22, 2001 by an unrelated third party. The Note bears interest at 16% per annum, with 12% payable quarterly in cash and 4% being accreted to the unpaid principal (“PIK amount”). The terms of the Note were modified effective March 30, 2009 whereby the maturity date was extended to October 29, 2010, at which time the principal and all PIK amounts of approximately $7.1 million will be due. Under the terms of the amendment, the Company will be required to make a mandatory prepayment of $1 million on or prior to July 31, 2010. If the Company fails to make the timely payment of $1 million, the accreted principal amount of the Note will then bear interest at a rate of 17% per annum with interest of 13% per annum payable in accordance with the term of the Note and interest of 4% accruing. Under the terms of the Note, the Company is required to maintain certain financial covenants and is in compliance as of March 31, 2009.

BrandPartners Group, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~NOTE E - LONG TERM DEBT~~ (~~continued~~unaudited)

Concurrently and in connection with the 2001 issuance of the ~~note~~Note, the Company issued 405,000 warrants to purchase ~~the~~ common stock of the Company at $0.01 per share. The warrants expire on October 11, 2011 and can be “put” to the Company ~~after the fifth year~~. The transaction has been treated as a debt discount and has been amortized to interest expense over prior periods. A liability for the put warrant has been recorded. Changes to the future fair value of the put warrants are recorded in accordance with SFAS No. 133 and charged to other income (loss). At June 30, 2005 and 2004, the Company had a liability of $332,000 and $220,348, respectively, related to the Put Warrant.

~~NOTE~~The Fwarrant -transaction has been treated as a debt discount and has been amortized ~~FORGIVENESS~~to OFinterest ~~LONG~~expense ~~TERM~~over ~~DEBT~~prior periods. Changes to the future fair value of the “put warrants” are recorded in accordance with FASB No. 133 and charged to selling, general and administrative expenses. As of March 31, 2009 and December 31, 2008, the liability of the put warrant has been disclosed in the amounts of $4,050 and $12,150, respectively, under Short Term Debt (Note D).

~~In July 2004,~~If the Company ~~recognized~~is aunable ~~gain on forgiveness of long term debt related~~ to ~~the~~ ~~2001~~pay ~~purchase of Brand Retail (formerly known as Willey Brothers). On January 20, 2004,~~ the ~~Company~~Put ~~entered~~Warrant ~~into~~repurchase ~~an amended agreement with the former shareholders of Brand Retail which provided for~~price, ~~among other things,~~ the ~~cancellation~~ ~~and~~Put ~~forgiveness~~Note ofcan ~~$7.5 Million notes payable. Upon the signing~~be ~~of the Agreement, two promissory notes were~~ issued, ~~each in the amount of $1,000,000, payable~~ to the ~~former~~holder ~~shareholders~~ of ~~Brand Retail. The $7.5 Million Notes were cancelled and forgiven along with all accrued unpaid interest of approximately $844,000. The balance of~~ the ~~promissory notes was repaid with the payment of $1~~warrants.0 That ~~Million~~Put inNote ~~the~~would ~~aggregate~~have ~~upon issuance of~~ the ~~notes and in~~ ~~two equal~~following installments of $500,000 each on April 15, 2004 and July 14, 2004. Upon payment in full of the promissory notes, the $2.0 Seller Notes and all accrued, unpaid interest on the Seller Notes (approximately $755,000 at July 14, 2004) was cancelled and forgiven and the accrued unpaid earn-out of $500,000 was forgiven. Total gain on forgiveness of debt was approximately $9.1 Million as of July 31, 2004. During the first quarter of 2004, $8.3 Million was recognized as gain on forgiveness of debt. Recovery of the earn-out expense was part of the general and administrative expense.characteristics:

~~NOTE G~~a) ~~- SIGNIFICANT~~Interest ~~CUSTOMERS~~rate of 18% per annum

~~For the six~~b) ~~months~~Due ~~ended June 30, 2005, two customers accounted for approximately 22%,~~ and ~~21%~~payable ofon ~~the~~October ~~Company’s revenues~~29, ~~respectively. For the three months ended June 30, 2005, four customers accounted for approximately 25%, 11%, 11% and 10% of the Company’s revenues, respectively.~~2010

~~For the six~~c) ~~months~~No ~~ended~~financial June 30, 2004, one customer accounted for approximately 10% of the Company’s revenues. For the three months ended June 30, 2004, one customer accounted for approximately 10% of the Company’s revenues.covenants

-10-

BrandPartners Group, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~NOTE H - SUPPLEMENTAL DISCLOSURES FOR STATEMENTS OF CASH FLOWS~~(unaudited)

OnNOTE F ~~April 7,~~– ~~2005~~FAIR ~~and~~VALUE May 5, 2005, using the Black-Scholes valuation model, interest expense of $82,167 was recognized for 96,667 warrants issued as part of an agreement to extend the maturity of a Note Payable. [See Note D (2)]. On February 7, and March 7, 2005, using the Black-Scholes valuation model, interest expense of $85,000 was recognized for 100,000 warrants issued as part of the same agreement. The transactions were accounted for by charging interest expense and crediting additional paid in capital.MEASUREMENTS

OnEffective January 201, ~~2004~~2008, ~~the~~we ~~Company~~adopted ~~entered~~SFAS ~~into~~157, aFair ~~surrender~~Value ~~agreement~~Measurements ~~with~~(SFAS ~~its~~157). SFAS ~~landlord~~157 ~~for~~clarifies the ~~termination~~definition of ~~its~~fair ~~lease at 777 Third Ave.~~value, ~~New~~prescribes ~~York,~~methods ~~New York. In exchange~~ for ~~the termination of its rights and obligations under the lease,~~measuring ~~the~~fair ~~Company paid to the landlord an aggregate of $800~~value,~~000~~ and ~~issued~~establishes toa ~~the landlord~~fair ~~500,000~~value ~~shares~~hierarchy ofto ~~restricted~~classify ~~common stock of~~ the ~~Company~~inputs ~~with cost-free~~used ~~piggyback registration rights. $500,000 was paid upon the signing of the agreement. The balance of $300,000 was paid~~ in ~~three~~measuring ~~equal~~fair ~~payments~~value onas ~~March 1, 2004, September 1, 2004 and March 1, 2005. The shares were valued at $0.55 per share.~~ follows:

~~NOTE~~Level I 1-Inputs are unadjusted quoted prices in active markets for identical assets or ~~COMMITMENTS~~liabilities ~~AND~~available ~~CONTINGENCIES~~at the measurement date.

OnLevel ~~May 12,~~2-Inputs ~~2005,~~are ~~the~~unadjusted ~~Company~~quoted ~~amended~~prices ~~its~~for ~~Employment~~similar ~~Agreement~~assets ~~with~~and ~~James~~liabilities ~~Brooks, the~~in ~~Chief~~active ~~Executive Officer. As part of the amendment~~markets, ~~Mr.~~quoted ~~Brooks’~~prices ~~salary~~for ~~was increased~~identical toor ~~$360,000~~similar ~~per~~assets ~~annum effective April 1, 2005~~ and ~~will~~liabilities ~~be pro-rated~~in ~~for~~markets ~~the~~that ~~balance~~are ofnot ~~the year. Additionally~~active, ~~the~~inputs Company approved a bonus policy for fiscal year 2005 for James Brooks, which ties the bonus schedule to the Company’s operating subsidiaries year-end results. The bonus policy is similar to those approved for other ~~executives~~then inquoted ~~the~~prices ~~Company’s~~that ~~subsidiaries. The~~are ~~agreement had been previously amended on March 15~~observable, ~~2005~~ and ~~provides~~inputs ~~for severance~~derived ~~payments,~~from asor ~~defined~~corroborated inby ~~the~~observable ~~agreement~~market data.

