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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">As filed with the Securities and Exchange
Commission on June 15, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">Registration No. 333-</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>UNITED STATES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Washington, D.C. 20549</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM S-1</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 14pt"><B>InsPro
Technologies Corporation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Exact name of registrant as specified in
charter)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <TD STYLE="width: 33%; padding-right: 2.35pt; padding-left: 2.35pt; text-align: center"><font style="font-size: 10pt"><b>Delaware</b></font></td>
    <TD STYLE="width: 34%; padding-right: 2.35pt; padding-left: 2.35pt; text-align: center"><font style="font-size: 10pt"><b>6411</b></font></td>
    <TD STYLE="width: 33%; padding-right: 2.35pt; padding-left: 2.35pt; text-align: center"><font style="font-size: 10pt"><b>98-0438502</b></font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-right: 2.35pt; padding-left: 2.35pt; text-align: center"><font style="font-size: 10pt">(State or Other Jurisdiction of</font></td>
    <TD STYLE="padding-right: 2.35pt; padding-left: 2.35pt; text-align: center"><font style="font-size: 10pt">(Primary Standard Industrial</font></td>
    <TD STYLE="padding-right: 2.35pt; padding-left: 2.35pt; text-align: center"><font style="font-size: 10pt">(I.R.S. Employer</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-right: 2.35pt; padding-left: 2.35pt; text-align: center"><font style="font-size: 10pt">Incorporation or Organization)</font></td>
    <TD STYLE="padding-right: 2.35pt; padding-left: 2.35pt; text-align: center"><font style="font-size: 10pt">Classification Code Number)</font></td>
    <TD STYLE="padding-right: 2.35pt; padding-left: 2.35pt; text-align: center"><font style="font-size: 10pt">Identification No.)</font></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>1510 Chester Pike</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Suite 400</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Eddystone, Pennsylvania 19022</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.45pt"><B>(484) 654-2200</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2.25pt; text-align: center; text-indent: 0.45pt">(Address,
including zip code, and Telephone Number, including area code of Registrant&rsquo;s Principal Executive Offices)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Anthony R. Verdi</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Chief Financial Officer</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>InsPro Technologies Corporation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>1510 Chester Pike</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Suite 400</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Eddystone, Pennsylvania 19022</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(484) 654-2200</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Name, Address, including zip code and Telephone
Number, including area code of Agent for Service)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.2in"><B>Copy to:</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>James W. McKenzie, Jr., Esq.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Morgan, Lewis &amp; Bockius LLP</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>1701 Market Street</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Philadelphia, Pennsylvania 19103</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(215) 963-5000</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>Approximate Date
of Proposed Sale to the Public: </B>As soon as practicable after the effective date of this registration statement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If any Securities being
registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933
check the following box: <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If this Form is filed
to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
<FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of &ldquo;large accelerated filer,&rdquo; &ldquo;accelerated
filer,&rdquo;  &ldquo;smaller reporting company&rdquo; and &ldquo;emerging
growth company&rdquo; in Rule 12b-2 of the Exchange Act. (Check one)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 23%; padding-right: 2.35pt; padding-left: 2.35pt; text-align: center"><font style="font-size: 10pt">Large Accelerated filer&nbsp;&nbsp;<font style="font-family: Wingdings">&uml;</font></font></td>
    <td style="width: 23%; padding-right: 2.35pt; padding-left: 2.35pt; text-align: center"><font style="font-size: 10pt">Accelerated filer <font style="font-family: Wingdings">&uml;</font></font></td>
    <td style="width: 28%; padding-right: 2.35pt; padding-left: 2.35pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Non-accelerated filer <font style="font-family: Wingdings">&uml;</font></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Do not check if a smaller<BR>
reporting company)</P></td>
    <td style="width: 26%; padding-right: 2.35pt; padding-left: 8.75pt; text-align: center"><font style="font-size: 10pt">Smaller reporting company <font style="font-family: Wingdings">&thorn;</font></font></td></tr>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 2.35pt; padding-left: 2.35pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 2.35pt; padding-left: 2.35pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 2.35pt; padding-left: 2.35pt">&nbsp;</TD>
    <TD STYLE="padding-right: 2.35pt; padding-left: 8.75pt; text-align: center"><P STYLE="margin: 0">Emerging growth company
                                         &#9744;</P>


</TD></TR>
</table>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<P STYLE="margin-top: 0; margin-bottom: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 7(a)(2)(B) of the Securities Act. &#9744;</P>



<P STYLE="margin-top: 0; margin-bottom: 0"></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CALCULATION OF REGISTRATION FEE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center">Title of Each Class of Securities To Be Registered</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Proposed Maximum Aggregate</b></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Offering Price ($)</b></P></TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Amount of Registration</b></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Fee ($)</b></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(1)</b></P></TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Series C Convertible Preferred Stock, par value $0.001 per share</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">(2)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Units Consisting of 25 Shares of Series C Convertible Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Common Stock issuable upon the conversion of the Series C Convertible Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">(3)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 64%; font-weight: bold; text-align: left; padding-left: 0.25in">Total Registration Fee:</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">1,000,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">116.00</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(1) Estimated solely for purposes of calculating the registration
fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(2) Estimated solely for purposes of calculating the registration
fee in accordance with Rule 457(i) under the Securities Act of 1933, as amended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(3) Pursuant to Rule 457(i), no separate registration fee is
required for the common stock underlying the convertible preferred stock because the common stock is being registered on the same
registration statement as the convertible preferred stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Pursuant to Rule 429 under the Securities
Act of 1933, the prospectus included in this Registration Statement is a combined prospectus and also relates to (i) 33,550,000
shares of common stock previously registered under the Registrant&rsquo;s Registration Statement on Form SB-2 (File No. 333-133182);
(ii) 6,050,000 shares of common stock previously registered under the Registrant&rsquo;s Registration Statement on Form SB-2 (File
No. 333-142556), (iii) 1,089,913 shares of common stock previously registered under the Registrant&rsquo;s Registration Statement
on Form SB-2 on Form S-1 (File No. 333-149015), (iv) 5,000 units, 1,250,000 shares of Series A Convertible Preferred Stock and
warrants to purchase 25,000,000 shares of common stock previously registered under the Registrant&rsquo;s Registration Statement
on Form S-1 (File No. 333-162712), (iv) 2,500 units, 833,280 shares of Series B Convertible Preferred Stock and warrants to purchase
8,332,800 shares of common stock previously registered under the Registrant&rsquo;s Registration Statement on Form S-1 (File No.
333-185752) and (v) 10,415 units, 833,200 shares of Series B Convertible Preferred Stock and warrants to purchase 8,332,000 shares
of common stock previously registered under the Registrant&rsquo;s Registration Statement on Form S-1 (File No. 333-208804). Accordingly,
this Registration Statement, which is a new registration statement, also constitutes Post-Effective Amendment No. 4 to Registration
Statement No. 333-133182, Post-Effective Amendment No. 4 to Registration Statement No. 333-142556, Post-Effective Amendment No.
4 to Registration Statement No. 333-149015, Post-Effective Amendment No. 3 to Registration Statement No. 333-162712, Post-Effective
Amendment No. 2 to Registration Statement No. 333-185752 and Post-Effective Amendment No. 1 to Registration Statement No. 333-208804,
which post-effective amendments shall hereafter become effective concurrently with the effectiveness of this Registration Statement
and in accordance with Section 8(c) of the Securities Act of 1933. If securities previously registered under Registration Statement
No. 333-133182, Registration Statement No. 333-142556, Registration Statement No. 333-149015, Registration Statement No. 333-162712,
Registration Statement No. 333-185752 and Registration Statement No. 333-208804 are offered and sold before the effective date
of this Registration Statement, the amount of previously registered securities so sold will not be included in the prospectus hereunder.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment
which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Explanatory Note</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">InsPro Technologies
Corporation (the &ldquo;Company&rdquo;) previously filed a Registration Statement on Form SB-2 (File No. 333-133 182) with the
U.S. Securities and Exchange Commission (the &ldquo;Commission&rdquo;) on April 10, 2006, which was declared effective on July
7, 2006 (the &ldquo;2006 Prior Registration Statement&rdquo;). The 2006 Prior Registration Statement registered up to 33,550,000
shares of our common stock for resale by the selling stockholders named therein, including 8,650,000 shares of our common stock
issuable upon the exercise of warrants held by such selling stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company previously
filed a Registration Statement on Form SB-2 (File No. 333-142556) with the Commission on May 2, 2007, which was declared effective
on June 1, 2007 (the &ldquo;2007 Prior Registration Statement&rdquo;). The 2007 Prior Registration Statement registered up to 6,050,000
shares of our common stock for resale by the selling stockholders named therein, including 2,000,000 shares of our common stock
issuable upon the exercise of warrants held by such selling stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company previously
filed a Registration Statement on Form SB-2 on Form S-l (File No. 333-149015) with the Commission on February 1, 2008, which was
declared effective on April 22, 2008 (the &ldquo;2008 Prior Registration Statement&rdquo;). The 2008 Prior Registration Statement
registered up to 739,913 shares of our common stock for resale by the selling stockholders named therein, including 350,000 shares
of our common stock issuable upon the exercise of warrants held by such selling stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company previously
filed a Registration Statement on Form S-l (File No. 333-162712) with the Commission on January 14, 2010, which was declared effective
on January 22, 2010 (the &ldquo;2010 Prior Registration Statement&rdquo;). The 2010 Prior Registration Statement registered up
to 5,000 units, 1,250,000 shares of Series A Convertible Preferred Stock and warrants to purchase 25,000,000 shares of common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company previously
filed a Registration Statement on Form S-1 (File No. 333-185752) with the Commission on February 8, 2013, which was declared effective
on February 12, 2013 (the &ldquo;2013 Prior Registration Statement&rdquo;). The 2013 Prior Registration Statement registered up
to 10,416 units, 833,280 shares of Series B Convertible Preferred Stock and warrants to purchase 8,332,800 shares of common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company previously
filed a Registration Statement on Form S-1 (File No. 333-208804) with the Commission on February 2, 2016, which was declared effective
on February 5, 2016 (the &ldquo;2016 Prior Registration Statement,&rdquo; and together with the 2006 Prior Registration Statement,
2007 Prior Registration Statement, 2008 Prior Registration Statement, the 2010 Prior Registration Statement, and the 2013 Prior
Registration Statement, the &ldquo;Prior Registration Statements&rdquo;). The 2016 Prior Registration Statement registered up to
10,415 units, 833,200 shares of Series B Convertible Preferred Stock and warrants to purchase 8,332,000 shares of common stock.
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus included in the 2016 Prior Registration Statement was a combined
prospectus and also related to 33,550,000 shares of common stock registered under the 2006 Prior Registration Statement, 6,050,000
shares of common stock registered under the 2007 Prior Registration Statement, 1,089,913 shares of common stock registered under
the 2008 Prior Registration Statement, 25,000,000 shares of common stock under the 2010 Prior Registration Statement and 8,332,800
shares of common stock under the 2013 Prior Registration Statement. Accordingly, the 2016 Prior Registration Statement also constituted
Post-Effective Amendment No. 3 to the 2006 Prior Registration Statement, Post-Effective Amendment No. 3 to the 2007 Prior Registration
Statement, Post-Effective Amendment No. 3 to the 2008 Prior Registration Statement, Post-Effective Amendment No. 2 to the 2010
Prior Registration Statement and Post-Effective Amendment No. 1 to the 2013 Prior Registration Statement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to Rule 429
under the Securities Act of 1933, the prospectus included in this Registration Statement is also a combined prospectus and also
relates to 33,550,000 shares of common stock registered under the 2006 Prior Registration Statement, 6,050,000 shares of common
stock registered under the 2007 Prior Registration Statement, 1,089,913 shares of common stock registered under the 2008 Prior
Registration Statement, the 5,000 units, 1,250,000 shares of Series A Convertible Preferred Stock and warrants to purchase 25,000,000
shares of common stock registered under the 2010 Prior Registration Statement, the 10,416 units, 833,280 shares of Series B Preferred
Stock and warrants to purchase 8,332,800 shares of common stock registered under the 2013 Prior Registration Statement, and 10,415
units, 833,200 shares of Series B Convertible Preferred Stock and warrants to purchase 8,332,000 shares of common stock registered
under the 2016 Prior Registration Statement. Accordingly, this Registration Statement, which is a new registration statement, also
constitutes Post-Effective Amendment No. 4 to the 2006 Prior Registration Statement, Post-Effective Amendment No. 4 to the 2007
Prior Registration Statement, Post-Effective Amendment No. 4 to the 2008 Prior Registration Statement, Post-Effective Amendment
No. 3 to the 2010 Prior Registration Statement, Post-Effective Amendment No. 2 to the 2013 Prior Registration Statement, and Post-Effective
Amendment No. 1 to the 2016 Prior Registration Statement and is being filed to, among other things: (i) include audited financial
statements for our fiscal year ended December 31, 2014 and to reflect additional information disclosed in our Annual Report on
Form 10-K (the &ldquo;Annual Report&rdquo;) for our fiscal year ended December 31, 2016, filed with the Commission on March 30,
2017; (ii) include unaudited interim financial statements for our three months ended March 31, 2017 and to reflect additional information
disclosed in our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K filed with the Commission subsequent to our
Annual Report.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Accordingly, this Registration
Statement on Form S-l (i) carries forward from the Prior Registration Statements an aggregate of (a) 40,689,913 shares of our common
stock, which includes 11,000,000 shares of our common stock issuable upon the exercise of warrants, held by certain of the named
selling stockholders, (b) 5,000 units, 1,250,000 shares of our Series A Convertible Preferred Stock and 25,000,000 warrants to
purchase shares of our common stock, (c) 10,416 units, 833,280 shares of Series B Preferred Stock and warrants to purchase 8,332,800
shares of common stock, and (d) 10,415 units, 833,200 shares of our Series B Convertible Preferred Stock and warrants to purchase
8,332,000 shares of our common stock, and (ii) registers an additional 20,000 Units, 500,000 shares of our Series C Convertible
Preferred Stock. All filing fees payable in connection with the initial filing of the Prior Registration Statements were previously
paid at the time of the initial filing of the Prior Registration Statements. A registration fee of $116.00 in respect of the 500,000
shares of our Series C Convertible Preferred Stock being registered in this Registration Statement on Form S-l is being paid concurrently
with the filing of this Registration Statement on Form S-l.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: red">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: red">The information in this prospectus
is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting
an offer to buy these securities in any state where the offer or sale is not permitted.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">PRELIMINARY PROSPECTUS</P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 50%; font-weight: bold">Subject to Completion</td>
    <td style="width: 50%; text-align: center; font-weight: bold">June 15, 2017</td></tr>
</table>
<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><IMG SRC="t1700378_logo.jpg" ALT=""></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Up to 20,000 Units, 500,000 Shares
of Preferred Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are distributing,
at no charge to the holders of our common stock, non-transferable subscription rights to subscribe for units, which we refer to
throughout this prospectus as Units, consisting of 25 shares of our Series C Convertible Preferred Stock. Our stockholders will
receive one subscription right for every 9,651 shares of our common stock, 483 shares of our Series A Convertible Preferred Stock
held, 483 shares of our Series B Convertible Preferred Stock held, and 483 shares of our Series C Convertible Preferred Stock held
of record as of 5:00 p.m., New York City time, on [___________], 201[_], the record date. Pursuant to the terms of this offering,
the rights may only be exercised for a maximum of 20,000 Units, or approximately $1,000,000 of gross subscription proceeds.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each subscription right
entitles the holder to subscribe for one Unit at the subscription price of $50.00 per Unit, which we refer to as the basic subscription
right. In addition, rights holders who fully exercise their basic subscription rights will be entitled, subject to limitations,
to subscribe for additional Units that remain unsubscribed as a result of any unexercised basic subscription rights, which we refer
to as the over-subscription right, at the subscription price of $50.00 per Unit.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is no minimum
number of Units you must purchase, but you may not purchase fractional Units. When determining the number of subscription rights
you will receive, divide the number of shares of our common stock you own by 9,651, the number of shares of our Series A Convertible
Preferred Stock you own by 483, the number of shares of our Series B Convertible Preferred Stock you own by 483, and the number
of shares of our Series C Convertible Preferred Stock you own by 483 and round down the sum of those amounts to the next whole
number. For example, if you own 100,000 shares of our common stock, 10,000 shares of our Series A Convertible Preferred Stock and
10,000 shares of our Series B Convertible Preferred Stock, you will receive 51 subscription rights (100,000 shares of common stock
divided by 9,651 = 10.36, 10,000 shares of Series A Convertible Preferred Stock divided by 483 = 20.70, 10,000 shares of Series
B Convertible Preferred Stock divided by 483 = 20.70, which sum = 51.76, rounded down to 51 subscription rights, the next whole
number), which will entitle you to subscribe for up to 51 Units under your basic subscription privilege.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This rights offering
was designed to give all of the holders of our capital stock the opportunity to participate in an equity investment in InsPro Technologies
Corporation on substantially the same economic terms as our last private placement in May 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The subscription rights
will expire if they are not exercised by 5:00 p.m., New York City time, on [___________], 201[__], unless we extend the rights
offering period. Our board of directors may cancel the rights offering at any time prior to the expiration of the rights offering
for any reason and may extend or amend the rights offering for any reason. In the event we cancel the rights offering, all subscription
payments received by us will be returned, without interest or penalty, as soon as practicable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The subscription rights
may not be sold, transferred or assigned, and will not be listed for trading on any stock exchange or on the Over-the-Counter Bulletin
Board (&ldquo;OTCBB&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You should carefully
consider whether to exercise your subscription rights before the expiration date. All exercises of subscription rights are irrevocable.
This is not an underwritten offering. The Units are being offered directly by us without the services of an underwriter or selling
agent. Our board of directors is making no recommendation regarding your exercise of the subscription rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our common stock is
quoted on the OTCBB under the symbol &ldquo;ITCC.OB.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The average of the
bid and asked prices of our common stock on the OTCBB on June 14, 2017 was $0.04 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B>INVESTING IN OUR SECURITIES
INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD READ THIS ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE SECTION ENTITLED &ldquo;RISK FACTORS&rdquo;
BEGINNING ON PAGE 11.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B>NEITHER THE SECURITIES
AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The date of this prospectus is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
20[__]</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.75pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.75pt; text-align: center"><FONT STYLE="text-transform: uppercase"><B>Table
of Contents</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.75pt; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: top; width: 95%; text-align: right">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; width: 5%; text-align: right"><b>Page</b></td></tr>
<tr>
    <TD STYLE="vertical-align: top">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_001">CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">1</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_002">QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">2</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_003">PROSPECTUS SUMMARY</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">8</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_004">RISK FACTORS</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">11</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_005">THE RIGHTS OFFERING</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">21</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_006">USE OF PROCEEDS</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">29</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_007">DILUTION</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">29</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_008">CAPITALIZATION</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">30</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_009">DESCRIPTION OF SECURITIES</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">30</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_010">MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">34</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_011">BUSINESS</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">35</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_012">MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">39</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_013">DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">47</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_014">EXECUTIVE COMPENSATION</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">51</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_015">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">59</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_016">TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">64</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_017">PLAN OF DISTRIBUTION</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">65</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_018">MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">65</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_019">EXPERTS</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">71</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_020">TRANSFER AGENT AND REGISTRAR</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">71</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_021">LEGAL MATTERS</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">71</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_023">WHERE YOU CAN FIND MORE INFORMATION</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">71</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; text-transform: uppercase; padding-left: 0.125in"><font style="font-size: 10pt"><A HREF="#a_024">DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">72</font></td></tr>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase">&nbsp;</td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <TD STYLE="vertical-align: top; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt"><A HREF="#a_025">FINANCIAL STATEMENTS</A></font></td>
    <TD NOWRAP STYLE="vertical-align: bottom; text-align: right; text-indent: 0in; text-transform: uppercase"><font style="font-size: 10pt">F-1</font></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You should rely only
on the information contained in this prospectus. We have not authorized anyone to provide you with information different from the
information contained in this prospectus. We will not make an offer to sell these securities in any jurisdiction where offers and
sales are not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless
of when this prospectus is delivered or when any sale of our common stock occurs. All dollar amounts in this prospectus are in
U.S. dollars unless otherwise stated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In this prospectus,
unless the context specifically indicates otherwise, all references to &ldquo;the Company,&rdquo; &ldquo;we,&rdquo; &ldquo;us,&rdquo;
and &ldquo;our&rdquo; refer to InsPro Technologies Corporation and its subsidiaries.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_001"></A>CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Certain of the statements
contained in this prospectus, including in the sections entitled &ldquo;Questions and Answers About the Rights Offering,&rdquo;
&ldquo;Prospectus Summary,&rdquo; &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations,&rdquo;
&ldquo;Business&rdquo; and elsewhere in this report are &ldquo;forward-looking statements&rdquo; within the meaning of Section
27A of the Securities Act of 1933, as amended. These statements are based on management&rsquo;s current expectations and are subject
to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained in the forward-looking
statements. The forward-looking statements herein include, among others, statements addressing management&rsquo;s views with respect
to future financial and operating results and costs associated with the Company&rsquo;s operations and other similar statements.
Various factors, including competitive pressures, market interest rates, regulatory changes, customer defaults or insolvencies,
litigation, acquisition of businesses that do not perform as we expect or that are difficult for us to integrate or control, adverse
resolution of any contract or other disputes with customers, could cause actual outcomes and results to differ materially from
those described in forward-looking statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The words &ldquo;may,&rdquo;
&ldquo;will,&rdquo; &ldquo;expect,&rdquo; &ldquo;intend,&rdquo; &ldquo;anticipate,&rdquo; &ldquo;estimate,&rdquo; &ldquo;believe,&rdquo;
&ldquo;continue&rdquo; and similar expressions may identify forward-looking statements, but the absence of these words does not
necessarily mean that a statement is not forward-looking. While we believe that we have a reasonable basis for each forward-looking
statement contained in this prospectus, we caution you that these statements are based on a combination of facts and factors currently
known by us and projections of the future about which we cannot be certain. Many factors, including general business and economic
conditions, affect our ability to achieve our objectives. As a result of these factors, we cannot assure you that the forward-looking
statements in this prospectus will prove to be accurate. In addition, if our forward-looking statements prove to be inaccurate,
the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard
these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any
specified time frame, if at all. We may not update these forward-looking statements, even though our situation may change in the
future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_002"></A>QUESTIONS AND ANSWERS ABOUT THE RIGHTS
OFFERING</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following are examples
of what we anticipate will be common questions about the rights offering. The answers are based on selected information included
elsewhere in this prospectus. The following questions and answers do not contain all of the information that may be important to
you and may not address all of the questions that you may have about the rights offering. This prospectus contains more detailed
descriptions of the terms and conditions of the rights offering and provides additional information about us and our business,
including potential risks related to the rights offering, the Units, and our business.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">What is the rights offering?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are distributing,
at no charge, to holders of our shares of capital stock, non-transferable subscription rights to subscribe for Units consisting
of 25 shares of our Series C Convertible Preferred Stock. You will receive one subscription right for every 9,651 shares of our
common stock, 483 shares of Series A Convertible Preferred Stock, 483 shares of Series B Convertible Preferred Stock, and 483 shares
of our Series C Convertible Preferred Stock held of record by you as of 5:00 p.m., New York City time, on [_________], 201[__],
the record date. Each subscription right entitles the holder to a basic subscription right and an over-subscription privilege,
which are described below. The shares of preferred stock as components of the Units in the rights offering do not currently trade
on the OTCBB or on any other exchange, and are only transferable to the extent permitted in the instruments governing such securities.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">What is the basic subscription right?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The basic subscription
right gives our stockholders the opportunity to purchase Units at a subscription price of $50.00 per Unit for each 9,651 shares
of common stock, 483 shares of Series A Convertible Preferred Stock, 483 shares of Series B Convertible Preferred Stock, and 483
shares of Series C Convertible Preferred Stock you own. We have granted to you, as a stockholder of record on the record date,
one subscription right for each 9,651 shares of our common stock, 483 shares of Series A Convertible Preferred Stock, 483 shares
of Series B Convertible Preferred Stock, and 483 shares of Series C Convertible Preferred Stock you owned at that time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is no minimum
number of Units you must purchase, but you may not purchase fractional Units. When determining the number of subscription rights
you will receive, divide the number of shares of our common stock you own by 9,651, the number of shares of Series A Convertible
Preferred Stock you own by 483, the number of shares of Series B Convertible Preferred Stock you own by 483, and the number of
shares of Series C Convertible Preferred Stock you own by 483, and round down the sum of those amounts to the next whole number.
For example, if you own 100,000 shares of our common stock, 10,000 shares of our Series A Convertible Preferred Stock and 10,000
shares of our Series B Convertible Preferred Stock, you will receive 51 subscription rights (100,000 shares of common stock divided
by 9,651 = 10.36, 10,000 shares of Series A Convertible Preferred Stock divided by 483 = 20.70, 10,000 shares of Series B Convertible
Preferred Stock divided by 483 = 20.70, which sum = 51.76, rounded down to 51 subscription rights, the next whole number), which
will entitle you to subscribe for up to 51 Units under your basic subscription privilege.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You may exercise all
or a portion of your basic subscription right, or you may choose not to exercise any subscription rights at all. However, if you
exercise less than your full basic subscription right, you will not be entitled to purchase shares under your over-subscription
privilege.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you hold an InsPro
Technologies Corporation stock certificate, the number of Units you may purchase pursuant to your basic subscription right is indicated
on the enclosed rights certificate. If you hold your shares in the name of a broker, dealer, custodian bank or other nominee who
uses the services of the Depository Trust Company (&ldquo;DTC&rdquo;), you will not receive a rights certificate. Instead, we will
issue one subscription right to your nominee record holder for each 9,651 shares of our common stock, 483 shares of Series A Convertible
Preferred Stock, 483 shares of Series B Convertible Preferred Stock, and 483 shares of Series C Convertible Preferred Stock that
you own at the record date. If you are not contacted by your nominee, you should contact your nominee as soon as possible.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">What is the over-subscription privilege?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the event that you
purchase all of the Units available to you pursuant to your basic subscription right, you may also choose to purchase any Units
that are not purchased by our other stockholders through the exercise of their basic subscription rights. You should indicate on
your rights certificate, or the form provided by your nominee if your shares are held in the name of a nominee, how many additional
Units you would like to purchase pursuant to your over-subscription privilege.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If sufficient Units
are available, we will seek to honor your over-subscription request in full. If, however, over-subscription requests exceed the
number of Units available, we will allocate the available Units pro rata among the stockholders exercising the over-subscription
privilege in proportion to the number of shares of capital stock owned by such stockholder on the record date, relative to the
number of shares owned on the record date by all stockholders exercising the over-subscription privilege. If this pro rata allocation
results in any stockholder receiving a greater number of Units than the stockholder subscribed for pursuant to the exercise of
the over-subscription privilege, then such stockholder will be allocated only that number of Units for which the stockholder oversubscribed,
and the remaining Units will be allocated among all other stockholders exercising the over-subscription privilege on the same pro
rata basis described above. The proration process will be repeated until all Units have been allocated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order to properly
exercise your over-subscription privilege, you must deliver the subscription payment related to your over-subscription privilege
prior to the expiration of the rights offering. Because we will not know the total number of unsubscribed Units prior to the expiration
of the rights offering, if you wish to maximize the number of Units you purchase pursuant to your over-subscription privilege,
you will need to deliver payment in an amount equal to the aggregate subscription price for the maximum number of Units that may
be available to you (i.e., for the maximum number of Units available to you, assuming you exercise all of your basic subscription
rights and are allotted the full amount of your over-subscription). See &ldquo;The Rights Offering &mdash; The Subscription Rights
&mdash; Over-Subscription Privilege.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any excess subscription
payments received by us will be returned, without interest or penalty, as soon as practicable.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Why are we conducting the rights offering?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are conducting the
rights offering for the primary purpose of providing all of the holders of our capital stock the opportunity to participate in
an equity investment in InsPro Technologies Corporation on substantially the same economic terms as our last private placement
in May 2017, and the secondary purpose of raising equity capital to improve our capital position, to inject additional capital
into InsPro Technologies Corporation and to retain the remainder of any proceeds at InsPro Technologies Corporation for general
corporate purposes. See &ldquo;Use of Proceeds.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This rights offering,
including the composition and price of the Units, was designed to give all of the holders of our capital stock the opportunity
to participate in an equity investment in InsPro Technologies Corporation on substantially the same economic terms as our last
private placement in May 2017.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">How was the $50.00 per Unit subscription price determined?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The $50.00 per Unit
subscription price was determined by our board of directors based on the per share value of the Series C Convertible Preferred
Stock purchased by investors in our last private placement in May 2017. In May 2017, we sold shares of our Series C Convertible
Preferred Stock (each share of which is convertible, at the sole option of the holder, into 20 shares of our common stock). We
sold a total of 150,000 shares in that offering for an aggregate purchase price of $300,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In determining the
subscription price, our board of directors considered the overall economic value offered to investors in InsPro Technologies Corporation
in the last private placement. If an investor had invested in the last private placement, for every $50.00 invested, such investor
would have received 25 shares of Series C Convertible Preferred Stock. As a result, the Units offered in this rights offering consist
of 25 shares of our Series C Convertible Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We did not seek or
obtain an opinion of financial advisors in establishing the subscription price. The subscription price will not necessarily be
related to our book value, tangible book value, net worth or any other established criteria of fair value.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">What are the material terms of the Series C Convertible
Preferred Stock offered in this rights offering?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each share of Series
C Convertible Preferred Stock offered in this rights offering is convertible, at the sole discretion of each holder of preferred
stock, into 20 shares of common stock, subject to certain adjustments. The holders of shares of our Series C Convertible Preferred
Stock are entitled to vote, with respect to any question upon which holders of our common stock are entitled to vote, together
with the holders of common stock as one class on an as-converted basis. At such time, if any, as our board of directors declares
a dividend or distribution on the common stock, the holders of preferred stock shall be entitled to receive, for each share of
Series C Convertible Preferred Stock held by them, a dividend or distribution in an amount equal to what such holder of preferred
stock would receive if their shares were converted into shares of common stock. We do not currently intend to pay any cash dividends
to the holders of shares of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, upon the
liquidation, sale or merger of InsPro Technologies Corporation, each share of our Series C Convertible Preferred Stock is entitled
to receive an amount equal to the greater of (i) a liquidation preference equal to two and a half (2.5) times the preferred stock
original issue price, subject to certain customary adjustments, or (ii) the amount such preferred stock would receive if it participated
pari passu with the holders of our common stock on an as-converted basis. For so long as any shares of Series C Convertible Preferred
Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series C Convertible Preferred
Stock is required to approve (i) any amendment to our certificate of incorporation or bylaws that would adversely alter the voting
powers, preferences or special rights of the Series C Convertible Preferred Stock or (ii) any amendment to our certificate of incorporation
to create any shares of capital stock that rank senior to the Series C Convertible Preferred Stock. In addition to the voting rights
described above, for so long as 1,000,000 shares of Series C Convertible Preferred Stock are outstanding, the vote or consent of
the holders of at least two-thirds of the Series C Convertible Preferred Stock is required to effect or validate any merger, sale
of substantially all of the assets of InsPro Technologies Corporation or other fundamental transaction, unless such transaction,
when consummated, will provide the holders of preferred stock with an amount per share equal to two and a half (2.5) times the
preferred stock original issue price plus any declared but unpaid dividends.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Am I required to exercise all of the subscription
rights I receive in the rights offering?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No. You may exercise
any number of your subscription rights, or you may choose not to exercise any subscription rights. If you do not exercise any subscription
rights, the number of shares of our common stock or preferred stock you own will not change. However, if you choose not to exercise
your subscription rights, your ownership interest in InsPro Technologies Corporation may be diluted by other stockholder purchases
(to the extent we receive any subscriptions in this rights offering). In addition, if you do not exercise your basic subscription
right in full, you will not be entitled to participate in the over-subscription privilege. See &ldquo;Risk Factors &mdash; If you
do not exercise your subscription rights, your percentage ownership in InsPro Technologies Corporation will be diluted.&rdquo;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">How soon must I act to exercise my subscription
rights?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you received a rights
certificate and elect to exercise any or all of your subscription rights, we must receive your completed and signed rights certificate
and payments prior to the expiration of the rights offering, which is [_________], 201[_], at 5:00 p.m., Eastern Time. If you hold
your shares in the name of a broker, dealer, custodian bank or other nominee, your nominee may establish a deadline prior to 5:00
p.m. Eastern Time, on [_________], 201[_] by which you must provide it with your instructions to exercise your subscription rights.
Although our board of directors may, in its discretion, extend the expiration of the rights offering, we currently do not intend
to do so. Our board of directors may cancel or amend the rights offering at any time. In the event the rights offering is cancelled,
all subscription payments received will be returned, without interest or penalty, as soon as practicable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although we will make
reasonable attempts to provide this prospectus to our stockholders, the rights offering and all subscription rights will expire
at 5:00 p.m., Eastern Time on [_________], 201[_], whether or not we have been able to locate each person entitled to subscription
rights.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">May I transfer my subscription rights?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No. You may not sell,
transfer or assign your subscription rights to anyone. Subscription rights will not be listed for trading on the OTCBB or any other
stock exchange or market. Rights certificates may only be completed by the stockholder who receives the certificate.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Are we requiring a minimum subscription to complete
the rights offering?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No. There is no individual
minimum purchase requirement in the rights offering and we are not requiring a minimum subscription to complete the rights offering.
However, because we are not issuing fractional Units, you must own at least 9,651 shares of our common stock, 483 shares of our
Series A Convertible Preferred Stock, 483 shares of our Series B Convertible Preferred Stock, or 483 shares of our Series C Convertible
Preferred Stock as of the record date in order to subscribe for one Unit in the rights offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, our board
of directors reserves the right to cancel the rights offering for any reason.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Can the board of directors cancel, amend or extend
the rights offering?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Yes. Our board of directors
may decide to cancel, amend or terminate the rights offering at any time before the expiration of the rights offering and for any
reason. If our board of directors cancels or terminates the rights offering, any money received from subscribing stockholders will
be returned, without interest or penalty, as soon as practicable. We also reserve the right to amend or modify the terms of the
rights offering. We further have the right to extend the rights offering and the time for exercising your subscription rights,
although we do not presently intend to do so.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Has our board of directors made a recommendation
to our stockholders regarding the rights offering?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No. Our board of directors
is making no recommendation regarding your exercise of the subscription rights. Stockholders who exercise subscription rights risk
investment loss on new money invested. There is currently no public market for our shares of Series C Convertible Preferred Stock.
You are urged to make your decision based on your own assessment of our business and financial condition, our prospects for the
future, the terms of the rights offering and the information contained in, or incorporated by reference into, this prospectus.
See &ldquo;Risk Factors&rdquo; for a discussion of some of the risks involved in investing in our common stock.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">How do I exercise my subscription rights if I own
shares in certificate form?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you hold an InsPro
Technologies Corporation stock certificate and you wish to participate in the rights offering, you must take the following steps:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>deliver payment to us before 5:00 p.m., Eastern Time, on [__________], 201[_]; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>deliver a properly completed and signed rights certificate to us before 5:00 p.m., Eastern Time, on [_________], 201[_].</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In certain cases, you may be required to
provide additional documentation or signature guarantees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Please follow the delivery
instructions on the rights certificate. You are solely responsible for completing delivery to us of your subscription documents,
rights certificate and payment. We urge you to allow sufficient time for delivery of your subscription materials to us so that
they are received by us by 5:00 p.m., Eastern Time, on [_________], 201[_]. <B>WE WILL NOT ACCEPT ANY SUBSCRIPTIONS THAT WE RECEIVE
AFTER THIS TIME.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you send a payment
that is insufficient to purchase the number of Units you request, or if the number of Units you request is not specified in the
forms, the payment received will be applied to exercise your subscription rights to the fullest extent possible based on the amount
of the payment received, subject to the availability of Units under the over-subscription privilege and the elimination of fractional
Units.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">What should I do if I want to participate in the
rights offering, but my shares are held in the name of a broker, dealer, custodian bank or other nominee?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you hold your shares
of common stock through a broker, dealer, custodian bank or other nominee, then your nominee is the record holder of the shares
you own. The record holder must exercise the subscription rights on your behalf. If you wish to purchase Units through the rights
offering, you should contact your broker, dealer, custodian bank or nominee as soon as possible. Please follow the instructions
of your nominee. Your nominee may establish a deadline that may be before the expiration date that we have established for the
rights offering.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">When will I receive my new shares?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you purchase Units
in the rights offering you will receive your new shares as soon as practicable after the closing of the rights offering.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">After I send in my payment and rights certificate,
may I cancel my exercise of subscription rights?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No. All exercises of
subscription rights are irrevocable unless the rights offering is terminated, even if you later learn information that you consider
to be unfavorable to the exercise of your subscription rights. You should not exercise your subscription rights unless you are
certain that you wish to purchase Units in the rights offering.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Are there any conditions to completing the rights
offering?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No, there are no conditions
to completion of the rights offering.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">What effects will the rights offering have on our
outstanding Series C Convertible Preferred Stock?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of June 15, 2017,
we had 1,150,000 shares of Series C Convertible Preferred Stock issued and outstanding. The number of shares of our Series C Convertible
Preferred Stock that we will issue in this rights offering through the exercise of subscription rights will depend on the number
of Units that are subscribed for in the rights offering. We could, depending on the number of Units that are subscribed for in
the offering, have a maximum of 1,650,000 shares of Series C Convertible Preferred Stock outstanding after completion of the rights
offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The issuance of Units
in the rights offering will dilute, and thereby reduce, your proportionate ownership in InsPro Technologies Corporation. If you
fully exercise your basic subscription right and a certain level of your over-subscription privilege, your ownership interest will
be diluted to a lesser extent.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">How much will InsPro Technologies Corporation receive
from the rights offering?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If all of the subscription
rights (including all over-subscription privileges) are exercised in full by our stockholders, we expect the gross proceeds from
the rights offering to be approximately $1,000,000. If no subscription rights are exercised by our stockholders, we would receive
no proceeds from the rights offering. We are offering shares in the rights offering to stockholders with no individual minimum
purchase requirement.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Are there risks in exercising my subscription rights?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Yes. The exercise of
your subscription rights involves risks. Exercising your subscription rights involves the purchase of additional shares of our
Series C Convertible Preferred Stock and should be considered as carefully as you would consider any other equity investment. Among
other things, you should carefully consider the risks described under the heading &ldquo;Risk Factors&rdquo; in this prospectus
and in the documents incorporated by reference in this prospectus.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">If the rights offering is not completed, will my
subscription payment be refunded to me?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Yes. We will hold all
funds we receive in a segregated bank account until completion of the rights offering. If the rights offering is not completed,
all subscription payments received by us will be returned, without interest or penalty, as soon as practicable. If you own shares
in &ldquo;street name,&rdquo; it may take longer for you to receive your subscription payment because we will return payments through
the record holder of your shares.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">What fees or charges apply if I purchase Units in
the rights offering?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are not charging
any fee or sales commission to issue subscription rights to you or to issue shares to you if you exercise your subscription rights.