OnLevel ~~April 1,~~3-Inputs ~~2005,~~are ~~the~~unobservable ~~Company~~inputs ~~formed~~which areflect ~~new~~the ~~wholly-owned~~reporting ~~subsidiary,~~entity’s ~~Grafico Incorporated~~own ~~(“Grafico”),~~assumptions ~~a Delaware corporation. Subsequently,~~ on ~~May~~what 9,assumptions ~~2005,~~the ~~Grafico purchased~~market ~~certain~~participants ~~assets~~would ofuse ~~nominal~~in ~~value,~~pricing ~~namely furniture and office~~the ~~equipment,~~asset ofor aliability ~~design~~based ~~company,~~on ~~along with certain nominal liabilities. Grafico is intended to provide design, branding and consulting services to a specific segment of~~ the ~~financial~~best ~~industry.~~available ~~The transaction was accounted for by the purchase method~~information.

AsThe adoption of ~~June~~ ~~30,~~SFAS ~~2005,~~No. ~~the~~157 ~~Company~~did ~~had~~not ~~booked~~have ~~orders,~~a ~~consisting~~material ofimpact ~~signed~~on ~~contracts not yet~~our ~~completed,~~fair ~~for approximately $26 million~~value measurements.

Under the terms of the warrant agreements entered into as part of the private placement completed in February 2002, the Company was obligated to reset the exercise price of the warrants issued under certain conditions. The ~~Company subsequently~~ ~~issued~~following ~~securities~~tables inpresent aour ~~private~~assets ~~placement~~and ~~that~~liabilities closed January 20, 2004. Due to the prior warrant agreements, the exercise price of some of the warrants issued in the February 2002 placement was ratcheted down. Certain holders of other warrants that ~~were~~are ~~issued~~measured inat ~~closings which did not fulfill the requirements~~fair ~~for the~~value ~~ratcheting~~on ~~down have also requested that their warrants be reset or be ratcheted down. Specifically,~~ a ~~total~~recurring ofbasis ~~681,985~~and ~~warrants~~are ~~issued~~categorized inusing ~~closings that occurred in~~ the ~~final~~fair ~~two~~value ~~traunches of the placement completed in February~~hierarchy. ~~2002~~The ~~were~~fair ~~eligible~~value ~~for~~hierarchy anhas ~~adjustment~~three oflevels ~~the~~based ~~exercise~~on ~~price as~~ the ~~January~~reliability ~~20, 2004 share issuance occurred within two years~~ of the ~~closings for those~~inputs ~~warrants.~~used ~~Certain holders of 4,232,421 warrants that were issued in closings more than two years prior~~ to ~~the~~determine ~~January~~fair ~~20, 2004 date have also requested that their warrants be reset or ratcheted down~~value. ~~The Company contends that these warrants should not be reset by virtue of the terms of their warrant agreements.~~

-11-

			Fair Value Measurements at Reporting Date Using
Description	March 31, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Liabilities - Put warrant (See Note E)	$	4,050	$	4,050

Total Liabilities	$	4,050	$	4,050	$	-	$	-

NOTE G – SIGNIFICANT CUSTOMERS

For the three months ended March 31, 2009, one customer accounted for approximately 43% of the Company’s revenue. Accounts receivable for this customer as of March 31, 2009 were $2.3 million. For the three months ended March 31, 2008, one customer accounted for approximately 38% of the Company’s revenue. Accounts receivable for this customer as of March 31, 2008 were $2.6 million.

BrandPartners Group, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~NOTE I - COMMITMENTS AND CONTINGENCIES~~ (~~continued~~unaudited)

NOTE H – COMMITMENTS AND CONTINGENCIES

As of March 31, 2009, the Company had booked orders, consisting of signed contracts not yet completed, for approximately $13.8 million versus $8.6 million as at March 31, 2008.

The Company has provided various representations, warranties and other standard indemnifications in the ordinary course of business, in agreements to acquire and sell business assets and in financing arrangements. The Company is subject to various legal proceedings and claims, which arise in the ordinary course of business.

Management believes the ultimate liability with respect to these contingent obligations will not have a material effect on the Company’s financial position, results of operations or cash flows.

NOTE I J– - STOCK -BASED COMPENSATION

InThe ~~April 2005, directors and employees of the~~ Company ~~were~~did ~~awarded~~not ~~525,000~~grant any stock options as ~~part~~for of the ~~2004~~three ~~Stock~~months ~~Incentive~~ending ~~Plan.~~March ~~The strike price on the options was~~31, ~~the~~2009 ~~share~~nor ~~price~~did ~~upon~~any ~~the date of grant. The~~ options ~~vested immediately and expire five years from the date of issuance~~vest.

~~On April 5,~~In ~~2005~~2008, the ~~Chief~~Company ~~Financial~~awarded ~~Officer~~4,750,000 ~~was~~shares ~~granted~~of ~~75,000~~restricted stock ~~options~~to atkey ~~$0.90~~officers, ~~the~~employees ~~share~~and ~~price~~directors atin accordance with the ~~date~~Company’s 2004 Stock Incentive Plan of ~~grant~~which 1,062,500 shares were subsequently cancelled. Compensation ~~The~~expense ~~options~~for ~~vested~~the ~~immediately~~number ~~and~~of ~~expire~~shares issued is ~~five~~recognized ~~years~~over ~~from~~the two-year vesting period. For the ~~date~~three ofmonth period ~~issuance~~ended March 31, 2009, this expense totaled approximately $24,000. For the three month period ended March 31, 2008, there were no such expenses.

~~Effective~~NOTE J ~~April~~– ~~11,~~INCOME 2005, the Company finalized agreements with five former Directors and officers, as well as one current Director (the “Option Holders”) whereby the Option Holders surrendered an aggregate of 1,050,000 out of 1,400,000 options previously granted to the Option Holders under the Company’s 2001 Stock Incentive Plan at the same strike price as the original option agreement. The Company further agreed to amend the terms of the options by providing a cashless exercise provision. The Company registered the shares of common stock underlying its 2001 Stock Incentive Plan as part of the agreement.TAXES

~~The Company~~At ~~has elected to follow Accounting Principles Board Opinion No. 25 (“APB~~March ~~No. 25”)~~31, ~~Accounting for Stock Issued to Employees~~2009, ~~and related~~ ~~interpretations in accounting for its employee stock options. Under APB No. 25, when~~ the ~~exercise price of employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recorded. The~~ Company ~~disclosed~~utilized ~~information~~net ~~relating~~operating tolosses ~~the fair value of stock-based compensation awards in accordance with Statement of Financial Accounting Standards No. 123~~ (“~~SFAS No. 123~~NOL’s”), ~~Accounting for~~to ~~Stock-Based~~reduce ~~Compensation.~~its ~~The following~~exposure ~~table~~to ~~illustrates~~federal ~~the effect on net~~ income ~~and~~tax ~~loss per share as if the Company had applied the fair value recognition provision of SFAS No~~expense. ~~123. The fair value of each option grant is estimated on the date of grant.~~

~~Using~~The ~~the Black-Scholes~~Company ~~option~~has ~~pricing~~NOL’s ~~model~~of ~~with~~approximately ~~the~~$9.0 ~~following~~million ~~assumptions~~available ~~used~~to ~~for~~offset future ~~grants~~taxable inincome. These ~~the~~NOL’s ~~six~~expire ~~months~~at ofvarious ~~2005~~dates ~~and~~through 2028. At ~~2004~~December 31, ~~respectively:~~2008, 1)the ~~average~~Company ~~expected~~had deferred tax assets of ~~volatility~~approximately $4.1 million. The deferred tax assets consist primarily of ~~351%~~net operating loss carry-forwards and ~~121~~previously accrued reserves.3% Realization of deferred tax assets is dependent upon future earnings, 2)if ~~average~~any, ~~risk-free~~the ~~interest~~timing ~~rates~~and amount of ~~4.22%~~which is ~~and 2~~uncertain.~~97%~~ Accordingly, ~~and~~the 3)deferred ~~expected~~tax ~~lives~~assets have been fully offset by a valuation allowance of ~~five~~the ~~years~~same ~~for~~amount. Pursuant to Section 382 of the ~~six~~Internal ~~months~~Revenue ~~and~~Code, ~~three~~NOL ~~months~~carry-forwards may be limited in ~~ended~~use ~~June~~in ~~30,~~any ~~2005~~given year in the event of a significant change in ownership.

~~-12-~~There may be state tax expense in certain states where the tax statutes do not recognize or do limit the use of NOL’s.

~~BrandPartners~~NOTE K ~~Group,~~- ~~Inc.~~SUBSEQUENT ~~and Subsidiaries~~EVENTS

~~NOTES~~On May TO14, 2009, the Company entered into a subscription agreement with an accredited ~~CONSOLIDATED~~investor ~~FINANCIAL~~in ~~STATEMENTS~~reliance on the exemption from registration provided by Section 4(~~Continued~~2) under the Securities Act of 1933 and in reliance of similar exemptions under applicable state securities laws for the sale of 1,000,000 shares of common stock at the then fair market value as quoted on the Over the Counter Bulletin Board.

~~NOTE~~In May J2009, -the Company entered into consulting and/or service agreements that ~~STOCK~~provided ~~BASED~~for ~~COMPENSATION~~the ~~(continued)~~issuance of 1,500,000 shares of restricted common stock as a portion of the consideration.

~~NOTE~~In May K2009, -the Company issued an aggregate of 2,600,000 shares of restricted common ~~INCOME~~stock ~~TAXES~~to officers and directors as well as employees of it’s wholly owned subsidiary BrandPartners Retail pursuant to it’s 2004 Stock Incentive Plan.

For the six months ended June 30, 2005, income taxes of approximately $1,151,000 were offset by net operating loss carry-forwards. At December 31, 2004, the Company had net operating loss carry-forwards (“NOL’s”) of approximately $9.3 million available to offset future taxable income. These NOL’s expire at various dates through 2024. At December 31, 2004, the Company had deferred tax assets of approximately $2,579,000. The deferred tax assets consist primarily of net operating loss carry-forwards and accrued expenses. Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which is uncertain. Accordingly, the deferred tax assets have been fully offset by a valuation allowance of the same amount. Pursuant to Section 382 of the Internal Revenue Code, NOL carryforwards may be limited in use in any given year in the event of a significant change in ownership. 12

-13-

BrandPartners Group, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE L - STOCKHOLDERS’ EQUITY

On February 2, 2004, the Company completed a private placement of equity. The Company received net proceeds from the private placement of approximately $2,900,000 and issued 12,400,001 shares of common stock. The proceeds from the private placement were used to reduce certain debt and obligations, repay the balance of a term loan, and for working capital.

NOTE M - SUBSEQUENT EVENTS

At the August 2, 2005 meeting of the Board of Directors of the Company, the board ratified the employment agreement between the Company and Suzanne Verrill, the Chief Financial Officer, effective as of June 30, 2005.

-14-

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

LIQUIDITY AND CAPITAL RESOURCES

As of ~~June~~March 3031, ~~2005~~2009, the Company had a working capital ~~(current~~deficit ~~assets, less current liabilities)~~ of approximately $~~582~~(712,000), stockholders’ equity of approximately $193.5 million,~~827,000,~~ and a current ratio ~~(current~~of ~~assets~~approximately .92 to ~~current liabilities) of approximately~~ 1.~~05:1.~~ At December 31, ~~2004~~2008, the Company had a working capital deficit of approximately $3(1.6 million),~~640,000,~~ stockholders’ equity of approximately $162.7 million,~~860,000~~ and a ~~working~~current ~~capital~~ ratio of approximately .~~75:~~87 to 1. This ~~The~~change ~~increase~~ in working capital ~~was~~arises ~~due~~primarily tofrom annet income, ~~increase in accounts receivable and~~ a decrease in ~~accounts~~ ~~payable.~~billing ~~The~~in ~~Company~~excess isof acosts ~~contract-driven business,~~ and ~~its~~estimated ~~working capital~~earnings ~~position is affected by the large contract cash deposits, which are invoiced to customers,~~ and ~~to the large invoices owed to vendors, all of which~~a ~~are~~decrease ~~dependent~~in ~~upon~~accounts ~~the~~payable ~~size~~ and ~~nature~~accrued ~~of the project(s)~~expenses.

As of ~~June~~March 3031, ~~2005~~2009, the Company had cash of approximately $~~547,000~~1. 7 million. As of December 31, ~~2004~~2008, the Company had cash of approximately $~~2,846,000~~1.3 million.

For the ~~six~~three months ended ~~June~~March 3031, ~~2005~~2009, the net cash ~~(used~~provided ~~in)~~by operating ~~activities~~ of activities amounted to approximately ($0.3 million,~~458,100)~~ ~~noted~~which resulted primarily from net income before non-cash expenses of $0.9 million and by a decrease in ~~the~~accounts ~~Statement~~receivable of ~~Cash~~$2.9 ~~Flows~~million. ~~consisted~~This was offset by a decrease in billings in excess of costs and estimated earnings ($2.5 million) and a ~~the following:~~decrease in accounts payable and accrued expenses ($1.5 million).

·Due ~~Decrease~~to the innature ~~cash~~of ~~required~~the project accounting used for large contracts, all vendor and labor costs are entered on the balance sheet until the associated revenue is recognized. Upon revenue recognition, the associated expenses and profit are transferred to ~~pay~~the statement of operations. The Cost and estimated earnings in excess of billings account reflects the costs which have been incurred by the Company with resultant revenue recognition in completing a contractual ~~obligations~~obligation, which according to the terms of the contract, cannot be invoiced as of the end of the fiscal period and is therefore an asset since those charges will be invoiced in the future. Its companion account, Billings in excess of costs and estimated earnings, reflects the balance of those invoices to clients for which work to the level of the billing deposits has not yet occurred. Thus, a liability exists on the balance sheet for the obligation on the part of the Company to perform work to the level of the deposits invoiced to the client. Due to the size of the contracts, these accounts can fluctuate considerably as of the end of the fiscal period and during the interim periods.

·The accompanying ~~Increase~~consolidated inbalance ~~Accounts~~sheets ~~Receivable~~include the following captions at:

· Decrease in Accounts Payable/Accrued Expenses. While Accounts Payable actually increased, several accruals were paid out or adjusted including accrued bonus, and contractually required fees.