If you exercise your subscription rights through a broker, dealer, custodian bank or other nominee, you are responsible for paying
any fees your record holder may charge you.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">What are the material U.S. federal income tax consequences
of exercising my subscription rights?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">It is the opinion of
our counsel, Morgan, Lewis &amp; Bockius LLP, that you should not recognize income or loss for U.S. federal income tax purposes
in connection with the receipt or exercise of subscription rights in the rights offering. You should consult your tax advisor as
to your particular tax consequences resulting from the rights offering. For a detailed discussion, see &ldquo;Material U.S. Federal
Income Tax Considerations.&rdquo;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">To whom should I send my forms and payment?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If your shares are
held in the name of a broker, dealer or other nominee, then you should send your subscription documents, rights certificate and
subscription payment to that record holder. If you are the record holder, then you should send your subscription documents, rights
certificate and subscription payment by hand delivery, first class mail or courier service to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">InsPro Technologies Corporation</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">1510 Chester Pike</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Suite 400</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Eddystone, Pennsylvania 19022</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Attn: Francis L. Gillan III</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You are solely responsible
for completing delivery to us of your subscription documents, rights certificate and payment. We urge you to allow sufficient time
for delivery of your subscription materials to us.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Whom should I contact if I have other questions?</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you have any questions
regarding InsPro Technologies Corporation or the rights offering, please contact Francis L. Gillan III at (484) 654-2200. You may
also contact us with questions by electronic mail at <U>rightsoffering@inspro.com</U>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you have any questions
regarding completing a rights certificate or submitting payment in the rights offering, please contact Francis L. Gillan III at
(484) 654-2200 or by electronic mail at <U>rightsoffering@inspro.com</U>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_003"></A>PROSPECTUS SUMMARY</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>This summary highlights
selected information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information
that you should consider before investing in our securities. You should read the entire prospectus carefully, including the &ldquo;Risk
Factors&rdquo; section, before making a decision to invest in our securities.</I></P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our Business</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a technology
company that provides software applications for use by insurance administrators in the insurance industry. Our business focuses
primarily on our InsPro Enterprise software application.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We acquired Atiam Technologies
L.P. on October 1, 2007. HBDC Acquisition, LLC, which changed its name to InsPro Technologies, LLC on May 14, 2009, develops, sells
and supports our InsPro Enterprise software application. InsPro Enterprise is a comprehensive, web-based insurance administration
software application, which was introduced by Atiam Technologies L.P. in 2004. InsPro Enterprise clients include insurance carriers
and third party administrators. We market InsPro Enterprise as a licensed software application, and we realize revenue from the
sale of the software licenses, application service provider fees, software maintenance fees and consulting and implementation services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During 2005 through
October 1, 2007 our operations were primarily that of our former Telesales and Insurint businesses. We effectively sold our former
Telesales business in 2009 and our former Insurint business in 2010. Our former Telesales and Insurint businesses are now classified
as part of our discontinued operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our common stock has
been quoted on the OTCBB since December 6, 2010 under the symbol ITCC.OB and from December 13, 2005 until December 3, 2010 under
the symbol HBDT.OB.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Summary of this Rights Offering</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 34%"><font style="font-size: 10pt">Securities Offered</font></td>
    <td style="width: 4%">&nbsp;</td>
    <td style="width: 62%"><font style="font-size: 10pt">We are distributing to you, at no charge, one non-transferable subscription right for each 9,651 shares of our common stock, 483 shares of Series A Convertible Preferred Stock, 483 shares of Series B Convertible Preferred Stock, and 483 shares of Series C Convertible Preferred Stock that you owned as of 5:00 p.m., Eastern Time, on [_________], 201[__], the record date, either as a holder of record or, in the case of shares held of record by brokers, dealers, custodian banks, or other nominees on your behalf, as a beneficial owner of such shares. &nbsp;If the rights offering is fully subscribed, we expect the gross proceeds from the rights offering to be approximately $1,000,000. &nbsp;This rights offering was designed to give all of the holders of our capital stock the opportunity to participate in an equity investment in InsPro Technologies Corporation on the same economic terms as the investment made by investors in our last private placement in May 2017.</font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td><font style="font-size: 10pt">Basic Subscription Right</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">The basic subscription right will entitle you to purchase one unit at a subscription price of $50.00.&nbsp;&nbsp;A unit consists of 25 shares of our Series C Convertible Preferred Stock.&nbsp;&nbsp;We refer to these units throughout this prospectus as &ldquo;Units.&rdquo;</font></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 34%">&nbsp;</td>
    <td style="width: 4%">&nbsp;</td>
    <td style="width: 62%"><font style="font-size: 10pt">There is no minimum number of Units you must purchase, but you may not purchase fractional Units.&nbsp;&nbsp;When determining the number of subscription rights you will receive, divide the number of shares of our common stock you own by 9,651, the number of shares of Series A Convertible Preferred Stock you own by 483, the number of shares of Series B Convertible Preferred Stock you own by 483, and the number of shares of Series C Convertible Preferred Stock you own by 483 and round down the sum of those amounts to the next whole number.&nbsp;&nbsp;For example, if you own 100,000 shares of our common stock, 10,000 shares of our Series A Convertible Preferred Stock and 10,000 shares of our Series B Convertible Preferred Stock, you will receive 51 subscription rights (100,000 shares of common stock divided by 9,651 = 10.36, plus 10,000 shares of Series A Convertible Preferred Stock divided by 483 = 20.70, plus 10,000 shares of Series B Convertible Preferred Stock divided by 483 = 20.70, which sum = 51.76, rounded down to 51 subscription rights, the next whole number), which will entitle you to subscribe for up to 51 Units under your basic subscription privilege.</font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td><font style="font-size: 10pt">Over-Subscription Privilege</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">In the event that you purchase all of the Units available to you pursuant to your basic subscription right, you may also choose to subscribe for a portion of any Units that are not purchased by our stockholders through the exercise of their basic subscription rights. You may subscribe for these Units pursuant to your over-subscription privilege, subject to the limitations described below. </font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td><font style="font-size: 10pt">Subscription Price</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$50.00 per Unit, payable in cash. To be effective, any payment related to the exercise of a subscription right must clear prior to the expiration of the rights offering. </font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td><font style="font-size: 10pt">Record Date</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">5:00 p.m., Eastern Time, on [_______], 201[__].</font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td><font style="font-size: 10pt">Expiration of the Rights Offering</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">5:00 p.m., Eastern Time, on [_______], 201[__].</font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td><font style="font-size: 10pt">Use of Proceeds</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">We intend to use the proceeds of the rights offering to improve our capital position and for general corporate purposes. </font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td><font style="font-size: 10pt">Non-Transferability of Rights</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">The subscription rights may not be sold, transferred or assigned and will not be listed for trading on the OTCBB or on any other stock exchange or market.</font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td><font style="font-size: 10pt">No Revocation</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">All exercises of subscription rights are irrevocable, even if you later learn of information that you consider to be unfavorable to the exercise of your subscription rights. &nbsp;You should not exercise your subscription rights unless you are certain that you wish to purchase additional Units at a subscription price of $50.00 per full Unit. </font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Material U.S. Federal</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Income Tax Consequences</P></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">It is the opinion of our counsel, Morgan, Lewis &amp; Bockius LLP, that you should not recognize income or loss for U.S. federal income tax purposes in connection with the receipt or exercise of subscription rights in the rights offering.&nbsp;&nbsp;You should consult your own tax advisor as to the tax consequences to you of the receipt, exercise or lapse of the subscription rights in light of your particular circumstances. </font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td><font style="font-size: 10pt">Extension, Cancellation and Amendment</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Although we do not presently intend to do so, we have the option to extend the rights offering and the period for exercising your subscription rights. Our board of directors may cancel the rights offering at any time prior to the expiration date of the rights offering for any reason. In the event that the rights offering is cancelled, all subscription payments received by us will be returned, without interest or penalty, as soon as practicable. We also reserve the right to amend or modify the terms of the rights offering at any time. </font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td><font style="font-size: 10pt">Procedures for Exercising Rights</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">To exercise your subscription rights, you must take the following steps: </font></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 34%">&nbsp;</td>
    <td style="width: 4%">&nbsp;</td>
    <td style="width: 3%"><font style="font-family: Symbol; font-size: 10pt">&middot;</font></td>
    <td style="width: 59%"><font style="font-size: 10pt">If you are a registered holder of our common stock or preferred stock, you must deliver payment and a properly completed rights certificate to us so that we receive these items before 5:00 p.m., Eastern Time, on [_______], 201[__]. &nbsp;You may deliver the documents and payments by hand delivery, first class mail or courier service. If first class mail is used for this purpose, we recommend using registered mail, properly insured, with return receipt requested.</font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Symbol; font-size: 10pt">&middot;</font></td>
    <td><font style="font-size: 10pt">If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, or if you would rather an institution conduct the transaction on your behalf, you should instruct your broker, dealer, custodian bank or other nominee to exercise your subscription rights on your behalf. &nbsp;Please follow the instructions of your nominee, who may require that you meet a deadline earlier than 5:00 p.m., Eastern Time, on [_______], 201[__].</font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Shares Outstanding</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Before the Rights Offering</P></td>
    <td>&nbsp;</td>
    <td colspan="2"><font style="font-size: 10pt">1,150,000 shares of our Series C Convertible Preferred Stock were outstanding as of June 15, 2017.</font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td><font style="font-size: 10pt">Shares Outstanding After Completion of the Rights Offering</font></td>
    <td>&nbsp;</td>
    <td colspan="2"><font style="font-size: 10pt">Assuming all Units are sold in the rights offering, we expect approximately 1,650,000 shares of our Series C Convertible Preferred Stock will be outstanding immediately after completion of the rights offering</font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td><font style="font-size: 10pt">Fees and Expenses</font></td>
    <td>&nbsp;</td>
    <td colspan="2"><font style="font-size: 10pt">We will pay the expenses related to the rights offering. </font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td><font style="font-size: 10pt">The Over-the-Counter Bulletin Board</font></td>
    <td>&nbsp;</td>
    <td colspan="2"><font style="font-size: 10pt">Our shares of common stock are currently listed for trading on the OTCBB under the ticker symbol &ldquo;ITCC.OB .&rdquo; </font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td><font style="font-size: 10pt">Risk Factors</font></td>
    <td>&nbsp;</td>
    <td colspan="2"><font style="font-size: 10pt">Before you exercise your subscription rights to purchase shares of our common stock, you should carefully consider risks described in the section entitled &ldquo;Risk Factors,&rdquo; beginning on page 11 of this prospectus.</font></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our Corporate Information</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our principal executive
offices are located at 1510 Chester Pike, Suite 400, Eddystone, Pennsylvania 19022. Our telephone number is (484) 654-2200. Our
website address is www.inspro.com. The information contained on our website is not incorporated by reference into, and does not
form any part of, this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_004"></A>RISK FACTORS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Investing in our
securities involves significant risks. In addition to all of the other information contained in this prospectus, you should carefully
consider the risks and uncertainties described below before deciding to invest in our common stock and preferred stock. If any
of the following risks actually occur, they may materially harm our business, our financial condition or our results of operations.
In this event, the market price of our securities could decline and you could lose all or part of your investment.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Risks Related to the Rights Offering</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">If you do not exercise your subscription rights,
your percentage ownership in InsPro Technologies Corporation will be diluted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Stockholders who do
not fully exercise their subscription rights should expect that they will, at the completion of this offering, own a smaller proportional
interest in our company than would otherwise be the case had they fully exercised their basic subscription and over-subscription
rights.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">The subscription rights are not transferable, and
there is no market for the subscription rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You may not sell, give
away or otherwise transfer your subscription rights. The subscription rights are only transferable by operation of law. Because
the subscription rights are non-transferable, there is no market or other means for you to directly realize any value associated
with the subscription rights.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">If we terminate this offering for any reason, we
will have no obligation other than to return subscription monies as soon as practicable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may decide, in our
sole discretion and for any reason, to cancel or terminate the rights offering at any time prior to the expiration date. If this
offering is cancelled or terminated, we will have no obligation with respect to subscription rights that have been exercised except
to return as soon as practicable, without interest, the subscription payments deposited with us. If we terminate this offering
and you have not exercised any subscription rights, such subscription rights will expire worthless.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">The subscription price determined for this offering
is not an indication of the fair value of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In determining the
subscription price, our board of directors considered the overall economic value offered to investors in InsPro Technologies Corporation
in our last private placement in May 2017. If an investor had invested in the last private placement, for every $50.00 invested,
such investor would have received 25 shares of Series C Convertible Preferred Stock. As a result, the Units offered in this rights
offering consist of 25 shares of our Series C Convertible Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We did not seek or
obtain an opinion of financial advisors in establishing the subscription price. The subscription price will not necessarily be
related to our book value, tangible book value, net worth or any other established criteria of fair value and may or may not be
considered the fair value of our common stock to be offered in the rights offering. You should not assume or expect that, after
the rights offering, our shares of common stock will trade at or above the equivalent component of the subscription price in any
given time period.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">We will have broad discretion in the use of the
net proceeds from this offering and may not use the proceeds effectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although we plan to
use the proceeds of this offering for general corporate purposes, including working capital, we will not be restricted to such
use and will have broad discretion in determining how the proceeds of this offering will be used. Our discretion is not substantially
limited by the uses set forth in this prospectus in the section entitled &ldquo;Use of Proceeds.&rdquo; While our board of directors
believes the flexibility in application of the net proceeds is prudent, the broad discretion it affords entails increased risks
to the investors in this offering. Investors in this offering have no current basis to evaluate the possible merits or risks of
any application of the net proceeds of this offering. Our stockholders may not agree with the manner in which we choose to allocate
and spend the net proceeds.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">If you do not act on a timely basis and follow subscription
instructions, your exercise of subscription rights may be rejected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Holders of subscription
rights who desire to purchase Units in this offering must act on a timely basis to ensure that all required forms and payments
are actually received by us prior to 5:00 p.m., New York City time, on the expiration date, unless extended, unless delivery of
the subscription rights certificate is effected pursuant to the guaranteed delivery procedures as described below. If you are a
beneficial owner of shares of capital stock and you wish to exercise your subscription rights, you must act promptly to ensure
that your broker, dealer, custodian bank or other nominee acts for you and that all required forms and payments are actually received
by your broker, dealer, custodian bank or other nominee in sufficient time to deliver such forms and payments to us to exercise
the subscription rights granted in this offering that you beneficially own prior to 5:00 p.m., New York City time on the expiration
date, as may be extended, unless delivery of the subscription rights certificate is effected pursuant to the guaranteed delivery
procedures as described below. We will not be responsible if your broker, dealer, custodian bank or other nominee fails to ensure
that all required forms and payments are actually received by us prior to 5:00 p.m., New York City time, on the expiration date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you fail to complete
and sign the required subscription forms, send an incorrect payment amount, or otherwise fail to follow the subscription procedures
that apply to your exercise in this rights offering, we may, depending on the circumstances, reject your subscription or accept
it only to the extent of the payment received. We do not undertake to contact you concerning an incomplete or incorrect subscription
form or payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine whether
a subscription exercise properly follows the subscription procedures.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">You may not receive all of the Units for which you
subscribe pursuant to the over-subscription privilege.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Holders who fully exercise
their basic subscription rights will be entitled to subscribe for an additional amount of Units that are not purchased by our other
holders through the exercise of their basic subscription rights. Over-subscription rights will be allocated pro-rata among subscription
rights holders who over-subscribed, based on the number of shares of capital stock owned by such holders on the record date, relative
to the number of shares owned on the record date by all stockholders exercising the over-subscription privilege. You may not receive
any or all of the amount of Units for which you over-subscribed. If the prorated amount of Units allocated to you in connection
with your over-subscription right is less than your over-subscription request, then the excess funds held by us on your behalf
will be returned to you, without interest, as soon as practicable after the rights offering has expired and all prorating calculations
and reductions contemplated by the terms of the rights offering have been effected, and we will have no further obligations to
you.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">If you make payment of the subscription price by
uncertified check, your check may not clear in sufficient time to enable you to purchase Units in this rights offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any uncertified check
used to pay for Units to be issued in this rights offering must clear prior to the expiration date of this rights offering, and
the clearing process may require five or more business days. If you choose to exercise your subscription rights, in whole or in
part, and to pay for Units by uncertified check and your check has not cleared prior to the expiration date of this rights offering,
you will not have satisfied the conditions to exercise your subscription rights and will not receive the Units you wish to purchase.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">The receipt of subscription rights may be treated
as a taxable distribution to you.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">It is the opinion of
our counsel, Morgan, Lewis &amp; Bockius LLP, that the distribution of the subscription rights in this rights offering should be
a non-taxable distribution under Section 305(a) of the Internal Revenue Code of 1986, as amended (the &ldquo;Code&rdquo;). Please
see the discussion on the &ldquo;Material U.S. Federal Income Tax Considerations&rdquo; below. This position is not binding on
the Internal Revenue Service, or the IRS, or the courts, however. If this rights offering is deemed to be part of a &ldquo;disproportionate
distribution&rdquo; under Section 305(b)(2) of the Code (or otherwise to be within one of the exceptions to Section 305(a) of the
Code set forth in Section 305(b) of the Code), your receipt of subscription rights in this offering may be treated as the receipt
of a taxable distribution to you equal to the fair market value of the subscription rights. Any such distribution would be treated
as dividend income to the extent of our current and accumulated earnings and profits, if any, with any excess being treated as
a return of capital to the extent thereof and then as capital gain. Each holder of capital stock is urged to consult his, her or
its own tax advisor with respect to the particular tax consequences of this rights offering.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Absence of a public trading market for the shares
of Series C Convertible Preferred Stock may limit the ability of a purchaser to resell the shares of Series C Convertible Preferred
Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is no established
trading market for the shares of our Series C Convertible Preferred Stock to be issued pursuant to this offering, and such securities
may not be widely distributed. There can be no assurance that a market will develop for the shares of Series C Convertible Preferred
Stock. Even if a market for these securities does develop, the price of the Series C Convertible Preferred Stock may fluctuate
and liquidity may be limited. If a market for these securities does not develop, then purchasers of the shares of Series C Convertible
Preferred Stock may be unable to resell the securities or sell them only at an unfavorable price for an extended period of time,
if at all. Future trading prices of the shares of Series C Convertible Preferred Stock will depend on many factors, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>our operating performance and financial condition;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>our ability to continue the effectiveness of the registration statement, of which this prospectus is a part, covering the shares
of Series C Convertible Preferred Stock and the common stock issuable upon exercise or conversion of these securities;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the interest of securities dealers in making a market; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the market for similar securities.</TD></TR></TABLE>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Your ability to resell the securities you acquire
in the rights offering may be limited by state securities laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you purchase securities
in the rights offering, you may not be able to resell the securities to other persons unless the securities are registered under
the securities laws of the states in which the potential purchasers reside or exemptions from registration requirements are available
in such states. We do not intend to register any of the securities for resale in any states or jurisdictions. Consequently, you
may only be able to sell the securities in those states where exemptions are available, such as an exemption for sales to institutional
investors.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Risks Relating to our Company and Industry</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have incurred significant operating losses since
our inception, which we anticipate will continue for the foreseeable future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since our inception,
we have incurred significant operating losses. As of March 31, 2017, we had an accumulated deficit of approximately $67.3 million.
We incurred operating losses of $646,302 for the three months ended March 31, 2017, approximately $2.7 million for the year ended
December 31, 2016, approximately $6.4 million for the year ended December 31, 2015, approximately $5.2 million for the year ended
December 31, 2014, approximately $1.7 million for the year ended December 31, 2013, approximately $7.9 million for the year ended
December 31, 2012, $6.9 million for the year ended December 31, 2011, $2.5 million for the year ended December 31, 2010, $6.3 million
for the year ended December 31, 2009, $9 million for the year ended December 31, 2008, $14.3 million for the year ended December
31, 2007, $14 million for the year ended December 31, 2006, $3.2 million for the year ended December 31, 2005 and approximately
$1.1 million for the period from our inception on January 27, 2004 through December 31, 2004. We expect to incur significant operating
expenses and capital expenditures relating to the development of our software-related business, particularly as we pursue growth
internally, expanding our marketing efforts, and further the development of our technologies. In addition, we will continue to
incur significant legal, accounting and other expenses associated with our status as a reporting company under the Securities Exchange
Act of 1934, as amended (the &ldquo;Exchange Act&rdquo;). As a result, we will need to generate significant revenues to achieve
profitability. Even if we achieve profitability, we may be unable to maintain or increase profitability on a quarterly or annual
basis. If we are unable to achieve and then maintain profitability, the market value of our stock will decline.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">If we fail to increase our brand recognition, we
may face difficulty in attracting new customers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that establishing,
maintaining and enhancing our brand in a cost-effective manner is critical to achieving widespread acceptance of our current and
future products and services and is an important element in our efforts to maintain and expand our relationships with customers
and to grow our customer base, particularly in light of the competitive nature of our business. We believe that the importance
of brand recognition will increase as competition in our market develops. Some of our competitors already have well-established
brands in the individual health and life insurance market. Successful promotion of our brand will depend largely on our ability
to maintain a sizeable and active customer base, the success of our marketing efforts and our ability to provide high quality products
and reliable and useful service to our customers. There can be no assurance that brand promotion activities will yield increased
revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand. If we fail to successfully
promote and maintain our brand, or if we incur substantial expenses in an unsuccessful attempt to promote and maintain our brand,
we may fail to attract enough new customers or retain our existing customers to the extent necessary to realize a sufficient return
on our brand-building efforts, in which case our business, financial condition and results of operations could be materially harmed.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may be unable to obtain additional capital when
necessary or on terms that are acceptable to us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since our inception,
we have used significant amounts of cash in our operations and in investing activities. As of March 31, 2017, we had a cash balance
of approximately $1.99 million. We used cash in operations of approximately $1.04 million for the three months ended March 31,
2017, net cash provided by operations was approximately $175,000 for the year ended December 31, 2016, cash used in operations
was approximately $3.64 million for the year ended December 31, 2015, net cash provided by operations was approximately $1.6 million
for the year ended December 31, 2014, cash used in operations was $1.9 million for the year ended December 31, 2013, $0.7 million
for the year ended December 31, 2012, $1.5 million for the year ended December 31, 2011, $4.8 million for the year ended December
31, 2010, $5.3 million for the year ended December 31, 2009, $8.4 million for the year ended December 31, 2008, $5.5 million for
the year ended December 31, 2007, approximately $6.5 million for the year ended December 31, 2006, $1.2 million for the year ended
December 31, 2005, and approximately $0.5 million for the period from our inception on January 27, 2004 through December 31, 2004.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We expect that we will
need significant additional cash resources to operate and expand our business in the future. Our future capital requirements will
depend on many factors, including our ability to maintain our existing cost structure and return on sales, and execute our business
and strategic plans as currently conceived. If these resources are insufficient to satisfy our cash requirements, we may seek to
sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities would result in
additional dilution to our stockholders. Additional indebtedness would result in debt service obligations and could result in operating
and financing covenants that would restrict our operations. In addition, financing might be unavailable in amounts or on terms
acceptable to us, if at all.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are substantially dependent on our InsPro Enterprise
software application.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We derive virtually
all of our revenue from software license and maintenance revenue attributable to our InsPro Enterprise software application. Accordingly,
our future results depend on continued market acceptance of InsPro Enterprise, and any factor adversely affecting the market for
InsPro Enterprise could have a material adverse effect on our business, financial condition and operating results.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may be unsuccessful in attracting or retaining
key technology, sales, marketing and other personnel or in retaining the members of our senior management team.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The success of our
business is dependent on our ability to attract and retain highly skilled managers and sales and marketing personnel and to retain
the members of our senior management team. Our inability to retain key personnel and attract additional qualified personnel could
harm our development and results of operations.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may be unable to sufficiently protect our intellectual
property.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business and competitive
positions are dependent on our ability to use and protect our proprietary technologies. Our patent applications may not protect
our technologies because, among other things:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>there is no guarantee that any pending patent applications will result in issued patents;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>we may develop additional proprietary technologies that are not patentable;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>there is no guarantee that any patent issued to us will provide us with any competitive advantage;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>there is no guarantee that any patents issued to us will not be challenged, circumvented or invalidated by third parties; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>there is no guarantee that any patents previously issued to others or issued in the future will not have an adverse effect
on our ability to do business.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, if we
are unable to protect and control unpatented trade secrets, know-how and other technological innovation, we may suffer competitive
harm. We also rely on trade secrets, know-how and technologies that are not protected by patents to maintain our competitive position.
Trade secrets are difficult to protect. To maintain the confidentiality of trade secrets and proprietary information, we generally
seek to enter into confidentiality agreements with our employees, consultants and collaborators upon the commencement of a relationship
with us. However, we at times do not obtain these agreements, nor can we guarantee that these agreements will provide meaningful
protection, that these agreements will not be breached or that we will have an adequate remedy for any such breach. In addition,
adequate remedies may not exist in the event of unauthorized use or disclosure of this information. Others may have developed,
or may develop in the future, substantially similar or superior know-how and technologies. The loss or exposure of our trade secrets,
know-how and other proprietary information, or independent development of similar or superior know-how, could harm our business,
financial condition and results of operations.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may become subject to intellectual property rights
claims in the future, which are extremely costly to defend, could require us to pay significant damages and could limit our ability
to use the affected technologies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our commercial success
will depend in part on not infringing the patents or proprietary rights of third parties. Third parties could bring legal actions
against us claiming damages and seeking to enjoin us from using any technology found to be in violation of a third party&rsquo;s
rights. If we become involved in any litigation, it could consume a substantial portion of our resources, regardless of the outcome
of the litigation. If any of these actions are successful, in addition to any potential liability for damages, we could be required
to obtain a license to continue to use the affected technology, in which case we may be required to pay substantial fees. There
can be no assurance that any such license will be available on acceptable terms or at all.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">If we are unable to satisfy regulatory requirements
relating to internal controls, or if our internal controls over financial reporting are not effective, our stock price could decline.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As directed by Section
404 of the Sarbanes-Oxley Act of 2002, the Securities and Exchange Commission (the &ldquo;Commission&rdquo;), adopted rules requiring
public companies to include a report of management on the company&rsquo;s internal controls over financial reporting in their annual
reports required by Section 13(a) of the Exchange Act. Ensuring that we have adequate internal financial and accounting controls
and procedures in place to help ensure that we can produce accurate financial statements on a timely basis is a costly and time-consuming
effort that needs to be re-evaluated frequently. Any failure to maintain the adequacy of our internal controls, or the resulting
inability to produce accurate financial statements on a timely basis, could increase our operating costs and harm our ability to
operate our business. In addition, investor perception that our internal controls are inadequate or that we are unable to produce
accurate financial statements on a consistent basis may adversely affect our stock price.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may be unable to manage our growth effectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ability to compete
effectively and to manage our future growth, if any, requires us to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>continue to improve our financial and management controls and reporting systems and procedures to support the proposed expansion
of our business operations; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>locate or hire, at reasonable compensation rates, qualified personnel and other employees necessary to expand our capacity
in order to accommodate the proposed expansion of our business operations.</TD></TR></TABLE>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may be unable to find or complete strategic acquisitions
of complementary businesses or technologies or to integrate acquired businesses or technologies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business strategy
includes, among other things, achieving growth through the acquisition and integration into our business of complementary businesses
or technologies. We may be unable to find additional complementary businesses or technologies to acquire. Future acquisitions may
result in substantial per share financial dilution of our common stock from the issuance of equity securities. Completion of future
acquisitions also would expose us to potential risks, including risks associated with:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the assimilation of new operations, technologies and personnel;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>unforeseen or hidden liabilities or other unanticipated events or circumstances;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the diversion of resources from our existing business;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the inability to generate sufficient revenue to offset the costs and expenses of acquisitions, which may result in the impairment
of assets acquired through acquisitions; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the potential loss of, or harm to, relationships with our employees and customers as a result of the integration of new businesses.</TD></TR></TABLE>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our operating results may fluctuate as a result
of factors beyond our control.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our operating results
may fluctuate significantly in the future as a result of a variety of factors, many of which are beyond our control. These factors
include, but are not limited to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>capital expenditures for the development of our technologies;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>marketing and promotional activities and other costs;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>changes in operating expenses;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>increased competition in our market; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>other general economic and seasonal factors.</TD></TR></TABLE>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our business may be materially adversely impacted
by U.S. and global market and economic conditions, particularly adverse conditions in the insurance industry.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the foreseeable
future, we expect to continue to derive most of our revenue from products and services we provide to the insurance industry. Given
the concentration of our business activities in the insurance industry, we may be particularly exposed to economic downturns in
this industry. U.S. and global market and economic conditions have been, and continue to be, disrupted and volatile. A poor economic
environment could result in significant decreases in demand for our products or could present difficulties in collecting accounts
receivables from our customers due to their deteriorating financial condition. Our existing customers may be acquired by or merged
into other institutions that use our competitors or decide to terminate their relationships with us for other reasons. As a result,
our sales could decline if an existing customer is merged with or acquired by another company or closed. All of these conditions
could adversely affect our operating results and financial position.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may not be able to secure additional financing
to support capital requirements when needed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may need to raise
additional funds in the future in order to fund more aggressive promotion or more rapid market penetration, to develop new or enhanced
products, to respond to competitive pressures, to make acquisitions or for other purposes. Any required additional financing may
not be available on terms favorable to us, or at all, particularly in light of current conditions in the credit markets. If adequate
funds are not available on acceptable terms, we may be unable to meet our strategic business objectives or compete effectively,
and the future growth of our business could be adversely impacted. If additional funds are raised by our issuing equity securities,
stockholders may experience dilution of their ownership and economic interests, and the newly issued securities may have rights
superior to those of our common stock. If additional funds are raised by our issuing debt, we may be subject to significant market
risks related to interest rates, and operating risks regarding limitations on our activities.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">The markets for our products are highly competitive
and are likely to become more competitive, and our competitors may be able to respond more quickly to new or emerging technology
and changes in customer requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our insurance software
business experiences competition from certain large hardware suppliers that sell systems and system components to independent agencies
and from small independent developers and suppliers of software, who sometimes work in concert with hardware vendors to supply
systems to independent agencies. Pricing strategies and new product introductions and other pressures from existing or emerging
competitors could result in a loss of customers or a rate of increase or decrease in prices for our services different than past
experience.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Some of our current
competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial
and marketing resources than we do.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">If we infringe on the proprietary rights of others,
our business operations may be disrupted, and any related litigation could be time consuming and costly.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Third parties may claim
that we have violated their intellectual property rights. Any of these claims, with or without merit, could subject us to costly
litigation and divert the attention of key personnel. To the extent that we violate a patent or other intellectual property right
of a third party, we may be prevented from operating our business as planned, and we may be required to pay damages, to obtain
a license, if available, to use the right or to use a non-infringing method, if possible, to accomplish our objectives. The cost
of such activity could have a material adverse effect on our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If a third party infringes on our
proprietary rights, our business operations may be disrupted, and any related litigation could be time consuming and costly. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.2in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We rely on a combination of trademark, copyright
and trade secret laws in the United States and other jurisdictions as well as confidentiality procedures and contractual provisions
to protect our proprietary technology and our brand.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may be unable to compete successfully against
new and existing competitors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We operate in a highly
competitive market with few barriers to entry. We expect that competition will continue to intensify. Some of our competitors are
more established than we are, and have significantly greater financial, technical, marketing and other resources than we do. In
addition, many of our current and potential competitors can devote substantially greater resources than we can to promotion, website
development and systems development. Many of our competitors have greater name recognition and a larger customer base than we do.
These competitors may be able to respond more quickly to new or changing opportunities and customer requirements.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Technology and customer requirements evolve rapidly
in our industry, and if we do not continue to develop new products and enhance our existing products in response to these changes,
our business could be harmed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Ongoing enhancements
to our products will be required to enable us to maintain our competitive position. We may not be successful in developing and
marketing enhancements to our products on a timely basis, and any enhancements we develop may not adequately address the changing
needs of the marketplace. Overlaying the risks associated with our existing products and enhancements are ongoing technological
developments and rapid changes in customer requirements. Our future success will depend upon our ability to develop and introduce
in a timely manner new products or upgrades to our existing products that take advantage of technological advances and respond
to new customer requirements. The development of new products is increasingly complex and uncertain, which increases the risk of
delays. We may not be successful in developing new or updated products incorporating new technology on a timely basis, and any
new products may not adequately address the changing needs of the marketplace. Failure to develop new products and product enhancements
that meet market needs in a timely manner could have a material adverse effect on our business, financial condition and operating
results.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Risks Relating to our Common Stock</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Sales of substantial amounts of our common stock
in the public market could depress the market price of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our common stock currently
is quoted on the OTCBB, which is a limited and illiquid market. If our stockholders sell substantial amounts of our common stock
in the public market, including the shares being registered under this registration statement and shares issuable upon the exercise
of outstanding warrants and options, or the market perceives that such sales may occur, the market price of our common stock could
fall and we may be unable to sell our common stock in the future.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our common stock may experience extreme price and
volume fluctuations, which could lead to costly litigation for us and make an investment in us less appealing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The market price of
our common stock may fluctuate substantially due to a variety of factors, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>our business strategy and plans;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>changing factors related to doing business in various jurisdictions within the United States;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>new regulatory pronouncements and changes in regulatory guidelines and timing of regulatory approvals;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>general and industry-specific economic conditions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>additions to or departures of our key personnel;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>variations in our quarterly financial and operating results;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>changes in market valuations of other companies that operate in our business segments or in our industry;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>lack of adequate trading liquidity;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>announcements about our business partners;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>changes in accounting principles; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>general market conditions.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The market prices of
the securities of early-stage companies, particularly companies like ours without consistent product revenues and earnings, have
been highly volatile and are likely to remain highly volatile in the future. This volatility has often been unrelated to the operating
performance of particular companies. In the past, companies that experience volatility in the market price of their securities
have often faced securities class action litigation. Whether or not meritorious, litigation brought against us could result in
substantial costs, divert our management&rsquo;s attention and resources and harm our financial condition and results of operations.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our directors, executive officers and entities affiliated
with them beneficially own a substantial number of shares of our common stock, which gives them significant control over certain
major decisions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of June 15, 2017,
our executive officers and directors and entities affiliated with them beneficially owned, in the aggregate, approximately 98.8%
of our outstanding shares of common stock, 98.7% of our outstanding shares of Series A Convertible Preferred Stock, 55.3% of our
outstanding shares of Series B Convertible Preferred Stock and 93.5% of our outstanding shares of Series C Convertible Preferred
Stock based on a total of 41,543,655 shares of common stock, 1,276,750 shares of Series A Convertible Preferred Stock, 5,307,212
shares of Series B Convertible Preferred Stock and 1,150,000 shares of Series C Convertible Preferred Stock outstanding. These
executive officers, directors and their affiliates may have different interests than you. For example, they could act to delay
or prevent a change of control of us, even if such a change of control would benefit our other stockholders, could prevent or frustrate
attempts to replace or remove current management or could pursue strategies that are different from the wishes of other investors.
This significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors&rsquo;
perception that conflicts of interest may exist or arise.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Transactions in which a privately-held company merges
into a largely inactive company with publicly traded stock are generally closely scrutinized by the Commission and we may encounter
difficulties or delays in obtaining future regulatory approvals.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Historically, the Commission
and Nasdaq and securities exchanges have disfavored transactions in which a privately-held company merges into a largely inactive
company with publicly traded stock, and there is a significant risk that we may encounter difficulties in obtaining the regulatory
approvals necessary to conduct future financing or acquisition transactions, or to eventually achieve our common stock being quoted
on Nasdaq or listed on a securities exchange. Effective August 22, 2005, the Commission adopted rules dealing with private company
mergers into dormant or inactive public companies. As a result, it is likely that we will be scrutinized carefully by the Commission
and possibly by the Financial Industry Regulatory Authority (&ldquo;FINRA&rdquo;) or Nasdaq or a national securities exchange,
which could result in difficulties or delays in achieving Commission clearance of any future registration statements or other Commission
filings that we may pursue, in attracting FINRA-member broker-dealers to serve as market-makers in our stock, or in achieving admission
to Nasdaq or a national securities exchange. As a result, our financial condition and the value and liquidity of our shares may
be negatively impacted.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">As a stock quoted on the OTCBB, our common stock,
which is deemed to be &ldquo;penny stock,&rdquo; currently has limited liquidity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Holders of shares of
our common stock, which are quoted on the OTCBB, may find that the liquidity of our common stock is impaired as compared with the
liquidity of securities listed on Nasdaq or one of the national or regional exchanges in the United States. This impairment of
liquidity may result from reduced coverage of us by security analysts and news media and lower prices for our common stock than
may otherwise be attained. In addition, our common stock is deemed to be &ldquo;penny stock,&rdquo; as that term is defined in
rules under the Exchange Act. Penny stocks generally are equity securities that are not registered on certain national securities
exchanges or quoted by Nasdaq and have a price per share of less than $5.00. Penny stock may be difficult for investors to resell.
Federal rules and regulations impose additional sales practice requirements on broker-dealers who sell the stock to persons other
than established customers and accredited investors. For transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of these securities and obtain the purchaser&rsquo;s written consent to the transaction
prior to the sale. Prior to the sale, broker-dealers must also deliver to the potential purchaser a disclosure schedule prescribed
by the Commission, describing the penny stock market and disclose the commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally, broker-dealers must deliver to penny stock investors monthly
statements disclosing recent price information for penny stocks held in the account and information on the limited market in penny
stocks. These additional requirements restrict the ability of broker-dealers to sell our common stock and make it more difficult
for investors to dispose of our common stock in the secondary market and may also adversely affect the price of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_005"></A>THE RIGHTS OFFERING</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Subscription Rights</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are distributing,
at no charge to the holders of our capital stock, non-transferable subscription rights to subscribe for units, which we refer to
throughout this prospectus as Units, consisting of 25 shares of our Series C Convertible Preferred Stock. Our stockholders will
receive one subscription right for every 9,651 shares of our common stock, 483 shares of Series A Convertible Preferred Stock,
483 shares of Series B Convertible Preferred Stock, and 483 shares of Series C Convertible Preferred Stock held of record as of
5:00 p.m., New York City time, on [_______], 201[__], the record date. Pursuant to the terms of this offering, the rights may only
be exercised for a maximum of 20,000 Units, or approximately $1,000,000 of gross subscription proceeds.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each subscription right
entitles the holder to a basic subscription right and an over-subscription privilege.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Basic Subscription
Right</I></B>. With your basic subscription right, you may purchase one Unit, consisting of 25 shares of our Series C Convertible
Preferred Stock, subject to delivery of the required documents and payment of the subscription price of $50.00 per Unit, prior
to the expiration of the rights offering. You may exercise all or a portion of your basic subscription right, or you may choose
not to exercise any of your subscription rights. If you do not exercise your basic subscription rights in full, you will not be
entitled to purchase any shares under your over-subscription privilege. There is no minimum number of Units you must purchase,
but you may not purchase fractional Units. When determining the number of subscription rights you will receive, divide the number
of shares of our common stock you own by 9,651, the number of shares of Series A Convertible Preferred Stock you own by 483, the
number of shares of Series B Preferred Stock you own by 483, and the number of shares of Series C Preferred Stock you own by 483,
and round down the sum of those amounts to the next whole number. For example, if you own 100,000 shares of our common stock, 10,000
shares of our Series A Convertible Preferred Stock and 10,000 shares of our Series B Convertible Preferred Stock, you will receive
51 subscription rights (100,000 shares of common stock divided by 9,651 = 10.36, 10,000 shares of Series A Convertible Preferred
Stock divided by 483 = 20.70, 10,000 shares of Series B Convertible Preferred Stock divided by 483 = 20.70, which sum = 51.76,
rounded down to 51 subscription rights, the next whole number), which will entitle you to subscribe for up to 30 Units under your
basic subscription privilege.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any excess subscription
payments received by us will be returned, without interest, as soon as practicable following the expiration of the rights offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We will deliver certificates
representing shares of our Series C Convertible Preferred Stock or credit your account at your record holder with shares of our
Series C Convertible Preferred Stock that you purchased with the basic subscription rights as soon as practicable after the rights
offering has expired.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Over-Subscription
Privilege</I></B>. If you purchase all of the Units available to you pursuant to your basic subscription right, you may also choose
to purchase a portion of any Units that are not purchased by other stockholders through the exercise of their basic subscription
rights. If sufficient Units are available, we will seek to honor the over-subscription requests in full. If, however, over-subscription
requests exceed the number of Units available, we will allocate the available Units pro rata among the stockholders exercising
the over-subscription privilege in proportion to the number of shares of capital stock owned by such stockholder on the record
date, relative to the number of shares owned on the record date by all stockholders exercising the over-subscription privilege.
If this pro rata allocation results in any stockholder receiving a greater number of Units than the stockholder subscribed for
pursuant to the exercise of the over-subscription privilege, then such stockholder will be allocated only that number of Units
for which the stockholder oversubscribed, and the remaining Units will be allocated among all other stockholders exercising the
over-subscription privilege on the same pro rata basis described above. The proration process will be repeated until all Units
have been allocated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order to properly
exercise your over-subscription privilege, you must deliver the subscription payment related to your over-subscription privilege
prior to the expiration of the rights offering. Because we will not know the total number of unsubscribed Units prior to the expiration
of the rights offering, if you wish to maximize the number of Units you purchase pursuant to your over-subscription privilege,
you will need to deliver payment in an amount equal to the aggregate subscription price for the maximum number of Units that may
be available to you (i.e., for the maximum number of Units available to you, assuming you exercise all of your basic subscription
right and are allotted the full amount of your over-subscription without reduction).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We can provide no assurances
that you will actually be entitled to purchase the number of Units issuable upon the exercise of your over-subscription right in
full at the expiration of the rights offering. We will not be able to satisfy any orders for Units pursuant to the over-subscription
privilege if all of our stockholders exercise their basic subscription rights in full, and we will only honor an over-subscription
privilege to the extent sufficient Units are available following the exercise of subscription rights pursuant to the basic subscription
rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To the extent the aggregate
subscription price of the actual number of unsubscribed Units available to you pursuant to the over-subscription privilege is less
than the amount you actually paid in connection with the exercise of the over-subscription privilege, you will be allocated only
the number of unsubscribed Units available to you, and any excess subscription payments will be returned to you, without interest
or penalty, as soon as practicable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To the extent the amount
you actually paid in connection with the exercise of the over-subscription privilege is less than the aggregate subscription price
of the maximum number of unsubscribed Units available to you pursuant to the over-subscription privilege, you will be allocated
the number of unsubscribed Units for which you actually paid in connection with the over-subscription privilege and subject to
the elimination of any fractional Units.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any excess subscription
payments received by us will be returned, without interest or penalty, as soon as practicable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We will deliver certificates
representing shares of our of Series C Convertible Preferred Stock or credit the account of your record holder with shares of our
of Series C Convertible Preferred Stock that you purchased with the over-subscription privilege as soon as practicable after the
expiration of the rights offering.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Reasons for the Rights Offering</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are engaging in
the rights offering to give all of the holders of our capital stock the opportunity to participate in an equity investment in InsPro
Technologies Corporation on substantially the same economic terms as our last private placement in May 2017 and to raise capital
to improve our overall capital position. Our board of directors has chosen to raise capital through a rights offering to give our
stockholders the best opportunity to limit ownership dilution by participating in the rights offering on a pro-rata basis. In addition,
this rights offering, including the composition and price of the Unit, was designed to give all of the holders of our capital stock
the opportunity to participate in an equity investment in InsPro Technologies Corporation on substantially the same economic terms
as our last private placement in May 2017.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Effect of Rights Offering on Existing Stockholders</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The ownership interests
and voting interests of the existing stockholders that do not exercise their basic subscription privileges will be diluted. See
&ldquo;Questions and Answers Related to the Rights Offering.&rdquo;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Method of Exercising Subscription Rights</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The exercise of subscription
rights is irrevocable and may not be cancelled or modified. You may exercise your subscription rights as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Subscription
by Registered Holders</I></B>. If you hold an InsPro Technologies Corporation stock certificate, the number of Units you may purchase
pursuant to your basic subscription right is indicated on the enclosed rights certificate. You may exercise your subscription rights
by properly completing and executing the rights certificate and forwarding it, together with your full payment, to us at the address
set forth below under &ldquo;&mdash; Delivery of Subscription Payments,&rdquo; to be received prior to 5:00 p.m., Eastern Time,
on [_______], 201[__].</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Subscription
by Beneficial Owners</I></B>. If you are a beneficial owner of shares of our capital stock that are registered in the name of a
broker, custodian bank or other nominee, you will not receive a rights certificate. Instead, the DTC will issue one subscription
right to the nominee record holder for each 9,651 shares of our common stock, 483 shares of Series A Convertible Preferred Stock,
483 shares of Series B Convertible Preferred Stock, and 483 shares of Series C Convertible Preferred Stock that you own at the
record date. If you are not contacted by your nominee, you should promptly contact your nominee in order to subscribe for Units
in the rights offering.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Payment Method</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Payments must be made
in full in U.S. currency by:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>check or bank draft payable to InsPro Technologies Corporation, drawn upon a U.S. bank; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>wire transfer of immediately available funds to an account maintained by InsPro Technologies Corporation for purposes of this
rights offering.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Payment received after
the expiration of the rights offering will not be honored, and we will return your payment to you, without interest, as soon as
practicable. We will be deemed to receive payment upon:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>clearance of any uncertified check deposited by us into our account designated for the rights offering;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>receipt by us of any certified check or bank draft, drawn upon a U.S. bank; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>receipt of collected funds in our account designated for the rights offering.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you elect to exercise
your subscription rights, we urge you to consider using a certified or cashier&rsquo;s check, money order or wire transfer of funds
to ensure that we receive your funds prior to the expiration of the rights offering. If you send an uncertified check, payment
will not be deemed to have been received by us until the check has cleared. If you send a certified check or bank draft, drawn
upon a U.S. bank, or wire or transfer funds directly to our account, payment will be deemed to have been received by us immediately
upon receipt of such instruments or wire transfer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any personal check
used to pay for Units must clear the appropriate financial institutions prior to 5:00 p.m., Eastern Time, on [_______], 201[__],
which is the expiration of the rights offering. The clearinghouse may require five or more business days. Accordingly, holders
that wish to pay the subscription price by means of an uncertified personal check are urged to make payment sufficiently in advance
of the expiration of the rights offering to ensure such payment is received and clears by such date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You should read the
instruction letter accompanying the rights certificate carefully and strictly follow it. We will not consider your subscription
received until we have received delivery of a properly completed and duly executed rights certificate and payment of the full subscription
amount. The risk of delivery of all documents and payments is borne by you or your nominee, not by InsPro Technologies Corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The method of delivery
of rights certificates and payment of the subscription amount to us will be at the risk of the holders of subscription rights.
If sent by mail, we recommend that you send those certificates and payments by overnight courier or by registered mail, properly
insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to us and clearance
of payment prior to the expiration of the rights offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unless a rights certificate
provides that the shares of preferred stock are to be delivered to the record holder of such rights or such certificate is submitted
for the account of a bank or a broker, signatures on such rights certificate must be guaranteed by an &ldquo;eligible guarantor
institution,&rdquo; as such term is defined in Rule 17Ad-15 of the Exchange Act.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Medallion Guarantee May Be Required</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Your signature on your
rights certificate must be guaranteed by an eligible institution, such as a member firm of a registered national securities exchange
or a member of the Financial Industry Regulatory Authority, Inc., or a commercial bank or trust company having an office or correspondent
in the United States, unless:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>you provide on the rights certificate that shares are to be delivered to you as record holder of those subscription rights;
or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>you are an eligible institution.</TD></TR></TABLE>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Missing or Incomplete Subscription Information</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you hold your shares
of capital stock in the name of a custodian bank, broker, dealer or other nominee, the nominee will exercise the subscription rights
on your behalf in accordance with your instructions. Your nominee may establish a deadline that may be before the 5:00 p.m., Eastern
Time [_______], 201[__] expiration date that we have established for the rights offering. If you send a payment that is insufficient
to purchase the number of Units you requested, or if the number of Units you requested is not specified in the forms, the payment
received will be applied to exercise your subscription rights to the fullest extent possible based on the amount of the payment
received, subject to the availability of Units under the over-subscription privilege and the elimination of fractional Units. Any
excess subscription payments received by us will be returned, without interest, as soon as practicable following the expiration
of the rights offering.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Expiration Date and Cancellation Rights</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The subscription period,
during which you may exercise your subscription rights, expires at 5:00 p.m., Eastern Time, on [_______], 201[__], which is the
expiration date of the rights offering. If you do not exercise your subscription rights prior to that time, your subscription rights
will expire and will no longer be exercisable. We will not be required to issue shares of our Series C Convertible Preferred Stock
to you if we receive your rights certificate or your subscription payment after that time. We have the option to extend the rights
offering without notice to you, although we do not presently intend to do so. We may extend the expiration of the rights offering
at any time prior to the scheduled expiration of the rights offering. If we elect to extend the expiration of the rights offering,
we will issue a press release announcing such extension no later than 9:00 a.m., Eastern Time, on the next business day after the
most recently announced expiration of the rights offering. We reserve the right to amend or modify the terms of the rights offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you hold your shares
of capital stock in the name of a broker, dealer, custodian bank or other nominee, the nominee will exercise the subscription rights
on your behalf in accordance with your instructions. Please note that the nominee may establish a deadline that may be before the
5:00 p.m., Eastern Time, [_______], 201[__], expiration date that we have established for the rights offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may cancel the rights
offering at any time for any reason prior to the time the rights offering expires. If we cancel the rights offering, we will issue
a press release notifying stockholders of the cancellation and all subscription payments received by us will be returned, without
interest or penalty, as soon as practicable.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Determination of Subscription Price</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The $50.00 per Unit
subscription price was determined by our board of directors based on the per share value of the Series C Convertible Preferred
Stock purchased by investors in our last private placement in May 2017. In May 2017 we sold shares of our Series C Convertible
Preferred Stock (each share of which is convertible, at the sole option of the holder, into 20 shares of our common stock) at a
per share price of $2.00. We sold a total of 150,000 shares of Series C Convertible Preferred Stock in that offering for an aggregate
purchase price of $300,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In determining the
subscription price, our board of directors considered the overall economic value offered to investors in InsPro Technologies Corporation
in the last private placement. If an investor had invested in the last private placement, for every $50.00 invested, such investor
would have received 25 shares of Series C Convertible Preferred Stock. As a result, the Units offered in this rights offering consist
of 25 shares of our Series C Convertible Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We did not seek or
obtain an opinion of financial advisors in establishing the subscription price. The subscription price will not necessarily be
related to our book value, tangible book value, net worth or any other established criteria of fair value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is currently
no market for our shares of Series C Convertible Preferred Stock and, unless you choose to convert any shares of preferred stock
you purchase in this offering into shares of common stock, you will not be able to re-sell such shares. We urge you to obtain a
current quote for our common stock and perform an independent assessment of our Series C Convertible Preferred Stock before exercising
your subscription rights and to make your own assessment of our business and financial condition, our prospects for the future,
and the terms of this rights offering.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Terms of Series C Convertible Preferred Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each share of Series
C Convertible Preferred Stock offered in this rights offering is convertible, at the sole discretion of each holder of preferred
stock, into 20 shares of common stock, subject to certain adjustments. The holders of shares of our Series C Convertible Preferred
Stock are entitled to vote, with respect to any question upon which holders of our common stock are entitled to vote, together
with the holders of common stock as one class on an as-converted basis. At such time, if at all, as our board of directors declares
a dividend or distribution on the common stock, the holders of preferred stock shall be entitled to receive, for each share of
Series C Convertible Preferred Stock held by them, a dividend or distribution in an amount equal to what such holder of preferred
stock would receive if their shares were converted into shares of common stock. We do not currently intend to pay any cash dividends
to the holders of shares of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, upon the
liquidation, sale or merger of InsPro Technologies Corporation, each share of our Series C Convertible Preferred Stock is entitled
to receive an amount equal to the greater of (i) a liquidation preference equal to two and a half (2.5) times the preferred stock
original issue price, subject to certain customary adjustments, or (ii) the amount such preferred stock would receive if it participated
pari passu with the holders of our common stock on an as-converted basis. For so long as any shares of Series C Convertible Preferred
Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series C Convertible Preferred
Stock is required to approve (i) any amendment to our certificate of incorporation or bylaws that would adversely alter the voting
powers, preferences or special rights of the Series C Convertible Preferred Stock or (ii) any amendment to our certificate of incorporation
to create any shares of capital stock that rank senior to the Series C Convertible Preferred Stock. In addition to the voting rights
described above, for so long as 1,000,000 shares of Series C Convertible Preferred Stock are outstanding, the vote or consent of
the holders of at least two-thirds of the preferred stock is required to effect or validate any merger, sale of substantially all
of the assets of InsPro Technologies Corporation or other fundamental transaction, unless such transaction, when consummated, will
provide the holders of Series C Convertible Preferred Stock with an amount per share equal to two and a half (2.5) times the preferred
stock original issue price plus any declared but unpaid dividends.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Withdrawal, Amendment and Termination</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We reserve the right
to withdraw the rights offering at any time for any reason. We also may amend or terminate the rights offering at any time before
its completion if our board of directors decides to do so in its sole discretion. If we terminate the rights offering, all affected
subscription rights will expire without value, and all excess subscription payments received by us will be returned, without interest,
as soon as practicable.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Delivery of Subscription Payments</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The address to which
rights certificates and payments, other than wire transfers, should be mailed or delivered is provided below. If sent by mail,
we recommend that you send documents and payments by overnight courier or by registered mail, properly insured, with return receipt
requested, and that a sufficient number of days be allowed to ensure delivery.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">InsPro Technologies Corporation</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">1510 Chester Pike</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Suite 400</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Eddystone, PA 19022</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Attn: Francis L. Gillan III</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you deliver subscription
documents or rights certificates in a manner different than that described in this prospectus, we may not honor the exercise of
your subscription rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you have any questions
regarding completing a rights certificate, submitting payment in the rights offering, or questions or requests regarding InsPro
Technologies Corporation or the rights offering in general, please call Francis L. Gillan III, at (484) 654-2200. You may also
contact us with questions by electronic mail at <U>rightsoffering@inspro.com</U>.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Fees and Expenses</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We will pay the fees
and expenses of collecting the subscription payments and distributing the share certificates associated with the Units. You are
responsible for paying any other commissions, fees, taxes or other expenses that you may incur in connection with the exercise
of your subscription rights.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">No Fractional Shares</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All Units will be sold
at a purchase price of $50.00 per Unit. We will not issue fractional Units. Fractional Units resulting from the exercise of the
basic subscription rights and the over-subscription privileges will be eliminated by rounding down to the nearest whole Unit. Any
excess subscription payments received by us will be returned, without interest, as soon as practicable.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Notice to Nominees</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you are a broker,
custodian bank or other nominee holder that holds shares of our capital stock for the account of others on the record date, you
should notify the beneficial owners of the shares for whom you are the nominee of the rights offering as soon as possible to learn
their intentions with respect to exercising their subscription rights. You should obtain instructions from the beneficial owners
of our capital stock. If a registered holder of our capital stock so instructs, you should complete the rights certificate and
submit it to us with the proper subscription payment by the expiration date. You may exercise the number of subscription rights
to which all beneficial owners in the aggregate otherwise would have been entitled had they been direct holders of our capital
stock on the record date, provided that you, as a nominee record holder, make a proper showing to us by submitting the form entitled
&ldquo;Nominee Holder Certification,&rdquo; which is provided with your rights offering materials. If you did not receive this
form, you should contact us to request a copy.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Beneficial Owners</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you are a beneficial
owner of shares of our capital stock and will receive your subscription rights through a broker, custodian bank or other nominee,
we will ask your nominee to notify you of the rights offering. If you wish to exercise your subscription rights, you will need
to have your nominee act for you, as described above. To indicate your decision with respect to your subscription rights, you should
follow the instructions of your nominee. If you wish instead to obtain a separate rights certificate, you should contact your nominee
as soon as possible and request that a rights certificate be issued to you. You should contact your nominee if you do not receive
notice of the rights offering, but you believe you are entitled to participate in the rights offering. We are not responsible if
you do not receive the notice by mail or otherwise from your nominee or if you receive notice without sufficient time to respond
to your nominee by the deadline established by your nominee, which may be before the 5:00 p.m., Eastern Time, [_______], 2017,
expiration date.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Non-Transferability of Subscription Rights</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The subscription rights
granted to you are non-transferable and, therefore, you may not sell, transfer or assign your subscription rights to anyone. We
will not be listing shares of our Series C Convertible Preferred Stock or the subscription rights for trading on OTCBB or any other
stock exchange or market.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Validity of Subscriptions</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We will resolve all
questions regarding the validity and form of the exercise of your subscription rights, including time of receipt and eligibility
to participate in the rights offering. Our determination will be final and binding. Once made, subscriptions and directions are
irrevocable, and we will not accept any alternative, conditional or contingent subscriptions or directions. We reserve the absolute
right to reject any subscriptions or directions not properly submitted or the acceptance of which would be unlawful. You must resolve
any irregularities in connection with your subscriptions before the subscription period expires, unless waived by us in our sole
discretion. We shall not be under any duty to notify you or your representative of defects in your subscriptions. A subscription
will be considered accepted, subject to our right to withdraw or terminate the rights offering, only when a properly completed
and duly executed rights certificate and any other required documents and the full subscription payment have been received by us.
Our interpretations of the terms and conditions of the rights offering will be final and binding.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Escrow Arrangements; Return of Funds</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We will hold funds
received in payment for Units in a segregated account pending completion of the rights offering. We will hold this money in escrow
until the rights offering is completed or is withdrawn and cancelled. If the rights offering is cancelled for any reason, all subscription
payments received by us will be returned, without interest or penalty, as soon as practicable.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Stockholder Rights</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You will have no rights
as a holder of the shares of our Series C Convertible Preferred Stock you purchase in the rights offering until certificates representing
the shares of our Series C Convertible Preferred Stock are issued to you.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">No Revocation or Change</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Once you submit the
rights certificate or have instructed your nominee of your subscription request, you are not allowed to revoke or change the exercise
or request a refund of monies paid. All exercises of subscription rights are irrevocable, even if you learn information about us
that you consider to be unfavorable. You should not exercise your subscription rights unless you are certain that you wish to purchase
Units at the subscription price.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Material U.S. Federal Income Tax Treatment of Rights
Distribution</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">It is the opinion of
our counsel, Morgan, Lewis &amp; Bockius LLP, that you should not recognize income or loss upon receipt or exercise of these subscription
rights to purchase shares of our Series C Convertible Preferred Stock for the reasons described below in &ldquo;Material U.S. Federal
Income Tax Considerations.&rdquo;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">No Recommendation to Rights Holders</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors
is making no recommendation regarding your exercise of the subscription rights. Stockholders who exercise subscription rights risk
investment loss on new money invested. You are urged to make your decision based on your own assessment of our business and financial
condition, our prospects for the future and the terms of this rights offering. Please see &ldquo;Risk Factors&rdquo; for a discussion
of some of the risks involved in investing in our common and preferred stock.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Shares of Our Series C Convertible Preferred Stock
Outstanding After the Rights Offering</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of June 15, 2017,
1,150,000 shares of our Series C Convertible Preferred Stock were issued and outstanding. Assuming no other transactions by us
involving our Series C Convertible Preferred Stock, if the rights offering is fully subscribed through the exercise of the subscription
rights, then an additional 500,000 shares of our Series C Convertible Preferred Stock will be issued and outstanding after the
closing of the rights offering, for a total of 1,650,000 shares of Series C Convertible Preferred Stock outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_006"></A>USE OF PROCEEDS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although the actual
amount will depend on participation in the rights offering, we expect that the net proceeds from the rights offering will be approximately
$892,384. We intend to use the proceeds of the rights offering for general corporate and working capital purposes, including for
the purpose of funding current operations, discontinued operations and future commitments. Obtaining funding through the rights
offering will allow us additional timing flexibility before we need to raise funds through additional financings or other methods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To the extent that
we raise less than $892,384 in net proceeds in the rights offering, we anticipate reducing the amounts of proceeds to be allocated
to the foregoing uses on a pro rata basis.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_007"></A>DILUTION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Purchasers of Units
in the rights offering will experience an immediate dilution of the net tangible book value per share of our common stock. Our
net tangible book value as of March 31, 2017 was approximately $(4,350,272), or $(0.0251) per share of our common stock (based
upon 41,354,655 shares of our common stock outstanding, as adjusted for 25,535,000 shares of common stock underlying the 1,276,750
shares of our Series A Convertible Preferred Stock and the 106,144,240 shares of common stock underlying the 5,307,212 shares of
our Series B Convertible Preferred Stock outstanding). Net tangible book value per share is equal to our total net tangible book
value, which is our total tangible assets less our total liabilities, divided by the number of shares of our outstanding common
stock. Dilution per share equals the difference between the amount per share of common stock paid by purchasers of Units in the
rights offering and the net tangible book value per share of our common stock immediately after the rights offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Based on the aggregate
offering of a maximum of 20,000 Units and after deducting estimated offering expenses payable by us of approximately $107,616,
and the application of the estimated $892,384 of net proceeds from the rights offering, our pro forma net tangible book value as
of March 31, 2017 would have been approximately $(3,457,888) or $(0.0189) per share. This represents an immediate increase in pro
forma net tangible book value to existing stockholders of $0.0062 per share and an immediate dilution to purchasers in the rights
offering of $0.0938 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table
illustrates this per-share dilution (assuming a fully subscribed for rights offering of 20,000 Units at the subscription price
of $50.00 per Unit but excluding any issuance of shares of common stock to holders of warrants):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 82%; font-weight: bold">Price per unit</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">50.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net tangible book value per common share prior to the rights offering</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.0251</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="font-weight: bold; text-align: left">Increase per common share attributable to the rights offering</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.0062</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Pro forma net tangible book value per common share after the rights offering</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.0189</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="font-weight: bold; text-align: left">Dilution in net tangible book value per common share to purchasers</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.0938</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_008"></A>CAPITALIZATION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table
sets forth our capitalization, cash and cash equivalents:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>on an actual basis as of March 31, 2017; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>on a pro forma as adjusted basis to give effect to the sale of maximum of 20,000 Units in this rights offering (but excluding
any issuance of shares of common stock to holders of warrants), assuming a subscription price of $50.00 per Unit, and our receipt
of the net proceeds of $892,384 from that sale after deducting estimated offering expenses payable by us.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This table should be
read in conjunction with our &ldquo;Management&rsquo;s Discussion and Analysis or Plan of Operation&rdquo; and our consolidated
financial statements and the related notes included elsewhere in this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center">March 31, 2017<BR> (Unaudited)</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center">Actual</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Pro Forma</b></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>As Adjusted (1)</b></P></TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 64%; font-weight: bold">Cash</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">1,985,940</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">2,878,324</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Total assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">6,539,410</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">7,431,794</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="font-weight: bold; text-align: left">Total liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10,889,682</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10,889,682</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net tangible book value</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(4,350,272</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(3,457,888</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="font-weight: bold; text-align: left">Total shareholders&rsquo; equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(4,350,272</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(3,457,888</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Total liabilities and shareholders&rsquo; equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">6,539,410</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">7,431,794</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(1) Assumes the rights offering is fully
subscribed for, of which no assurances can be given.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_009"></A>DESCRIPTION OF SECURITIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our authorized capital
stock consists of 500,000,000 shares of common stock, par value $0.001 per share, and 20,000,000 shares of preferred stock, par
value $0.001 per share, 3,437,500 of which are designated as Series A Convertible Preferred Stock, 11,000,000 of which are designated
as Series B Convertible Preferred Stock, and 4,000,000 of which are designated as Series C Convertible Preferred Stock. As of March
31, 2017, we had 1,276,750 shares of Series A Convertible Preferred Stock currently issued and outstanding, 380,000 shares of Series
A Convertible Preferred Stock reserved for issuance underlying currently issued and outstanding warrants. As of March 31, 2017,
we had 5,307,212 shares of Series B Convertible Preferred Stock currently issued and outstanding and 3,250,000 shares of Series
B Convertible Preferred Stock reserved for issuance under currently issued and outstanding warrants. As of March 31, 2017, none
of our shares of preferred stock were designated as Series C Convertible Preferred Stock. As of March 31, 2017, we had 41,543,655
shares of common stock issued and outstanding, 25,098,330 shares of common stock reserved for issuance underlying currently issued
and outstanding warrants, 3,400,000 shares of common stock reserved for issuance underlying currently issued and outstanding options,
and 25,596,980 shares of common stock reserved for issuance under certain of our existing equity compensation plans.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Common Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Holders of shares of
our common shares are entitled to one vote per share on all matters to be voted upon by the stockholders and are not entitled to
cumulative voting for the election of directors. Holders of common stock are entitled to receive ratably such dividends, if any,
as may be declared from time to time by our board of directors out of funds legally available therefore, subject to the rights
of the preferred stockholders. We do not currently intend to pay any cash dividends to the holders of common stock. In the event
that we liquidate, dissolve or wind up the Company, the holders of common stock are entitled to share ratably in all assets remaining
after payment of liabilities and the preferences of preferred stockholders. Our common stock has no preemptive, conversion or other
subscription rights. There are no redemption or sinking fund provisions applicable to common shares.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Series A Convertible Preferred Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each share of Series
A Convertible Preferred Stock is convertible, at the sole discretion of each holder of Series A Convertible Preferred Stock, into
20 shares of common stock, subject to certain adjustments. The holders of shares of our Series A Convertible Preferred Stock are
entitled to vote, with respect to any question upon which holders of our common stock are entitled to vote, together with the holders
of common stock as one class on an as-converted basis. At such time, if any, as our board of directors declares a dividend or distribution
on the common stock, the holders of Series A Convertible Preferred Stock shall be entitled to receive, for each share of Series
A Convertible Preferred Stock held by them, a dividend or distribution in an amount equal to what such holder of Series A Convertible
Preferred Stock would receive if their shares were converted into shares of common stock. We do not currently intend to pay any
cash dividends to the holders of shares of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, upon the
liquidation, sale or merger of InsPro Technologies Corporation, each share of our Series A Convertible Preferred Stock is entitled
to receive an amount equal to the greater of (i) a liquidation preference equal to two and a half (2.5) times the Series A Convertible
Preferred Stock original issue price, subject to certain customary adjustments, or (ii) the amount such preferred stock would receive
if it participated pari passu with the holders of our common stock on an as-converted basis. For so long as any shares of Series
A Convertible Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series
A Convertible Preferred Stock is required to approve (i) any amendment to our certificate of incorporation or bylaws that would
adversely alter the voting powers, preferences or special rights of the Series A Convertible Preferred Stock or (ii) any amendment
to our certificate of incorporation to create any shares of capital stock that rank senior to the Series A Convertible Preferred
Stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series A Convertible Preferred Stock
are outstanding, the vote or consent of the holders of at least two-thirds of the Series A Convertible Preferred Stock is required
to effect or validate any merger, sale of substantially all of the assets of InsPro Technologies Corporation or other fundamental
transaction, unless such transaction, when consummated, will provide the holders of Series A Convertible Preferred Stock with an
amount per share equal to two and a half (2.5) times the Series A Convertible Preferred Stock original issue price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the event of (i)
the sale of all or substantially all of the assets of InsPro Technologies Corporation, (ii) any tender offer or exchange pursuant
to which the holders of a majority of common stock exchange such shares for other securities, cash or property or (iii) any reclassification
of the common stock pursuant to which the shares of common stock are effectively converted or exchanges for other securities, cash
or property, if we do not effect a dissolution within 90 days after such event, the holder of a majority of the shares of Series
A Convertible Preferred Stock may require, within 120 days of such event, to redeem all outstanding shares of Series A Convertible
Preferred Stock at a price per share equal to two and a half (2.5) times the Series A Convertible Preferred Stock original issue
price, subject to certain customary adjustments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Except as noted above
our shares of Series A Convertible Preferred Stock have no other conversion, preemptive or other subscription rights. There are
no sinking fund provisions applicable to preferred stock.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Series B Convertible Preferred Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each share of Series
B Convertible Preferred Stock is convertible, at the sole discretion of each holder of Series B Convertible Preferred Stock, into
20 shares of common stock, subject to certain adjustments. The holders of shares of our Series B Convertible Preferred Stock are
entitled to vote, with respect to any question upon which holders of our common stock are entitled to vote, together with the holders
of common stock as one class on an as-converted basis. At such time, if any, as our board of directors declares a dividend or distribution
on the common stock, the holders of Series B Convertible Preferred Stock shall be entitled to receive, for each share of Series
B Convertible Preferred Stock held by them, a dividend or distribution in an amount equal to what such holder of Series B Convertible
Preferred Stock would receive if their shares were converted into shares of common stock. We do not currently intend to pay any
cash dividends to the holders of shares of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, upon the
liquidation, sale or merger of InsPro Technologies Corporation, each share of our Series B Convertible Preferred Stock is entitled
to receive an amount equal to the greater of (i) a liquidation preference equal to the Series B Convertible Preferred Stock original
issue price, subject to certain customary adjustments, or (ii) the amount such Series B Convertible Preferred Stock would receive
if it participated pari passu with the holders of our common stock on an as-converted basis. For so long as any shares of Series
B Convertible Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series
B Convertible Preferred Stock is required to approve (i) any amendment to our certificate of incorporation or bylaws that would
adversely alter the voting powers, preferences or special rights of the Series B Convertible Preferred Stock or (ii) any amendment
to our certificate of incorporation to create any shares of capital stock that rank senior to the Series B Convertible Preferred
Stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series B Convertible Preferred Stock
are outstanding, the vote or consent of the holders of at least two-thirds of the Series B Convertible Preferred Stock is required
to effect or validate any merger, sale of substantially all of the assets of InsPro Technologies Corporation or other fundamental
transaction, unless such transaction, when consummated, will provide the holders of Series B Convertible Preferred Stock with an
amount per share equal to the Series B Convertible Preferred Stock original issue price, plus any declared but unpaid dividends.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Except as noted above
our shares of Series B Convertible Preferred Stock have no other conversion, preemptive or other subscription rights. There are
no sinking fund provisions applicable to Series B Convertible Preferred Stock.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Series C Convertible Preferred Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each share of Series
C Convertible Preferred Stock is convertible, at the sole discretion of each holder of Series C Convertible Preferred Stock, into
20 shares of common stock, subject to certain adjustments. The holders of shares of our Series C Convertible Preferred Stock are
entitled to vote, with respect to any question upon which holders of our common stock are entitled to vote, together with the holders
of common stock as one class on an as-converted basis. At such time, if any, as our board of directors declares a dividend or distribution
on the common stock, the holders of Series C Convertible Preferred Stock shall be entitled to receive, for each share of Series
C Convertible Preferred Stock held by them, a dividend or distribution in an amount equal to what such holder of Series C Convertible
Preferred Stock would receive if their shares were converted into shares of common stock. We do not currently intend to pay any
cash dividends to the holders of shares of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, upon the
liquidation, sale or merger of InsPro Technologies Corporation, each share of our Series C Convertible Preferred Stock is entitled
to receive an amount equal to the greater of (i) a liquidation preference equal to two and a half (2.5) times the Series C Convertible
Preferred Stock original issue price, subject to certain customary adjustments, or (ii) the amount such preferred stock would receive
if it participated pari passu with the holders of our common stock on an as-converted basis. For so long as any shares of Series
C Convertible Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series
C Convertible Preferred Stock is required to approve (i) any amendment to our certificate of incorporation or bylaws that would
adversely alter the voting powers, preferences or special rights of the Series C Convertible Preferred Stock or (ii) any amendment
to our certificate of incorporation to create any shares of capital stock that rank senior to the Series C Convertible Preferred
Stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series C Convertible Preferred Stock
are outstanding, the vote or consent of the holders of at least two-thirds of the Series C Convertible Preferred Stock is required
to effect or validate any merger, sale of substantially all of the assets of InsPro Technologies Corporation or other fundamental
transaction, unless such transaction, when consummated, will provide the holders of Series C Convertible Preferred Stock with an
amount per share equal to two and a half (2.5) times the Series C Convertible Preferred Stock original issue price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the event of (i)
the sale of all or substantially all of the assets of InsPro Technologies Corporation, (ii) any tender offer or exchange pursuant
to which the holders of a majority of common stock exchange such shares for other securities, cash or property or (iii) any reclassification
of the common stock pursuant to which the shares of common stock are effectively converted or exchanges for other securities, cash
or property, if we do not effect a dissolution within 90 days after such event, the holder of a majority of the shares of Series
C Convertible Preferred Stock may require, within 120 days of such event, to redeem all outstanding shares of Series C Convertible
Preferred Stock at a price per share equal to two and a half (2.5) times the Series C Convertible Preferred Stock original issue
price, subject to certain customary adjustments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Except as noted above
our shares of Series C Convertible Preferred Stock have no other conversion, preemptive or other subscription rights. There are
no sinking fund provisions applicable to preferred stock.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Warrants</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of June 15, 2017,
there were outstanding warrants to purchase up to 25,098,330 shares of our common stock at an exercise price per share of $0.15.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of June 15, 2017,
there were outstanding warrants to purchase up to 380,000 shares of our Series A Convertible Preferred Stock at an exercise price
per share of $4.00.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of June 15, 2017,
there were outstanding warrants to purchase up to 3,250,000 shares of our Series B Convertible Preferred Stock at an exercise price
per share of $3.00.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Prior to exercise,
the warrants do not confer upon holders any voting or any other rights as a stockholder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_010"></A>MARKET FOR OUR COMMON STOCK AND RELATED
STOCKHOLDER MATTERS</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Market Information</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our common stock has
been quoted on the OTCBB since December 6, 2010 under the symbol ITCC.OB and from December 13, 2005 until December 3, 2010 under
the symbol HBDT.OB. Prior to December 13, 2005, there was no active market for our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table
sets forth the high and low bid prices for our common stock for the periods indicated, as reported by the OTCBB. The prices state
inter-dealer quotations, which do not include retail mark-ups, mark-downs or commissions. Such prices do not necessarily represent
actual transactions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: right; border-bottom: Black 2px solid">High</TD><TD STYLE="padding-bottom: 2px; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: center">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: right; border-bottom: Black 2px solid">Low</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="border-bottom: Black 2px solid">2015:</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%">First quarter, ended March 31, 2015</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">0.090</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">0.040</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Second quarter, ended June 30, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.075</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.030</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Third quarter, ended September 30, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.060</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.030</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Fourth quarter, ended December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.0625</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.015</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="border-bottom: Black 2px solid">2016:</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>First quarter, ended March 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.045</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.031</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Second quarter, ended June 30, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.042</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.025</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Third quarter, ended September 30, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.038</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Fourth quarter, ended December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.090</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.023</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="border-bottom: Black 2px solid">2017:</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>First quarter, ended March 31, 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.0724</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.0280</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Second quarter, through [________], 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.0650</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.0400</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Holders of Record</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Based on information
furnished by our transfer agent, as of June 15, 2017, we had approximately 109 holders of record of our common stock.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Dividends</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have not declared any cash dividends
on our common stock during the last two fiscal years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_011"></A>BUSINESS</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Overview</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a technology
company that provides software applications for use by insurance administrators in the insurance industry. Our business focuses
primarily on our InsPro Enterprise software application.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We acquired Atiam Technologies,
L.P. on October 1, 2007. HBDC Acquisition, LLC, which changed its name to InsPro Technologies, LLC (&ldquo;InsPro LLC&rdquo;) on
May 14, 2009, develops, sells and supports our InsPro Enterprise software application. InsPro Enterprise is a comprehensive, web-based
insurance administration software application, which was introduced by Atiam Technologies, L.P. in 2004. InsPro Enterprise clients
include insurance carriers and third party administrators. We market InsPro Enterprise as a licensed software application, and
we realize revenue from the sale of the software licenses, application service provider fees, software maintenance fees and consulting
and implementation services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During 2005 through
October 1, 2007 our operations were primarily that of our former Telesales and Insurint businesses. We effectively sold our former
Telesales business in 2009 and our former Insurint business in 2010. Our former Telesales and Insurint businesses are now classified
as part of our discontinued operations.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">InsPro Enterprise</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><U>Product Evolution and Development</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">InsPro LLC and its
predecessor, Systems Consulting Associates, Inc., or SCA, was founded in 1986 by Robert J. Oakes as a programming and consulting
services company. In 1988, SCA entered into a long-term contract with Provident Mutual Insurance Company to develop, maintain,
install, support and enhance IMACS, which was an insurance direct marketing and administration software system. IMACS was the precursor
of InsPro Enterprise. InsPro LLC dedicated four years, from 2001 to 2005, to developing its principal product, InsPro Enterprise,
which is a comprehensive, scalable and modular web-based insurance marketing, claims administration and policy servicing platform.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><U>Product and Services</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We offer InsPro Enterprise
on both a licensed and an Application Service Provider (&ldquo;ASP&rdquo;) basis. InsPro is an insurance administration and marketing
system that supports group and individual business lines, and efficiently processes agent, direct market, worksite and web site
generated business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">During the three months ended March 31,
2017, we earned $5,046,766 in revenue of which 31% was earned from Trustmark Insurance Company, 20% earned from various subsidiaries
of Cap Gemini S.A. During 2016, we earned $21,830,928 in revenue of which 30% was earned from Trustmark Insurance Company, 16%
earned from various subsidiaries of Cap Gemini S.A. and 14% from Cigna Corporate Services, LLC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">InsPro Enterprise incorporates
a modular design, which enables the customer to purchase only the functionality needed, thus minimizing the customer&rsquo;s implementation
cost and time necessary to implement InsPro Enterprise. InsPro Enterprise can be rapidly tailored to the requirements of a wide
range of customers from the largest insurance companies and marketing organizations to the smallest third party administrators,
operating in environments ranging from a single server environment to the mainframe installations. InsPro Enterprise currently
supports a wide range of insurance distribution channels, including the Internet, traditional direct marketing, agent-generated,
individual and group plans, worksite and association-booked business, and supports underwritten as well as guaranteed issue insurance
products including long term care, Medicare supplement, critical illness, long and short term disability, whole and term life,
comprehensive major, hospital indemnity and accidental death and dismemberment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">An InsPro Enterprise
software license entitles the purchaser to a perpetual license to a copy of the InsPro Enterprise software installed at a single
client location, which may be used to drive a production and model office instance of the application. The ASP Hosting Service
enables a client to lease InsPro Enterprise, paying only for that capacity required to support their business. ASP hosting clients
access an instance of InsPro Enterprise installed on our servers located at InsPro LLC&rsquo;s offices or at a third party&rsquo;s
site. The ASP Hosting Service can also enable a client to outsource their application management of their perpetually licensed
InsPro Enterprise software to InsPro LLC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Software maintenance
fees apply to both licensed and ASP clients. Maintenance fees cover periodic updates to the application and the InsPro Enterprise
Help Desk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Consulting and implementation
services are generally associated with the implementation of an InsPro Enterprise instance for either an ASP or licensed client,
and cover such activity as InsPro Enterprise installation, configuration, modification of InsPro Enterprise functionality, client
insurance plan set-up, client insurance document design and system documentation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">InsPro Enterprise software
agreements with our clients often involve multiple elements. We allocate revenue to each element based on the relative fair value
or the residual method, as applicable using vendor specific objective evidence to determine fair value, which is based on prices
charged when the element is sold separately. Software revenue is recognized when persuasive evidence of an arrangement exists,
the software is delivered in accordance with all terms and conditions of the customer contracts, the fee is fixed or determinable
and collectability is probable. Maintenance revenue, which pertains to post-contract customer support including technical support
and unspecified when-and-if available software upgrades, is recognized ratably over the maintenance agreement term. If fair value
does not exist for any undelivered element, revenue is not recognized until the earlier of (i) delivery of such element or (ii)
when fair value of the undelivered element is established, unless the undelivered element is a service, in which case revenue is
recognized as the service is performed once the service is the only undelivered element.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><U>Sales, Marketing and Operations</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">InsPro LLC markets
its products and services directly to prospective insurance carriers and third party administrators via trade shows, advertising
in industry publications and direct mail.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">InsPro LLC also provides
professional services to its clients, which include InsPro system implementation, legacy system migration to InsPro, InsPro application
management, web development, InsPro help desk and 24x7 hosting service support.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Competition</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The market for insurance
policy administration systems and services is very competitive, rapidly evolving, highly fragmented and subject to technological
change. Many of our competitors are more established than we are and have greater name recognition, a larger customer base and
greater financial, technical and marketing resources than InsPro LLC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">InsPro LLC is focused
on the group voluntary (workplace) life and health products, senior health, disability, affinity, long term care and association
segments of the insurance industry. InsPro LLC competes with such concerns as Synnex Corporation (Genelco Software), Computer Sciences
Corporation (FutureFirst), LifePro and Fiserv Inc. (ID3), as well as with such smaller enterprises as Management Data, Inc. To
compete we use best practice technologies and methods incorporated into InsPro Enterprise, which provides customers with a user-friendly,
flexible, modular and cost-effective insurance administrative software system. InsPro Enterprise&rsquo;s modular design, scalability
and ASP hosting service option makes InsPro Enterprise a compelling insurance administrative system for clients ranging from small
third party administrators to the largest insurance carriers.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Employees</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of June 15, 2017
we had 62 full time and 1 part time employees for a total of 63 employees. None of our employees are members of any labor union
and we are not a party to any collective bargaining agreement. We believe that the relationship between our management and our
employees is good.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Intellectual Property and Proprietary Rights</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We rely on a combination
of trademark, copyright and trade secret laws in the United States and other jurisdictions as well as confidentiality procedures
and contractual provisions to protect our proprietary technology and our brand.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Corporate Information</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We were incorporated
under the laws of the state of Nevada on October 21, 2004 as Darwin Resources Corp., or Darwin-NV, an exploration stage company
engaged in mineral exploration. On November 22, 2005, Darwin-NV merged with and into its newly-formed wholly-owned subsidiary,
Darwin Resources Corp., a Delaware corporation, or Darwin-DE, solely for the purpose of changing the company&rsquo;s state of incorporation
from Nevada to Delaware. On November 23, 2005, HBDC II, Inc., a newly-formed wholly-owned subsidiary of Darwin-DE, was merged with
and into Health Benefits Direct Corporation, a privately-held Delaware corporation engaged in direct marketing and distribution
of health and life insurance and related products primarily over the Internet, and the name of the resulting entity was changed
from Health Benefits Direct Corporation to HBDC II, Inc. Following this merger, Darwin-DE changed its name to Health Benefits Direct
Corporation and, as a result, HBDC II, Inc. became our wholly-owned subsidiary. On November 29, 2010, Health Benefits Direct Corporation
changed its name to InsPro Technologies Corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our principal executive
offices are located at 1510 Chester Pike, Suite 400, Eddystone, Pennsylvania 19022. Our telephone number is (484) 654-2200. The
principal offices of our wholly-owned subsidiary, InsPro LLC, are located at 1510 Chester Pike, Suite 400, Eddystone, PA 19022
and its web site is www.inspro.com.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Investor Information</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All periodic and current
reports, registration statements and other material that we are required to file with the Commission, including our annual report
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant
to Section 13(a) of the Exchange Act, may be obtained free of charge by writing to us at InsPro Technologies Corporation, 1510
Chester Pike, Suite 400, Eddystone, Pennsylvania 19022 or e-mailing us at <U>finance@inspro.com</U>. Such documents are available
as soon as reasonably practicable after electronic filing of the material with the Commission. Our Internet websites and the information
contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The public may also
read and copy any materials we have filed with the Commission at the Commission&rsquo;s Public Reference Room at 100 F Street,
NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission
at 1-800-SEC-0330. The Commission maintains an Internet site, www.sec.gov, which contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the Commission.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Properties</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not own any real
estate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We lease approximately
17,567 square feet of space in Eddystone, Pennsylvania. We lease this office space under a lease agreement with BPG Officer VI
Baldwin Tower L.P. The term of this lease commenced on August 1, 2007, and will expire on January 31, 2018. The monthly rent increases
every 12 months, starting at approximately $8,500 and ending at approximately $28,546.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Legal Proceedings</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are involved in
various investigations, claims and lawsuits arising in the normal conduct of our business, none of which, in our opinion, will
harm our business. We cannot assure that we will prevail in any litigation. Regardless of the outcome, any litigation may require
us to incur significant litigation expense and may result in significant diversion of our attention.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_012"></A>MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Overview</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The current operations
of InsPro Technologies Corporation (the &ldquo;Company&rdquo;, &ldquo;we&rdquo;, &ldquo;us&rdquo; or &ldquo;our&rdquo;) consist
of the operations of our wholly owned InsPro Technologies, LLC subsidiary (&ldquo;InsPro LLC&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">InsPro Enterprise is
a comprehensive, web-based insurance administration software application. InsPro Enterprise was introduced by Atiam Technologies,
L.P. (now InsPro LLC) in 2004. InsPro Enterprise clients include health insurance carriers and third party administrators. We market
InsPro Enterprise as a licensed software application, and we realize revenue from the sale of the software licenses, application
service provider fees, software maintenance fees and professional services.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Critical Accounting Policies</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Financial Reporting
Release No. 60, which was released by the Securities and Exchange Commission (the &ldquo;Commission&rdquo;), encourages all companies
to include a discussion of critical accounting policies or methods used in the preparation of financial statements. Our consolidated
financial statements include a summary of the significant accounting policies and methods used in the preparation of the consolidated
financial statements. Management believes the following critical accounting policies affect the significant judgments and estimates
used in the preparation of the consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Use of Estimates &ndash;
Management&rsquo;s Discussion and Analysis is based upon the Company&rsquo;s consolidated financial statements, which have been
prepared in accordance with United States generally accepted accounting principles (&ldquo;US GAAP&rdquo;). The preparation of
financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from those estimates. Significant estimates in 2017 and 2016
include the allowance for doubtful accounts, stock-based compensation, the useful lives and valuation of property and equipment,
and deferred revenue. Actual results may differ from these estimates under different assumptions or conditions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company offers
InsPro Enterprise on a licensed and an application service provider (&ldquo;ASP&rdquo;) basis. An InsPro Enterprise software license
entitles the purchaser a perpetual license to a copy of the InsPro Enterprise installed at a single client location, which may
be used to drive a production and model office instance of the application. The ASP hosting service enables a client to lease the
InsPro Enterprise, paying only for that capacity required to support their business. ASP clients access an instance of InsPro Enterprise
installed on clients&rsquo; servers or on the Company&rsquo;s servers located at a third party&rsquo;s site.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Software maintenance
fees apply to both licensed and ASP clients. Maintenance fees cover periodic updates to the application and the InsPro Enterprise
Help Desk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Professional services
are generally associated with the implementation of InsPro Enterprise instance for either an ASP or licensed client, and cover
such activity as InsPro Enterprise installation, configuration, modification of InsPro Enterprise functionality, client insurance
plan set-up, client insurance document design and system documentation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company&rsquo;s
revenue is generally recognized under FASB ASC 985-605 (&ldquo;ASC 985-605&rdquo;). For software arrangements involving multiple
elements, we allocate revenue to each element based on the relative fair value or the residual method, as applicable using vendor
specific objective evidence to determine fair value, which is based on prices charged when the element is sold separately. Software
revenue accounted for under ASC 985-605 is recognized when persuasive evidence of an arrangement exists, the software is delivered
in accordance with all terms and conditions of the customer contracts, the fee is fixed or determinable and collectability is probable.