	March 31,			December 31,
	2009			2008			Difference
	(unaudited)
Cost and estimated earnings in excess of billings	$	696,450		$	986,616		$	(290,166	)
Billings in excess of costs and estimated earnings		(5,304,930	)		(7,790,590	)		2,485,660

Totals	$	(4,608,480	)	$	(6,803,974	)	$	2,195,494

·We ~~Change~~used cash inflows ~~Costs/Billings and Estimated Earnings in Excess of Billings due~~ to ~~timing~~principally ~~differences~~fund ~~on major contracts between revenue recognition and invoicing of monies due for work performed because of~~ the ~~terms~~acquisition of ~~the~~equipment ~~contracts.~~amounting ~~Cost in Excess increased~~ to approximately $~~1.8~~9,800 ~~million~~during ~~and Billings in Excess decreased approximately $2.3 million. The large swings in these accounts are typical due to~~ the ~~contract~~three ~~nature~~months ofended ~~the~~March ~~Company’s~~31, ~~business~~2009.

~~Net~~ Our cash ~~(used~~flows ~~in)~~provided ~~investing~~by financing activities ~~was~~were ~~approximately~~the ~~$(418,100)~~result ~~for~~of ~~the~~payments ~~purchase~~on long-term debt of ~~new~~ ~~equipment~~$13,000 offset by proceeds from long-term debt of $66,000.

Net cash provided by financing activities was approximately $1,577,000 from the new credit Facility ($1,270,000) with a commercial lender [see Note D(1)], and the exercise of stock options for $307,000.13

INDEBTEDNESS

~~THE~~BRANDPARTNERS ~~BRAND RETAIL~~CREDIT FACILITY

~~On January 11, 2001, the Company’s wholly owned subsidiary,~~ BrandPartners ~~Retail,~~ ~~Inc.~~negotiated ~~(formerly known as Willey Brothers, Inc.), established~~ a ~~loan~~credit facility (the “Facility”) with a ~~third~~commercial ~~party.~~lender ~~The Facility was replaced on~~ effective May 5, 2005. The byFacility ~~a credit~~provides ~~facility~~for ~~between~~ the ~~Company and a commercial lender.~~following:

~~-15-~~· $2,000,000 Term Loan, which required 36 equal monthly payments

BRANDPARTNERS FACILITY

BrandPartners Group, Inc. and its wholly owned subsidiaries completed a credit facility arrangement (the “Facility”) with a commercial lender effective May 5, 2005. The Facility provides for the following:

· Repayment of previous Brand Retail Facility

· $2,000,000 Term Loan with 36 equal monthly payments

$5,000,000 Revolving Line of Credit

· Prime ~~rate~~Interest ~~interest~~Rate on ~~revolving~~Term ~~line~~Loan ofprincipal ~~credit~~ not subject to LIBOR ~~rate~~

· ~~LIBOR~~Prime ~~rate~~Rate oninterest ~~Term~~plus ~~Loan~~25 ~~and~~basis ~~portion~~points of(0.25%) on Revolving Line of Credit ~~(LIBOR~~Loan ~~rate~~principal ~~equals~~not ~~LIBOR~~subject ~~plus~~to ~~250 basis points)~~LIBOR

· ~~Expiration~~LIBOR ~~date~~equals ofLIBOR ~~May~~plus 5,275 ~~2008~~basis points (2.75%)

Under the terms of the agreement, the Company is required to maintain certain financial covenants and ratios. The Facility expires on April 30, 2010, pursuant to an extension negotiated on March 30, 2009. On March 31, 2009, LIBOR was 0.50%, and the adjusted interest rate was 3.50% for the revolving line of credit. At March 31, 2009, approximately $3.7 million was available under the line of credit. On May 5, 2008, the $2,000,000 Term Loan was paid in full.

On March 22, 2007, certain of the financial covenants were waived and adjusted. As part of the waiver agreement, the amount available under the Revolving Line of Credit was adjusted to be the lesser of (1) $5 million or (2) 70% of acceptable accounts receivable, plus 50% of the cost in excess of billings (capped at $1 million), less an available reserve of $250,000. The Prime Rate interest premium was increased to 50 basis points (0.50%) for the Revolving Line of Credit and to 25 basis (0.25%) points for the Term Loan principal.

On July 13, 2007, the Company’s commercial lender consented to the Company exceeding the revolving line of credit limit on a temporary basis. Effective October 3, 2007, the amount outstanding under the revolving line of credit was reduced and was within the limits provided by the March 28, 2007 amendment to the Company’s banking facility.

On November 12, 2007, the Company received a waiver and adjustment of certain financial covenants from its commercial lender and its subordinated promissory note holder.

Effective March 30, 2009, the Company entered into an amendment to it’s Loan Agreement with it’s commercial lender whereby it’s revolving facility was renewed. The line of credit as renewed continues to be a demand facility subject to the terms and conditions of the Company’s Loan Agreement and Revolving Line of Credit.

If for any reason the Company defaults on the Facility, the amount outstanding under the Facility becomes due and payable, and the lender has the right to proceed against the collateral granted to secure the indebtedness under the Facility, including substantially all of the assets of BrandPartners.

THE BRAND RETAIL SUBORDINATED NOTE PAYABLE

OnA ~~October 22, 2001, Brand Retail issued a~~ subordinated promissory note (“the Note”) in the principal amount of $5,000,000 was ~~(the~~issued ~~“Brand~~on ~~Retail~~October ~~Subordinated~~22, ~~Note~~2001 ~~Payable”)~~by ~~to a~~an unrelated third party. The ~~note~~ Note bears interest at 16% per annum, with 12% payable asquarterly in cash and 4% being ~~follows:~~accreted to the unpaid principal (“PIK amount”). The Note matures on October 29, 2010, at which time the principal and all PIK amounts of approximately $7.1 million will be due. Under the terms of the Note, the Company is required to maintain certain financial covenants and is in compliance as of March 31, 2009.

·Concurrently and ~~12%~~in onconnection ~~accreted~~with ~~principal~~the ~~amount~~2001 issuance of the Note, ~~payable~~the inCompany ~~cash~~issued ~~quarterly~~405,000 warrants to purchase common stock of the Company at $0.01 per share. The warrants expire on October 11, 2011 and can be “put” to the Company.

·The warrant 4%transaction onhas ~~the~~been ~~accreted~~treated ~~principal~~as ~~amount,~~a ~~added~~debt discount and has been amortized to ~~principal~~interest (expense over prior periods. Changes to the future fair value of the “~~PIK~~put ~~amount~~warrants”) are recorded in accordance with FASB No. 133 and charged to selling, general and administrative expenses.

~~The balance~~At ~~of the note at June 30, 2005 was $5,802,074, including PIK interest~~March ~~of $802~~31,~~074.~~ On2009 ~~January 7, 2004, when the closing price of the Company’s common stock was $0.70, the Company amended~~ and ~~restructured its subordinated note payable. In exchange for a waiver of certain covenants through~~ December 31, ~~2004 and~~ ~~a reduction in the interest rate on the note~~2008, the Company ~~issued~~had ~~to the note-holder~~ a ~~common~~liability ~~stock purchase warrant to purchase 250,000 shares~~ of ~~the Company’s common stock at~~ $~~0.26 per share. The interest rate reduction is for a period of two years~~4,050 ~~commencing January 1, 2004~~ and ~~reduces the interest rate~~ ~~from~~$12,150 ~~16%~~related ~~per annum~~ to ~~10% per annum - 8% payable in cash quarterly and 2% added to~~ the ~~PIK~~“put ~~amount~~warrants,” respectively.

~~The note matures~~If ~~on October 22, 2008, at which time~~ the ~~principal and all PIK amounts~~ ~~are due.~~Company ~~The~~is ~~funds~~unable ~~were used for working capital and~~ to ~~reduce~~pay the ~~balance of the Term Loan. Concurrently, and in connection with the issuance of the Brand Retail Subordinated Note Payable, the Company issued a common stock purchase warrant (the “~~Put Warrant”) torepurchase ~~purchase 405~~price,~~000~~ ~~shares of common stock of~~ the ~~Company at an exercise price of $0.01. The~~ Put ~~Warrant~~Note ~~expires on October 22, 2011 and~~ can be issued ~~put~~ to the ~~Company~~holder ~~after~~of the ~~fifth year, or earlier under certain conditions, based on certain criteria~~warrants. That ~~The~~Put ~~Company~~Note iswould ~~also~~have ~~required to maintain compliance with certain financial and other covenants. At June 30, 2005,~~ the ~~Company had~~ ~~a long-term~~following ~~liability of approximately $332,000 related to the Put Warrant.~~characteristics:

~~On September 30, 2003, in consideration for the extension of an interest payment due date, the Company issued~~ (a) ~~common~~Interest ~~stock~~rate ~~purchase warrant to purchase 10,000 shares~~ of ~~common~~18% ~~stock~~per ~~of the Company at an exercise price of $0.24, the closing price on the date of issuance. The terms are similar to those on the Put Warrant.~~ annum

~~-16-~~(b) Due and payable on October 29, 2010

~~BRANDPARTNERS GROUP~~(c) ~~SUBORDINATED~~No ~~NOTE~~financial covenants

OnAs part ~~July 6,~~of ~~2004~~the extension and amendment, the ~~Company~~terms ~~negotiated~~of anthe ~~unsecured~~Note ~~subordinated~~were ~~promissory~~modified ~~note~~so ~~for~~that the ~~$1,000,000.~~Company ~~The~~will ~~stated~~be ~~interest~~required ~~rate~~to ~~was~~make ~~12%~~a ~~per~~mandatory ~~annum.~~prepayment ~~With~~of ~~the~~$1 ~~issuance~~million ofon or ~~the note,~~prior ato ~~three-year~~July ~~Common~~31, ~~Stock~~2010. ~~Purchase~~If ~~Warrant~~the ~~was~~Company ~~issued~~fails to ~~purchase~~make uptimely prepayment of $1 ~~to 500~~million,~~000~~ ~~shares~~the accreted principal amount of the ~~Company’s~~Note ~~common~~will ~~stock~~then bear interest at ~~$0.68,~~a rate ~~the~~of ~~closing~~17% ~~price~~per annum with interest of ~~the~~13% per annum payable quarterly in cash ~~stock~~and on4% ~~the~~being ~~date~~accreted ofto the ~~issuance~~unpaid ofprincipal ~~the~~(“PIK ~~note~~amount”).

OnWhile we ~~September~~are ~~29,~~seeking ~~2004,~~to ~~the~~modify ~~Note~~terms ~~and~~of the ~~Purchase~~facility, ~~Warrants~~if ~~were~~we ~~cancelled.~~are ~~In consideration~~unable ofto ~~the~~modify ~~cancellation~~same ofor make ~~the~~payment ~~original~~on ~~note,~~this afacility ~~new~~at ~~unsecured subordinated~~any ~~promissory~~time ~~note~~or inat the ~~amount~~maturity date of ~~$625~~same,~~000~~ ~~was~~or ~~issued, with interest~~if ~~accruing~~we atare ~~12%~~unable ~~per~~to ~~annum.~~abide ~~The~~by ~~Company~~the ~~also~~financial ~~issued~~covenants ~~750,000 restricted shares~~ of ~~common~~ ~~stock on September 29, 2004 for~~ the ~~sum of $375~~facility,~~000,~~ ~~which~~we ~~was~~may ~~applied~~be ~~as partial~~deemed ~~payment~~in todefault ~~the original note. The price~~ of the ~~stock~~subordinate onloan ~~the date of issuance was $0~~agreement.~~63 per share. The new note matured on January 6, 2005.~~

On January 5, 2005, the maturity date of the new note was extended to May 6, 2005. In consideration of the extension, a total of 200,000 common stock warrants could be issued at an exercise price of $0.85 per share subject to a pro rata percentage adjustment reducing the number of warrants to be issued if the Company elected to make prepayments against the note. A total of 100,000 warrants were issued - 50,000 on February 7, 2005 and 50,000 on March 7, 2005. Interest expense of $85,000 was recorded in Quarter 1 based on a Black-Scholes valuation of the warrants. On April 7, 2005, 50,000 warrants were issued. On May 5, 2005, the subordinated note and all applicable interest were paid in full, and an additional 46,667 warrants were issued. Interest expense of approximately $84,000 was recorded in Quarter 2 based on a Black-Scholes valuation of the warrants. The proceeds of the note were used for working capital purposes.15

LIQUIDITY ISSUES

On February 2, 2004, the Company completed a private placement of equity. The Company received net proceeds from the private placement of approximately $2,900,000 and issued 12,400,001 shares of common stock. The proceeds from the private placement were used to reduce certain debt and obligations as described below and to repay the balance of the term loan. The balance of the proceeds was used for working capital.

On January 20, 2004, in conjunction with the closing of the first traunch of the private placement, the Company entered into a new agreement with the former shareholders of Brand Retail (the “Agreement”). The Agreement provided for, among other things:

· $7.5 Million Seller Notes were cancelled and forgiven

· All accrued unpaid interest on the Seller Notes of approximately $844,000 was cancelled and forgiven

· $2.0 Million Seller Notes were maintained in escrow and were cancelled upon payment in full of the promissory notes.

· Two new promissory notes were issued, each in the amount of $1.0 million, payable to the former shareholders of Brand Retail.

· Payment of $1.0 million was made to the former shareholders of Brand Retail against one of the 24-Month Notes.

-17-

The balance of the new promissory notes was paid on April 15, 2004 and July 14, 2004. Upon payment in full of the promissory notes:

· All accrued, unpaid interest on the $2.0 Million 24-Month Notes (approximately $755,000 at July 14, 2004) was cancelled and forgiven

· Accrued, unpaid earn-out of $500,000 was forgiven

On January 20, 2004, in conjunction with the private placement, the Company entered into a surrender agreement with its landlord for the termination of its lease at 777 Third Ave., New York, New York. In exchange for the termination of its rights and obligations under the lease, the Company agreed to:

· Pay the landlord an aggregate of $800,000

· Issue to the landlord 500,000 shares of restricted common stock of the Company with cost free piggyback registration rights

Upon the signing of the agreement, $500,000 was paid. The balance of the fee was paid in three equal installments of $100,000 each on March 1, 2004, September 1, 2004 and March 1, 2005. The shares were valued at $0.55 per share, the closing price of the stock on February 9, 2004, the date the stock was issued. The terminated lease had an expiration date of December 31, 2009 with minimum lease rentals of approximately $637,000 in 2004 and $671,000 annually through 2009

The Company’s ability to generate cash flow from operations sufficient to make scheduled payments on its debts as they become due will depend on its future performance and the Company’s ability to successfully implement business and growth strategies. The Company’s performance will also be affected by prevailing economic conditions. Many of these factors are beyond the Company’s control. If future cash flows and capital resources are insufficient to meet the Company’s debt obligations and commitments, the Company may be forced to reduce or delay activities and capital expenditures, obtain additional equity capital or restructure or refinance its debt. In the event that the Company is unable to do so, the Company may be left without sufficient liquidity, and it may not be able to meet its debt service requirements. In such a case, an event of default would occur and could result in all of the Company’s indebtedness becoming immediately due and payable.