Revenue related to post-contract customer support (&ldquo;PCS&rdquo;), including technical support and unspecified when-and-if
available software upgrades, is recognized ratably over the PCS term. Under ASC 985-605, if fair value does not exist for any undelivered
element, revenue is not recognized until the earlier of (i)&nbsp;delivery of such element or (ii)&nbsp;when fair value of the undelivered
element is established, unless the undelivered element is a service, in which case revenue is recognized as the service is performed
once the service is the only undelivered element.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We recognize revenues
from software license agreements when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee
is fixed or determinable, and collectability is probable. We consider fees relating to arrangements with payment terms extending
beyond one year to not be fixed or determinable and revenue for these arrangements is recognized as payments become due from the
customer. In software arrangements that include more than one InsPro Enterprise module, we allocate the total arrangement fee among
the modules based on the relative fair value of each of the modules.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">License revenue allocated
to software products generally is recognized upon delivery of the products or deferred and recognized in future periods to the
extent that an arrangement includes one or more elements to be delivered at a future date and for which fair values have not been
established. Revenue allocated to maintenance agreements is recognized ratably over the maintenance term and revenue allocated
to training and other service elements is recognized as the services are performed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The unearned portion
of the Company&rsquo;s revenue, which is revenue collected or billed but not yet recognized as earned, has been included in the
consolidated balance sheet as a liability for deferred revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We review the carrying
value of property and equipment and intangible assets for impairment at least annually or whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparison
of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are
considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property,
if any, exceeds its fair market value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">RESULTS OF OPERATIONS FOR THREE MONTHS
ENDED MARCH 31, 2017 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2016</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Revenues</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the three months ended March 31, 2017
(&ldquo;First Quarter 2017&rdquo;), we earned revenues of $5,046,766 compared to $6,797,271 for the three months ended March 31,
2016 (&ldquo;First Quarter 2016&rdquo;), a decrease of $1,750,505 or 25.8%. Revenues include the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Three Months Ended March 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">Increase (Decrease)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Dollars</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Percentage</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 48%; text-align: left">Professional services, gross</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,798,251</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4,627,058</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(1,828,807</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">-39.5</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">ASP revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,815,840</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,690,149</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">125,691</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.4</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Sales of software licenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(10,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-100.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Maintenance revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">432,675</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">452,064</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(19,389</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-4.3</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Sub-leasing and other revenue</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">18,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(18,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: right">-100.0</TD><TD STYLE="padding-bottom: 2px; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 4px">Total</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">5,046,766</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">6,797,271</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">(1,750,505</TD><TD STYLE="padding-bottom: 4px; text-align: left">)</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px; text-align: right">-25.8</TD><TD STYLE="padding-bottom: 4px; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>In First Quarter 2017 our professional services revenue, gross decreased primarily as a result of lower post implementation
services to a large existing client and lower implementation services to the Company&rsquo;s largest client. Implementation services
included assisting clients in setting up their insurance products in InsPro Enterprise, providing modifications to InsPro Enterprise&rsquo;s
functionality to support the client&rsquo;s business, interfacing InsPro Enterprise with the client&rsquo;s other systems, automation
of client correspondence to their customers and data conversion from the client&rsquo;s existing systems to InsPro Enterprise.
Post implementation services include these same services to existing clients supporting their ongoing utilization of InsPro Enterprise.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>In First Quarter 2017 our ASP revenue increased as a result of increased fees from ongoing and recent implementations of InsPro
Enterprise from several existing clients. ASP hosting service enables a client to either lease InsPro Enterprise software, paying
only for that capacity required to support their business, or for a client to outsource the operation of their licensed InsPro
Enterprise installation to the Company. ASP hosting clients&rsquo; access InsPro Enterprise installed on clients&rsquo; servers
or on the Company&rsquo;s servers located at a third party&rsquo;s site.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>In First Quarter 2016 we earned $10,000 of license fee revenue, which pertained to the re-sale of third party software licenses
to a client in the process of implementing InsPro Enterprise.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>In First Quarter 2017 our maintenance revenue decreased as a result of the loss of fees from 2 former clients.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>In First Quarter 2016 sub-leasing and other revenue consisted of reimbursements of office and administrative expenses pertaining
to various agreements with related and unrelated parties pertaining to our former Radnor office.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Cost of Revenues</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Cost of revenues consisted of the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Three Months Ended March 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">Increase (Decrease)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Dollars</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Percentage</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 48%; text-align: left">Compensation, employee benefits and related taxes</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,920,423</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,232,355</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(311,932</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">-14.0</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Professional fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,914,984</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,012,354</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,097,370</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-36.4</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">88,149</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,214</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(12,065</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-12.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Rent, utilities, telephone and communications</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,488</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">137,670</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(31,182</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-22.6</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Other cost of revenues</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">78,925</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">96,976</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(18,051</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: right">-18.6</TD><TD STYLE="padding-bottom: 2px; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">4,108,969</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">5,579,569</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">(1,470,600</TD><TD STYLE="padding-bottom: 4px; text-align: left">)</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px; text-align: right">-26.4</TD><TD STYLE="padding-bottom: 4px; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>In First Quarter 2017 our salaries, employee benefits and related taxes component of cost of revenues decreased as compared
to First Quarter 2016 primarily as a result of decreased employee staffing.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>In First Quarter 2017 our professional fees component of cost of revenues decreased as compared to First Quarter 2016 as a
result of decreased utilization of several outside consulting firms, which were assisting us with modifications to InsPro Enterprise&rsquo;s
functionality and new clients&rsquo; implementations of InsPro Enterprise<SUP>TM, </SUP>combined with decreased recruiting expenses.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>In First Quarter 2017 our depreciation expense component of cost of revenues decreased as compared to First Quarter 2016 as
a result of certain assets having been fully depreciated in accordance with the original depreciation schedule for such assets.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>In First Quarter 2017 our rent, utilities, telephone and communications component of cost of revenues decreased as compared
to First Quarter 2016 primarily due to lower rented space pertaining to our Eddystone office.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>In First Quarter 2017 our other cost of revenues component of cost of revenues decreased as compared to First Quarter 2016
primarily due to lower allowance for doubtful collection expense and lower cost of 3<SUP>rd</SUP> party <FONT STYLE="font-size: 10pt">l</FONT>icensed
software resold to clients. Other cost of revenues consisted of the cost of 3<SUP>rd</SUP> party licensed software resold to clients,
equipment sold to clients, computer processing incurred primarily to provide ASP hosting services, hardware and software, travel
and entertainment, and office expenses.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Gross Profit (Loss)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a result of the aforementioned factors,
we reported a gross profit of $937,797 in First Quarter 2017, as compared to a gross profit of $1,217,702 in First Quarter 2016.
The results from operations in First Quarter 2017 were unfavorably impacted by lower professional services revenue partially offset
by lower IT consulting expenses in First Quarter 2017 as compared to First Quarter 2016.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Selling, General and Administrative Expenses</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Selling, marketing and administrative expenses
consisted of the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Three Months Ended March 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">Increase (Decrease)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Dollars</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Percentage</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 48%; text-align: left">Compensation, employee benefits and related taxes</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,132,958</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,008,087</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">124,871</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">12.4</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Advertising and other marketing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,735</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41,720</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(32,985</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-79.1</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34,789</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,421</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,368</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36.9</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Rent, utilities, telephone and communications</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">99,513</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,932</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,419</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-1.4</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Professional fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">138,300</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">260,802</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(122,502</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-47.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px">Other general and administrative</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">182,202</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">193,174</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(10,972</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: right">-5.7</TD><TD STYLE="padding-bottom: 2px; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">1,596,497</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">1,630,136</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">(33,639</TD><TD STYLE="padding-bottom: 4px; text-align: left">)</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px; text-align: right">-2.1</TD><TD STYLE="padding-bottom: 4px; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>In First Quarter 2017 our salaries, employee benefits and related taxes increased as compared to First Quarter 2016 primarily
due to severance expense pertaining to the termination of a former executive in First Quarter 2017.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>In First Quarter 2017 our advertising and other marketing expenses decreased as compared to First Quarter 2016 primarily as
a result of decreased marketing activities.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>In First Quarter 2017 our depreciation expense increased as compared to First Quarter 2016 as a result of a greater percentage
allocated to selling, general and administrative expense and a lesser percentage of depreciation allocated to cost of revenues.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>In First Quarter 2017 our rent, utilities, telephone and communications expense decreased as compared to First Quarter 2016
due to lower rented space pertaining to our Eddystone office.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">In First Quarter 2017 our professional fees decreased as compared
to First Quarter 2016 primarily due to lower legal expenses in part due to the company&rsquo;s rights offering in First Quarter
2016.</FONT></TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Operating loss from continuing operations</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a result of the aforementioned factors,
we reported a loss from continuing operations of $658,700 in First Quarter 2017, as compared to a loss of $412,434 in First Quarter
2016.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Other income (expenses)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Interest expense increased in the First Quarter 2017 as compared
to the in the First Quarter 2016 primarily due to interest on capital leases. Interest expense is attributable to interest on the
capital leases and note payable for premium financing on a portion of the Company&rsquo;s insurance coverages.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Gain on the sale of equipment in First Quarter 2017 is attributable
to the sale of furniture and fixtures from the Company&rsquo;s former Radnor office.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Gain on discontinued operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Results from discontinued operations consisted of the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Three Months Ended March 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">Increase (Decrease)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Dollars</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Percentage</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Revenues:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left">Commission and other revenue from carriers</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,378</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,067</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(689</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">-22.5</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">eHealth Agreement</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">15,934</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">16,148</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(214</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: right">-1.3</TD><TD STYLE="padding-bottom: 2px; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">18,312</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">19,215</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(903</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: right">-4.7</TD><TD STYLE="padding-bottom: 2px; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Operating expenses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: 11pt">Other general and administrative</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">6,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">6,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: right">0.0</TD><TD STYLE="padding-bottom: 2px; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">6,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">6,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: right">0.0</TD><TD STYLE="padding-bottom: 2px; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px">Income from discontinued operations</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">12,312</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">13,215</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">(903</TD><TD STYLE="padding-bottom: 4px; text-align: left">)</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px; text-align: right">-6.8</TD><TD STYLE="padding-bottom: 4px; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Revenues and income from discontinued operations in the First
Quarter 2017 decreased as compared to the First Quarter 2016 due to the declines in our discontinued telesales call center produced
agency business. We reported a gain from discontinued operations of $0 per share in First Quarter 2017 and First Quarter 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On February 20, 2009, the Company entered into and completed
the sale of its agency business to eHealth Insurance Services, Inc. The Company earns renewal commissions from certain insurance
companies and a transition policy commission pursuant to a client transition agreement with eHealth Insurance Services, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Net loss</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a result of these factors discussed
above, we reported a net loss of $646,302, or $0.02 net income per share, in First Quarter 2017, as compared to a net loss of $403,197,
or $0.01 net loss per share in First Quarter 2016.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">LIQUIDITY AND CAPITAL RESOURCES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">At March 31, 2017, we had a cash balance of $1,985,940 and a
working capital deficit of $3,145,962.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Net cash used by operations was $1,044,732 in First Quarter
2017 as compared to $499,293 in First Quarter 2016. Impacting our cash flow from operations was our net loss of $646,302 in First
Quarter 2017 as compared to our net loss of $403,197 in First Quarter 2016 and:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 22.3pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Increases in accounts receivable of $1,413,358 in First Quarter 2017, which is primarily the result of increased billings to
clients primarily for professional services.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 40.3pt; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 22.3pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Increases in prepaid expenses of $128,404 in First Quarter 2017, which is primarily the result of annual software maintenance
fees, which were paid in First Quarter 2017.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 40.3pt; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 22.3pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Decreases in accounts payable of $136,597 in First Quarter 2017, which is primarily the result of payments of amounts to outside
IT consulting firms that were incurred prior to 2017.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 40.3pt; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 22.3pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Increases in accrued expenses of $140,069 in First Quarter 2017, which is primarily the result of accrued severance expense
pertaining to the termination of a former executive in First Quarter 2017.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 40.3pt; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 22.3pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Increases in deferred revenue of $935,272 in First Quarter 2017, which is primarily the result of annual maintenance fees and
to a lesser extent professional services, which were not earned in First Quarter 2017.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition to cash used in operating activities, we incurred
the following non-cash gain and expenses, which were included in our net loss, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Recorded depreciation expense of $122,938 and $125,635 in First Quarter 2017 and First Quarter 2016, respectively.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Recorded stock-based compensation expense of $85,090 and $164,246 in First Quarter 2017 and First Quarter 2016, respectively.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Net cash used by investing activities in First Quarter 2017
was $19,834 as compared to $10,188 in First Quarter 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Net cash used in financing activities in First Quarter 2017
was $111,111 as compared to $78,618 in First Quarter 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>On February 2, 2016 the Company filed a registration statement for a rights offering on Form S-1/A, which the Commission declared
effective on February 5, 2016, to distribute to shareholders excluding residents of Arizona and California at no charge, one non-transferable
subscription right for each 16,615 shares of our Common Stock, 831 shares of our Series A Preferred Stock and 830 shares of our
Series B Preferred Stock owned as of January 31, 2016 (the &ldquo;Record Date&rdquo;), either as a holder of record or, in the
case of shares held of record by brokers, dealers, custodian banks, or other nominees on shareholders&rsquo; behalf, as a beneficial
owner of such shares. The basic subscription right entitled the holder to purchase one unit (&ldquo;Subscription Unit&rdquo;) at
a subscription price of $240. A Subscription Unit consisted of 80 shares of Series B Preferred Stock and a warrant to purchase
800 shares of Common Stock that expires on November 20, 2017 at an exercise price of $0.15 per share. Effective with the expiration
of the subscription rights, which occurred on March 14, 2016, holders of subscription rights exercised in aggregate 17 basic subscription
rights and 0 over subscription rights for a total 17 Subscription Units. The Company received $4,080 in gross proceeds as a result
of the exercise of Subscription Units. As a result of the exercise of 17 Subscription Units the Company issued effective on March
14, 2016 in aggregate 1,360 shares of Series B Preferred Stock and warrants to purchase in aggregate 13,600 shares of Common Stock
that expires on November 20, 2017 at an exercise price of $0.15 per share (the &ldquo;2016 Warrants&rdquo;). Effective with the
expiration of the subscription rights all unexercised subscription rights expired.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Payments on notes payable pertain to notes payable, which we entered into in order to finance two of the Company&rsquo;s corporate
insurance premiums.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>InsPro LLC has entered into various capital lease obligations to purchase equipment used for operations.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Off-Balance Sheet Arrangements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We do not currently have any relationships with unconsolidated
entities or financial partnerships, such as entities referred to as structured finance or special purpose entities, which would
have been established for the purpose of facilitating off-balance sheet or other contractually narrow or limited purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Impact of Inflation and Changing Prices</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We believe that inflation has not had a material impact on our
results of operation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Liquidity and Other Considerations</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As indicated in the accompanying financial statements during
the three months ended March 31, 2017, the Company&rsquo;s net loss was $646,302 and cash used in operations was $1,044,732. As
of March 31, 2017, the Company had $1,985,940 of cash, a working capital deficit of $3,145,962 and the Company&rsquo;s shareholder
deficit was $4,350,272. During 2016 the Company implemented cost reduction initiatives, which resulted in the reduction of expenses
in 2016 as compared to 2015. During the three months ended March 31, 2017, the Company implemented additional cost reduction initiatives,
which resulted in the reduction of cost of revenues of $1,470,600 and selling, general and administrative expenses of $33,639 as
compared to the same period in 2016. Management believes these actions will reduce expenses in 2017 as compared to 2016. On March
29, 2017, the Company obtained a $2,000,000 funding commitment from its largest stockholder The Co-Investment Fund II, L.P. This
funding closed on April 20, 2017, and is described in Note 10 &ndash; Subsequent Events.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our liquidity needs for the next twelve months and beyond are
principally for the funding of our operations, payments on capital leases and the purchase of property and equipment. Based on
the forgoing, management believes the Company has sufficient funds to finance its operations over the next twelve months.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><BR CLEAR="ALL"></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_013"></A>DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table
sets forth the name, age and position of each of our executive officers and directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Directors serve until
the next annual meeting of stockholders, until their successors are elected or appointed or qualified, or until their prior resignation
or removal. Our executive officers are appointed by, and serve at the discretion of, our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <TD STYLE="width: 30%; border-bottom: Black 2px solid"><b>Name</b></td>
    <TD STYLE="width: 1%; text-align: center; padding-bottom: 2px">&nbsp;</td>
    <TD STYLE="width: 6%; border-bottom: Black 2px solid; text-align: center"><b>Age</b></td>
    <TD STYLE="width: 1%; padding-bottom: 2px">&nbsp;</td>
    <TD STYLE="width: 62%; border-bottom: Black 2px solid"><b>Position</b></td></tr>
<tr style="vertical-align: top">
    <td>Donald R. Caldwell</td>
    <td style="text-align: center">&nbsp;</td>
    <td style="text-align: center">70</td>
    <td>&nbsp;</td>
    <td>Chief Executive Officer and Chairman</td></tr>
<tr style="vertical-align: top">
    <td>John Harrison</td>
    <td style="text-align: center">&nbsp;</td>
    <td style="text-align: center">73</td>
    <td>&nbsp;</td>
    <td>Director</td></tr>
<tr style="vertical-align: top">
    <td>Michael Azeez</td>
    <td style="text-align: center">&nbsp;</td>
    <td style="text-align: center">59</td>
    <td>&nbsp;</td>
    <td>Director</td></tr>
<tr style="vertical-align: top">
    <td>Kenneth Harvey</td>
    <td style="text-align: center">&nbsp;</td>
    <td style="text-align: center">56</td>
    <td>&nbsp;</td>
    <td>Director</td></tr>
<tr style="vertical-align: top">
    <td>Alan Krigstein</td>
    <td style="text-align: center">&nbsp;</td>
    <td style="text-align: center">64</td>
    <td>&nbsp;</td>
    <td>Director</td></tr>
<tr style="vertical-align: top">
    <td>Robert Oakes</td>
    <td style="text-align: center">&nbsp;</td>
    <td style="text-align: center">58</td>
    <td>&nbsp;</td>
    <td>Director</td></tr>
<tr style="vertical-align: top">
    <td>Sanford Rich</td>
    <td style="text-align: center">&nbsp;</td>
    <td style="text-align: center">59</td>
    <td>&nbsp;</td>
    <td>Director</td></tr>
<tr style="vertical-align: top">
    <td>L.J. Rowell</td>
    <td style="text-align: center">&nbsp;</td>
    <td style="text-align: center">84</td>
    <td>&nbsp;</td>
    <td>Director</td></tr>
<tr style="vertical-align: top">
    <td>Paul Soltoff</td>
    <td style="text-align: center">&nbsp;</td>
    <td style="text-align: center">62</td>
    <td>&nbsp;</td>
    <td>Director</td></tr>
<tr style="vertical-align: top">
    <td>Frederick C. Tecce</td>
    <td style="text-align: center">&nbsp;</td>
    <td style="text-align: center">80</td>
    <td>&nbsp;</td>
    <td>Director</td></tr>
<tr style="vertical-align: top">
    <td>Anthony R. Verdi</td>
    <td style="text-align: center">&nbsp;</td>
    <td style="text-align: center">68</td>
    <td>&nbsp;</td>
    <td>Chief Financial Officer and Director</td></tr>
<tr style="vertical-align: top">
    <td>Edmond J. Walters</td>
    <td style="text-align: center">&nbsp;</td>
    <td style="text-align: center">55</td>
    <td>&nbsp;</td>
    <td>Director</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Michael Azeez</I></B>,
59, has served as one of our directors since December, 2011. Mr. Azeez is a managing member of Azeez Investors, LLC. Mr. Azeez
co-founded Unitel in 1988 and served its President from 1988 until 2002. Mr. Azeez served in various executive positions at American
Cellular Network Corporation from 1982 until 1988 and his positions included Vice President, General Manager of various divisions
and as assistant to the President. Mr. Azeez is a member of the board of directors of Acrometis Strategic Software Services, which
provides software solutions to insurance companies for workers compensation claims management. Mr. Azeez is a member of the board
of directors of the Friends of Yemin Orde. Mr. Azeez is the Chairman and founder of the Sam Azeez Museum of Woodbine Heritage.
Mr. Azeez&rsquo;s significant executive and business development experience in the telecommunications industry and his civic service
for various non-profit organizations qualifies him to be a member of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Donald R. Caldwell</I></B>,
70, has served as one of our directors and as one of the Co-Chairmen of our board of directors from April 2008 through November
24, 2009, as our Chairman since November 24, 2009 and as our Chief Executive Officer since January 26, 2015. Mr. Caldwell founded
Cross Atlantic in 1999, and presently serves as its Chairman and Chief Executive Officer and serves on its Audit and Nominating
and Governance committees. He has served as a director at Rubicon Technology, Inc. since 2001 and chairs its Compensation Committee.
He served on the board of directors at Diamond Management &amp; Technology Consultants, Inc. (NASDAQ) from 1994 until its sale
to PriceWaterhouse in 2010 and served as a member of its Compensation Committee, Audit Committee and as the lead Director since
2006. Mr. Caldwell has been a director of Quaker Chemical Corporation (NYSE:KWR), a provider of process chemicals and chemical
specialties, since 1997 and was appointed as lead director in May 2016. He also serves as Chairman of Quaker&rsquo;s Executive
Committee and a member of its Compensation and Audit Committees. He is a member of the Compensation Committee and a director of
Voxware, Inc., a supplier of voice driven solutions. Mr. Caldwell has been a director, Chairman of the Audit Committee and member
of the Compensation Committee of Lighting Gaming, Inc. since 2005. Mr. Caldwell was a director of Amber Road, Inc. (NYSE:AMBR)
and served on the Nominating and Governance Committee and Compensation Committee from 2005 until his resignation on December 31,
2016. Mr. Caldwell was a director and member of the Risk Management Committee and Chairman of the Audit Committee of Fox Chase
Bancorp, Inc. (NASDAQ:FXCB), a stock holding company of Fox Chase Bank, from October 2014 until it was acquired by Univest Corporation
of Pennsylvania on July 1, 2016. Mr. Caldwell was a director of Kanbay International, Inc. from 1999 through 2007 when it was purchased
by Capgemini. From 1996 to 1999, Mr. Caldwell was President and Chief Operating Officer and a director of Safeguard Scientifics,
Inc. Mr. Caldwell was a Certified Public Accountant in the State of New York. Mr. Caldwell&rsquo;s experience serving as a director
and officer of numerous public companies qualifies him to be a member of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>John Harrison</I></B>,
73, has served as one of our directors since November 2005. He is a founding Partner and Executive Director of The Keystone Equities
Group, Inc., a full service investment banking group and a registered NASD broker-dealer founded in 2003. Mr. Harrison also is
a Managing Director of Covenant Partners, a hedge fund that invests in direct marketing services companies. In 1999, Mr. Harrison
became a founding Partner of Emerging Growth Equities, Ltd., a full service investment banking and brokerage firm focused on raising
capital for emerging technology companies addressing high-growth industry sectors. From 1985 to 2000, Mr. Harrison served as President
of DiMark, a direct marketing agency that was subsequently acquired by Harte-Hanks in 1996. He also has held senior management
positions with CUNA Mutual, RLI Insurance and CNA Insurance where he directed their direct marketing practice. Mr. Harrison was
Chairman of Professional Insurance Marketing Association (PIMA) and Chairman of the DMA Financial Services Council. Mr. Harrison&rsquo;s
extensive experience in the financial and insurance sectors qualifies him to be a member of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Kenneth M. Harvey</I></B>,
56, has served as a director since May 2014. Mr. Harvey has served as a director of Amber Road, Inc. (NYSE: AMBR), a provider of
cloud-based global trade management solutions, since 2008. From 1989 until 2011, Mr. Harvey was employed by HSBC&mdash;Global Bank,
serving as Chief Information Officer/Chief Operating Officer from 2008 to 2011 and as group general manager and Chief Information
Officer from 2004 to 2007. He was president of HSBC Technology and Services, a wholly-owned subsidiary of HSBC, from 2003 to 2004.
Since 2012, Mr. Harvey served as a Director of CLS Group Holdings AG. From 2012 to 2014 he was the Chairman of the Technology and
Operations Committee and from 2014 Mr. Harvey has served as Chairman of the Board and a member of the Chairman&rsquo;s Committee,
which serves as the Compensation and Compliance Committees. Mr. Harvey also serves on the Senior Advisory Board of Oliver Wyman;
a global management consulting firm. Mr. Harvey also served as director of CLS Bank International since 2011, and served as a director
of Kanbay, Inc. from 2004 until 2007 and Vertical Networks, Inc. from 2002 until 2004. Mr. Harvey&rsquo;s experience as an executive
in the information technology field qualifies him to be a member of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Alan Krigstein</I></B>,
64, has served as a director since June 2014. Mr. Krigstein was Executive Vice President and Chief Financial Officer of Independence
Blue Cross, a health insurer organization and independent licensee of the Blue Cross and Blue Shield Association from 2009 through
2017. Mr. Krigstein previously served as Senior Vice President and Chief Financial Officer of AmeriHealth Mercy Family of Companies
from 1994 to 2009. Mr. Krigstein also serves as trustee and member of the audit committee of Plan Investment Fund, Inc., a mutual
fund company that is open only to members and licensees of the Blue Cross and Blue Shield Association and certain related organizations,
from 2011 to the present. Mr. Krigstein&rsquo;s experience as an executive in the health insurance field qualifies him to be a
member of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Robert J. Oakes</I></B>,
58, has served as one of our directors since August 2008. He has served as the President and CEO of our InsPro Technologies, LLC
subsidiary since our acquisition of the subsidiary on October 1, 2007 through January 26, 2015 and as our Vice Chairman since January
26, 2015. From 1986 until 2007 Mr. Oakes was President and Chief Executive Officer of the general partner of Atiam Technologies
L.P. (now known as InsPro Technologies, LLC), a software development and servicing company that developed, expanded and serviced
products to serve the insurance and financial services markets. Mr. Oakes founded InsPro Technologies, LLC under the name &ldquo;Atiam&rdquo;
in 1986 and led the company&rsquo;s effort to design and develop its flagship product, InsPro Enterprise. InsPro Enterprise is
a state-of-the-art Insurance, Marketing, Administration and Claim System that provides end-to-end insurance processing, technology
and support, for a broad range of life, health and disability products. Mr. Oakes&rsquo; experience in the development of our flagship
product and his management of InsPro Technologies, LLC through January 26, 2015, qualifies him to be a member of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Sanford Rich</I></B>,
59, has served as one of our directors since April 2006. Mr. Rich is currently the Executive Director at New York City Board of
Education Retirement System since January 2016.&nbsp; Mr. Rich was Chief of Negotiations and Restructuring at the Pension Benefit
Guaranty Corporation, a U.S. government agency, from November 2012 to January 2016. He is a director and the Audit Committee Chairman
at Aspen Group Inc., an online for profit university. Mr. Rich served as director and Chief Executive Officer at In the Car, LLC
from October 2011 to November 2012. Mr. Rich was a FINRA Registered Managing Director with Whitemarsh Capital Advisors LLC, a broker-dealer,
from February 2009 through December 2014. Mr. Rich served as a director, audit committee chairman and Commission qualified audit
committee financial expert of Interclick, Inc. from 2007 to 2010. From 1995 to May 2008, Mr. Rich was director, Senior Vice President
and Portfolio Manager at GEM Capital Management Inc. From 1993 to 1995, Mr. Rich was a Managing Director of High Yield Finance,
Capital Markets &amp; North American Loan Syndicate, Sales and Trading at Citicorp Securities. From 1985 to 1993, he served as
Managing Director of Debt Capital Markets at Merrill Lynch. From 1978 to 1985, Mr. Rich held various Analyst positions in numerous
companies, including Cypress Capital Management, Inc. (Vice President and Analyst from 1983 to 1985), FIAMCO (Distressed/High Yield
Bond Analyst from 1981 to 1983), Progressive Corporation (Financial Analyst from 1980 to 1981) and Prescott, Ball and Turben (Distressed/High
Yield Bond Analyst from 1978 to 1980). Mr. Rich&rsquo;s 30+ years of experience in the financial sector qualifies him to be a member
of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>L.J. Rowell</I></B>,
84, has served as one of our directors since April 2006. He is a past President (1984-1996), Chief Executive Officer (1991-1996)
and Chairman of the Board (1993-1996) of Provident Mutual Life Insurance Company, where he also held various other executive and
committee positions from 1980 until his retirement in 1996. Mr. Rowell served on the board of directors of the PMA Group from 1992
until 2009. Mr. Rowell served on the board of directors of the Southeast Pennsylvania Chapter of the American Red Cross, the American
College, The Foundation at Paoli, and The Milton S. Hershey Medical Center. Mr. Rowell also has served on the Board of Trustees
of The Pennsylvania State University as a business and industry trustee since 1992. In 1991, he served as the Chairman of the Major
Business Division for the United Way of Southeastern Pennsylvania. Mr. Rowell also has served as Chairman of The American Red Cross
Ad Blood Campaign and has previously served on its Major Contributions Donor Campaign. Mr. Rowell&rsquo;s extensive experience
in the health insurance industry and his civic service for various health care organizations qualifies him to be a member of our
board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Paul Soltoff</I></B>,
62, has served as one of our directors since November 2005. He is currently Managing Partner of RobPet, LLC since 2015, and Managing
Partner of Paul Soltoff Advisors, LLC since 2016. He served as Chairman and Chief Executive Officer of Acquirgy, Inc. from 2009
to 2014. He served as Chairman and Chief Executive Officer of SendTec, Inc. from its inception in February 2000 through 2009. From
1997 until February 2000, Mr. Soltoff served as Chief Executive Officer of Soltoff Direct Corporation, a specialized direct marketing
consulting company. From September 2004 until October 2005, Mr. Soltoff served as a director of theglobe.com. Mr. Soltoff&rsquo;s
experience as an officer and director in the Internet marketing sector qualifies him to be a member of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Frederick C.
Tecce</I></B>, 80, has served as one of our directors since August 2016 and he previously served as one of our directors from August
2, 2007 through August 14. 2012. He has also served on the board of several publicly traded companies as well as numerous privately
held companies. In addition, he served on the Board of Independence Blue Cross for 2 different terms. On a day to day basis, he
serves as Of Counsel to the law firm of Buchanan Ingersoll and Rooney as well as being Of Counsel and Partner to Cross Atlantic
Capital Partners. In addition to his pursuits in the private sector, Mr. Tecce has also served in the public sector where he was
appointed by Pennsylvania Governor Tom Ridge to serve on the transition team. His board experience includes being an active member
of the Board of the $50 billion Public School Employees Retirement Systems (PSERS), where he held the title of chairman of the
Finance Committee for 6 years until his retirement in 2001. Mr. Tecce also served in the federal sector as a member of the Federal
Judicial Nominating Committee. He has served in a management position in several for-profit businesses, some of which he has founded.
Mr. Tecce&rsquo;s numerous legal, business and government experiences qualify him to be a member of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Anthony R. Verdi</I></B>,
68, has served as one of our directors since June 2008, as our Chief Financial Officer and Assistant Secretary since November 2005,
as our Chief Operating Officer since April 2008, as Acting Principal Executive Officer from June 20, 2008 through May 18, 2011
and as Principal Executive Officer from May 18, 2011 through January 26, 2015. From 2001 until November 2005, Mr. Verdi provided
consulting services to life, health and property and casualty insurance company agency and venture capital clients. Mr. Verdi served
as Chief Operating Officer of Provident American Corporation and Chief Financial Officer of HealthAxis, Inc. From January 1990
until December 1998, Mr. Verdi served as Chief Financial Officer of Provident American Corporation. From July 1986 until January
1990, he was the Vice President and Controller of InterCounty Hospitalization and Health Plans, a nonprofit group medical insurer.
From April 1971 until July 1986, he served in various finance and accounting capacities for the Academy Insurance Group, ultimately
serving as the Assistant Controller. Mr. Verdi&rsquo;s extensive experience in the health insurance industry and his financial
and accounting background qualifies him to be a member of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Edmond J. Walters</I></B>,
55, has served as one of our directors since April 2008. Mr. Walters is Founder and was the Chief Executive Officer of eMoney Advisor,
a wealth planning and management solutions provider for financial advisors that Mr. Walters founded in 2000 and is now a wholly-owned
subsidiary of Commerce Bancorp. Prior to forming eMoney Advisor in 2000, Mr. Walters spent more than 20 years in the financial
services industry, advising high net worth clients. From 1983 to 1992 he was associated with Kistler, Tiffany &amp; Company in
Wayne, PA. In 1992, Walters helped found the Wharton Business Group, a financial advising firm, in Malvern, PA. Mr. Walters&rsquo;
20+ years of experience in the financial sector qualify him to be a member of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><B><I>Board Independence</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Board has determined
that Messrs. Azeez, Harrison, Harvey, Krigstein, Rich, Rowell, Soltoff, Tecce and Walters are &ldquo;independent&rdquo; directors
as defined by Rule 4200(a)(15) of the NASDAQ listing standards and as defined by Rule 10A-3(b)(1)(ii) promulgated by the Commission.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_014"></A>EXECUTIVE COMPENSATION</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Summary Compensation Table</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table
summarizes the compensation paid to, awarded to or earned during the fiscal years ended December 31, 2016 and 2015 by our Principal
Executive Officer and each of our three other most highly compensated executive officers whose total salary and bonus exceeded
$100,000 for services rendered to us in all capacities during 2016 and 2015. The executive officers listed in the table below are
referred to in this report as our &ldquo;named executive officers&rdquo;. There were no non-equity incentive plan compensation
or non-qualified deferred compensation earnings for any of the named executive officers for the fiscal years ended December 31,
2016 and December 31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 2px solid">Name and Principal Position</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Fiscal<BR> Year</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Salary ($)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Bonus ($)<BR> (6)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Stock<BR> Awards<BR>
($)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Option<BR> Awards ($)<BR> (7)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">All Other<BR> Compensation<BR> ($) (8)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Total ($)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 19%; text-align: left">Donald R. Caldwell (1)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 8%; text-align: center">2016</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">1</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">9,370</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">9,371</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Chief Executive Officer,</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,669</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,670</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Chairman of the Board of Directors</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Anthony R. Verdi (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,296</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">316,296</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Chief Executive Officer,</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">258,333</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,331</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">274,664</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Chief Financial Officer &amp; Chief </TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Operating Officer</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Robert J. Oakes (3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,764</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">368,764</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">President &amp; Chief Executive Officer of </TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,416</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">316,416</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">InsPro Technologies, LLC</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Mark Daley (4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">250,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,894</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">256,894</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Chief Revenue Officer of</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">245,833</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,986</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">415,819</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">InsPro Technologies, LLC</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">John Keddy (5)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Chief Information Officer of </TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">140,477</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,770</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">268,247</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">InsPro Technologies, LLC</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.