COMMITMENTS AND CONTINGENCIES

As of ~~June~~March 3031, ~~2005,~~2009 booked orders for the company, consisting of signed contracts not yet completed, ~~for~~ ~~the Company~~ totaled approximately $2613.8 million versus $8.6 million as at March 31,~~000,000~~ 2008.

Management believes the ultimate liability with respect to these contingent obligations will not have a material effect on the Company’s financial position, results of operations or cash flows.

OFF BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements that provide financing, liquidity, market or credit risk support or involve leasing, hedging or research and development services for our business or other similar arrangements that may expose us to liability that is not expressly reflected in the financial statements, except for facilities operating leases.

As of March 31, 2009, we did not have any relationships with unconsolidated entities or financial partnerships, often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such we are not subject to any material financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

RESULTS OF OPERATIONS

~~SIX~~THREE MONTHS ENDED ~~JUNE~~MARCH 3031, ~~2005~~2009 COMPARED TO ~~SIX~~THREE MONTHS ENDED ~~JUNE~~MARCH 3031, ~~2004~~2008

REVENUES: Revenues are recognized as products and services are delivered. If ~~For~~the ~~construction~~Company ~~projects,~~is ~~this~~managing ~~means using~~ the ~~percentage~~project ~~of completion method. Revenues~~ for ~~the first~~ ~~six~~its ~~months~~customers, ofthese ~~2005~~services asand ~~compared~~their ~~to 2004 increased slightly. Fiscal year~~related ~~2004~~products ~~produced~~are ~~the~~accounted ~~highest revenues in the Company’s history. The Company has been able to maintain revenues~~ for ~~2005~~using at the ~~same~~percentage ~~level. Revenues recognized in any period depend upon a number~~ of ~~factors, including but not limited~~completion ~~to:~~method.

·Revenues for ~~Design,~~the ~~manufacturing~~first orthree ~~construction~~months ~~times~~of ~~given~~2009 compared to the ~~scope~~first three months of ~~each~~2008 increased ~~project~~by 24%, or approximately $2.2 million, which was primarily due to new projects being signed and delivered in the first quarter of 2009.

~~-18-~~COST OF REVENUES: Cost of revenues increased 26% or approximately $1.7 million primarily due to higher revenues in the first three months of 2009 versus the same 2008 period. In addition, due to the change in our product and services mix, our cost of revenues as a percentage of revenue was 71% for the first three months of 2009 as compared to 70% for the first three months of 2008.

·SELLING, GENERAL ~~Customer’s~~& ~~required~~ADMINISTRATIVE ~~delivery dates~~EXPENSES: Selling, ~~which~~general ~~may~~and administrative ~~change~~expenses (SG&A) amounted to approximately $2.3 million in ~~each~~the first ~~project~~three months of 2009 versus $1.9 million for the same period in 2008, an increase of approximately $359,000 or 19%. The increased SG&A expense was principally due to increased costs including compensation (approximately $183,000), professional fees (approximately $72,000) and other general overhead costs.

·OPERATING INCOME: Operating ~~New~~income ~~projects~~for ~~signed~~the ~~and~~first ~~delivered~~three months of 2009 in the amount ~~same~~of ~~quarter~~$1.0 million increased approximately $165,000 or 19.5% due to the factors noted above.

~~COST~~INTEREST ~~OF REVENUES~~EXPENSE, NET: Interest ~~Cost~~expense, ofnet ~~revenues~~for ~~from~~the ~~continuing~~three ~~operations~~months ~~decreased~~ended ~~approximately~~March ~~$525~~31,~~000~~ ~~(3%).~~2009 ~~Cost~~decreased ofby ~~revenues~~approximately ~~for~~$24,000 ~~the~~or ~~first~~8% ~~six~~versus ~~months~~the ofsame ~~2005~~period ~~was~~in ~~approximately~~2008. ~~68%~~This ofwas ~~revenue.~~due ~~For~~to the ~~first~~term ~~six~~loan ~~months~~being ofpaid ~~2004,~~in ~~the~~full ~~cost~~May ~~of revenues~~5, ~~was~~2008 ~~approximately~~and ~~70%.~~also ~~Product~~due to ~~mix~~improved iscash aflow, ~~determining~~which ~~factor~~resulted ~~when comparing~~in ~~cost~~less use of ~~revenues~~the toline ~~revenue~~of credit.

~~SELLING,~~NET ~~GENERAL & ADMINISTRATIVE EXPENSES~~INCOME: Net ~~Selling,~~income ~~general and administrative expenses~~ for the first ~~six~~three months of ~~2005~~2009 ~~increased~~ of approximately $~~668~~717,000 ~~or 14%.~~ ~~Relationship~~compares ~~selling~~to is a ~~critical~~net ~~component~~income of ~~the Company’s success. Besides devoting time and energy to current projects~~$546,000 ~~the~~for ~~Company’s sales force is working aggressively to develop new clients and markets. The number of sales personnel increased during~~ the ~~period~~first ~~to work on the above initiatives and~~three ~~to help~~months ~~us further penetrate the market. Wages increased due to the hiring~~ of ~~additional~~ ~~personnel~~2008, ~~with~~an ~~related~~increase ~~increases~~of ~~in travel and administrative expense~~$171,000. Marketing expense increased with the Company’s renewed focus on trade show activity. The above expenses were offset by the decrease in bonus expense due to the previously accrued bonus not being distributed entirely to personnel.

OPERATING INCOME: Operating income for the first six months of 2005 increased slightly by $7,000 due to the factors noted above, namely the increase in revenue of approximately $150,000 with an approximate $525,000 decrease in cost of revenues, offset by an increase of $668,000 in selling, general and administrative expenses.

OTHER INCOME (EXPENSE): Other Income (Expense) decreased approximately $8.3 million due to a gain in forgiveness of debt from the former shareholders of Brand Retail being recognized in 2004. Interest expense increased approximately $256,000 due to the increased interest rate on the prior Credit Facility and additional fee assessments required by the amended agreement with the prior commercial lender,

NET INCOME: Net income from operations decreased 8% or approximately ($204,000) due to the decrease in the cost of revenue offset by the increase in sales, general and administrative expense. Net income for the Company decreased approximately $8.6 million due to the forgiveness of debt in 2004 from the former shareholders of Brand Retail.

THREE MONTHS ENDED JUNE 30, 2005 COMPARED TO THREE MONTHS ENDED JUNE 30, 2004

REVENUES: Revenues increased approximately $1.3 million or 11% for the second quarter of 2005 as compared to 2004. Revenues recognized in any period depend upon a number of factors, including but not limited to:

· Design, manufacturing or construction times given the scope of each project

· Customer’s required delivery dates, which may change in each project

· New projects signed and delivered in the same quarter

COST OF REVENUES: Cost of revenues from operations increased approximately $1.2 million or 16% for the three months ended June 30, 2005. As a percentage of revenue, the cost of revenues for the second quarter of 2005 was 71%. For 2004, the cost of revenues as a percentage of revenue was 68%. The profit margin was reduced due to market and competitive pressures.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and administrative expenses increased approximately $291,000 or 12% for the three months ended June 30, 2005. The new subsidiaries, along with an increase in the size of our sales force and associated marketing activity, resulted in the increase.

-19-

OPERATING INCOME: Operating income for the second quarter decreased 20% or approximately ($243,000) due to the increase in the cost of revenues and the increase in Selling, General and Administrative expenses explained above.

OTHER INCOME (EXPENSE): Other Income/(Expense) consisted of interest expense, offset by a derivative gain on the put warrant associated with the subordinated debt (See Note E). Interest expense increased by approximately $105,000 due to the amended agreement with the prior commercial lender. The gain on the put warrant is due to the difference in the stock price at the end of the period as compared to the prior period.