Caldwell has served as one of our directors and as one of the Co-Chairman of our board of directors from April 2008 through November
24, 2009, as our Chairman since November 24, 2009 and as our Chief Executive Officer and Chairman since January 26, 2015. Mr. Caldwell&rsquo;s
compensation received in 2014 was that of a non-employee director and is included in the tables and disclosures with all other
non-employee directors.<B> </B>Mr. Caldwell has assigned all of his compensation to the Co-Investment Fund II, L.P.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.
Verdi was appointed as our Chief Financial Officer on November 10, 2005, Chief Operating Officer on April 1, 2008, interim Principal
Executive Officer on June 20, 2008 and Principal Executive Officer on May 18, 2011 and effective January 26, 2015 serves as Chief
Financial Officer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.
Oakes was appointed as President of our subsidiary InsPro Technologies, LLC on October 1, 2007 concurrently with the closing of
our acquisition of InsPro and effective January 26, 2015 serves as Vice Chairman of our board of directors.&#9;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(4)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.
Daley was appointed Chief Revenue Officer of our subsidiary InsPro Technologies, LLC on June 2, 2014. Mr. Daley&rsquo;s employment
terminated effective March 8, 2017, and all amounts owed to Mr. Daley pursuant to his employment agreement will be paid to him
during 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(5)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.
Keddy was appointed Chief Information Officer of our subsidiary InsPro Technologies, LLC on September 24, 2014. Mr. Keddy resigned
effective July 17, 2015, and all amounts owed to Mr. Keddy pursuant to his employment agreement were paid to him.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(6)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.
Daley received variable compensation based on license fee revenue recognized in accordance with his variable compensation arrangement.
Mr. Oakes received a one-time discretionary bonus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(7)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Represents
the aggregate grant date fair value of the stock option or warrants to purchase the Company&rsquo;s Series B Convertible Preferred
Stock as of the date of grant using the Black-Scholes option-pricing model. Fair value is estimated based on an expected life of
five years, an assumed dividend yield of 0% and the assumptions below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 8pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 2px solid; vertical-align: bottom">Name</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Fiscal&nbsp;Year</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Fair Value<BR> at Date of<BR> Grant ($)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Number of<BR> Options<BR> Granted (#)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Option<BR> Exercise<BR> Price ($)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Closing<BR> Stock
    Price<BR> on the Date<BR>  of Grant ($)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Date of<BR> Grant</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Expected<BR> Volatility</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Risk&nbsp;Free<BR> Interest<BR> Rate</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Expected<BR> Life in<BR> Years</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Assumed<BR> Dividend<BR> Yield</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 30%; text-align: left">Donald R. Caldwell</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 6%; text-align: center">2016</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 4%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 4%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 4%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 4%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 4%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 4%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 4%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 4%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 4%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Anthony R. Verdi</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Robert J. Oakes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Mark Daley (a)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4.000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.400</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3/27/2015</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">779</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.120</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">John Keddy (a)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4.000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.400</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3/27/2015</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">779</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.120</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.0</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March 27, 2015, the board of directors of the Company granted warrants to purchase 80,000 shares of Series A Preferred Stock at
an exercise price equal to $4.00 per share to Messrs. Daley and Keddy. The warrants are immediately exercisable, non-transferrable
and expire on May 22, 2019, however the warrants to Mr. Keddy expired in 2015 and the warrants to Mr. Daley will expire in 2017
as a result of the termination of their employment in accordance with the terms of the warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(8)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
other compensation paid to our named executive officers in the fiscal year ended December 31, 2016 consisted of the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: left; border-bottom: Black 2px solid; vertical-align: bottom">Name</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Payments for<BR> Auto and<BR> Equipment ($)<BR> (a)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Company Paid<BR>
    Health,     Life and<BR>  Disabilitly<BR> Insurance ($) (b)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Company<BR> Matching of<BR> Employee<BR> 401(k)<BR> Contributions<BR>
(c)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Board of<BR>
    Directors<BR> Meeting Fees (d)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Total ($)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 25%; text-align: left">Donald R. Caldwell</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">9,370</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">9,370</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Anthony R. Verdi</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">619</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,477</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,296</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Robert J. Oakes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,914</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,650</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,764</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Mark Daley</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,182</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,512</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,894</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">John Keddy</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 31.5pt; text-indent: -31.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 31.5pt">(a)</TD><TD>Payments for auto and equipment represent monthly allowances for auto, cell phones and other equipment.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(b)</TD><TD>Company-paid health, life and disability insurance represent the cost of company-paid insurance premiums covering the named
executive officers and, in the case of health insurance premiums, their dependents. The Company paid approximately 71% of the health
insurance and 100% of the life and disability insurance premiums for the named executive officers. Health insurance premiums vary
based on several factors, including the coverage selected and the age of the named executive officer and the number of their covered
dependents.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(c)</TD><TD>Company matching of employee 401(k) contributions represents 25% of the employee&rsquo;s contribution up to 4% of the employee&rsquo;s
compensation, which were fully vested for Messrs. Daley, Verdi and Oakes and unvested for Mr. Keddy.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(d)</TD><TD>Mr. Caldwell received board and committee meeting fees at the rates specified in the Company&rsquo;s non-employee director
compensation plan. Mr. Caldwell has assigned all of his compensation to the Co-Investment Fund II, L.P.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Outstanding Equity Awards at Fiscal Year-End</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth information
for the outstanding equity awards held by our named executive officers for the year ended December 31, 2016. There have been no
stock awards granted. The information below pertains to stock options, which were granted under the 2010 Equity Compensation Plan,
a warrant to purchase 150,000 shares of the Company&rsquo;s Series A Convertible Preferred Stock, which was issued to Mr. Oakes
on August 18, 2010, a warrant to purchase 150,000 shares of the Company&rsquo;s Series A Convertible Preferred Stock, which was
issued to Mr. Verdi on September 14, 2011, warrants to purchase 300,000 shares of the Company&rsquo;s Series B Convertible Preferred
Stock were issued to Mr. Oakes and Mr. Verdi on May 22, 2014, and a warrant to purchase 80,000 shares of the Company&rsquo;s Series
A Convertible Preferred Stock, which was issued to Mr. Daley on March 27, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="18" STYLE="font-weight: bold; text-align: center">Option Awards</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 2px solid">Name</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Number of<BR> Securities<BR> Underlying<BR> Unexercised<BR> Options <BR> (#)<BR>
Exercisable</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Number of<BR> Securities<BR> Underlying<BR> Unexercised<BR> Options<BR> (#)<BR>
Unexercisable</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Equity<BR> Incentive<BR> Plan&nbsp;Awards:<BR> Number of<BR> Securities<BR> Underlying<BR> Unexercised<BR> Unearned<BR> Options<BR> (#)</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Option<BR> Exercise<BR> Price<BR> ($)</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Option<BR> Expiration<BR> Date</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Donald R. Caldwell</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 30%; text-align: left">Anthony R. Verdi</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">300,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">3.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right"><font style="font-size: 10pt">5/22/2019</font></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">9/14/2017</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Robert J. Oakes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">5/22/2019</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">9/14/2017</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Mark Daley</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">600,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,200,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">8/19/2019</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">3/27/2020</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">John Keddy</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Compensation Committee Interlocks and Insider Participation</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">No members of our compensation committee
are currently, or have been, employed by us as officers or employees. None of our executive officers currently serve, or in the
past three years have served, as a member of the board of directors, compensation committee or other board committee performing
equivalent functions of another entity that has one or more executive officers serving on our board or compensation committee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Employment, Severance and Other Agreements</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Donald R. Caldwell</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our board of directors appointed Mr. Caldwell
Chief Executive Officer and Chairman of our board of directors on January 26, 2015, with an annual salary of $1. Mr. Caldwell is
employed as an at-will employee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Anthony R. Verdi </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to an amended and restated employment
agreement Mr. Verdi serves as our Chief Financial Officer and Chief Operating Officer. His amended and restated employment agreement
automatically renewed for a one year term on March 31, 2016, and, if not terminated, will automatically renew for one year periods.
His annual base salary was $225,000 per year from March 31, 2008 through May 30, 2011 and was then increased by the board of directors
to $250,000 effective June 1, 2011 and increased to $300,000 effective November 1, 2015. He is entitled to receive such bonus compensation
as a majority of our board of directors may determine from time to time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the event of Mr. Verdi&rsquo;s termination
without cause or for good reason, he or his estate would receive his then current base annual salary, plus unpaid accrued employee
benefits, which is primarily accrued vacation, plus the continuation of his employee benefits for a period of 18 months, less all
applicable taxes. In the event of his voluntary termination, death or disability, he or his estate would receive unpaid accrued
employee benefits, plus the continuation of his employee benefits for a period of one month, less all applicable taxes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Robert J. Oakes </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to an amended and restated employment
agreement with InsPro Technologies, LLC, Mr. Oakes serves as Vice Chairman of the board of directors. Pursuant to his employment
agreement, his annual base salary was $250,000 per year through September 30, 2011. On April 7, 2011, Mr. Oakes received an increase
in his base compensation pursuant to his employment agreement to $300,000 retroactive to July 1, 2010, upon InsPro Technologies,
LLC achievement of one calendar quarter of positive operating cash flow, which occurred during the calendar quarter ended March
31, 2011. Mr. Oakes was entitled to bonus compensation equal to 100% of the InsPro Technologies, LLC&rsquo;s net income up to a
maximum of $100,000 in 2010 and $100,000 in 2011. Mr. Oakes is entitled to such fringe benefits as are available to other executives
of the Company. Mr. Oakes employment agreement was automatically extended for an additional one year term on March 25, 2014 and
will be annually automatically extended thereafter unless either party provides written notification to the other party of non-renewal
no later than 60 days prior to the termination date of the agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the event of Mr. Oakes&rsquo;s termination
without cause or for good reason, he or his estate would receive his then current base annual salary, plus unpaid accrued employee
benefits, which is primarily accrued vacation, plus the continuation of his employee benefits for a period of 12 months, less all
applicable taxes. In the event of his voluntary termination, death or disability, he or his estate would receive unpaid accrued
employee benefits, plus the continuation of his employee benefits for a period of one month, less all applicable taxes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to Mr. Oakes employment agreement,
he is subject to a non-competition and non-solicitation provision during the term of his employment agreement and for a period
of one year following his termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Mark Daley</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Mr. Daley served as InsPro Technologies,
LLC&rsquo;s Chief Revenue Officer from June 2, 2014 until March 8, 2017. His employment agreement commenced for a one year term
on November 15, 2015, was automatically renewed on November 15, 2016, and was terminated effective March 8, 2017. His annual base
salary was $200,000 per year from June 2, 2014 through January 31, 2015 and was then increased by the board of directors to $250,000
effective February 1, 2015. Pursuant to his employment agreement, his annual base salary was $250,000 per year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As a result of Mr. Daley&rsquo;s termination
without cause or for good reason, he or his estate will receive his then current base annual salary, plus unpaid accrued employee
benefits, which is primarily accrued vacation, for a period of six months, less all applicable taxes during 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Mr. Daley was entitled to variable incentive
compensation based on a percentage of new sales pursuant to a written variable compensation arrangement with InsPro Technologies,
LLC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to Mr. Daley&rsquo;s employment
agreement, he is subject to a non-competition and non-solicitation provision during the term of his employment agreement and for
a period of six months following his termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>John Keddy</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to an employment agreement with
InsPro Technologies, LLC Mr. Keddy serves as InsPro Technologies, LLC&rsquo;s Chief Information Officer effective September 25,
2014. Pursuant to his employment agreement, his annual base salary is $250,000 per year plus such fringe benefits as are available
to other executives of the Company. His employment agreement has a term of one year and automatically renewed for a one year term
on each anniversary unless either party provides written notification to the other party of non-renewal no later than 30 days prior
to the termination date of the agreement. Mr. Keddy resigned effective July 17, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to his written offer of employment
Mr. Keddy was entitled to receive a $40,000 one-time sign-on bonus, receive up to $3,500 per week for up to 10 weeks effective
September 25, 2014, as reimbursement for out-of-pocket temporary housing costs, receive up to $12,000 for reimbursement of reasonable
moving expenses and be eligible to participate in the Company&rsquo;s management bonus program beginning on January 1, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to Mr. Keddy&rsquo;s employment
agreement, he is subject to a non-competition and non-solicitation provision during the term of his employment agreement and for
a period of 6 months following his termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Compensation of Directors</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth information
concerning the compensation of all individuals who served on our board of directors during the fiscal year ended December 31, 2016.
There were no option awards and no non-equity incentive plan compensation or nonqualified deferred compensation earnings paid to
any of our directors for the year ended December 31, 2016. Directors who are employees receive no additional or special compensation
for serving as directors. All compensation for Messrs. Caldwell, Oakes and Verdi is included in the Summary Compensation Table.
Mr. Caldwell was appointed Chief Executive Officer of the Company on January 26, 2015. Messrs. Adamsky, Tecce and Caldwell have
assigned all of their compensation to The Co-Investment Fund II, L.P. Messrs. Tecce and Caldwell are stockholders, directors and
officers of Co-Invest II Capital Partners, Inc., which is the general partner of Co-Invest Management II, L.P., which is the general
partner of The Co-Investment Fund II, L.P. Mr. Adamsky was an officer of Co-Invest II Capital Partners, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 2px solid">Name</TD><TD STYLE="border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; border-bottom: Black 2px solid">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Fees&nbsp;Earned&nbsp;or<BR> Paid&nbsp;in&nbsp;Cash<BR> ($) (1)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Stock&nbsp;Awards<BR> ($)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Option<BR>
Awards<BR> ($)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; border-bottom: Black 2px solid">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Total<BR> ($)</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 30%; text-align: left">Brian Adamsky</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 13%; text-align: center">(2)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">4,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">4,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Michael Azeez</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">John Harrison</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Kenneth Harvey</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Alan Krigstein</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">(3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Sanford Rich</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">L.J. Rowell</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Paul Soltoff</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Frederick Tecce</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Edmond Walters</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(1)</TD><TD>Represents board and committee meeting fees paid to our directors under our Non-Employee Director Compensation Plan.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(2)</TD><TD>Messrs. Adamsky, Caldwell and Tecce have assigned all of their board compensation to The Co-Investment Fund II, L.P. Mr. Tecce
received no cash compensation during 2016.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(3)</TD><TD>Mr. Krigstein has assigned his equity compensation to Independence Blue Cross, LLC and he has declined all cash compensation.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table sets forth information concerning the aggregate
number of options and warrants available, which are options or warrants issued, outstanding and exercisable, for non-employee directors
as of December&nbsp;31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Aggregate Number of<BR> Options/Warrants Available as<BR> of December 31, 2016</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Brian Adamsky (a)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 67%; text-align: left">Michael Azeez (b)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 30%; text-align: right">30,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Donald Caldwell (a)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">John Harrison (b)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Kenneth Harvey (b)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Alan Krigstein (c)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Sanford Rich (b)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">L.J. Rowell&nbsp;&nbsp;(b)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Paul Soltoff (b)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Frederick Tecce (a)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Edmond Walters (b)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(a)</TD><TD>Messrs. Adamsky, Caldwell and Tecce have assigned all of their board compensation to The Co-Investment Fund II, L.P.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(b)</TD><TD>Represents warrants to purchase shares of the Company&rsquo;s Series B Convertible Preferred Stock.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(c)</TD><TD>Mr. Krigstein has assigned his equity compensation to Independence Blue Cross, LLC.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Director Compensation Plan</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Directors who are employees receive no additional
or special compensation for serving as directors. Non- employee directors receive the following compensation under the terms of
our Non Employee Director Compensation Plan, which was amended on December 13, 2011, to remove all equity compensation and annual
cash retainer components from the plan and to increase the per Board meeting cash fee effective January 2, 2012:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The compensation of the Company&rsquo;s non-employee directors
is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>$1,500 meeting fee for each director for each meeting of the Board attended in person or via conference telephone.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>$500 meeting fee for each committee member for each meeting of a committee of the Board, attended in person or via conference
telephone.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We also purchase directors&rsquo; and officers&rsquo; liability
insurance for the benefit of our directors and officers as a group. We also reimburse our non-employee directors for their reasonable
out-of-pocket expenses incurred in attending meetings of our board of directors or its committees in accordance with the Company&rsquo;s
expense reimbursement policies in effect from time to time. No fees are payable to directors for attendance at specially called
meetings of the board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_015"></A>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table shows information known
by us with respect to the beneficial ownership of our common stock, Series A Convertible Preferred Stock, Series B Convertible
Preferred Stock and Series C Convertible Preferred Stock as of June 15, 2017, for each of the following persons:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>our directors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>our named executive officers;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>all of our directors, director nominees and executive officers as a group; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>each person or group of affiliated persons or entities known by us to beneficially own 5% or more of our common stock, Series
A Convertible Preferred Stock, Series B Convertible Preferred Stock or Series C Convertible Preferred Stock .</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The number of shares beneficially owned,
beneficial ownership and percentage ownership are determined in accordance with the rules of the Commission. Under these rules,
beneficial ownership includes (i) any shares as to which the individual or entity has sole or shared voting power or investment
power and (ii) any shares that an individual or entity has the right to acquire beneficial ownership of within 60 days of June
15, 2017 through the exercise of any warrant, stock option or other right. In computing the number of shares beneficially owned
by a person and the percentage ownership of that person, shares underlying options and warrants that are exercisable within 60
days of June 15, 2017 are considered to be outstanding. To our knowledge, except as indicated in the footnotes to the following
table and subject to community property laws where applicable, the persons named in this table have sole voting and investment
power with respect to all shares shown as beneficially owned by them. The following table is based on 25,084,730 shares of Common<B>
</B>Stock, 1,276,750 shares of Series A Convertible Preferred Stock, 5,307,212 shares of Series B Convertible Preferred Stock and
1,150,000 shares of Series C Preferred Stock outstanding as of June 15, 2017. Unless otherwise indicated, the address of all
individuals and entities listed below is InsPro Technologies Corporation, 1510 Chester Pike, 400 Baldwin Tower, Eddystone, Pennsylvania
19022.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 2px solid; text-align: left; vertical-align: bottom">Name of Beneficial Owner</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Number of Shares<BR> Beneficially<BR>
Owned</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid; vertical-align: bottom">Title of Class</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Percent of<BR> Shares<BR> Beneficially<BR> Owned</TD><TD STYLE="padding-bottom: 2px; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="font-weight: bold; text-align: left; vertical-align: top">Directors and Executive Officers:</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="font-weight: normal; text-align: left; vertical-align: top">Brian Adamsky</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 35%; text-align: left; vertical-align: top">Michael Azeez</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 24%; text-align: right">16,599,990 (4)(5)(13)(21)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 24%; text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">26.7</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">463,333(4)(7)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.7</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">75,000(4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series C Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.5</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">Donald R. Caldwell</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">106,199,770&nbsp;&nbsp;(1)(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92.7</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,250,000 (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series A Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">97.9</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,887,186 (2)(3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35.2</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,000,000 (2)(3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series C Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">87.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">Mark Daley</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">Robert J. Oakes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">9,026,813 (6)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16.9</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">151,250 (8)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series A Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10.6</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">300,000 (10)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.4</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

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<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 2px solid; text-align: left; vertical-align: bottom">Name of Beneficial Owner</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Number of Shares<BR> Beneficially<BR>
Owned</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid; vertical-align: bottom">Title of Class</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Percent of<BR> Shares<BR> Beneficially<BR> Owned</TD><TD STYLE="padding-bottom: 2px; font-weight: bold">&nbsp;</TD></TR>

<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; width: 35%; vertical-align: top">John Harrison</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: right; width: 24%">770,000&nbsp;&nbsp;(14)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; width: 24%; vertical-align: top">Common Stock</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 12%">1.8</TD><TD STYLE="text-align: left; width: 1%">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,250</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series A Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">30,000 (7)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">Kenneth Harvey</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">6,000,000 (11)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12.6</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">300,000 (10)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.4</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">John Keddy</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">Alan Krigstein</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">L. J. Rowell</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">815,600 (12)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.9</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">30,000 (7)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">Sanford Rich</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">715,000&nbsp;&nbsp;(14)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.7</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,250</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series A Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">30,000 (7)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">Paul Soltoff</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">805,000&nbsp;&nbsp;(14)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.9</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,250</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series A Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">30,000 (7)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">Frederick Tecce</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">105,688,674&nbsp;&nbsp;(1)(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92.2</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,250,000 (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series A Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">97.9</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,887,186 (2)(3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35.2</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,000,000 (2)(3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series C Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">87.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">Anthony R. Verdi</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">9,085,000&nbsp;&nbsp;(9)(15)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">151,250(8)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series A Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10.6</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">300,000 (10)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.4</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">Edmond Walters</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">5,771,613(20)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12.2</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">196,666 (7)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.7</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">All directors and executive officers as a group (15 persons)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">155,391,700 (1)(2) (4)(5)(6)(9)(11)<BR>
(12)(13)(14)(15)<BR>
(20)(21)(21)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">98.8</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,556,250(2)(8)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series A Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">98.7</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,075,000 (2)(3)(4)(7)(10)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in; vertical-align: top">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55.3</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 2px solid">Name of Beneficial Owner</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Number of Shares<BR> Beneficially<BR>
Owned</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Title of Class</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Percent of<BR> Shares<BR> Beneficially<BR> Owned</TD><TD STYLE="padding-bottom: 2px; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="font-weight: bold; text-align: left">Holders of More than Five Percent of Our Common Stock, Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C Convertible Preferred Stock:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 35%; text-align: left">The Co-Investment Fund II, L. P.</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 24%; text-align: right">105,688,674 (16)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 24%; text-align: center; padding-left: 0.05in">Common Stock</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">92.2</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,250,000</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Series A Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">97.9</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,887,186 (3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35.2</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,000,000</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Series C Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">87.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Independence Blue Cross</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">58,933,330 (17)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58.7</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2,530,000 (7)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47.4</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Azeez Investors, LLC</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">9,999,990 (5)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19.4</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">283,333</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.3</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Azeez Enterprises, LP</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">6,000,000 (13)(21)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12.6</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">150,000</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.8</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">75,000</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Series C Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.5</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Scarpa Family Trust, 2005</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">8,000,010 (18)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.2</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">216,667</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.9</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">John Scarpa</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">6,000,000 (23)(21)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12.6</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">150,000</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.8</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">75,000</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Series C Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.5</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Trustmark Insurance Company</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">40,000,000 (24)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49.1</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2,000,000 (22)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Series B Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27.4</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Alvin H. Clemens</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2,929,080 (19)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.05in">Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.1</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">* Less than 1%</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>Includes 12,646,874 shares of common stock, 10,298,080 shares underlying warrants, which are convertible within 60 days of
June 15, 2017, 25,000,000 shares underlying 1,250,000 shares of Series A Preferred Stock, which are convertible, at the sole
option of the holder, into twenty shares of our common stock per share of Series A Preferred Stock, 36,543,720 shares underlying
1,827,186 shares of Series B Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common
stock per share of Series B Preferred Stock, and 20,000,000 shares underlying 1,000,000 shares of Series C Preferred Stock, which
are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series C Preferred Stock, which
are beneficially owned by The Co-Investment Fund II, L. P. (&ldquo;Co-Investment&rdquo;)), designee of Cross Atlantic Capital Partners,
Inc. Also includes 1,200,000 shares underlying warrants which are exercisable within 60 days of June 15, 2017, to purchase 60,000
shares of Series B Preferred Stock, which are also convertible, at the sole option of the holder, into 20 shares of our common
stock per share of Series B Preferred Stock, which are beneficially owned by Co-Investment.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>Represents securities owned by Co-Investment, the designee of Cross Atlantic Capital Partners, Inc., of which Brian Adamsky
was secretary, treasurer and chief financial officer, Frederick Tecce is counsel and partner and of which Donald R. Caldwell is
managing partner. Mr. Caldwell is also a shareholder, director and officer of Co-Invest II Capital Partners, Inc., which is the
general partner of Co-Invest Management II, L.P., which is the general partner of Co-Investment. Mr. Adamsky, Mr. Tecce and Mr.
Caldwell disclaim beneficial ownership of these securities, except to the extent of their pecuniary interest therein.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(3)</TD><TD>Includes 60,000 underlying shares underlying warrants which are exercisable within 60&nbsp;days of June 15, 2017, which are
beneficially owned by Co-Investment.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(4)</TD><TD>Includes securities owned by Azeez Investors, LLC and Azeez Enterprises, LP. Mr. Azeez is a managing member of Azeez Investors,
LLC and Azeez Enterprises, LP. Mr. Azeez disclaims beneficial ownership of these securities, except to the extent of his pecuniary
interest therein.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(5)</TD><TD>Includes 600,000 shares underlying a warrant which is exercisable within 60&nbsp;days of March 28, 2016, to purchase 30,000
shares of Series B Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares of our common stock
per share of Series B Preferred Stock. Includes 8,666,660 shares underlying 433,333 shares of Series B Preferred Stock, which are
convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Preferred Stock.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(6)</TD><TD>Includes 3,000,000 shares underlying a warrant which is exercisable within 60&nbsp;days of June 15, 2017, to purchase 150,000
shares of Series A Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares of our common stock
per share of Series A Preferred Stock. Includes 25,000 shares underlying 1,250 shares of Series A Preferred Stock, which are convertible,
at the sole option of the holder, into 20 shares of our common stock per share of Series A Preferred Stock. Includes 6,000,000
shares underlying a warrant which is exercisable within 60&nbsp;days of June 15, 2017, to purchase 300,000 shares of Series B
Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series
B Preferred Stock.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(7)</TD><TD>Includes 30,000 shares underlying warrants, which are exercisable within 60&nbsp;days of June 15, 2017.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(8)</TD><TD STYLE="text-align: justify">Includes 150,000 shares underlying warrants which are exercisable within 60&nbsp;days of June 15,
2017.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(9)</TD><TD STYLE="text-align: left">Includes 25,000 shares underlying 1,250 shares of Series A Preferred Stock, which are convertible, at the sole option of the
holder, into 20 shares of our common stock per share of Series A Preferred Stock.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0; text-align: left"></TD><TD STYLE="width: 0.25in; text-align: left">(10)</TD><TD STYLE="text-align: left">Includes 300,000 shares underlying warrants, which are exercisable within 60&nbsp;days of June 15, 2017.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0; text-align: left"></TD><TD STYLE="width: 0.25in; text-align: left">(11)</TD><TD STYLE="text-align: left">Includes 6,000,000 shares underlying a warrant which is
exercisable within 60&nbsp;days of June 15, 2017, to purchase 300,000 shares of Series B Preferred Stock which are also convertible,
at the sole option of the holder, into 20 shares of our common stock per share of Series B Preferred Stock.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0; text-align: left"></TD><TD STYLE="width: 0.25in; text-align: left">(12)</TD><TD STYLE="text-align: left">Includes 600,000 shares underlying a warrant which is exercisable
within 60&nbsp;days of June 15, 2017, to purchase 30,000 shares of Series B Preferred Stock which are also convertible, at the
sole option of the holder, into 20 shares of our common stock per share of Series B Preferred Stock.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0; text-align: left"></TD><TD STYLE="width: 0.25in; text-align: left">(13)</TD><TD STYLE="text-align: left">Includes 3,000,000 shares underlying 150,000 shares of
Series B Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share
of Series B Preferred Stock. Includes 1,500,000 shares underlying a warrant which is exercisable within 60&nbsp;days of June 15,
2017.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 13.7pt; text-align: justify; text-indent: -13.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(14)</TD><TD STYLE="text-align: left">Includes 25,000 shares underlying 1,250 shares of Series
A Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series
A Preferred Stock. Includes 600,000 shares underlying a warrant which is exercisable within 60&nbsp;days of June 15, 2017, to
purchase 30,000 shares of Series B Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares
of our common stock per share of Series B Preferred Stock.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 13.7pt; text-indent: -13.7pt">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 13.7pt; text-indent: -13.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(15)</TD><TD>Includes 3,000,000 shares underlying a warrant which is
exercisable within 60&nbsp;days of June 15, 2017, to purchase 150,000 shares of Series A Preferred Stock, which are also convertible,
at the sole option of the holder, into 20 shares of our common stock per share of Series A Preferred Stock. Includes 6,000,000
shares underlying a warrant which is exercisable within 60&nbsp;days of June 15, 2017, to purchase 300,000 shares of Series
B Preferred Stock, which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share
of Series B Preferred Stock.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 13.7pt; text-indent: -13.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(16)</TD><TD>Includes 8,333,330 shares underlying warrants, which are
exercisable within 60 days of June 15, 2017. Includes 25,000,000 shares underlying 1,250,000 shares of Series A Preferred Stock,
which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series A Preferred Stock.
Includes 36,543,720 shares underlying 1,827,186 shares of Series B Preferred Stock, which are convertible, at the sole option
of the holder, into 20 shares of our common stock per share of Series B Preferred Stock. Includes 20,000,000 shares underlying
1,000,000 shares of Series C Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common
stock per share of Series C Preferred Stock. Also includes 1,200,000 shares underlying warrants which are exercisable within 60
days of June 15, 2017, to purchase 60,000 shares of Series B Preferred Stock, which are also convertible, at the sole option
of the holder, into 20 shares of our common stock per share of Series B Preferred Stock, which are beneficially owned by Co-Investment.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 13.7pt; text-indent: -13.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(17)</TD><TD>Includes 8,333,330 shares underlying warrants which are
exercisable within 60&nbsp;days of June 15, 2017. Includes 50,000,000 shares underlying 2,500,000 shares of Series B Preferred
Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Preferred
Stock.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.3in; text-indent: -0.3in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(18)</TD><TD>Includes 3,666,670 shares underlying warrants which are
exercisable within 60&nbsp;days of June 15, 2017. Includes 7,333,340 shares underlying 366,667 shares of Series B Preferred
Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Preferred
Stock.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(19)</TD><TD>Includes 1,000,000 shares of common stock held by The Clemens-Beaver
Creek Limited Partnership, of which Alvin H. Clemens is the general partner. Also includes 100,000 shares held by Mr.&nbsp;Clemens&rsquo;s
minor children.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(20)</TD><TD>Includes 1,666,660 shares underlying warrants which are
exercisable within 60&nbsp;days of June 15, 2017. Includes 3,333,320 shares underlying 166,666 shares of Series B Preferred
Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Preferred
Stock. Includes 600,000 shares underlying a warrant which is exercisable within 60&nbsp;days of June 15, 2017, to purchase 30,000
shares of Series B Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares of our common
stock per share of Series B Preferred Stock.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(21)</TD><TD>Includes 1,500,000 shares underlying 75,000 shares of Series
C Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series
C Preferred Stock.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(22)</TD><TD>Includes 2,000,000 shares underlying warrants, which are
exercisable within 60&nbsp;days of June 15, 2017.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(23)</TD><TD>Includes 1,500,000 shares underlying warrants which are
exercisable within 60&nbsp;days of June 15, 2017. Includes 3,000,000 shares underlying 150,000 shares of Series B Preferred
Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Preferred
Stock.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(24)</TD><TD>Includes 40,000,000 shares underlying a warrant which is
exercisable within 60&nbsp;days of June 15, 2017, to purchase 2,000,000 shares of Series B Preferred Stock which are also convertible,
at the sole option of the holder, into 20 shares of our common stock per share of Series B Preferred Stock.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_016"></A>TRANSACTIONS WITH RELATED PERSONS,
PROMOTERS AND CERTAIN CONTROL PERSONS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From the beginning of our last fiscal year
until the date of this proxy statement, there has been no transaction, nor is there any transaction currently proposed, to which
we were, are, or would be a participant, in which the amount involved exceeded or would exceed the lesser of $120,000 or one percent
of the average of our total assets at year end for the last two completed fiscal years and in which any of our directors or executive
officers, any holder of more than 5% of our common stock or any member of the immediate family of any of these persons or entities
had or will have a direct or indirect material interest, other than the transactions described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We believe that we have executed all of
the transactions described below on terms no less favorable to us than we could have obtained from unaffiliated third parties.
It is our intention to ensure that all future transactions between us and our officers, directors and principal stockholders and
their affiliates are approved by a majority of our board of directors, including a majority of the independent and disinterested
members of our board of directors, and are on terms no less favorable to us than those that we could obtain from unaffiliated third
parties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>On April 20, 2017, the Company completed a private placement (the &ldquo;<U>April Private Placement</U>&rdquo;) with The Co-Investment
Fund II, L.P., a holder of more than 5% of our common stock on an as converted basis (the &ldquo;<U>Investor</U>&rdquo;), for an
aggregate of 1,000,000 shares of Series C Convertible Preferred Stock. In the April Private Placement the Company sold to the Investor
1,000,000 shares of Series C Convertible Preferred Stock at a per share price equal to $2.00.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>On May 11, 2017, the Company entered into and completed a private placement (the &ldquo;<U>May Private Placement</U>&rdquo;)
with Azeez Enterprises, L.P., which is affiliated with Michael Azeez, who is a director of the Company, and John Scarpa, who is
a holder of more than 5% of our common stock on an as converted basis, for an aggregate of 150,000 shares of Series C Convertible
Preferred Stock. In the May Private Placement the Company issued 75,000 shares of Series C Convertible Preferred Stock to each
of Azeez Enterprises, L.P. and John Scarpa.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_017"></A>PLAN OF DISTRIBUTION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On or about [_______],
201[__], we will distribute the rights, rights certificates and copies of this prospectus to individuals who owned shares of capital
stock on [_______], 201[__]. If you wish to exercise your rights and purchase Units, you should complete the rights certificate
and return it with payment for the shares, to us at the following address:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">InsPro Technologies Corporation</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">1510 Chester Pike</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Suite 400</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Eddystone, Pennsylvania 19022</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Attn: Francis L. Gillan III</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">See further the section
of this prospectus entitled &ldquo;The Rights Offering.&rdquo; If you have any questions, you should contact Francis L. Gillan
III, at (484) 654-2200 or by electronic mail at <U>rightsoffering@inspro.com</U>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not know of any
existing agreements between any stockholder, broker, dealer, underwriter or agent relating to the sale or distribution of the Series
C Convertible Preferred Stock underlying the rights.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_018"></A>MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following is a
discussion of the material U. S. federal income tax consequences to U.S. holders, as defined below, of the receipt, ownership and
exercise (or expiration) of the subscription rights distributed in the subscription rights offering; the ownership and disposition
of Series C Convertible Preferred Stock received upon exercise of the subscription rights; the conversion of Series C Convertible
Preferred Stock and ownership of common stock upon conversion of the Series C Convertible Preferred Stock. The legal conclusions
with respect to matters of U.S. federal income tax law identified in this section, &ldquo;Material U.S. Federal Income Tax Considerations,&rdquo;
are the opinion of our counsel, Morgan, Lewis &amp; Bockius LLP. In this section, all references to &ldquo;we&rdquo; and &ldquo;our&rdquo;
refer to the Company and not to Morgan, Lewis &amp; Bockius LLP.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This discussion is
based on the Code, Treasury regulations promulgated thereunder, and administrative and judicial interpretations thereof, all as
in effect as of the date hereof and all of which are subject to change, possibly with retroactive effect. This discussion is not
binding on the Internal Revenue Service, the (&ldquo;IRS&rdquo;), or the courts. Accordingly, no assurance can be given that the
tax consequences described herein will not be challenged by the IRS or that such a challenge would not be sustained by a court.
No ruling has been sought from the IRS as to the U.S. federal income tax consequences set forth in this discussion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This discussion does
not address all aspects of U.S. federal income taxation that may be applicable to holders in light of their particular circumstances
or to holders subject to special treatment under the U.S. federal income tax laws, including, but not limited to, financial institutions,
brokers and dealers in securities or currencies, insurance companies, regulated investment companies, real estate investment trusts,
tax-exempt organizations, persons who hold their shares as part of a straddle, hedge, conversion or other risk-reduction transaction,
persons liable for the alternative minimum tax, persons who have received their common stock pursuant to which the subscription
rights in this rights offering have been granted through the exercise of employee stock options or otherwise as compensation for
services, partnerships or other entities treated as partnerships for U.S. federal income tax purposes, U.S. expatriates, and persons
whose functional currency is not the U.S. dollar and foreign taxpayers. This discussion does not describe any tax consequences
arising out of the tax laws of any state, local or foreign jurisdiction, or any U.S. federal tax considerations other than income
taxation (such as alternative minimum, estate or gift taxation). This discussion is limited to U.S. holders which hold our shares
as capital assets and does not address U.S. holders which beneficially hold our shares through either a &ldquo;foreign financial
institution&rdquo; (as such term is defined in Section 1471(d)(4) of the Code) or certain other non-U.S. entities specified in
Section 1472 of the Code. For purposes of this discussion, a &ldquo;U.S. holder&rdquo; is a holder that is, for U.S. federal income
tax purposes:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a citizen or resident of the United States;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>


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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under
the laws of the United States or any political subdivision thereof;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>an estate the income of which is subject to U.S. federal income taxation regardless of its source; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a trust if (i) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more &ldquo;United
States persons&rdquo; (within the meaning of the Code) have the authority to control all substantial decisions of the trust or
(ii) has a valid election in effect under applicable Treasury regulations to be treated as a United States person.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If a partnership (including
any entity treated as a partnership for U.S. federal income tax purposes) receives the subscription rights or holds shares of Series
C Convertible Preferred Stock upon exercise of the subscription rights or the oversubscription privilege, the tax treatment of
a partner in a partnership generally will depend upon the status of the partner and the activities of the partnership. Such a partner
or partnership should consult its own tax advisor as to the U.S. federal income tax consequences of the receipt and ownership of
the subscription rights or the ownership of shares of Series C Convertible Preferred Stock received upon exercise of the subscription
rights or, if applicable, upon exercise of the oversubscription privilege.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>YOU SHOULD CONSULT
YOUR TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO YOU OF YOUR RECEIPT, OWNERSHIP, AND EXERCISE OF THE SUBSCRIPTION RIGHTS,
THE OWNERSHIP AND DISPOSITION OF SERIES C CONVERTIBLE PREFERRED STOCK, AND THE OWNERSHIP AND DISPOSITION OF COMMON STOCK RECEIVED
UPON THE CONVERSION OF SERIES C CONVERTIBLE PREFERRED STOCK, INCLUDING THE APPLICABILITY OF ANY FEDERAL ESTATE OR GIFT TAX LAWS
OR ANY STATE, LOCAL OR FOREIGN TAX LAWS.</B></P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-style: normal">&nbsp;</FONT></P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-style: normal">Receipt of the
Subscription Rights</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each subscription right
entitles an eligible stockholder the right to purchase for $50.00 one Unit, consisting of 25 shares of our Series C Convertible
Preferred Stock. Generally, the distribution of stock by a corporation to its stockholders with respect their stock is not taxable
to such stockholders pursuant to Section 305(a) of the Code. For such purpose, a distribution of rights to acquire stock of the
distributing corporation constitutes a distribution of stock. However, if a distribution of stock or rights to acquire stock is
within one of several exceptions to the general rule of Section 305(a) set forth in Section 305(b) of the Code, the distribution
may be taxable to the stockholders of the distributing corporation as described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Many of the exceptions
to the general rule of Section 305(a) set forth in Section 305(b) involve preferred stock, such as the distribution of convertible
preferred stock in certain circumstances pursuant to Section 305(b)(5). Treasury regulations define preferred stock not for its
preferred rights and privileges, but its inability to participate in corporate growth to any significant extent. It is the opinion
of Morgan, Lewis &amp; Bockius LLP that the Series C Convertible Preferred Stock should not be preferred stock for tax purposes
based on certain features of the preferred stock, including its right to participate in dividends on an as converted basis and
the right to a distribution in a liquidation or other capital event on an as converted basis if such distribution would be greater
than the liquidation preference right associated with the Series C Convertible Preferred Stock, as well as based on certain representations
relied upon in rendering the opinion, and, accordingly, that none of the Section 305(b) exceptions that apply to preferred stock
for tax purposes should apply to the rights offering and that the rights offering should be evaluated for Section 305 purposes
as if we have only one outstanding class of stock. However, the application of the Code Section 305 rules to the rights offering
(and any interest therein or obtained thereby) is uncertain. This opinion is not binding on the IRS or any court and there can
be no assurance that the IRS or a court will agree with this opinion. The remainder of this discussion assumes that the Series
C Convertible Preferred Stock is not treated as preferred stock for tax purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Section 305(b)(2) is
an exception to the general rule of Section 305(a) that applies to a &ldquo;disproportionate distribution.&rdquo; Pursuant to Section
305(b)(2), a distribution (or a series of distributions of which such a distribution is one) of stock rights constitutes a &ldquo;disproportionate
distribution,&rdquo; and is therefore taxable, if the distribution results in (i) the receipt of property by some stockholders,
and (ii) an increase in the proportionate interest of other stockholders in the assets or earnings and profits of the distributing
corporation. For this purpose, the term &ldquo;property&rdquo; means money, securities and any other property, except that such
term does not include stock in the corporation making the distribution or rights to acquire such stock. A &ldquo;series of distributions&rdquo;
encompasses all distributions of stock made or deemed made by a corporation which have the result of receipt of cash or property
by some stockholders and an increase in the proportionate interests of other stockholders. It is not necessary for a distribution
of stock to be considered as one of a series of distributions that such distribution be pursuant to a plan to distribute cash and
property to some stockholders and to increase the proportionate interests of the other stockholders, rather it is sufficient if
there is a distribution (or a deemed distribution) having such effect. In addition, there is no requirement that both elements
of Section 305(b)(2) of the Code occur in the form of a distribution or series of distributions as long as the result is that some
stockholders receive cash and property and other stockholders&rsquo; proportionate interests increase. Under the applicable Treasury
regulations, where the receipt of cash or property occurs more than 36 months following a distribution or series of distributions
of stock, or where a distribution is made more than 36 months following the receipt of cash or property, such distribution or distributions
will be presumed not to result in the receipt of cash or property by some stockholders and an increase in the proportionate interest
of other stockholders, unless the receipt of cash or property by some stockholders and the distribution or series of distributions
are made pursuant to a plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">It is the opinion of
Morgan, Lewis &amp; Bockius LLP that the distribution of subscription rights in the rights offering should not constitute an increase
in the proportionate interest of some stockholders in the assets or earnings and profits of the Company for the purpose of Section
305(b)(2) based on the fact that all of our stockholders will receive rights in the rights offering based upon their respective
ownership of our stock, as well as based on certain representations relied upon in rendering the opinion, and, accordingly, that
the rights offering should not constitute part of a &ldquo;disproportionate distribution,&rdquo; pursuant to Section 305(b)(2)
of the Code. However, the application of the Code Section 305 rules to the rights offering (and any interest therein or obtained
thereby) is uncertain. This opinion is not binding on the IRS or any court and there can be no assurance that the IRS or a court
will agree with this opinion. The remainder of this discussion assumes that Section 305(b)(2) does not apply to the subscription
rights offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to the foregoing,
it is the opinion of Morgan, Lewis &amp; Bockius LLP that you should not recognize taxable income for U.S. federal income tax purposes
in connection with the receipt of the subscription right in the rights offering and the remainder of this discussion so assumes.
Morgan, Lewis &amp; Bockius LLP is unable to opine at a higher level of certainty on this matter due to the aforementioned uncertainty
associated with the application of the Code Section 305 rules to the rights offering (and any interest therein or obtained thereby).
In the event the IRS successfully asserts or a court determines that your receipt of subscription rights is currently taxable pursuant
to Section 305(b)(2) of the Code, the discussion under the heading &ldquo;Alternative Treatment of Subscription Rights&rdquo; describes
the tax consequences that will result from such a determination.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Tax Basis and Holding Period of the Subscription Rights</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Your tax basis of the
subscription rights for U.S. federal income tax purposes will depend on the fair market value of the subscription rights you receive
and the fair market value of your existing shares of stock on the date you receive the subscription rights. The tax basis of the
subscription rights received by you in the subscription rights offering will be zero unless either (i) the fair market value of
the subscription rights on the date such subscription rights are distributed is equal to at least 15% of the fair market value
on such date of the shares with respect to which they are received or (ii) you elect to allocate part of the tax basis of such
shares to the subscription rights. If either (i) or (ii) is true, then, if you exercise the subscription rights, your tax basis
in your shares will be allocated between the subscription rights and the shares with respect to which the subscription rights were
received in proportion to their respective fair market values on the date the subscription rights are distributed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have not obtained
an independent appraisal of the valuation of the subscription rights and, therefore, you should consult with your tax advisor to
determine the proper allocation of basis between the subscription rights and the shares with respect to which the subscription
rights are received.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Your holding period
for the subscription rights will include your holding period for the shares with respect to which the subscription rights were
received.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Expiration of the Subscription Rights</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If you allow subscription
rights received in the subscription rights offering to expire, you will not recognize any gain or loss. If you have tax basis in
the subscription rights, the tax basis of the shares owned by you with respect to which such subscription rights were distributed
will be restored to the tax basis of such shares immediately prior to the receipt of the subscription rights in the subscription
rights offering.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-style: normal">&nbsp;</FONT></P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-style: normal">Alternative Treatment
of Subscription Rights</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Receipt</I></B>.
If the IRS were to successfully assert that the distribution of the subscription rights in the rights offering resulted in a &ldquo;disproportionate&rdquo;
distribution or is otherwise taxable pursuant to Section 305(b)(2), each holder would be considered to have received a distribution
with respect to such holder&rsquo;s stock in an amount equal to the fair market value of the subscription rights received by such
holder on the date of the distribution. This distribution generally would be taxed as dividend income to the extent of your ratable
share of our current and accumulated earnings and profits. The amount of any distribution in excess of our earnings and profits
will be applied to reduce, but not below zero, your tax basis in your stock, and any excess generally will be taxable to you as
capital gain (long-term, if your holding period with respect to your capital stock is more than one year as of the date of distribution,
and otherwise short-term). Your tax basis in the subscription rights received pursuant to the rights offering would be equal to
their fair market value on the date of distribution and the holding period for the rights would begin upon receipt.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Expiration</I></B>.
Assuming the receipt of subscription rights in the rights offering is a taxable event, if your subscription rights lapse without
being exercised, you will recognize a capital loss equal to your tax basis in such expired subscription rights. The deductibility
of capital losses is subject to limitations.</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-style: normal">&nbsp;</FONT></P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-style: normal">Exercise of the
Subscription Rights; Tax Basis and Holding Period of the Shares </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Generally, you will
not recognize any gain or loss upon the exercise of the subscription rights received in the subscription rights offering by purchasing
Unit(s) for $50.00 per Unit. The tax basis of the Series C Convertible Preferred Stock acquired will be the sum of (i) the subscription
price of the Series C Convertible Preferred Stock, plus (ii) the tax basis of the subscription rights, if any.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The holding period
for the Series C Convertible Preferred Stock acquired through exercise of the subscription rights will begin on the date the subscription
rights are exercised.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Taxation of Series C Convertible Preferred
Stock </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Distributions</I></B><I>.</I><B>
</B>Generally, any distribution with respect to the Series C Convertible Preferred Stock that is paid out of our current or accumulated
earnings and profits, as determined for U.S. federal income tax purposes, will constitute a dividend and will be includible in
gross income by you when paid. Distributions with respect to the Series C Convertible Preferred Stock in excess of our current
or accumulated earnings and profits would be treated first as a non-taxable return of capital to the extent of your basis in the
Series C Convertible Preferred Stock (thus reducing such tax basis dollar-for-dollar), and thereafter as capital gain, which will
be long-term capital gain if the your holding period for such stock at the time of distribution exceeds one year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Sale, Exchange
or Other Disposition</I></B>. Upon a sale, exchange or other disposition of the Series C Convertible Preferred Stock (not including
a conversion of the Series C Convertible Preferred Stock into our common stock), you generally will recognize capital gain or loss
equal to the difference between the amount realized (not including any amount attributable to declared and unpaid dividends, which
generally will be taxable as described above, under &ldquo;&mdash; Taxation of Series C Convertible Preferred Stock &mdash; Distributions,&rdquo;
to holders that have not previously included such dividends in income) and your tax basis in the Series C Convertible Preferred
Stock so disposed. Such capital gain or loss generally will be long-term capital gain or loss if your holding period for such stock
at the time of disposition exceeds one year. The deductibility of capital losses is subject to limitations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Adjustment of
the Conversion Rate</I></B>. The conversion rate of the Series C Convertible Preferred Stock is subject to adjustment. Treasury
regulations promulgated under Section 305 of the Code could, under certain circumstances, treat a U.S. holder of the Series C Convertible
Preferred Stock as having received a constructive distribution includable in such U.S. holder&rsquo;s income in the manner described
above under &ldquo;&mdash; Taxation of Series C Convertible Preferred Stock &mdash; Distributions&rdquo; if and to the extent that
certain adjustments in the conversion rate (or failures to adjust) increase the proportionate interest of a U.S. holder in our
earnings and profits or assets. Thus, under certain circumstances, U.S. holders may recognize income in the event of a constructive
distribution even though they may not receive any cash or property. Adjustments to the conversion rate made pursuant to a bona
fide reasonable adjustment formula which has the effect of preventing dilution in the interest of the U.S. holders of the Series
C Convertible Preferred Stock, however, will generally not be considered to result in a constructive dividend distribution.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Conversion of
the Series C Convertible Preferred Stock into Our Common Stock</I></B>. You generally will not recognize any gain or loss in respect
of the receipt of our common stock upon the conversion of the Series C Convertible Preferred Stock. The tax basis of our common
stock that you receive on conversion will equal the tax basis of the Series C Convertible Preferred Stock converted (reduced by
the portion of tax basis allocated to any fractional common share exchanged for cash, as described below), and the holding period
of such common stock received on conversion will generally include the period during which you held the Series C Convertible Preferred
Stock prior to conversion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cash received in lieu
of a fractional common share will generally be treated as a payment in a taxable exchange for such fractional common share, and
capital gain or loss will be recognized on the receipt of cash in an amount equal to the difference between the amount of cash
received and the amount of tax basis allocable to the fractional common share. Any cash received attributable to any declared and
unpaid dividends on the Series C Convertible Preferred Stock will be treated as described above under &ldquo;&mdash; Taxation of
Series C Convertible Preferred Stock &mdash; Distributions.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Taxation of Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B><I>Distributions</I></B><I>.</I><B>
</B>Distributions received with respect to our common stock will be treated as described above under &ldquo;&mdash; Taxation of
Series C Convertible Preferred Stock &mdash; Distributions.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Sale, Exchange or Other Disposition</I></B><I>.
</I>Upon a sale, exchange or other disposition of our common stock, you generally will recognize capital gain or loss in the manner
described above under &ldquo;&mdash; Taxation of Series C Convertible Preferred Stock &mdash; Sale, Exchange or Other Disposition.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Additional Medicare Tax on Net Investment Income </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">An additional 3.8% tax will be imposed on
the &ldquo;net investment income&rdquo; of certain U.S. citizens and resident aliens, and on the undistributed &ldquo;net investment
income&rdquo; of certain estates and trusts. Among other items, &ldquo;net investment income&rdquo; generally includes gross income
from dividends and net gain from the disposition of property, such as our capital stock, less certain deductions. You should consult
your tax advisor with respect to this additional tax.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Information Reporting and Backup Withholding </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In general, payments made to you of proceeds
from the sale or other disposition of Series C Convertible Preferred Stock or our common stock, or of dividends on our stock may
be subject to information reporting to the IRS and possible U.S. federal backup withholding at the then applicable backup withholding
rate (currently at 28%). Backup withholding will not apply if you furnish a correct taxpayer identification number (certified on
the IRS Form W-9 or valid substitute Form W-9) or otherwise establish that you are exempt from backup withholding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Backup withholding is not an additional
tax.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Amounts withheld as backup withholding may
be credited against your U.S. federal income tax liability. You may obtain a refund of any excess amounts withheld under the backup
withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You should consult
your own tax advisor regarding your qualification for an exemption from backup withholding and the procedures for obtaining such
an exemption, if applicable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_019"></A>EXPERTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our consolidated financial
statements as of and for the years ended December 31, 2015 and 2016 included in this prospectus and in the registration statement
of which this prospectus is a part have been audited by D&rsquo;Arelli Pruzansky, P.A., independent registered public accountants,
to the extent and for the periods set forth in their report and are incorporated in this prospectus in reliance upon the report
given upon the authority of D&rsquo;Arelli Pruzansky, P.A. as experts in auditing and accounting.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_020"></A>TRANSFER AGENT AND REGISTRAR</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The transfer agent
and registrar for our common stock is Pacific Stock Transfer Company, whose address is 6725 Via Austi Parkway, Suite 300, Las Vegas,
NV 89119, and whose phone number is (702) 361-3033.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_021"></A>LEGAL MATTERS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The validity of the
securities being offered by this prospectus have been passed upon for us by Morgan, Lewis &amp; Bockius LLP, Philadelphia, Pennsylvania.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_022"></A>CHANGE IN ACCOUNTANTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Prior to May 3, 2017, D&rsquo;Arelli Pruzansky,
P.A. was engaged by the Company as the Company&rsquo;s independent registered public accounting firm. On May 3, 2017, the practice
of D&rsquo;Arelli Pruzansky, P.A. was combined with Assurance Dimensions, Inc., and the professional staff and partners of D&rsquo;Arelli
Pruzansky, P.A. joined Assurance Dimensions, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On May 11, 2017, the Company formally engaged
Assurance Dimensions, Inc. to serve as the Company&rsquo;s independent registered public accounting firm. The engagement was due
to the merger of our existing certifying accountant, D&rsquo;Arelli Pruzansky, P.A., and Assurance Dimensions, Inc. The decision
to engage Assurance Dimensions, Inc. as our independent registered public accounting firm was approved by the Company&rsquo;s Audit
Committee on May 11, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">D&rsquo;Arelli Pruzansky, P.A.&rsquo;s reports
on the Company&rsquo;s consolidated financial statements as of and for the fiscal year ended December 31, 2016 did not contain
an adverse opinion of disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_023"></A>WHERE YOU CAN FIND MORE INFORMATION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have filed with
the Commission a registration statement on Form S-1, including exhibits, schedules and amendments filed with this registration
statement, under the Securities Act with respect to offers and resales of shares of our common stock by the selling stockholders
identified in this prospectus. This prospectus, which constitutes part of the registration statement, does not include all of the
information contained in the registration statement and its exhibits and schedules. You should refer to the registration statement
and its exhibits and schedules for additional information. Whenever we make reference in this prospectus to any of our contracts,
agreements or other documents, the references are not necessarily complete and you should refer to the exhibits filed with the
registration statement for copies of the actual contract, agreement or other document. Statements contained in this prospectus
as to the contents of any contract or other document referred to in this prospectus are not necessarily complete and, where that
contract is an exhibit to the registration statement, each statement is qualified in all respects by reference to the exhibit to
which the reference relates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You can read the registration
statement and our other filings with the Commission, over the Internet at the Commission&rsquo;s website at http://www.sec.gov.
You also may read and copy any document that we file with the Commission at its public reference room at Headquarters Office, 100
F Street, N.E., Washington, D.C. 20549.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_024"></A>DISCLOSURE OF COMMISSION POSITION ON<BR>
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers or persons controlling us
pursuant to the foregoing provisions, we have been informed that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_025"></A>FINANCIAL STATEMENTS</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">TABLE OF CONTENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><B>&nbsp;</B></P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr>
    <td style="vertical-align: top; width: 87%; text-align: right"><b>&nbsp;</b></td>
    <TD STYLE="vertical-align: bottom; width: 13%; border-bottom: Black 1pt solid; text-align: center"><b>Page Number</b></td></tr>
<tr>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: right">&nbsp;</td></tr>
<TR STYLE="background-color: Azure">
    <td style="vertical-align: top"><A HREF="#a_026">Management&rsquo;s Report on Internal Control Over Financial Reporting</A></td>
    <td style="vertical-align: bottom; text-align: right">F-2</td></tr>
<TR STYLE="background-color: White">
    <td style="vertical-align: top"><A HREF="#a_027">Report of Independent Registered Public Accounting Firm</A></td>
    <td style="vertical-align: bottom; text-align: right">F-3</td></tr>
<TR STYLE="background-color: Azure">
    <td style="vertical-align: top"><A HREF="#a_028">Consolidated Balance Sheets at December 31, 2016 and December 31, 2015</A></td>
    <td style="vertical-align: bottom; text-align: right">F-4</td></tr>
<TR STYLE="background-color: White">
    <td style="vertical-align: top"><A HREF="#a_029">Consolidated Statements of Operations for the Years Ended December 31, 2016 and December 31, 2015</A></td>
    <td style="vertical-align: bottom; text-align: right">F-5</td></tr>
<TR STYLE="background-color: Azure">
    <td style="vertical-align: top"><A HREF="#a_030">Consolidated Statements of Changes in Shareholders&rsquo; Equity for the Years Ended December 31, 2016 and December 31, 2015</A></td>
    <td style="vertical-align: bottom; text-align: right">F-6</td></tr>
<TR STYLE="background-color: White">
    <td style="vertical-align: top"><A HREF="#a_031">Consolidated Statements of Cash Flows for the Years Ended December 31, 2016 and December 31, 2015</A></td>
    <td style="vertical-align: bottom; text-align: right">F-7</td></tr>
<TR STYLE="background-color: Azure">
    <td style="vertical-align: top"><A HREF="#a_032">Notes to Consolidated Financial Statements</A></td>
    <td style="vertical-align: bottom; text-align: right">F-8 &ndash; F-36</td></tr>
<TR STYLE="background-color: White">
    <td style="vertical-align: top"><A HREF="#a_033">Consolidated Balance Sheets as of March 31, 2017 (UNAUDITED) and December 31, 2016</A></td>
    <td style="vertical-align: bottom; text-align: right">F-37</td></tr>
<TR STYLE="background-color: Azure">
    <td style="vertical-align: top"><A HREF="#a_034">Consolidated Statements of Operations (UNAUDITED) for the three months ended March 31, 2017 and 2016</A></td>
    <td style="vertical-align: bottom; text-align: right">F-38</td></tr>
<TR STYLE="background-color: White">
    <td style="vertical-align: top"><A HREF="#a_035">Consolidated Statements of Cash Flows (UNAUDITED) for the three months ended March 31, 2017 and 2016</A></td>
    <td style="vertical-align: bottom; text-align: right">F-39</td></tr>
<TR STYLE="background-color: Azure">
    <td style="vertical-align: top"><A HREF="#a_036">Notes to Consolidated UNAUDITED Financial Statements</A></td>
    <td style="vertical-align: bottom; text-align: right">F-40 &ndash; F-60</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_026"></A>Management Report on Internal Control
over Financial Reporting</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>Disclosure Controls
and Procedures.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our management is responsible
for establishing and maintaining adequate internal control over financial reporting for the Company. Under the supervision of our
Principal Officer and Chief Financial Officer, our management conducted an assessment of the effectiveness of our disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended)
as of the end of the period covered by this report. Based on that assessment, the Principal Executive Officer and Chief Financial
Officer has concluded that our disclosure controls and procedures were effective for their intended purposes as of December 31,
2014.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>Internal Control
over Financial Reporting.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company&rsquo;s
internal control over financial reporting is a process to provide reasonable assurance that the information required to be disclosed
by the Company in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported
within the time periods specified in the Commission&rsquo;s rules and is accumulated and communicated to management, including
the Company&rsquo;s principal executive and principal financial officers, or person performing similar functions, as appropriate
to allow timely decisions regarding required recording and disclosure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;A control system,
no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. 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. 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, control may become 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 not be detected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December 31,
2016 management conducted an assessment of the effectiveness of the Company&rsquo;s internal control over financial reporting based
on the criteria for effective internal control over financial reporting established in &ldquo;Internal Control&nbsp;&mdash; Integrated
Framework,&rdquo; issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on that assessment,
our Principal Executive Officer and Chief Financial Officer has concluded that our internal control over financial reporting was
effective as of December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>Changes in internal
control over financial reporting.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There have not been
any changes in the Company&rsquo;s internal control over financial reporting during the Company&rsquo;s last fiscal year to which
this report relates that have materially affected, or are reasonably likely to materially affect, the Company&rsquo;s internal
control over financial reporting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_027"></A>REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To the Board of Directors<BR>
InsPro Technologies Corporation<BR>
Eddystone, Pennsylvania</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have audited the accompanying consolidated
balance sheets of InsPro Technologies Corporation and Subsidiaries as of December 31, 2016 and 2015, the related consolidated statements
of operations, changes in shareholders' (deficit) equity and cash flows for each of the two years in the period ended December
31, 2016. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We conducted our audits
in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In our opinion, the
consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position
of InsPro Technologies Corporation and Subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their
cash flows for each of the two years in the period ended December 31, 2016, in conformity with accounting principles generally
accepted in the United States of America</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 70%">&nbsp;</td>
    <td style="width: 30%; border-bottom: black 1pt solid"><font style="font-size: 10pt">/s/ D&rsquo;Arelli Pruzansky</font></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Certified Public Accountants</font></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Coconut Creek, Florida<BR>
March 30, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_028"></A>INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED BALANCE SHEETS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: center">ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">CURRENT ASSETS:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-indent: 11pt">Cash</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3,161,617</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3,398,293</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; text-indent: 11pt">Accounts receivable, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,333,817</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,959,437</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 11pt">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">225,439</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">179,700</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; text-indent: 11pt">Other current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,520</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,954</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: 11pt">Assets of discontinued operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">8,636</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">15,212</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.375in">Total current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,760,029</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,557,596</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 11pt">Property and equipment, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">512,960</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">747,937</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: 11pt">Other assets</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">40,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px; padding-left: 0.375in">Total assets</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">6,272,989</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">8,345,533</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: center">LIABILITIES AND SHAREHOLDERS' DEFICIT</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">CURRENT LIABILITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 11pt">Notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">39,194</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">27,474</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; text-indent: 11pt">Accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,460,035</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,410,146</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 11pt">Accrued expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">436,516</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">497,088</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; text-indent: 11pt">Current portion of capital lease obligations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">188,025</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">227,880</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: 11pt">Deferred revenue</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">2,285,140</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">2,680,361</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 0.375in">Total current liabilities</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">8,408,910</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">8,842,949</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0in">LONG TERM LIABILITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 0.375in">Deferred revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,500,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 0.375in">Capital lease obligations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">153,139</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">149,892</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 0.375in">Total long term liabilities</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">1,653,139</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">2,149,892</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 0.375in">Total liabilities</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">10,062,049</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">10,992,841</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">COMMITMENTS AND CONTINGENCIES: (See Note 9)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">SHAREHOLDERS' DEFICIT:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-left: 9pt">Preferred stock ($.001 par value; 20,000,000 shares authorized)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Series A convertible preferred stock; 3,437,500 shares designated, 1,276,750 shares issued and outstanding (liquidation value $12,767,500)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,864,104</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,864,104</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Series B convertible preferred stock; 11,000,000 shares designated, 5,307,212 and 5,305,852 shares issued and outstanding (liquidation value $15,921,636 and $15,917,556)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,689,019</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,689,018</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Common stock ($.001 par value; 500,000,000 shares authorized, 41,543,655 shares issued and outstanding)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41,543</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41,543</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Additional paid-in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48,268,968</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">46,742,784</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: -0.1in; padding-left: 16.2pt">Accumulated deficit</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(66,652,694</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(63,984,757</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 0.375in">Total shareholders' deficit</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(3,789,060</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(2,647,308</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px; padding-left: 0.375in">Total liabilities and shareholders' deficit</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">6,272,989</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">8,345,533</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to consolidated financial
statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.4pt">&nbsp;</P>


<!-- Field: Page; Sequence: 83; Value: 1 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.4pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_029"></A>INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF OPERATIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Year Ended December 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Revenues, net of $1,299,963 of stock based fees paid to a client during the year ended December 31, 2016</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">21,830,928</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">21,377,557</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 2px">Cost of revenues</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">19,070,205</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">21,702,984</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Gross profit (loss)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">2,760,723</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(325,427</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Selling, general and administrative expenses</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">5,473,566</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">6,099,564</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Operating gain (loss) from continuing operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(2,712,843</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(6,424,991</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Other income (expense):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Gain on the sale of equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,738</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">Interest expense</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(25,249</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(125,012</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 0.25in">Total other income (expense)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(25,249</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(107,274</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">Gain (loss) from continuing operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(2,738,092</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(6,532,265</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Income from discontinued operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">70,155</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">155,797</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Net income (loss)</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">(2,667,937</TD><TD STYLE="padding-bottom: 4px; text-align: left">)</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">(6,376,468</TD><TD STYLE="padding-bottom: 4px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Net income (loss) per common share - basic and diluted:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Income (loss) from operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.06</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.15</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">Income from discontinued operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px; padding-left: 9pt">Net income (loss) per common share</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">(0.06</TD><TD STYLE="padding-bottom: 4px; text-align: left">)</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">(0.15</TD><TD STYLE="padding-bottom: 4px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px">Weighted average common shares outstanding - basic and diluted</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">41,543,655</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">41,543,655</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to consolidated financial
statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.4pt">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_030"></A>INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' DEFICIT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FOR THE YEARS ENDED DECEMBER 31, 2016
and 2015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 8pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center">Series A Preferred Stock,</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center">Series B Preferred Stock,</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center">Common Stock, $.001</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center">$.001 Par Value</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center">$.001 Par Value</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center">Par Value</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center">Total</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 2px solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Number
                                         of</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Shares</B></FONT></P></TD><TD STYLE="padding-bottom: 2px; font-size: 10pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Amount</TD><TD STYLE="padding-bottom: 2px; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 2px solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Number
                                         of</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Shares</B></FONT></P></TD><TD STYLE="padding-bottom: 2px; font-size: 10pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Amount</TD><TD STYLE="padding-bottom: 2px; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 2px solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Number
                                         of</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Shares</B></FONT></P></TD><TD STYLE="padding-bottom: 2px; font-size: 10pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 2px solid">Amount</TD><TD STYLE="padding-bottom: 2px; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 2px solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Additional</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Paid-in
                                         Capital</B></FONT></P></TD><TD STYLE="padding-bottom: 2px; font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 2px solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Accumulated</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Deficit</B></FONT></P></TD><TD STYLE="padding-bottom: 2px; font-size: 10pt">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; text-align: center; border-bottom: Black 2px solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Shareholders'</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>(Deficit)</B></FONT></P></TD><TD STYLE="padding-bottom: 2px; font-size: 10pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 10%">Balance - December 31, 2014</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; font-weight: bold; text-align: right">1,276,750</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 7%; font-weight: bold; text-align: right">2,864,104</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; font-weight: bold; text-align: right">3,809,378</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 7%; font-weight: bold; text-align: right">7,709,919</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; font-weight: bold; text-align: right">41,543,655</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 7%; font-weight: bold; text-align: right">41,543</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 7%; font-weight: bold; text-align: right">45,738,974</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 7%; font-weight: bold; text-align: right">(57,608,289</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">)</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 7%; font-weight: bold; text-align: right">(1,253,749</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Amortization of deferred compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">259,048</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">259,048</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Net loss for the period</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,376,468</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,376,468</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Preferred stock and warrants issued in private placements</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,496,474</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,979,099</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">497,310</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,476,409</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Fair value of warrant liability whose anti-dilution provisions expired during the period</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,760</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,760</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Warrants issued to executives as compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,200</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Warrants amended to extend the expiration date issued to an executive as compensation</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">190,492</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">190,492</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 2px">Balance - December 31, 2015</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: right">1,276,750</TD><TD STYLE="padding-bottom: 2px; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: right">2,864,104</TD><TD STYLE="padding-bottom: 2px; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: right">5,305,852</TD><TD STYLE="padding-bottom: 2px; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: right">11,689,018</TD><TD STYLE="padding-bottom: 2px; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: right">41,543,655</TD><TD STYLE="padding-bottom: 2px; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: right">41,543</TD><TD STYLE="padding-bottom: 2px; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: right">46,742,784</TD><TD STYLE="padding-bottom: 2px; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: right">(63,984,757</TD><TD STYLE="padding-bottom: 2px; font-weight: bold; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2px solid; font-weight: bold; text-align: right">(2,647,308</TD><TD STYLE="padding-bottom: 2px; font-weight: bold; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Amortization of deferred compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74,762</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74,762</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Net loss for the period</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,667,937</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,667,937</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Preferred stock and warrants issued in rights offering</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,360</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,079</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,080</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Warrants issued to client as compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,299,963</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,299,963</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Warrants amended to extend the expiration date issued to executives as compensation</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">147,380</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">147,380</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 4px">Balance - December 31, 2016</TD><TD STYLE="font-weight: bold; padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: right">1,276,750</TD><TD STYLE="padding-bottom: 4px; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: right">2,864,104</TD><TD STYLE="padding-bottom: 4px; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: right">5,307,212</TD><TD STYLE="padding-bottom: 4px; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: right">11,689,019</TD><TD STYLE="padding-bottom: 4px; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: right">41,543,655</TD><TD STYLE="padding-bottom: 4px; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: right">41,543</TD><TD STYLE="padding-bottom: 4px; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: right">48,268,968</TD><TD STYLE="padding-bottom: 4px; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: right">(66,652,694</TD><TD STYLE="padding-bottom: 4px; font-weight: bold; text-align: left">)</TD><TD STYLE="font-weight: bold; padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; font-weight: bold; text-align: right">(3,789,060</TD><TD STYLE="padding-bottom: 4px; font-weight: bold; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to consolidated financial
statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_031"></A>INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Year Ended December 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD NOWRAP>Cash Flows From Operating Activities:</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left; padding-left: 9pt">Net loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(2,667,937</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(6,376,468</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">Less: income from discontinued operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(70,155</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(155,797</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">Loss from continuing operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(2,738,092</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(6,532,265</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 9pt">Adjustments to reconcile net loss to net cash used in operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.25in">Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">501,463</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">599,930</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 0.25in">Stock-based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">222,142</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">500,739</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Stock based fees paid to client as a reduction to revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,299,963</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 0.25in">(Gain) on the sale of used equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(17,738</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Changes in assets and liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,625,620</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,714,625</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">78,886</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">141,528</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 0.25in">Other current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,434</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,158</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49,889</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">576,018</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accrued interest on secured note from related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">89,425</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accrued expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(60,572</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">123,778</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 0.25in">Deferred revenue</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(895,221</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">2,428,673</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Net cash provided by (used in) continuing operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">98,512</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,796,695</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 27pt">Income from discontinued operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70,155</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">155,797</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 27pt">Changes in assets of discontinued operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">6,576</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">4,571</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 27pt">Net cash provided by discontinued operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">76,731</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">160,368</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 27pt">Net cash provided by (used in) operating activities</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">175,243</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(3,636,327</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Cash Flows From Investing Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 9pt">Purchase of property and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(34,351</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(139,862</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">Proceeds from the sale of equipment</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">79,053</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 27pt">Net cash used in investing activities</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(34,351</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(60,809</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Cash Flows From Financing Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 9pt">Gross proceeds from sale of preferred stock and warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,080</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,899,999</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Fees paid in connection with sale of preferred stock and warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(13,013</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 9pt">Payments on notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(112,905</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(521,855</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Gross proceeds from secured note from related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 9pt">Gross proceeds loan payable to related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">500,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">Payments on capital leases</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(268,743</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(200,703</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 27pt">Net cash (used in) provided by financing activities</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(377,568</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">3,664,428</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Net (decrease) in cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(236,676</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(32,708</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">Cash - beginning of the period</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">3,398,293</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">3,431,001</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4px">Cash - end of the period</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">3,161,617</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">3,398,293</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Supplemental Disclosures of Cash Flow Information</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px; padding-left: 9pt">Cash payments for interest</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">25,249</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">125,012</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Non cash investing and financing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px; padding-left: 9pt">Acquisition of equipment acquired through capital leases</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">232,135</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">164,880</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px; padding-left: 9pt">Fair value of warrant liability whose anti-dilution provisions expired during the period</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">-</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">5,760</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px; padding-left: 9pt">Issuance of preferred stock and warrants valued at the amounts owed on secured notes plus accrued interest from related party and loan from related party</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">-</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">2,589,425</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to consolidated financial
statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_032"></A>INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 1 &ndash; <U>BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Organization</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><BR>
InsPro Technologies Corporation (the &ldquo;Company&rdquo;, &ldquo;ITCC&rdquo;, &ldquo;we&rdquo;, &ldquo;us&rdquo; or &ldquo;our&rdquo;)
is a technology company that provides software applications for use by insurance administrators in the insurance industry. Our
business focuses primarily on our InsPro Enterprise<SUP>TM</SUP> software application, which was introduced in 2004.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company offers InsPro Enterprise on both a licensed and
an application service provider (&ldquo;ASP&rdquo;) basis. InsPro Enterprise is an insurance administration and marketing system
that supports group and individual business lines, and efficiently processes agent, direct market, worksite and web site generated
business. InsPro Technologies' clients include insurance carriers and third party administrators. The Company realizes revenue
from the sale of software licenses, application service provider fees, hosting fees, software maintenance fees and consulting and
implementation services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Basis of presentation and principles of consolidation</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The consolidated financial statements are prepared in accordance
with generally accepted accounting principles in the United States of America (&ldquo;US GAAP&ldquo;). The consolidated financial
statements of the Company include the Company and its wholly-owned subsidiaries. All material inter-company balances and transactions
have been eliminated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Use of estimates</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The preparation of financial statements in conformity with US
GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates. Significant estimates in 2014 and 2013 include the warrant liability, allowance for
doubtful accounts, valuation allowance on deferred tax asset, stock-based compensation, the useful lives and valuation of property
and equipment and intangible assets, and deferred revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Cash and cash equivalents</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company had no cash equilavents during the two years ended
December 31, 2016. The Company considers all liquid debt instruments with original maturities of three months or less to be cash
equivalents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Accounts receivable</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has a policy of establishing an allowance for uncollectible
accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically
reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other
factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged
to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. At December
31, 2016 and 2015, the Company has established, based on a review of its outstanding balances, an allowance for doubtful accounts
in the amount of $0 and $140,946, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Fair value of financial instruments</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The carrying amounts of financial instruments,
including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, notes payable and capital lease obligations
approximated fair value as of December 31, 2016, and December 31, 2015, because of the relatively short-term maturity of these
instruments and their market interest rates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">NOTE 1 &ndash; <U>BASIS OF PRESENTATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company follows Financial Accounting
Standards Board (&ldquo;FASB&rdquo;) ASC 820, &ldquo;Fair Value Measurements and Disclosures&rdquo; (&ldquo;ASC 820&rdquo;), for
assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be
applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework
for measuring fair value, and expands disclosure about such fair value measurements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Property and equipment</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property and equipment are carried at cost.
The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are
retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses
are included in income in the year of disposition. In accordance with Statement of Financial Accounting Standards ASC 360, &quot;Accounting
for the Impairment or Disposal of Long-Lived Assets,&quot; the Company examines the possibility of decreases in the value of fixed
assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Impairment of long-lived assets</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company periodically reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company
recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset.
The amount of impairment is measured as the difference between the asset&rsquo;s estimated fair value and its book value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Income taxes</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company accounts for income taxes pursuant to the provisions
of ASC 740-10, &rdquo;<I>Accounting for Income Taxes</I>,&rdquo; which requires, among other things, an asset and liability approach
to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and
liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely
than not that the net deferred asset will not be realized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company follows the provisions of ASC 740 -10 related to,<I>
Accounting for Uncertain Income Tax Positions.</I> When tax returns are filed, it is highly certain that some positions taken would
be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position
taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit
of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management
believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or
litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the
more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely
of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions
taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the
accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon
examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company
has not recorded a liability for uncertain tax benefits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 29.7pt">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 29.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 29.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 1 &ndash; <U>BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has adopted ASC 740-10-25<I> Definition of Settlement,</I>
which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing
previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion of an examination
by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize
the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on
the basis of its technical merits and the statute of limitations remains open. The Company has not yet filed its tax returns for
the tax year ended December 31, 2016. As of December 31, 2016, the tax years ended December 31, 2015, 2014 and 2013 are still subject
to audit.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Income (loss) per common share</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Basic earnings per share is computed by dividing income (loss)
from continuing operations by the weighted average number of shares of common stock outstanding during the period. Diluted earnings
per share is computed by dividing the adjusted net loss from operations for diluted earnings per share by the weighted average
number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.
The effects of common stock equivalents and potentially dilutive securities outstanding during 2016 and 2015 are excluded from
the calculation of diluted loss per common share because it is anti-dilutive.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company&rsquo;s common stock equivalents
include the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, <BR>2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, <BR>2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Series A convertible preferred stock issued and outstanding</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">25,535,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">25,535,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Series B convertible preferred stock issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,144,240</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,117,040</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Options to purchase common stock issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,975,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Warrants to purchase common stock issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,098,330</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,084,730</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Warrants to purchase series A convertible preferred stock, issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,600,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,600,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px">Warrants to purchase series B convertible preferred stock, issued and outstanding</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">65,000,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">25,000,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">233,377,570</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">192,311,770</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Revenue recognition</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">Revenue for the year ended
December 31, 2016, include a reduction in the amount of $1,299,963 for stock based fees paid to a client. See Note 6 - Stockholders&rsquo;
Deficit &ndash; Series B Preferred Stock Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">The Company offers InsPro
Enterprise<SUP>TM</SUP> on both a licensed and an ASP basis. An InsPro Enterprise software license entitles the purchaser a perpetual
license to a copy of the InsPro Enterprise software installed at a single client location or hosted by InsPro Technologies. Alternatively,
ASP hosting service enables a client to lease the InsPro Enterprise software, paying only for that capacity required to support
their business. ASP and hosting clients access InsPro Enterprise installed on InsPro Technologies owned servers located at InsPro
Technologies&rsquo; offices or at a third party&rsquo;s site.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">The Company&rsquo;s software maintenance fees
apply to both licensed and ASP clients. Maintenance fees cover periodic updates to the application and the InsPro Enterprise help
desk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 1 &ndash; <U>BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company&rsquo;s consulting and implementation services are
generally associated with the implementation of InsPro Enterprise for either an ASP or licensed client, and cover such activity
as InsPro Enterprise installation, configuration, modification of InsPro Enterprise functionality, client insurance plan set-up,
client insurance document design and system documentation. Professional services revenue also consists of post implementation activities
for clients pertaining to their InsPro Enterprise installation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company&rsquo;s revenue is generally recognized under Accounting
Standards Codification 985-605, Software Revenue Recognition. For software arrangements involving multiple elements, which are
the sale of software licenses, professional services, ASP services and maintenance services, the Company allocates revenue to each
element based on the specific objective evidence of selling price of each deliverable, which is based on prices charged when the
element is sold separately. Software revenue accounted for under ASC 985-605 is recognized when persuasive evidence of an arrangement
exists, the software is delivered in accordance with all terms and conditions of the customer contracts, the fee is fixed or determinable
and collectability is probable. Revenue related to post-contract customer support (&ldquo;PCS&rdquo;), including technical support
and unspecified when-and-if available software upgrades, is recognized ratably over the PCS term. Under ASC 985-605, if fair value
does not exist for any undelivered element, revenue is not recognized until the earlier of (i)&nbsp;delivery of such element or
(ii)&nbsp;when fair value of the undelivered element is established, unless the undelivered element is a service, in which case
revenue is recognized as the service is performed once the service is the only undelivered element.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company recognizes revenue from software license agreements
when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and collectability
is probable. The Company considers fees relating to arrangements with payment terms extending beyond one year to not be fixed or
determinable and revenue for these arrangements is recognized as payments become due from the customer. In software arrangements
that include more than one InsPro Enterprise<SUP>TM</SUP> module, the Company allocates the total arrangement fee among the modules
based on the relative fair value of each of the modules.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">License revenue allocated to software products generally is
recognized upon delivery of the products or deferred and recognized in future periods to the extent that an arrangement includes
one or more elements to be delivered at a future date and for which fair values have not been established. Revenue allocated to
maintenance agreements is recognized ratably over the maintenance term and revenue allocated to training and other service elements
is recognized as the services are performed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Effective August 18, 2015, the Company entered into a five year
software and services reseller agreement (the &ldquo;Reseller Agreement&rdquo;) with an unaffiliated 3<SUP>rd</SUP> party (the
&ldquo;Reseller&rdquo;) whereby the Company granted the Reseller the exclusive right to market InsPro Enterprise to prospective
clients for their administration of long term care insurance products for an initial fee of $2,500,000 (the &ldquo;Reseller Fee&rdquo;).