NET INCOME: Net income for the Company decreased 34% or approximately ($347,000) due to the increases in the cost of revenue; sales, general and administrative expense; and interest.

We may in the future continue to experience fluctuations in quarterly operating results. Factors that may cause our quarterly operating results to vary include:

· Active number of customer projects

· Requirements of customer projects

· Termination of major customer projects

· Loss of major customers

· Timing of new engagements

· Vendor delays or problems with delivery

HOLDING COMPANY AND OPERATING SUBSIDIARIES

We conduct our ~~operations~~business through our wholly owned subsidiaries (Brand Retail and Build Partners). We ~~There~~have ~~are~~relied ~~currently~~and ~~three~~continue to rely on cash payments from our operating subsidiaries: ~~BrandPartners~~to, ~~Retail~~among other things, ~~Inc.~~pay ~~(formerly~~creditors, ~~known~~maintain capital, asand ~~Willey~~meet ~~Brothers~~our operating requirements. Regulations, legal ~~Inc~~restrictions, and contractual agreements could restrict any needed payments from our present subsidiaries and any other operating subsidiaries we may subsequently acquire.); If ~~BrandPartners~~we ~~Europe~~were unable to receive cash funds from any of our operating subsidiaries, ~~Ltd.;~~our operations and ~~Grafico~~financial ~~Incorporated.~~condition would be materially and adversely affected.

BrandPartners Retail is the largest of the three subsidiaries. The original company (Willey Brothers, Inc.) was founded in 1983 and became a leader in providing services and products to the financial services industry. In January 2001, the Company purchased Willey Brothers, Inc. As part of BrandPartners Group, the Brand Retail subsidiary has not only maintained its previous status in the marketplace but has increased that reputation. 17

The European subsidiary was started in mid-January 2005 and has not produced any revenue as of yet. We have made a minimum investment in organizing the venture and look to developing relationships with other local suppliers instead of creating our own infrastructure. Research concerning the European market, as well as of our domestic competitors’ success in the European market, has demonstrated to us the potential in the European market for our products and services. Brand Europe has participated in trade shows, has engaged industry consultants to assist with the penetration of the European market and is building a solid pipeline of business opportunities.

Grafico Incorporated was formed on April 1, 2005 and has recently purchased certain nominal assets, namely furniture and office equipment, of a design firm, along with certain liabilities. Grafico services a specific segment of the financial services industry, which is showing large potential for expansion.

-20-

We cannot determine at the present time when or if any of these subsidiaries will remain or be profitable in the future. We have relied and continue to reply upon cash payments from our operating subsidiaries to, among other things, pay creditors, maintain capital and meet our operating requirements. Regulations, legal restrictions and contractual agreements could restrict any needed payments from our subsidiaries. If we are unable to receive cash from our subsidiaries, or from any operating subsidiaries which we may acquire in the future, our operations and financial condition would be materially and adversely affected.

STOCK PRICE FLUCTUATIONS

The market price of our common stock ~~has~~may ~~fluctuated~~be ~~significantly~~affected by our operating results, changes in our business and ~~may~~management, bechanges in the industries in which we conduct our business, and general and market conditions. In addition, the stock markets commonly experience price and volume fluctuations. These fluctuations have affected ~~by:~~stock prices of many companies without regard to their specific operating performance. The price of our common stock may fluctuate significantly in the future.

· Our operating results

· Changes in our business and management

· General and market conditions

The stock markets in general frequently experience extreme price and volume fluctuations. These fluctuations have affected stock prices of many companies without regard to their specific operating performance. In addition, at the opening of business on August 29, 2003, our common stock was de-listed from the Nasdaq SmallCap Market and became eligible for quotation on the Over-the Counter Bulletin Board. The delisting was the result of our failure to satisfy Nasdaq’s minimum bid price requirements for continued listing. It is impossible to predict the effect of these or other factors on the market price of our common stock. The price may continue to fluctuate significantly in the future.

INFLATION

We do not believe that inflation has ~~not~~ had a material effect on ~~our~~the Company’s results of operations.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of ~~Section~~section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are not historical facts, but rather reflect the Company’s current expectations concerning future results and events. The words “believes,” “anticipates,” “expects,” and similar expressions, which identify forward-looking statements, ~~which~~ are subject to certain risks, uncertainties and factors, including those which are economic, competitive, and technological, ~~which~~that could cause actual results to differ materially from ~~those~~results ~~forecast~~forecasted or anticipated. Such factors include, among others:

· ~~Continued~~The continued services of James Brooks as ~~Chief~~Chairman ~~Executive~~of ~~Officer~~the Board and ~~President~~Chief Executive Officer of ~~the~~BrandPartners ~~Company~~Group and ~~its~~other ~~subsidiaries~~key senior management members.

· Our ability to identify appropriate acquisition candidates, finance and complete such acquisitions and successfully integrate the acquired businesses

Changes in our business strategies or development plans

Competition

Our ability to grow within the financial services industry

· Our ability to successfully penetrate ~~new~~other markets

· ~~Our~~General ~~ability~~economic toand ~~obtain~~business ~~sufficient~~conditions, ~~financing~~both tonationally ~~continue~~and ~~operations~~in the regions in which we operate

· ~~General~~Our ~~economic~~ability ~~and~~to ~~business~~pass ~~conditions~~vendor cost increases on to our customers

Readers are cautioned not to place undue reliance on those forward-21looking statements, which speak only as of the date hereof. The Company undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of the unanticipated events. Readers are also urged to carefully review and consider the various disclosures made by the Company in this report, as well as the Company’s periodic reports on Form 10-K, Form 10-Q, and other filings with the Securities and Exchange Commission.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligations to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures made in this report, as well as in our periodic reports on Forms 10-K and 10-Q, current reports on Form 8-K, and other filings with the Securities and Exchange Commission.18

ITEM 1A. RISK FACTORS

For information regarding factors that could affect the Company’s results of operations, financial condition or liquidity, see the risk factors discussed under “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of BrandPartners’ most recent Annual Report on Form 10-K. See also “Forward-Looking Statements,” included in Item 2 of this Quarterly Report on Form 10-Q. There have been no material changes from the risk factors previously disclosed in BrandPartner’s most recent Annual Report on Form 10-K.

ITEM 3. QUALITATIVE AND QUANTATIVE DISCLOSURES ABOUT MARKET RISK

Our ~~Term Loan and~~ Revolving Credit Facility ~~expose~~exposes us to the risk of earnings or cash flow loss due to changes in market interest rates. A ~~The Term Loan and a~~ portion of the Revolving Credit Facility ~~accrued~~accrues interest at LIBOR plus an applicable margin. The balance of the Facility accrues interest at the Wall ~~Street~~ Street Journal’s published prime rate. For a description of the terms of the Term Loan and Revolving Credit Facility, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations -– Liquidity and Capital Resources” above.

The table below provides information on our market sensitive financial instruments as of ~~June~~March 3031, ~~2005~~2009.

	Principal Balance		~~Interest Rate at June 30, 2005~~	Weighted Average Interest Rate at March 31, 2009
Term Loan	$	1,944,444		5.65	%
Revolving Credit Facility	$	-			3.50	%
Revolving Credit Facility	$	3,434,700		5.80	%

ITEM 4. CONTROLS AND PROCEDURES

~~Based~~Evaluation ~~on their evaluation as~~ of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange CommissionCompany’s ~~rules~~Disclosure and ~~forms.~~Internal There has been no change in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 promulgated under the Exchange Act that occurred during our fiscal quarter ended June 30, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.Controls

~~-22-~~The Company evaluated the effectiveness of the design and operation of its “disclosure controls and procedures” as of the end of the period covered by this report. This evaluation was done with the participation of management, under the supervision of the Chief Executive Officer (“CEO) and the Chief Accounting Officer (“CAO”).