Pursuant to the Reseller Agreement, the Reseller Fee is fully or partially refundable to the Reseller in the event that the Company
materially breaches the Reseller Agreement or the Company becomes insolvent, goes into liquidation or seeks protection under bankruptcy
during the term of the Reseller Agreement (each a &ldquo;Refund Event&rdquo;). The Reseller Fee was fully refundable if a Refund
Event occurred before August 31, 2016. A Refund Event did not occur as of December 31, 2016, and as a result the Company recognized
$500,000 of Reseller Fee as revenue in the year ended December 31, 2016. The Company shall refund the following amounts to the
Reseller if a Refund Event occurs between the following dates; $2,000,000 between September 1, 2016 and August 31, 2017, $1,500,000
between September 1, 2017 and August 31, 2018, and $1,000,000 between September 1, 2018 and August 31, 2019. As of December 31,
2016 the Company has recorded the $2,000,000 Reseller Fee in deferred revenue ($500,000 included in short term liabilities and
$1,500,000 included in long term liabilities).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 1 &ndash; <U>BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The unearned portion of the Company&rsquo;s revenue, which is
revenue collected but not yet recognized as earned, has been included in the consolidated balance sheet as a liability for deferred
revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">See Note 2 - Discontinued Operations - Revenue Recognition for
Discontinued Operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Cost of revenues</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">Cost of revenues includes
direct labor and associated costs for employees and independent contractors performing InsPro Enterprise<I>&trade;</I> design,
development, implementation and testing together with customer management, training and technical support, as well as a portion
of facilities costs. For the years ended December 31, 2016 and 2015, cost of revenues consisted of the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Year Ended December 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Compensation, employee benefits and related taxes</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">7,519,551</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">8,034,470</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Professional fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,317,169</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,973,271</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">382,876</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">490,551</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Rent, utilities, telephone and communications</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">443,348</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">486,976</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Other cost of revenues</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">407,261</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">717,716</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">19,070,205</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">21,702,984</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><U>Selling, general and
administrative expenses</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">Selling, general and administrative
expenses include all selling, marketing, and other expenses not classified as cost of revenues. The following table discloses selling,
general and administrative expenses as reported in the statement of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Year Ended December 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Compensation, employee benefits and related taxes</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3,337,346</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3,336,287</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Advertising and other marketing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">140,552</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">148,880</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">118,587</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">109,379</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Rent, utilities, telephone and communications</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">405,032</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">364,569</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Professional fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">709,383</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">927,623</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px">Other general and administrative</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">762,666</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">1,212,826</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">5,473,566</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">6,099,564</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Advertising and other marketing</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Advertising and other marketing costs are expensed as incurred
and are reported in selling, general and administrative expenses. See the previous table under selling, general and administrative
expenses for advertising and other marketing expenses reported in the statement of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 1 &ndash; BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Concentrations of credit risk</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company maintains its cash and restricted cash in bank deposit
accounts, which exceed the federally insured limits as provided through the Federal Deposit Insurance Corporation (&ldquo;FDIC&rdquo;).
At December 31, 2016 and 2015, the Company had $3,195,018 and $3,398,293 of cash in United States bank deposits, of which $500,930
and $500,050 was federally insured and $2,694,088 and $2,898,243 was not federally insured, respectively</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table lists the percentage of the Company&rsquo;s
accounts receivable balance from the Company&rsquo;s InsPro Enterprise clients representing 10% or more of the accounts receivable
balances as of the periods listed below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%">Client #1</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">30</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">32</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Client #2</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Client #3</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Client #4</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table lists the percentage of the Company&rsquo;s
revenue earned from the Company&rsquo;s InsPro Enterprise<I>&trade;</I> clients representing 10% or more of the revenue earned
in each of the periods listed below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Year Ended December 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%">Client #1</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">30</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">28</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Client #2</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Client #3</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Stock-based compensation</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company accounts for stock based compensation transactions
using a fair-value-based method and recognizes compensation cost for share-based payments to employees based on their grant-date
fair value from the beginning of the fiscal period in which the recognition provisions are first applied.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Non-employee stock based compensation</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The cost of stock based compensation awards issued to non-employees
for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services,
whichever is more readily determinable, based on their grant-date fair value from the beginning of the fiscal period in which the
recognition provisions are first applied.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 1 &ndash; BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Recent accounting pronouncements</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">From time to time, new accounting pronouncements are issued
by the Financial Accounting Standards Board (&quot;FASB&quot;), which are adopted by the Company as of the specified effective
date. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective,
will not have a material impact on the Company&rsquo;s consolidated financial statements upon adoption.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In May 2014, the FASB issued Accounting Standards Update (&ldquo;ASU&rdquo;)
ASU No. 2014-09,&nbsp;<I>Revenue from Contracts with Customers (Topic 606)</I>&nbsp;(&quot;ASU 2014-09&quot;), that outlines a
comprehensive five-step revenue recognition model based on the principle that an entity should recognize revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to
be entitled in exchange for those goods or services. In July 2015, the FASB approved a one-year deferral of the effective date
of ASU 2014-09 to the beginning of 2018 for public companies, with an option that would permit companies to adopt the standard
as early as the original effective date of 2017. The updated standard will replace most existing revenue recognition guidance in
U.S. GAAP. ASU 2014-09 may be adopted either retrospectively or on a modified retrospective basis whereby it would be applied to
new contracts and existing contracts with remaining performance obligations as of the effective date, with a cumulative catch-up
adjustment recorded to beginning retained earnings at the effective date for those contracts. The updated standard is effective
for us in the first quarter of 2018 and we do not plan to early adopt. We have not yet selected a transition method and we are
currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In November 2015, the FASB issued ASU No.&nbsp;2015-17,&nbsp;&ldquo;Balance
Sheet Classification of Deferred Taxes&rdquo;, which requires that all deferred tax liabilities and assets be classified as noncurrent
amounts on the balance sheet. ASU 2015-17 will be effective for interim and annuals periods beginning after December&nbsp;15, 2016
and may be applied prospectively or retrospectively. Early adoption of the standard is permitted. The new standard is effective
for the Company at the beginning of fiscal year 2017. We are currently evaluating the impact of adopting this ASU on our consolidated
financial statements and do not expect adoption to have a material impact.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In February 2016, the FASB issued ASU No. 2016-02,&nbsp;<I>Leases
(Topic 842)</I>&nbsp;(&quot;ASU 2016-02&quot;), that requires all leases with a term greater than 12 months to be recognized on
the balance sheet, while lease expenses would continue to be recognized in the statement of operations in a manner similar to current
accounting guidance. The new standard establishes a right-of-use model (ROU) asset and lease liability on the balance sheet for
all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting
the pattern and classification of expense recognition in the statement of operations. ASU 2016-02 is effective for the Company
at the beginning of fiscal year 2019 and early adoption is permitted. Entities must adopt ASU 2016-02 on a modified retrospective
basis whereby it would be applied at the beginning of the earliest comparative year. The new standard is effective for us in the
first quarter of 2019 and we do not plan to early adopt. We are currently evaluating the impact of the adoption of ASU 2016-02
on our consolidated financial statements. Effective December 31, 2016, our only lease with a term greater than 12 months is for
our Radnor office, which will expire on March 31, 2017. We believe our current lease for our Eddystone office, which was extended
for a 1 year term that expires on January 31, 2018, would continue to be accounted for as an operating lease under the new standard.
We may enter into a new lease for office space, which may have a term greater than 12 months, in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In June 2016, the FASB issued ASU No. 2016-13, &ldquo;Financial
Instruments &ndash; Credit Losses (Topic 326).&rdquo; For most financial assets, such as trade and other receivables, loans and
other instruments, this standard changes the current incurred loss model to a forward-looking expected credit loss model, which
generally will result in the earlier recognition of allowances for losses. The new standard is effective for the Company at the
beginning of fiscal year 2019. Entities are required to apply the provisions of the standard through a cumulative-effect adjustment
to retained earnings as of the effective date. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated
financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 1 &ndash; BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In August 2014, the FASB issued ASU No. 2014-15, &ldquo;Presentation
of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as
a Going Concern&rdquo;. Under US GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing
financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this
presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent,
financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation
of Financial Statements - Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there may be conditions
or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial
statements should continue to be prepared under the going concern basis of accounting, but the provisions in this ASU should be
followed to determine whether to disclose information about the relevant conditions and events. ASU No. 2014-15 was effective for
us as of December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In March 2016, the FASB issued ASU&nbsp;2016-09,&nbsp;&ldquo;Improvements
to Employee Share-Based Payment Accounting (Topic 718)&rdquo;, which simplifies several aspects of the accounting for employee
share-based payment transactions, including the accounting for the related income taxes, forfeitures, statutory tax withholding
requirements and classification in the statement of cash flows. ASU 2016-09 is effective for annual reporting periods beginning
after December&nbsp;15, 2016, including interim periods within those annual reporting periods. Early adoption is permitted. The
new standard is effective for the Company at the beginning of fiscal year 2017. We are currently evaluating the impact of adopting
this ASU on our consolidated financial statements and do not expect adoption to have a material impact.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In August 2016, the FASB issued ASU 2016-15,&nbsp;&ldquo;Classification
of Certain Cash Receipts and Cash Payments (Topic 230)&rdquo;, which provides guidance for eight specific cash flow issues with
the objective of reducing the existing diversity in practice. ASU 2016-15 is effective retrospectively for annual reporting periods
beginning after December 15, 2017, including interim periods within those annual reporting periods. Early adoption is permitted.
The new standard is effective for the Company at the beginning of fiscal year 2018. We are currently evaluating the impact of adopting
this ASU on our consolidated financial statements and do not expect adoption to have a material impact.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Liquidity</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the year ended December 31, 2016, the Company&rsquo;s
net loss was $2,667,937 and cash used primarily to fund financing activities resulted in a net decrease in cash of $236,676. As
of December 31, 2016, the Company had $3,161,617 of cash, a working capital deficit of $2,648,881 and the Company&rsquo;s shareholder
deficit was $3,789,060. During 2016 the Company implemented cost reduction initiatives, which resulted in the reduction of expenses
in 2016 as compared to 2015. During the first quarter of 2017 the Company implemented additional cost reduction initiatives, which
management believes will reduce expenses in 2017 as compared to 2016. The Company has obtained a $2,000,000 funding commitment
from its largest stockholder Co-Investment Fund II, L.P., which is described in Note 11 &ndash; Subsequent Events.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our liquidity needs for the next twelve months and beyond are
principally for the funding of our operations, payments on capital leases and the purchase of property and equipment. Based on
the forgoing, management believes the Company has sufficient funds to finance its operations over the next twelve months.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 2 &ndash; <U>DISCONTINUED OPERATIONS</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has classified its former telesales call center
and external agent produced agency business as discontinued operations. During the first quarter of 2009, the Company ceased the
direct marketing and sale of health and life insurance and related products to individuals and families in its telesales call center.
The Company also determined to discontinue selling health and life insurance and related products to individuals and families through
its non-employee agents. On February 20, 2009, the Company entered into and completed the sale of the agency business to an unaffiliated
third party, pursuant to the terms of a client transition agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Revenue Recognition for Discontinued Operations</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our discontinued operations generate revenue primarily from
transition policy commissions pursuant to the client transition agreement and renewal commissions paid to the Company by insurance
companies based upon the insurance policies sold to consumers by the Company&rsquo;s telesales call center.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We recognize commissions and other revenue from carriers after
we receive notice that the insurance carrier has received payment of the related premium. The Company recognizes as revenue commission
payments received in connection with the client transition agreement upon the Company&rsquo;s notification of such amounts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The financial position of discontinued
operations was as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left; padding-bottom: 2px">Accounts receivable</TD><TD STYLE="width: 1%; padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2px solid; text-align: left">$</TD><TD STYLE="width: 12%; border-bottom: Black 2px solid; text-align: right">8,636</TD><TD STYLE="width: 1%; padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2px solid; text-align: left">$</TD><TD STYLE="width: 12%; border-bottom: Black 2px solid; text-align: right">15,212</TD><TD STYLE="width: 1%; padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px">Net current assets of discontinued operations</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">8,636</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">15,212</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The results of discontinued operations do not include any allocated
or common overhead expenses. The results of operations of discontinued operations were as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Year Ended December 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Revenues:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left">Commission and other revenue from carriers</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">10,016</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">18,499</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Transition policy commission pursuant to the Agreement</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">88,006</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">165,044</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">98,022</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">183,543</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Operating expenses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: 11pt">Other general and administrative</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">27,867</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">27,746</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">27,867</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">27,746</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px">Income from discontinued operations</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">70,155</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">155,797</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 3 - <U>PROPERTY AND EQUIPMENT</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property and equipment consisted of the
following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; border-bottom: Black 2px solid">Useful <BR> Life <BR> (Years)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, <BR>2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, <BR>2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 55%; text-align: justify">Computer equipment and software</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 14%; text-align: center">3</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">4,419,412</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">4,152,927</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Office equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">4.6</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">158,732</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">158,732</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: justify">Office furniture and fixtures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">6.7</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">189,857</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">189,857</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 2px">Leasehold improvements</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-bottom: 2px">5.4</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">94,620</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">94,620</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,862,621</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,596,136</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: justify; padding-bottom: 2px">Less accumulated depreciation</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(4,349,661</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(3,848,199</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">512,960</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">747,937</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">The following table discloses
depreciation expense as reported in the statement of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Year Ended December 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Depreciation included in cost of revenues</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">382,876</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">490,551</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px">Depreciation included in selling, general and administrative</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">118,587</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">109,379</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Total depreciation</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">501,463</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">599,930</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 4 &ndash; <U>NOTES PAYABLE</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Notes payable at December 31, 2016, consist of two notes payable
for insurance premium financing on two of the Company&rsquo;s insurance policies. The first note commenced on April 28, 2016, has
an annual interest rate of 8.75% and consists of 11 monthly payments of principal and interest of $7,456 per month commencing on
May 28, 2016 and ending on March 28, 2017. The second note commenced on May 3, 2016, has an annual interest rate of 7.99% and consists
of 11 monthly payments of principal and interest of $4,358 per month commencing on June 3, 2016 and ending on April 3, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Notes payable at December 31, 2015, consist of two notes payable
for insurance premium financing on two of the Company&rsquo;s insurance policies. The first note commenced on April 28, 2015, has
an annual interest rate of 7.50% and consists of 11 monthly payments of principal and interest of $7,566 per month commencing on
May 28, 2015 and ending on March 28, 2016. The second note commenced on May 3, 2015, has an annual interest rate of 7.99% and consists
of 11 monthly payments of principal and interest of $4,396 per month commencing on June 3, 2015 and ending on April 3, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 5 &ndash; <U>RELATED PARTY TRANSACTIONS</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>September 2015 Private Placement</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 18, 2015, the Company completed a private placement
(the &ldquo;Private Placement&rdquo;) with certain accredited investors (collectively the &ldquo;Investors&rdquo;), including The
Co-Investment Fund II, L.P., which hold more than 5% of our common stock (&ldquo;Co-Investment&rdquo;) and Donald Caldwell, who
is the CEO and chairman of the board of directors of the Company and managing partner of Co-Investment; Edmond Walters, who is
a director of the Company, and Azeez Enterprises, LP, which is affiliated with Michael Azeez, who is a director of the Company,
for an aggregate of 1,163,141 shares of our Series B Convertible Preferred Stock and warrants to purchase 11,631,410 shares of
our common stock (the &ldquo;2015 Warrants&rdquo;). The Company sold to the Investors 1,163,141 units (&ldquo;Units&rdquo;) at
a per Unit price of $3.00, for an aggregate total investment of $3,489,423, and each unit consisted of one share of Series B Convertible
Preferred Stock and a warrant to purchase 10 shares of our Common Stock at an initial exercise price of $0.15 per share (&ldquo;Warrant
Shares&rdquo;), subject to adjustment pursuant to the terms of a securities purchase agreement (the &ldquo;Purchase Agreement&rdquo;).
The Company intends to use the net proceeds of the Private Placement for working capital purposes. See Note 6 - Shareholders&rsquo;
Deficit &ndash; Series B Preferred Stock and Common Stock Warrants. In the Private Placement the Company issued; 696,475 shares
of Series B Preferred Stock and a warrant to purchase 6,964,750 shares of our Common Stock to Co-Investment, 166,666 shares of
Series B Preferred Stock and a warrant to purchase 1,666,660 shares of our Common Stock to Edmond Walters, 150,000 shares of Series
B Preferred Stock and a warrant to purchase 1,500,000 shares of our Common Stock to Azeez Enterprises, and 150,000 shares of Series
B Preferred Stock and a warrant to purchase 1,500,000 shares of our Common Stock to an unrelated third party.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company agreed, pursuant to the terms of the Purchase Agreement,
that for a period of 90 days after the effective date (the &ldquo;Initial Standstill&rdquo;) of the Purchase Agreement, the Company
shall not, subject to certain exceptions, offer, sell, grant any option to purchase, or otherwise dispose of any equity securities
or equity equivalent securities, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument
that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, capital stock and
other securities of the Company. In addition, pursuant to the Purchase Agreement, the Company was permitted to sell up to an additional
1,000,000 Units to Independence Blue Cross within 90 days following the Closing on substantially the same terms and conditions
described above and as set forth in the Purchase Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Purchase Agreement also provides for a customary participation
right for the Investors, subject to certain exceptions and limitations, which grants the Investors the right to participate in
any future capital raising financings of the Company occurring from the effective date of the Purchase Agreement until 24 months
after the effective date of the Purchase Agreement. The Investors may participate in such financings at a level based on the Investors&rsquo;
ownership percentage of the Company on a fully-diluted basis prior to such financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Secured Convertible Promissory Note to Co-Investment Fund
II, LP.</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On January 30, 2015, the Company and InsPro LLC issued a Secured
Convertible Promissory Note (&ldquo;Note&rdquo;) to Co-Investment, pursuant to a Secured Convertible Promissory Note Purchase Agreement
(the &ldquo;Note Purchase Agreement&rdquo;). In connection with the Note Purchase Agreement, the Company, InsPro LLC (collectively
the &ldquo;Borrowers&rdquo;) and Co-Investment entered into a Security Agreement (the &ldquo;Security Agreement&rdquo;, and together
with the Note and the Note Purchase Agreement, the &ldquo;Financing Agreements&rdquo;). Pursuant to the terms and subject to the
conditions set forth in the Financing Agreements, Co-Investment provided a loan in the amount of $1,000,000 (&ldquo;Loan&rdquo;)
to the Company and InsPro LLC, which is secured by all assets of the Company and InsPro LLC other than copyright applications,
copyright registration, patents, patent applications, trademarks, services markets and other intellectual property (&ldquo;Collateral&rdquo;).
Pursuant to the Note, interest in the amount of 8% per annum, calculated on a 365 or 366 day year, as the case may be, and the
principal amount of $1,000,000 and accrued interest will be paid on or before June 30, 2016. Co-Investment has the right to convert
principal and accrued interest into the equity securities of the Company in the event that the Company issues and sells equity
securities to investors on or before the repayment in full of the Note in an equity financing resulting in gross proceeds to the
Company of at least $1,000,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 5 &ndash; EQUITY TRANSACTIONS AND LOANS FROM RELATED
PARTIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to the Security Agreement, the Borrowers shall not,
without Co-Investment&rsquo;s prior consent, sell, lease or otherwise dispose of any equipment or fixtures constituting Collateral.
In addition, the Borrowers will furnish Co-Investment with such information and documents regarding the Collateral and their financial
condition, business, assets and liabilities as is reasonably requested by Co-Investment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In connection with the Financing Agreements, Co-Investment entered
into a Subordination Agreement (&ldquo;Subordination Agreement&rdquo;) with SVB, the terms of such agreement were approved by the
Company, InsPro LLC and Atiam Technologies L.P. Pursuant to the Subordination Agreement, Co-Investment agreed, among other things,
that all obligations under the Loan Agreement and any other obligations to SVB would be senior to the outstanding indebtedness
under the Financing Agreements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 27, 2015, the Borrowers issued a second Secured Convertible
Promissory Note (the &ldquo;Second Note&rdquo;) in the amount of $1,000,000 to Co-Investment pursuant to a second Secured Convertible
Promissory Note Purchase Agreement (the &ldquo;Second Note Purchase Agreement&rdquo;). The terms of the Second Note are essentially
identical to the terms of the Note and the terms of the Second Note Purchase Agreement are essentially identical to the terms of
the Note Purchase Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to the terms of the Purchase Agreement,
the Company and Co-Investment agreed that, effective at the closing of the Private Placement on September 18, 2015, (i) the Note
and Second Note (collectively, &ldquo;Notes&rdquo;) were amended such that the entire principal amount of the Notes plus accrued
interest as of the closing was converted into 696,475 Units that consisted of 696,475 shares of Series B Preferred Stock and a
warrant to purchase 6,964,750 shares of our Common Stock , (ii) the Notes were converted in accordance with the terms thereof by
the issuance of the Units to Co-Investment under the Purchase Agreement, (iii) all amounts owed to Co-Investment by the Company
under borrowings by the Company, whether evidenced orally or in writing, including without limitation, the Notes and any unpaid
principal balance, any interest owed and any penalties or additional fees owed to Co-Investment (collectively, &ldquo;Existing
Indebtedness&rdquo;), was fully paid and satisfied by the Company, and the Existing Indebtedness was cancelled, and (iv) the Notes
and any other agreements entered into in connection with the Notes were amended to give effect to the foregoing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: left; margin-bottom: 0pt"><U>Loan Payable to Related Party</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 17, 2015, the Company received a loan from Edmond Walters,
a current director of the Company, in the amount of $500,000 (the &ldquo;Walters Loan&rdquo;). The Walters Loan was a pre-payment
by Mr. Walters in connection with any future issuance of equity securities of the Company, and is convertible into equity securities
of the Company in connection with any such future issuance of equity securities as agreed to by the Company and Mr. Walters. The
Loan from Mr. Walters is refundable to Mr. Walters on demand, without interest, if the Company does not consummate an equity financing
within a time period to be determined by the Company and Mr. Walters.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">Pursuant to the terms of the Purchase Agreement,
the Company and Edmond Walters agreed that, effective at the closing on September 18, 2015, (i) the Walters Loan was converted
by the issuance of the 166,666 Units that consisted of 166,666 shares of Series B Preferred Stock and a warrant to purchase 1,666,660
shares of our Common Stock to Edmond Walters under the Purchase Agreement, (ii) all amounts owed to Edmond Walters by the Company
under borrowings by the Company, whether evidenced orally or in writing, including without limitation, the Walters Loan and any
unpaid principal balance, any interest owed and any penalties or additional fees owed to Edmond Walters (collectively, &ldquo;Walters
Existing Indebtedness&rdquo;), was fully paid and satisfied by the Company, and the Walters Existing Indebtedness was cancelled,
and (iii) the Walters Loan and any agreements entered into in connection with the Loan were amended to give effect to the foregoing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 5 &ndash; EQUITY TRANSACTIONS AND LOANS FROM RELATED
PARTIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>IBC Private Placement</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On October 6, 2015, the Company entered into and completed a
private placement (the &ldquo;IBC Private Placement&rdquo;) with Independence Blue Cross, LLC, a Pennsylvania limited liability
company, which hold more than 5% of our common stock ( &ldquo;IBC&rdquo;), for an aggregate of 333,333 shares of its Series B Preferred
Stock and a warrant (the &ldquo;IBC Warrant&rdquo;) to purchase 3,333,330 shares of the Company&rsquo;s Common Stock, pursuant
to the terms of a securities purchase agreement (the &ldquo;IBC Purchase Agreement&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to the IBC Purchase Agreement, the Company agreed to
sell to IBC 333,333 Units in the IBC Private Placement at a per Unit purchase price equal to $3.00. Each Unit sold in the IBC Private
Placement consisted of one share of Series B Preferred Stock and an IBC Warrant to purchase ten shares of Common Stock at an initial
exercise price of $0.15 per share, subject to adjustment. The gross proceeds from the closing of the IBC Private Placement were
$999,999 and the Company intends to use the net proceeds of the Private Placement for working capital purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company also agreed, pursuant to the terms of the IBC Purchase
Agreement, that for a period of 90 days after the effective date of the Purchase Agreement, the Company shall not, subject to certain
exceptions, offer, sell, grant any option to purchase, or otherwise dispose of any equity securities or equity equivalent securities,
including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible
into or exchangeable for, or otherwise entitles the holder thereof to receive, capital stock and other securities of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The IBC Purchase Agreement also provides for a customary participation
right for the Investor, subject to certain exceptions and limitations, which grants the Investor the right to participate in any
future capital raising financings of the Company occurring from the effective date of the Purchase Agreement until 24 months after
the effective date of the Purchase Agreement. IBC may participate in such financings at a level based on the Investor&rsquo;s ownership
percentage of the Company on a fully-diluted basis prior to such financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 6 &ndash; <U>SHAREHOLDERS&rsquo; (DEFICIT) EQUITY</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Common Stock</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt">As of December 31, 2016 and 2015, the Company was
authorized to issue 500,000,000 shares of common stock with a par value of $0.001 per share (&ldquo;Common Stock&rdquo;). As of
December 31, 2016 and 2015, the Company had 41,543,655 shares of its Common Stock issued and outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.4pt">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.4pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.4pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.4pt"><U>NOTE 6 &ndash; SHAREHOLDERS&rsquo; DEFICIT (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.4pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.4pt">The Company has reserved shares of Common Stock, on
an as-if-converted basis, as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Exercise of options issued and outstanding to purchase common stock</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">4,000,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">2,975,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Issuance of common shares available under the 2010 Equity Compensation Plan</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24,996,980</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26,021,980</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Exercise of warrants issued and outstanding to purchase common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,098,330</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,084,730</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Conversion of series A convertible preferred stock issued and outstanding into common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,535,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,535,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Exercise of warrants to purchase series A convertible preferred stock issued and outstanding and converted into common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,600,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,600,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Conversion of series B convertible preferred stock issued and outstanding into common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,144,240</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,117,040</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Exercise of warrants to purchase series B convertible preferred stock issued and outstanding and converted into common stock</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">65,000,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">25,000,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Total common stock reserved for issuance</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">258,374,550</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">218,333,750</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The above table includes common stock reserved for non-exercisable
stock options and common stock reserved for the issuance of stock options in the future under the Company&rsquo;s 2010 Equity Compensation
Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Series A Convertible Preferred Stock</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of December 31, 2016 and 2015, the Company&rsquo;s board
of directors has designated 3,437,500 shares of Series A Convertible Preferred Stock with a par value of $0.001 per share (&ldquo;Series
A Preferred Stock&rdquo;). As of December 31, 2016 and 2015, the Company had 1,276,750 shares of its Series A Preferred Stock issued
and outstanding. As of December 31, 2016 and 2015, the Company has reserved 380,000 shares of Series A Preferred Stock for the
exercise of warrants issued and outstanding to purchase its Series A Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Series A Preferred Stock is entitled to vote as a single
class with the holders of the Company&rsquo;s common stock, with each share of Series A Preferred Stock having the right to 20
votes. Upon the liquidation, sale or merger of the Company, each share of Series A Preferred Stock is entitled to receive an amount
equal to the greater of (A) a liquidation preference equal to two and a half (2.5) times the Series A Preferred Stock original
issue price or $12,767,500, subject to certain customary adjustments, or (B) the amount such share of Series A Preferred Stock
would receive if it participated <I>pari</I> <I>passu</I> with the holders of common stock on an as-converted basis. The liquidation
preference is calculated by taking the product of the issued and outstanding shares of Series A Preferred stock times $10.00. Each
share of Series A Preferred Stock becomes convertible into 20 shares of common stock, subject to adjustment and at the option of
the holder of the Series A Preferred Stock. For so long as any shares of Series A Preferred Stock are outstanding, the vote or
consent of the holders of at least two-thirds of the Series A Preferred Stock is required to approve (Y) any amendment to the Company&rsquo;s
certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special rights of the Series
A Preferred Stock or (Z) any amendment to the Company&rsquo;s certificate of incorporation to create any shares of capital stock
that rank senior to the Series A Preferred Stock. In addition to the voting rights described above, for so long as 1,000,000 shares
of Series A Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series
A Preferred Stock is required to effect or validate any merger, sale of substantially all of the assets of the Company or other
fundamental transaction, unless such transaction, when consummated, will provide the holders of Series A Preferred Stock with an
amount per share equal to two and a half (2.5) times the Series A Preferred Stock original issue price or $12,767,500 in aggregate
for all issued and outstanding Series A Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; SHAREHOLDERS&rsquo; DEFICIT (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Series B Convertible Preferred Stock</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of December 31, 2016 and 2015, the Company&rsquo;s board
of directors has designated 11,000,000 shares of Series B Convertible Preferred Stock with a par value of $0.001 per share (&ldquo;Series
B Preferred Stock&rdquo;). As of December 31, 2016 and 2015, the Company had 5,307,212 and 5,305,852 of its Series B Preferred
Stock issued and outstanding, respectively. As of December 31, 2016 and 2015, the Company has reserved 1,250,000 and 1,170.000
shares of Series B Preferred Stock for the exercise of warrants issued and outstanding to purchase its Series B Preferred Stock,
respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Series B Preferred Stock is entitled to vote as a single
class with the holders of the Company&rsquo;s common and preferred stock, with each share of Series B Preferred Stock having the
right to 20 votes. Upon the liquidation, sale or merger of the Company, each share of Preferred Stock is entitled to receive an
amount equal to the greater of (A) a liquidation preference equal to the Series B Preferred Stock original issue price or $15,921,636
and $15,917,556 as of December 31, 2016 and 2015, respectively, subject to certain customary adjustments, or (B) the amount such
share of Series B Preferred Stock would receive if it participated <I>pari</I> <I>passu</I> with the holders of common and preferred
stock on an as-converted basis. The liquidation preference is calculated by taking the product of the issued and outstanding shares
of Series B Preferred stock times $3.00. Each share of Series B Preferred Stock becomes convertible into 20 shares of common stock,
subject to adjustment and at the option of the holder of the Series B Preferred Stock. For so long as any shares of Series B Preferred
Stock are outstanding, the vote or consent of the holders of at least two-thirds of the Series B Preferred Stock is required to
approve (Y) any amendment to the Company&rsquo;s certificate of incorporation or bylaws that would adversely alter the voting powers,
preferences or special rights of the Series B Preferred Stock or (Z) any amendment to the Company&rsquo;s certificate of incorporation
to create any shares of capital stock that rank senior to the Series B Preferred Stock. In addition to the voting rights described
above, for so long as 1,000,000 shares of Series B Preferred Stock are outstanding, the vote or consent of the holders of at least
two-thirds of the shares of Series B Preferred Stock is required to effect or validate any merger, sale of substantially all of
the assets of the Company or other fundamental transaction, unless such transaction, when consummated, will provide the holders
of Series B Preferred Stock with an amount per share equal the Series B Preferred Stock original issue price in aggregate for all
issued and outstanding Series B Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>2015</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 18, 2015, pursuant to the Purchase Agreement, the
Company sold to the investors 1,163,141 Units in the Private Placement at a per Unit purchase price equal to $3.00. Each Unit sold
in the Private Placement consisted of one share of Series B Preferred Stock and a warrant to purchase ten shares of Common Stock
at an initial exercise price of $0.15 per share, subject to adjustment. See Note 5 &ndash; Equity Transactions and Loans from Related
Parties &ndash; September 2015 Private Placement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company allocated $364,928 of the $3,489,423 proceeds received
as a result of the Private Placement, which represent the fair value of the Warrant Shares, to additional paid in capital using
a Black-Scholes option pricing model with the following assumptions: expected volatility of 422%, a risk-free interest rate of
0.10%, an expected term of 2.1 years and 0% dividend yield. The remaining $3,124,495 of the proceeds received was allocated to
the Series B Preferred Stock less $13,013 of legal expenses incurred as a result of the September 2015 Private Placement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On October 6, 2015, pursuant to the IBC Purchase Agreement,
the Company sold to IBC 333,333 Units in the IBC Private Placement at a per Unit purchase price equal to $3.00. Each Unit sold
in the IBC Private Placement consisted of one share of Series B Preferred Stock and a warrant to purchase ten shares of Common
Stock at an initial exercise price of $0.15 per share, subject to adjustment. See Note 5 &ndash; Equity Transactions and Loans
from Related Parties &ndash; IBC Private Placement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; SHAREHOLDERS&rsquo; DEFICIT (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company allocated $132,382 of the $999,999 proceeds received
as a result of the Private Placement, which represent the fair value of the IBC Warrant shares, to additional paid in capital using
a Black-Scholes option pricing model with the following assumptions: expected volatility of 397%, a risk-free interest rate of
0.70%, an expected term of 2.1 years and 0% dividend yield. The remaining $867,617 of the proceeds received was allocated to the
Series B Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>2016</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On February 2, 2016 the Company filed a registration statement
for a rights offering on Form S-1/A, which the Commission declared effective on February 5, 2016, to distribute to shareholders
excluding residents of Arizona and California at no charge, one non-transferable subscription right for each 16,615 shares of our
Common Stock, 831 shares of our Series A Preferred Stock and 830 shares of our Series B Preferred Stock owned as of January 31,
2016 (the &ldquo;Record Date&rdquo;), either as a holder of record or, in the case of shares held of record by brokers, dealers,
custodian banks, or other nominees on shareholders&rsquo; behalf, as a beneficial owner of such shares. If the rights offering
was fully subscribed the gross proceeds from the rights offering would have been approximately $2.5&nbsp;million. This rights offering
was designed to give all of the holders of the Company&rsquo;s capital stock the opportunity to participate in an equity investment
in the Company on the same economic terms as the Private Placement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The basic subscription right entitled the holder to purchase
one unit (&ldquo;Subscription Unit&rdquo;) at a subscription price of $240. A Subscription Unit consisted of 80 shares of Series
B Preferred Stock and a warrant to purchase 800 shares of Common Stock that expires on November 20, 2017 at an exercise price of
$0.15 per share. In the event that a holder of a Subscription Unit purchased all of the basic Subscription Units available to the
holder then pursuant to their basic subscription right, the holder had the option to choose to subscribe for a portion of any Subscription
Units that were not purchased by all other holders of Subscription Units through the exercise of their basic subscription rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Effective with the expiration of the subscription rights, which
occurred on March 14, 2016, holders of subscription rights exercised in aggregate 17 basic subscription rights and 0 over subscription
rights for a total 17 Subscription Units. The Company received $4,080 in gross proceeds as a result of the exercise of Subscription
Units. As a result of the exercise of 17 Subscription Units the Company issued effective on March 14, 2016 in aggregate 1,360 shares
of Series B Preferred Stock and of warrants to purchase in aggregate 13,600 shares of Common Stock that expires on November 20,
2017 at an exercise price of $0.15 per share (the &ldquo;2016 Warrants&rdquo;). Effective with the expiration of the subscription
rights all unexercised subscription rights expired.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company allocated $451 of the $4,080 proceeds received as
a result of the rights offering, which represent the fair value of the 2016 Warrants, to additional paid in capital using a Black-Scholes
option pricing model with the following assumptions: expected volatility of 259%, a risk-free interest rate of 0.51%, an expected
term of 1.7 years and 0% dividend yield. The remaining $3,629 of the proceeds received was allocated to the Series B Preferred
Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Stock Options</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>2015</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During 2015, options to purchase 4,450,000 shares of the Company&rsquo;s
Common Stock, which were previously granted to directors and current and former employees of the Company, expired in accordance
with the terms of such options.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; SHAREHOLDERS&rsquo; DEFICIT (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 27, 2015, the Company granted to an executive of the
Company an option to purchase a total of 200,000 shares of the Company&rsquo;s Common Stock, which vests as follows: 66,666 shares
of Common Stock on March 27, 2016 and 66,667 shares of Common Stock on March 27 of each of 2017 and 2018. This option has a five
year term and an exercise price of $0.10 per share, which exceeded the $0.067 closing price of one share of the Company&rsquo;s
Common Stock as quoted on the OTCBB on March 27, 2015. The fair value of the option granted was estimated on the date of the grant
to be $14,000 using the Black-Scholes option-pricing model based on the following assumptions: expected volatility: 792%, risk-free
interest rate: 0.12%, expected life in years: 5 based on the contract life of the option grant, and assumed dividend yield: 0%.