~~PART~~Limitations ~~II OTHER~~on ~~INFORMATION~~the Effectiveness of Controls

~~ITEM~~A control 4system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are being met. Further, the design of a control system must reflect the fact ~~SUBMISSION~~that OFthere ~~MATTERS~~are TOresource Aconstraints, ~~VOTE~~and OFthe ~~SECURITY~~benefits ~~HOLDERS~~of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may be inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and may not be detected. The Company conducts periodic evaluations of its internal controls to enhance, where necessary, its procedures and controls.

On May 20, 2005, the Company held is 2005 annual meeting of shareholders. As of the April 12, 2005 record date, holders of a total of 33,548,597 shares of common stock were eligible to vote on the proposals presented at the annual meeting. Of the shares eligible to vote, a total of 25,041,991 shares were present at the meeting in person or by proxy. Three proposals were presented to shareholders at the annual meeting, the votes cast for same are set forth below:19

· The Board of Directors is currently comprised of four (4) directors. Two (2) standing directors stood for re-election for three (3) year terms, while two (2) directors [Mr. Anthony J. Cataldo, whose term expires in 2007, and Mr. James F. Brooks, whose term expires in 2006] were not required to stand for election. The votes cast for the director nominees was as follows:Conclusions

oBased ~~Mr.~~on our J.evaluation, ~~Weldon~~the ~~Chitwood~~CEO -and 24the CAO concluded that the registrant’s disclosures,~~668~~ controls,~~280~~ ~~shares~~and procedures are effective to ensure that information required to be disclosed in ~~favor~~reports ~~and~~that ~~373~~it files or submits under the Exchange Act is recorded,~~711~~ ~~shares~~processed, ~~withheld~~summarized and reported within the time periods specified in the Security Exchange Commission rules and forms.

o Mr. Richard Levy - 24,666,810 shares in favor and 375,181 shares withheld

· The proposal to ratify Moore Stephens, P.C., Certified Public Accountants as the Company’s independent public accountants for the 2005 fiscal year received the affirmative vote of 24,793,981 shares; 101,450 votes were cast against the proposal; and there were 146,560 abstentions.

· The proposal to amend the Company’s 2004 Stock Incentive Plan to increase the underlying shares available for issuance from 5,000,000 to 8,000,000 shares of common stock received the affirmative vote of 10,724,354 shares; and 954,539 shares were voted in opposition. There were 21,733 abstentions; and 13,309,865 shares were not voted on the proposal.

ITEM 5. OTHER INFORMATION

~~Effective April~~On 11May 14, ~~2005~~2009, the Company ~~finalized~~entered ~~agreements~~into ~~with~~a ~~five~~subscription ~~former~~agreement ~~directors and officers,~~with asan ~~well~~accredited investor asin ~~one~~reliance ~~current~~on ~~director (~~the ~~“Option~~exemption ~~Holders”),~~from ~~whereby~~registration ~~the Option~~provided ~~Holders~~by ~~surrendered~~Section ~~an aggregate of 1,050,000 options out of 1,400,000~~4(2) ~~options previously granted to them~~ under the ~~Company’s~~Securities ~~2001~~Act ~~Stock Incentive Plan. The Company further agreed to amend the terms~~ of ~~the options by providing a cashless exercise provision~~1933. ~~As part of the agreement, the Company filed an S-8 registration statement for its 2001 Stock Incentive Plan.~~

OnIn May ~~April 18~~2009, ~~2005,~~ the Company ~~engaged~~entered ~~Moore~~into ~~Stephens,~~consulting ~~P.C.~~and/or ~~(“Moore~~service ~~Stephens”)~~agreements ~~to audit~~that ~~the~~provided ~~consolidated financial statements of the Company~~ for the ~~year~~issuance ~~ended~~of ~~December 31~~1, ~~2005. On April 20~~500,000 ~~2005,~~shares ~~the~~of ~~Company~~restricted ~~dismissed~~common ~~Michael~~stock ~~F. Albanese, CPA (“Albanese”)~~ as ~~its certifying accounting effective immediately. The decision to~~a ~~retain~~portion ~~Moore~~of ~~Stephens and to dismiss Albanese was approved by~~ the ~~Company’s Board of Directors~~consideration.

~~Effective May~~In 1May 2009, ~~2005,~~ the Company ~~entered~~issued ~~into~~ an ~~agreement~~aggregate ~~with~~of ~~Bristol~~2,600,000 ~~Investor Relations~~shares ~~(“Bristol”)~~of torestricted ~~provide~~common stock ~~financial~~to ~~public~~officers ~~relations~~ and ~~investor relations~~directors ~~services~~as ~~for~~well ~~one~~as ~~year.~~employees ~~Under the terms~~ of ~~the~~it’s ~~agreement, Bristol~~wholly-owned issubsidiary ~~to be~~BrandPartners ~~paid~~Retail ~~$5,000~~pursuant ~~per month. An early termination provision permits either party~~ to ~~terminate~~ ~~the~~it’s ~~agreement~~2004 atStock ~~prescribed times following the first three~~Incentive ~~months~~Plan.

-23-

· Repayment of previous Brand Retail Facility

· $2,000,000 Term Loan

· $5,000,000 Revolving Line of Credit

· Prime rate interest on principal not subject to LIBOR rate

· LIBOR rate on Term Loan and portion of Revolving Line of Credit

· Expiration date of May 5, 2008

On August 2, 2005, the Board of Directors of the Company ratified the employment agreement between the Company and Suzanne Verrill, the Chief Financial Officer, effective as of June 30, 2005.

-24-

ITEM 6. EXHIBITS

10.1 Agreement with former directors/officers of the Company regarding the surrendering of options (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 15, 2005).

31.1	Certification of Chief Executive Officer, President and Interim Financial Officer Pursuant to 17 C.F.R. 240.13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification of Chief Accounting Officer Pursuant to 17 C.F.R. 240.13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

10.2 Consulting agreement with Bristol Capital effective May 1, 2005.

10.3 Commercial Loan Agreement between the Company and Banknorth, N.A. dated May 5, 2005.

10.4 Revolver Note between the Company and Banknorth, N.A. dated May 5, 2005.

10.5 Term Note between the Company and Banknorth, N.A. dated May 5, 2005.

10.6 Employment agreement between the Company and Suzanne Verrill effective June 30, 2005.

16.1 Letter from Michael F. Albanese, CPA, dated April 20, 2005 to the Securities and Exchange Commission in connection with Item 304(a)(3) of Regulation S-K (incorporated by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K filed April 15, 2005).

31.1 Certification of Chief Executive Officer and President Pursuant to 17 C.F.R. 240.13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of Chief Financial Officer Pursuant to 17 C.F.R. 240.13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~-25-~~20

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.

Dated: August 8, 2005
	BRANDPARTNERS GROUP, INC.
	By:	/s/ JAMES F. BROOKS
Dated: May 15, 2009
	By:	/S/ James F. Brooks
		James F. Brooks
		Chief Executive Officer and President

-26-



Dated: May 15, 2009	By:	/S/ Jane E. Quilliam
		Jane E. Quilliam
		Chief Accounting Officer

Filing Compare · BRANDPARTNERS GROUP INC