The Company recorded compensation expense pertaining to this option in salaries, commission and related taxes of $3,565 in the
year ended December 31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On November 13, 2015, the Company granted to an executive of
the Company an option to purchase a total of 500,000 shares of the Company&rsquo;s Common Stock, which vests as follows: 125,000
shares of Common Stock on March 13 of each year from 2016 through 2018. This option has a five year term and an exercise price
of $0.10 per share, which exceeded the $0.032 closing price of one share of the Company&rsquo;s Common Stock as quoted on the OTCBB
on November 13, 2015. The fair value of the option granted was estimated on the date of the grant to be $16,000 using the Black-Scholes
option-pricing model based on the following assumptions: expected volatility: 778%, risk-free interest rate: 0.3%, expected life
in years: 5 based on the contract life of the option grant, and assumed dividend yield: 0%. The Company recorded compensation expense
pertaining to this option in salaries, commission and related taxes of $1,600 in the year ended December 31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company recorded compensation expense pertaining to employee
stock options and warrants in salaries, commission and related taxes of $500,739 for the year ended December 31, 2015, which included
$125,667 of expense pertaining to stock options, $133,381 of expense pertaining to warrants to purchase Series A Preferred Stock,
$51,200 of expense pertaining to warrants to purchase Series B Preferred Stock, and $190,491 of expense pertaining to an amended
and restated warrant to purchase Series A Preferred Stock. See Note 6 &ndash; Stockholders Deficit &ndash; Series A Preferred Stock
warrants and Series B Preferred Stock warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>2016</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 31, 2016, the Company granted two executives of the
Company options to purchase a total of 1,000,000 shares of the Company&rsquo;s Common Stock, which vest as follows: 250,000 shares
of Common Stock on March 31 of each year from 2017 to 2020. Such options have a five year term and an exercise price of $0.10 per
share, which exceeded the $0.04 closing price of one share of the Company&rsquo;s Common Stock as quoted on the OTCBB on March
31, 2016. The fair value of the options granted was estimated on the date of the grant to be $40,000 using the Black-Scholes option-pricing
model based on the following assumptions: expected volatility: 724%, risk-free interest rate: 0.38%, expected life in years: 5
based on the contract life of the option grant, and assumed dividend yield: 0%. The Company recorded compensation expense pertaining
to these options in salaries, commission and related taxes of $7,500 in the year ended December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On May 20, 2016, the Company granted to an executive of the
Company options to purchase a total of 500,000 shares of the Company&rsquo;s Common Stock, which vest as follows: 125,000 shares
of Common Stock on May 20 of each year from 2017 to 2020. Such options have a five year term and an exercise price of $0.10 per
share, which exceeded the $0.04 closing price of one share of the Company&rsquo;s Common Stock as quoted on the OTCBB on May 20,
2016. The fair value of the options granted was estimated on the date of the grant to be $16,000 using the Black-Scholes option-pricing
model based on the following assumptions: expected volatility: 710%, risk-free interest rate: 0.32%, expected life in years: 5
based on the contract life of the option grant, and assumed dividend yield: 0%. The Company recorded compensation expense pertaining
to these options in salaries, commission and related taxes of $2,664 in the year ended December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; SHAREHOLDERS&rsquo; DEFICIT (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the year ended December 31, 2016, 475,000 options, which
were previously granted to directors and a former employee of the Company, expired in accordance with the terms of such stock options.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company recorded compensation expense pertaining to employee
stock options and warrants in the amount of $222,142 for the year ended December 31, 2016, which included $74,762 of expense pertaining
to stock options and $147,380 of expense pertaining to the amendment of warrants to purchase Series A Preferred Stock. See Note
6 &ndash; Stockholders Deficit &ndash; Series A Preferred Stock Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The value of equity compensation expense not yet expensed pertaining
to unvested equity compensation was $138,694 as of December 31, 2016, which will be recognized over a weighted average 2.6 years
in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of December 31, 2016, there were 30,000,000 shares of our
Common Stock authorized to be issued under the 2010 Equity Compensation Plan, of which 24,996,980 shares of our common stock remain
available for future stock option grants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A summary of the Company&rsquo;s outstanding stock options as
of and for the years ended December 31, 2016 and 2015 are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Number</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Weighted</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Weighted</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Of Shares</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Average</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Weighted</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Average</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Aggregate</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Underlying</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Exercise</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Average</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Remaining</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Intrinsic</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Options</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Price</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Fair Value</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Contractual Life</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Value (1)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">(in years)</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 35%">Outstanding at December 31, 2014</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">6,725,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">0.46</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">0.30</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1.66</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>For the period ended December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">700,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.07</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-left: 9pt">Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px; padding-left: 9pt">Expired</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(4,450,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">0.10</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">0.10</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Outstanding at December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,975,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.90</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.54</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.53</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>For the period ended December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-left: 9pt">Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,500,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.04</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 2px; padding-left: 9pt">Expired</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(475,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">3.58</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">2.94</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 4px">Outstanding at December 31, 2016</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">4,000,000</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">0.10</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">0.06</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">-</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">-</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Outstanding and exercisable at December 31, 2016</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">1,516,666</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">0.10</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">0.10</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">3.44</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">-</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>The aggregate intrinsic value is based on the $0.0375 closing price as of December 31, 2016 for the Company&rsquo;s Common
Stock.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Common Stock Warrants</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>2015</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During 2015, warrants to purchase 35,353,790 shares of the Company&rsquo;s
Common Stock expired in accordance with the terms of such warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; SHAREHOLDERS&rsquo; DEFICIT (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The 2015 Warrants provide that the holders thereof shall have
the right at any time prior to the earlier of (i) ten business days&rsquo; after the Company has properly provided written notice
to all such holders of a Call Event (as defined below) and (ii) November 20, 2017, to acquire up to a total of 11,631,410 shares
of Common Stock of the Company upon the payment of $0.15 per Share (the &ldquo;Exercise Price&rdquo;). See Note 5 &ndash; Equity
Transactions and Loans from Related Parties &ndash; September 2015 Private Placement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The IBC Warrant provides that the holders thereof shall have
the right at any time prior to the earlier of (i) ten business days&rsquo; after the Company has properly provided written notice
to all such holders of a Call Event and (ii) November 20, 2017, to acquire up to a total of 3,333,330 shares of Common Stock of
the Company (each an &ldquo;IBC Warrant Share&rdquo;) upon the payment of $0.15 per Warrant Share (the &ldquo;Exercise Price&rdquo;).
The Company also has the right upon a Call Event to call the outstanding IBC Warrant, in which case such IBC Warrant will expire
if not exercised within ten business days thereafter. See Note 5 &ndash; Equity Transactions and Loans from Related Parties &ndash;
IBC Private Placement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company also has the right, at any point after which the
volume weighted average trading price per share of the Common Stock for a minimum of 20 consecutive trading days is equal to at
least eight times the Exercise Price per share, provided that certain other conditions have been satisfied (a &ldquo;Call Event&rdquo;),
to call the outstanding 2015 Warrants and IBC Warrant, in which case such 2015 Warrants and IBC Warrant will expire if not exercised
within ten business days thereafter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company determined the 2015 Warrants and the IBC Warrant
qualify for a scope exception under ASC 815 as they were determined to be indexed to the Company&rsquo;s stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>2016</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 14, 2016, the 2016 Warrants were issued in connection
with the rights offering. See Note 6 &ndash; Stockholders Deficit &ndash; Series B Convertible Preferred Stock. The Company determined
the 2016 Warrants qualify for a scope exception under ASC 815 as they were determined to be indexed to the Company&rsquo;s stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A summary of the status of the Company's outstanding common
stock warrants as of and for the years ended December 31, 2016 and 2015 are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Weighted</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Common</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Average</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Stock</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Exercise</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Warrants</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Price</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Outstanding and exercisable at December 31, 2014</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">45,473,780</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">0.15</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>For the year ended December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Issued</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,964,740</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.15</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">Expired</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(35,353,790</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">0.15</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Outstanding and exercisable at December 31, 2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">25,084,730</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">0.15</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>For the year ended December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Issued</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,600</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.15</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">Expired</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Outstanding and exercisable at December 31, 2016</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">25,098,330</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">0.15</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Outstanding common stock warrants at December 31, 2016, have
a weighted average remaining contractual life of 0.9 years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; SHAREHOLDERS&rsquo; DEFICIT (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Series A Preferred Stock warrants</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>2015</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 27, 2015, the Company granted to two executives of
the Company warrants to purchase a total of 160,000 shares of the Company&rsquo;s Series A Preferred Stock, which in total vests
as follows: 40,000 shares of Series A Preferred Stock on March 27 of each year from 2016 through 2019. These warrants each have
a five year term and an exercise price of $4.00 per share. The fair value of these warrants granted were estimated on the date
of the grant to be $224,000 using the Black-Scholes option-pricing model based on the following assumptions: expected volatility:
768%, risk-free interest rate: 0.12%, expected life in years: 5 based on the contract life of the warrant grant, and assumed dividend
yield: 0%. During the year ended December 31, 2015, one of the two executives resigned and warrants to purchase a total of 80,000
shares of the Company&rsquo;s Series A Preferred Stock expired in accordance with the terms of such warrants. The Company recorded
compensation expense pertaining to these warrants in salaries, commission and related taxes of $133,381 in the year ended December
31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>2016</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 31, 2016, the Company amended and restated a warrant
to purchase a total of 150,000 shares of the Company&rsquo;s Series A Preferred Stock originally granted to Mr. Robert J. Oakes
on August 18, 2010, and also amended and restated a warrant to purchase a total of 150,000 shares of the Company&rsquo;s Series
A Preferred Stock originally granted to Mr. Anthony R. Verdi on September 14, 2011 (collectively the &ldquo;Original Warrants&rdquo;).
Immediately prior to March 31, 2016, the Original Warrants had an expiration date of September 14, 2016 and the Original Warrants
were amended and restated to have an expiration date of September 14, 2017 (as amended, the &ldquo;Amended and Restated Warrants&rdquo;).
The Amended and Restated Warrants are fully exercisable and have an exercise price of $4.00 per share. The fair value of the amendment
to the Amended and Restated Warrants was estimated on the date of the amendment to be the difference between the value of the Amended
and Restated Warrants immediately before and after the change in the expiration date. The fair value of the Amended and Restated
Warrants was estimated on the date of the amendment before the change in the expiration date to be $2,224 using the Black-Scholes
option-pricing model based on the following assumptions: expected volatility: 111%, risk-free interest rate: 0.38%, expected life
in years: 0.5 based on the contract life of the warrant grant, and assumed dividend yield: 0%. The fair value of the Amended and
Restated Warrants was estimated on the date of the amendment after the change in the expiration date to be $149,605 using the Black-Scholes
option-pricing model based on the following assumptions: expected volatility: 263%, risk-free interest rate: 0.38%, expected life
in years: 1.5 based on the contract life of the warrant grant, and assumed dividend yield: 0%. The Company recorded compensation
expense pertaining to the Amended and Restated Warrant in salaries, commission and related taxes of $147,380 in the year ended
December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Outstanding warrants to purchase the Company&rsquo;s Series
A Preferred Stock at December 31, 2016, have a remaining contractual life of 0.7 years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; SHAREHOLDERS&rsquo; DEFICIT (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A summary of the status of the Company's outstanding Series
A Preferred Stock warrants as of and for the years ended December 31, 2016 and 2015 are as follows:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Weighted</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Preferred</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Average</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Stock</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Exercise</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Warrants</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Price</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Outstanding and exercisable at December 31, 2014</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">300,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">4.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>For the year ended December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">160,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.00</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">Expired</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(80,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Outstanding and exercisable at December 31, 2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">380,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">4.00</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>For the year ended December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">Expired</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Outstanding and exercisable at December 31, 2016</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">380,000</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">4.00</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Series B Preferred Stock Warrants</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>2015</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On November 13, 2015, the Company granted to two executives
of the Company warrants to purchase a total of 80,000 shares of the Company&rsquo;s Series B Preferred Stock, which were immediately
exercisable. These warrants each have a five year term and an exercise price of $3.00 per share. The fair value of these warrants
granted were estimated on the date of the grant to be $51,200 using the Black-Scholes option-pricing model based on the following
assumptions: expected volatility: 778%, risk-free interest rate: 0.3%, expected life in years: 5 based on the contract life of
the warrant grant, and assumed dividend yield: 0%. The Company recorded compensation expense pertaining to these warrants in salaries,
commission and related taxes of $51,200 in the year ended December 31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>2016</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On April 4, 2016, the Company entered into an agreement with
an existing client, which among other things, included a provision that the Company issue a warrant to the client to purchase 2,000,000
shares of the Company&rsquo;s Series B Preferred Stock, which is immediately exercisable (the &ldquo;2016 Series B Warrants&rdquo;).
The 2016 Series B Warrants have a three year term, a cashless exercise provision and an exercise price of $3.00 per share. On May
4, 2016 the Company issued the 2016 Series B Warrant to the client. The fair value of the 2016 Series B Warrants was estimated
on April 4, 2016, which was the date of the agreement with the client, to be $1,299,963 using the Black-Scholes option-pricing
model based on the following assumptions: expected volatility: 503%, risk-free interest rate: 0.38%, expected life in years: 3
based on the contract life of the 2016 Series B Warrants, and assumed dividend yield: 0%. The Company determined the 2016 Series
B Warrants qualify for a scope exception under ASC 815 as they were determined to be indexed to the Company&rsquo;s stock. The
Company recorded the fair value of the 2016 Series B Warrant as an increase to additional paid in capital and a reduction to revenue
in the nine months ended September 30, 2016, in the amount of $1,299,963.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Outstanding Series B Warrants at December 31, 2016, have a remaining
contractual life of 2.5 years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; SHAREHOLDERS&rsquo; DEFICIT (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A summary of the status of the Company's outstanding Series
B Warrants as of and for the period ended December 31, 2016, are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Weighted</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Preferred</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Average</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Stock</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Exercise</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Warrants</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Price</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Outstanding and exercisable at December 31, 2014</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">1,170,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>For the year ended December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.00</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">Expired</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Outstanding and exercisable at December 31, 2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">1,250,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">3.00</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>For the year ended December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.00</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">Expired</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Outstanding and exercisable at December 31, 2016</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">3,250,000</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">3.00</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Registration and Participation Rights</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In connection with the Company&rsquo;s acquisition of Atiam
Technologies L. P., the Company and certain owners of Atiam Technologies L.P. entered into a registration rights agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In connection with the Company&rsquo;s 2008 private placement,
the Company and the participating investors also entered into a Registration Rights Agreement (the &ldquo;2008 Registration Rights
Agreement&rdquo;). Under the terms of the 2008 Registration Rights Agreement, the Company agreed to prepare and file with the SEC,
a registration statement on Form S-1 covering the resale of the shares and the warrant shares, which was filed with the SEC on
February 1, 2008 and declared effective by the SEC on April 22, 2008. Subject to limited exceptions, the Company also agreed to
use its reasonable best efforts to keep the registration statement effective under the Securities Act until the date that all of
the registrable securities covered by the registration statement have been sold or may be sold without volume restrictions pursuant
to Rule 144(b)(i)) promulgated under the Securities Act. The 2008 Registration Rights Agreement also provides for payment of partial
damages to the investors under certain circumstances relating to failure to file or obtain or maintain effectiveness of the registration
statement, subject to adjustment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; SHAREHOLDERS&rsquo; DEFICIT (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In connection with the Company&rsquo;s 2009 private placement,
the Company and the participating investor also entered into a Registration Rights Agreement (the &ldquo;2009 Registration Rights
Agreement&rdquo;). Under the terms of the 2009 Registration Rights Agreement, the Company agreed to prepare and file with the SEC,
within 30&nbsp;days following the receipt of a demand notice of a holder of registrable securities, a registration statement on
Form S-1 covering the resale of the shares and the warrant shares. Subject to limited exceptions, the Company also agreed to use
its reasonable best efforts to cause the registration statement to be declared effective under the Securities Act, and to use its
reasonable best efforts to keep the registration statement effective under the Securities Act until the date that all of the registrable
securities covered by the registration statement have been sold or may be sold without volume restrictions pursuant to Rule 144(b)(i)
promulgated under the Securities Act. In addition, if the Company proposes to register any of its securities under the Securities
Act in connection with the offering of such securities for cash, the Company shall, at such time, promptly give each holder of
registrable securities notice of such intent, and such holders shall have the option to register their registrable securities on
such additional registration statement. The 2009 Registration Rights Agreement also provides for payment of partial damages to
the investor under certain circumstances relating to failure to file or obtain or maintain effectiveness of the Registration Statement,
subject to adjustment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In connection with the Company&rsquo;s 2010 private placement,
the Company and the participating investors also entered into a Registration Rights Agreement (the &ldquo;2010 Registration Rights
Agreement&rdquo;), which provided the investors with demand and &ldquo;piggyback&rdquo; registration rights on substantially the
same terms as the 2009 Registration Rights Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In connection with Co-Investment&rsquo;s note conversion, the
Company and Co-Investment also entered into a Registration Rights Agreement (the &ldquo;December 2010 Registration Rights Agreement&rdquo;),
in substantially the same form as the 2010 Registration Rights Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In connection with the 2012 private placement, the 2013 Private
Placement, the Private Placement and the IBC Private Placement, the Company and the participating investors also entered into registration
rights agreements, in substantially the same form as the 2010 Registration Rights Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of December 31, 2016, the Company has not received a demand
notice in connection with any registration rights agreement. At December 31, 2016, the Company does not believe that it is probable
that the Company will incur a penalty in connection with the Company&rsquo;s registration rights agreements. Accordingly no liability
was recorded as of December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 7 &ndash; <U>CAPITAL LEASE OBLIGATIONS</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">InsPro LLC has entered into several capital lease obligations
to purchase equipment used for operations. InsPro LLC has the option to purchase the equipment at the end of the lease agreements
for one dollar. The underlying assets and related depreciation were included in the appropriate fixed asset category, and related
depreciation account.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Property and equipment includes the following amounts for leases
that have been capitalized as of December 31, 2016 and 2015:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">Useful Life (Years)</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 46%; text-align: left">Computer equipment and software</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 17%; text-align: center">3</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">1,576,226</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">1,344,091</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px">Phone System</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-bottom: 2px">3</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">15,011</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">15,011</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">1,591,237</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">1,359,102</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px">Less accumulated depreciation</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(1,260,944</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(990,007</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">330,293</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">369,095</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Future minimum payments required under capital leases at December
31, 2016 are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 50%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 82%; text-align: left">2017</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">203,110</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2018</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">130,693</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">2019</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">30,307</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total future payments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">364,110</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Less amount representing interest</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">22,946</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Present value of future minimum payments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">341,164</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px">Less current portion</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">188,025</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px">Long-term portion</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">153,139</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 8 &ndash; <U>DEFINED CONTRIBUTION 401(k) PLAN</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company implemented a 401(k) plan on January 1, 2007. Eligible
employees contribute to the 401(k) plan. Employees become eligible after attaining age 19 and after 3 months of employment with
the Company. The employee may become a participant of the 401(k) plan on the first day of the month following the completion of
the eligibility requirements. Effective January 1, 2007 the Company implemented an elective contribution to the plan of 25% of
the employee&rsquo;s contribution up to 4% of the employee&rsquo;s compensation (the &ldquo;Contribution&rdquo;). The Contributions
are subject to a vesting schedule and become fully vested after one year of service, retirement, death or disability, whichever
occurs first. The Company made contributions of $79,080 and $82,462 for the years ended December 31, 2016 and 2015, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 9 &ndash; <U>COMMITMENTS AND CONTINGENCIES</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Employment and Separation Agreements</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">On March 31, 2008, Anthony R. Verdi,
our Chief Financial Officer, was also appointed to the position of Chief Operating Officer, effective April 8, 2008. Mr. Verdi
was appointed to the board on June 20, 2008, and was appointed our Principal Executive Officer on May 18, 2011 through January
26, 2015.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">Mr. Verdi&rsquo;s amended and restated
employment agreement automatically renewed for a one year term on March 31, 2015, and, if not terminated, will automatically renew
for one year periods. His annual base salary was $225,000 per year from March 31, 2008 through May 30, 2011 and was then increased
by the board of directors to $250,000 effective June 1, 2011 and again increased to $300,000 effective November 1, 2015. He is
entitled to receive such bonus compensation as a majority of our board of directors may determine from time to time.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">If we terminate Mr. Verdi&rsquo;s employment
for cause or Mr. Verdi terminates his employment agreement without good reason, Mr. Verdi will be entitled to receive (i) all accrued
and unpaid salary and vacation pay through the date of termination and (ii) continued participation for one month in our benefit
plans. Otherwise if we terminate Mr. Verdi&rsquo;s employment or Mr. Verdi terminates his employment agreement for good reason
including his permanent disability he will be entitled to receive 18 months&rsquo; base salary at the then current rate, payable
in accordance with our usual practices, continued participation for 18 months in our benefit plans and payment, within a commercially
reasonable time and on a prorated basis, of any bonus or other payments earned in connection with our bonus plan existing at the
time of termination. In addition, if Mr. Verdi&rsquo;s employment is terminated in accordance with the foregoing sentence within
two months prior to, or 24 months following, a change in control (as described in the employment agreement), Mr. Verdi will be
entitled to receive 18 months&rsquo; base salary at the then current rate upon the date of termination, regardless of our usual
practices, and all stock options held by Mr. Verdi at the date of termination will immediately become 100% vested and all restrictions
on such options will lapse.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">If Mr. Verdi&rsquo;s employment is
terminated due to a permanent disability we may credit any such amounts against any proceeds paid to Mr. Verdi with respect to
any disability policy maintained and paid for by us for Mr. Verdi&rsquo;s benefit. If Mr. Verdi dies during the term of his employment
agreement, the employment agreement will automatically terminate and Mr. Verdi&rsquo;s estate or beneficiaries will be entitled
to receive (i) three months&rsquo; base salary at the then current rate, payable in a lump sum and (ii) continued participation
for one year in our benefit plans.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.45pt; text-indent: -17.55pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to an amended and restated written employment agreement
with InsPro LLC, Mr. Robert J. Oakes serves as Vice Chairman of the board of directors. Pursuant to his employment agreement, his
annual base salary was $250,000 per year through September 30, 2011. On April 7, 2011, Mr. Oakes received an increase in his base
compensation pursuant to his employment agreement to $300,000 retroactive to July 1, 2010, upon InsPro LLC achievement of one calendar
quarter of positive operating cash flow, which occurred during the calendar quarter ended March 31, 2011. Mr. Oakes was entitled
to bonus compensation equal to 100% of the InsPro LLC&rsquo;s net income up to a maximum of $100,000 in 2010 and $100,000 in 2011.
Mr. Oakes is entitled to such fringe benefits as are available to other executives of the Company. Mr. Oakes employment agreement
was automatically extended for an additional one year term on March 25, 2016 and will be annually automatically extended thereafter
unless either party provides written notification to the other party of non-renewal no later than 60 days prior to the termination
date of the agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">In the event of Mr. Oakes&rsquo;s termination
without cause or for good reason, he or his estate would receive his then current base annual salary, plus unpaid accrued employee
benefits, which is primarily accrued vacation, plus the continuation of his employee benefits for a period of 12 months, less all
applicable taxes. In the event of his voluntary termination, death or disability, he or his estate would receive unpaid accrued
employee benefits, plus the continuation of his employee benefits for a period of one month, less all applicable taxes.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 9 &ndash; COMMITMENTS AND CONTINGENCIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">As of December 31, 2016, the Company
has employment agreements with the Chief Revenue Officer, which commenced in 2016 for a one year term that will automatically renew
for a one year term in 2017, and four vice presidents of the Company, which automatically renewed each for a one year term in 2016.
These employment agreements provide that these executives will be compensated at an aggregate annual base salary of $1,011,000
with bonus compensation at the discretion of the Company&rsquo;s board of directors. These agreements may be terminated by the
Company for &ldquo;cause&rdquo; (as such term is defined in the agreements) and without &ldquo;cause&rdquo; upon 30 days&rsquo;
notice. These agreements may be terminated by the Company without &ldquo;cause&rdquo;, in which case the terminated employee will
be entitled to their base salary for a period of six months. In the event of termination without cause or for good reason, these
executives would receive their then current base annual salary for a period of six months, plus unpaid accrued employee benefits,
which is primarily accrued vacation, less all applicable taxes. In the event of the voluntary termination of any of these executives&rsquo;,
death or disability, they or their estate would receive unpaid accrued employee benefits, less all applicable taxes. These agreements
also contain non-competition and non-solicitation provisions for the duration of the agreements plus a period of six months after
termination of employment.</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Operating Leases</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On July 7, 2006, the Company entered into a lease agreement
with Radnor Properties-SDC, L.P. (the &ldquo;Landlord&rdquo;) for the lease of 7,414 square feet of office space located in Radnor
Financial Center, Building B, 150 Radnor-Chester Road, Radnor, Pennsylvania. The term of the lease commenced on November 1, 2006,
which was the date the Company, with the Landlord&rsquo;s prior consent, assumed possession of the premises and the date the Landlord
tendered possession of the premises to the Company following the substantial completion of the improvements required to be made
by the Landlord under the lease agreement, and will expire on the last day of the 125<SUP>th</SUP> month following the commencement
of the lease term, which is March 31, 2017. The annual rent increases every 12&nbsp;months, starting at approximately $161,592
plus a proportionate share of the Landlord&rsquo;s building expenses after the second month and ending at approximately $258,378
plus a proportionate share of the Landlord&rsquo;s building expenses. Under the terms of the lease agreement, rent is waived for
the first five months of the lease term with respect to 5,238 square feet and for the first twelve months for the remaining 2,176
square feet. The Company recorded a liability for deferred rent in the amount of $7,564 as of December 31, 2016, which is included
in accrued liabilities on the consolidated balance sheet.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company paid the Landlord a security deposit of $110,000
under the lease (the &ldquo;Security Deposit&rdquo;) during the third quarter of 2006, which is accounted for as a deposit in other
assets. The Company will not earn interest on the Security Deposit. The Security Deposit will decrease and the Landlord will return
to the Company $10,000 on the third anniversary of the commencement date of the lease and on each anniversary thereafter until
the required Security Deposit has been reduced to $20,000. The Security Deposit will be returned to the Company 30 days after the
end of the lease provided the Company has complied with all provisions of the lease. The balance of the Security Deposit is $30,000
as of December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 14, 2007, InsPro LLC entered into a lease agreement
with BPG Officer VI Baldwin Tower L.P. (&ldquo;BPG&rdquo;) for approximately 5,524 square feet of office space at Baldwin Towers
in Eddystone, Pennsylvania. On March 26, 2008, and again on December 2, 2008, the Company and BPG agreed to amend the lease to
increase the leased office space by 1,301 and 6,810 square feet, respectively (as amended the &ldquo;BPG Lease&rdquo;). The original
term of the lease commenced on October 1, 2007 and expired on January 31, 2013. The annual rent increases every 12&nbsp;months,
starting at approximately $102,194 plus a proportionate share of landlord&rsquo;s building expenses and ending at approximately
$286,335 plus a proportionate share of landlord&rsquo;s building expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 9 &ndash; COMMITMENTS AND CONTINGENCIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 15, 2012, InsPro LLC and BPG agreed to amend the BPG
Lease to extend its term to January 31, 2017, and after BPG completes certain building improvements InsPro Technologies will move
from its current location to another floor of the same building and lease 17,567 square feet of furnished office space from BPG.
Effective April 1, 2015, InsPro LLC and BPG agreed to amend the BPG Lease to lease 6,810 square feet of furnished office space
from BPG on another floor of the same building. The Company&rsquo;s monthly rent shall be $24,887 per month commencing with InsPro
Technologies&rsquo; occupancy of the new office space, which occurred in June 2012 through January 31, 2013. InsPro Technologies&rsquo;
monthly rent increased to $25,619 per month February 1, 2013 through January 31, 2014, increased to $26,351 per month February
1, 2014 through January 31, 2015, increased to $27,082 per month February 1, 2015 through March 31, 2015, increased to $37,082
through January 31, 2016, will increase to $37,814 per month February 1, 2016 through March 31, 2016, and will decrease to $27,814
per month from April 1, 2016 through January 31, 2017. On June 9, 2016, InsPro LLC and BPG entered into a sixth amendment to the
Lease Agreement whereby InsPro LLC and BPG agreed to amend the Lease Agreement to extend the term through January 31, 2018 for
17,567 of rentable square feet at a monthly cost of $28,546 for the period February 1, 2017 through January 31, 2018.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company leases certain real and personal property under
non-cancelable operating leases. Rent expense was $613,250 and $664,995 for the years ended December 31, 2016 and 2015, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Future minimum payments required under operating leases and
service agreements at December 31, 2016 are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 40%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 82%; text-align: left">2017</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">638,946</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2018</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">257,591</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">2019</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">225,108</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px; text-align: left">thereafter</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4px; text-align: left">Total</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">1,121,645</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal">NOTE 10 - <U>INCOME TAXES</U></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has net operating loss carry forwards for federal
income tax purposes of approximately $50,600,000 at December 31, 2016, the unused portion of which expires in years 2026 through
2036. The Company accounts for income taxes under Accounting Standards Codification 740, Income Taxes &ldquo;ASC 740&rdquo;. ASC
740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial
statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and
tax credit carry forwards. ASC 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of
realization of deferred tax assets. Internal Revenue Code Section 382 &ldquo;IRC 382&rdquo; places a limitation on the amount of
taxable income that can be offset by carry forwards after a change in control (generally greater than a 50% change in ownership).
The issuance of the Company&rsquo;s Series A Preferred Stock on January 15, 2009 resulted in a change of control as defined under
IRC 382.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>NOTE 10 - INCOME TAXES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The table below summarizes the differences
between the Company&rsquo;s effective tax rate and the statutory federal rate as follows for the periods ended December 31, 2016
and 2015:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Computed "expected" expense (benefit)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(933,778</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(2,231,764</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">State tax expense (benefit), net of federal effect</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(80,038</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(191,294</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Amortization/impairment of acquisition related assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,002</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,002</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Stock based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">84,414</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">190,281</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Stock based fees paid to client</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">493,986</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Other permanent differences</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,917</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,995</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Increase in valuation allowance</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">425,501</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">2,231,784</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">-</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">-</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Deferred tax assets and liabilities are
provided for significant income and expense items recognized in different years for tax and financial reporting purposes. The components
of the net deferred tax assets for the years ended December 31, 2016 and 2015 were as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2015</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Deferred tax assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left; text-indent: 10pt">Net operating loss carry forward</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">19,227,610</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">18,868,252</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-indent: 10pt">Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">88,909</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,177</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 10pt">Compensation expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">64,230</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">61,683</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; text-indent: 10pt">Deferred revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">686,297</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">648,288</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">All Miscellaneous Other</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">2,874</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">14,019</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; text-indent: 20pt">Total deferred tax asset</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,069,920</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,644,419</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: justify; padding-bottom: 2px; padding-left: 0in">Deferred tax liabilities</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 20pt">Net deferred tax asset</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,069,920</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,644,419</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Less: valuation allowance</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(20,069,920</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(19,644,419</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">-</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">-</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has fully reserved the deferred tax asset in excess
of the deferred tax liabilities due to the limitation on taxable income that can be offset by net operating loss carry forwards
in future periods under IRC section 382 as a result of changes in control and substantial uncertainty of the realization of any
tax assets in future periods. The valuation allowance was increased by $425,501 from the prior year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">December 31, 2016 and 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NOTE 11 &ndash; <U>SUBSEQUENT EVENTS</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -1in"><U>Co-Investment $2,000,000 funding
Commitment</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 29, 2017, Co-Investment provided the Company with a
funding commitment letter (the &ldquo;Commitment Letter&rdquo;) whereby Co-Investment committed to purchase 1,000,000 shares of
the Company&rsquo;s new series C preferred stock, par value $0.001 per share, (&ldquo;Series C Preferred Stock&rdquo;) at a per
share purchase price of $2.00 per share for an aggregate purchase price of $2,000,000 (the &ldquo;Commitment&rdquo;). The Company
anticipates Co-Investment will fulfill the Commitment in April as soon as practical. The Company intends to use the net proceeds
of the Commitment for working capital purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Series C Preferred Stock will be entitled to vote as a single
class with the holders of the Company&rsquo;s common stock, with each share of Series C Preferred Stock having the right to 20
votes. Upon the liquidation, sale or merger of the Company, each share of Series C Preferred Stock is entitled to receive an amount
equal to the greater of (A) a liquidation preference equal to two and half (2.5) times the Series C Preferred Stock original issue
price, subject to certain customary adjustments, or (B) the amount such share of Series C Preferred Stock would receive if it participated
<I>pari</I> <I>passu</I> with the holders of common stock on an as-converted basis. The liquidation preference is calculated by
taking the product of the issued and outstanding shares of Series C Preferred stock times $5.00. Each share of Series C Preferred
Stock becomes convertible into 20 shares of common stock, subject to adjustment and at the option of the holder of the Series C
Preferred Stock. For so long as any shares of Series C Preferred Stock are outstanding, the vote or consent of the holders of at
least two-thirds of the Series C Preferred Stock is required to approve (Y) any amendment to the Company&rsquo;s certificate of
incorporation or bylaws that would adversely alter the voting powers, preferences or special rights of the Series C Preferred Stock
or (Z) any amendment to the Company&rsquo;s certificate of incorporation to create any shares of capital stock that rank senior
to the Series C Preferred Stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series C
Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series C Preferred
Stock is required to effect or validate any merger, sale of substantially all of the assets of the Company or other fundamental
transaction, unless such transaction, when consummated, will provide the holders of Series C Preferred Stock with an amount per
share equal to two and a half (2.5) times the Series C Preferred Stock original issue price in aggregate for all issued and outstanding
Series C Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_033"></A>INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED BALANCE SHEETS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">March 31, 2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">(Unaudited)</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: center">ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">CURRENT ASSETS:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-indent: 11pt">Cash</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,985,940</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3,161,617</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; text-indent: 11pt">Accounts receivable, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,747,175</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,333,817</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 11pt">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">353,843</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">225,439</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; text-indent: 11pt">Other current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,520</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: 11pt">Assets of discontinued operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">7,216</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">8,636</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 27pt">Total current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,124,174</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,760,029</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: 11pt">Property and equipment, net</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">415,236</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">512,960</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px; text-indent: 27pt">Total assets</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">6,539,410</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">6,272,989</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">LIABILITIES AND SHAREHOLDERS' DEFICIT</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">CURRENT LIABILITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; text-indent: 11pt">Notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,330</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">39,194</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 11pt">Accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,323,438</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,460,035</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; text-indent: 11pt">Accrued expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">576,585</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">436,516</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 11pt">Current portion of capital lease obligations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">145,371</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">188,025</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: 11pt">Deferred revenue</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">3,220,412</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">2,285,140</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: 27pt">Total current liabilities</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">9,270,136</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">8,408,910</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">LONG TERM LIABILITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 27pt">Deferred revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,500,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,500,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: 27pt">Capital lease obligations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">119,546</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">153,139</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: 27pt">Total long term liabilities</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">1,619,546</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">1,653,139</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: 27pt">Total liabilities</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">10,889,682</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">10,062,049</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">COMMITMENTS AND CONTINGENCIES: (See Note 9)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">SHAREHOLDERS' DEFICIT:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Preferred stock ($.001 par value; 20,000,000 shares authorized)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Series A convertible preferred stock; 3,437,500 shares designated, 1,276,750 shares issued and outstanding (liquidation value $12,767,500)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,864,104</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,864,104</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Series B convertible preferred stock; 11,000,000 shares designated, 5,307,212 shares issued and outstanding (liquidation value $15,921,636)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,689,019</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,689,019</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Common stock ($.001 par value; 500,000,000 shares authorized, 41,543,655 shares issued and outstanding)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41,543</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41,543</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Additional paid-in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48,354,058</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48,268,968</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: -0.1in; padding-left: 16.2pt">Accumulated deficit</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(67,298,996</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(66,652,694</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: 27pt">Total shareholders' deficit</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(4,350,272</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(3,789,060</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px; text-indent: 27pt">Total liabilities and shareholders' deficit</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">6,539,410</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">6,272,989</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to unaudited consolidated
financial statements.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_034"></A>INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF OPERATIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Three Months Ended March 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">(Unaudited)</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">(Unaudited)</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%">Revenues</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">5,046,766</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">6,797,271</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Cost of revenues</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,108,969</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,579,569</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Gross profit</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">937,797</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">1,217,702</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Selling, general and administrative expenses</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">1,596,497</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">1,630,136</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Operating loss from continuing operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(658,700</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(412,434</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Other income (expense):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Gain on the sale of equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,380</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">Interest expense</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(5,294</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(3,978</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 0.25in">Total other income (expense)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">86</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(3,978</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">Loss from continuing operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(658,614</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(416,412</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Income from discontinued operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">12,312</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">13,215</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Net loss</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">(646,302</TD><TD STYLE="padding-bottom: 4px; text-align: left">)</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">(403,197</TD><TD STYLE="padding-bottom: 4px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Net income (loss) per common share - basic and diluted:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Income (loss) from operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.02</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.01</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">Income from discontinued operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px; padding-left: 9pt">Net income (loss) per common share</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">(0.02</TD><TD STYLE="padding-bottom: 4px; text-align: left">)</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">(0.01</TD><TD STYLE="padding-bottom: 4px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px">Weighted average common shares outstanding - basic and diluted</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">41,543,655</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">41,543,655</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to unaudited consolidated
financial statements.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_035"></A>INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Three Months Ended March 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">(Unaudited)</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">(Unaudited)</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Cash Flows From Operating Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left; padding-left: 0.125in">Net loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(646,302</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(403,197</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">Less: income from discontinued operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(12,312</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(13,215</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">Loss from continuing operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(658,614</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(416,412</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 9pt">Adjustments to reconcile net loss to net cash used in operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.25in">Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">122,938</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">125,635</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 0.25in">Stock-based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">85,090</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">164,246</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">(Gain) on the sale of used equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,380</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 9pt">Changes in assets and liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,413,358</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,024,034</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 0.25in">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(128,404</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(18,093</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Other current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">520</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,290</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(136,597</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">734,519</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accrued expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">140,069</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">64,802</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 0.25in">Deferred revenue</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">935,272</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">848,911</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 27pt">Net cash (used in) provided by continuing operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,058,464</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(518,136</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Income from discontinued operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,312</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,215</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 27pt">Changes in assets of discontinued operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">1,420</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">5,628</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 27pt">Net cash provided by discontinued operations</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">13,732</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">18,843</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 27pt">Net cash (used in) provided by operating activities</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(1,044,732</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(499,293</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Cash Flows From Investing Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Purchase of property and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(25,214</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(10,188</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">Proceeds from the sale of equipment</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">5,380</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 27pt">Net cash used in investing activities</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(19,834</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(10,188</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Cash Flows From Financing Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Gross proceeds from sale of preferred stock and warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,080</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-left: 9pt">Payments on notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(34,864</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(27,474</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 9pt">Payments on capital leases</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(76,247</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(55,224</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; padding-left: 0.375in">Net cash (used in) provided by financing activities</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(111,111</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(78,618</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Net (decrease) in cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,175,677</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(588,099</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px; padding-left: 0in">Cash - beginning of the period</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">3,161,617</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">3,398,293</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4px">Cash - end of the period</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">1,985,940</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">2,810,194</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Supplemental Disclosures of Cash Flow Information</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px; padding-left: 9pt">Cash payments for interest</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">5,294</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">3,978</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Non cash investing and financing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px; padding-left: 9pt">Acquisition of equipment acquired through capital leases</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">-</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">131,078</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">See accompanying notes to unaudited consolidated
financial statements.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_036"></A>INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>NOTE 1 &ndash; BASIS OF PRESENTATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Organization</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">InsPro Technologies Corporation (the &ldquo;Company&rdquo;,
&ldquo;ITCC&rdquo;, &ldquo;we&rdquo;, &ldquo;us&rdquo; or &ldquo;our&rdquo;) is a technology company that provides software applications
for use by insurance administrators in the insurance industry. Our business focuses primarily on our InsPro Enterprise<SUP>TM</SUP>
software application, which was introduced in 2004.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company offers InsPro Enterprise on both a licensed and
an Application Service Provider (&ldquo;ASP&rdquo;) basis. InsPro Enterprise is an insurance administration and marketing system
that supports group and individual business lines, and efficiently processes agent, direct market, worksite and web site generated
business. InsPro Technologies' clients include insurance carriers and third party administrators. The Company realizes revenue
from the sale of software licenses, application service provider fees, hosting fees, software maintenance fees and consulting and
implementation services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Basis of presentation and principles of consolidation</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting principles in the United States of America (&ldquo;US GAAP&rdquo;)
for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, the consolidated
financial statements do not include all of the information and footnotes required by US GAAP for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments
are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial
statements for the year ended December 31, 2016 and notes thereto and other pertinent information contained in our Annual Report
on Form 10-K as filed with the Securities and Exchange Commission (the &ldquo;Commission&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The consolidated financial statements of
the Company include the Company and its wholly owned subsidiaries. All material inter-company balances and transactions have been
eliminated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Use of estimates</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The preparation of financial statements in conformity with US
GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates. Significant estimates in 2017 and 2016 include the allowance for doubtful accounts,
stock-based compensation, the useful lives and valuation of property and equipment, and deferred revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Cash and cash equivalents</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company considers all liquid debt instruments with original
maturities of three months or less to be cash equivalents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 1 &ndash; BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Accounts receivable and allowance for uncollectable accounts</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has a policy of establishing an allowance for uncollectible
accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically
reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other
factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged
to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. At March
31, 2017 and December 31, 2016, the Company has established, based on a review of its outstanding balances, an allowance for doubtful
accounts in the amounts of $0.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Fair value of financial instruments</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The carrying amounts of financial instruments,
including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and capital leases approximated fair
value as of March 31, 2017 and December 31, 2016, because of the relatively short-term maturity of these instruments and their
market interest rates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company follows Financial Accounting
Standards Board (&ldquo;FASB&rdquo;) ASC 820, &ldquo;Fair Value Measurements and Disclosures&rdquo; (&ldquo;ASC 820&rdquo;), for
assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be
applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework
for measuring fair value, and expands disclosure about such fair value measurements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Property and equipment</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property and equipment are carried at cost.
The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are
retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses
are included in income in the year of disposition. In accordance with Statement of Financial Accounting Standards ASC 360, &ldquo;Accounting
for the Impairment or Disposal of Long-Lived Assets,&rdquo; the Company examines the possibility of decreases in the value of fixed
assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Impairment of long-lived assets</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company periodically reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company
recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset.
The amount of impairment is measured as the difference between the asset's estimated fair value and its book value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 1 &ndash; BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Income taxes</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company accounts for income taxes pursuant to the provisions
of FASB ASC 740-10, &ldquo;Accounting for Income Taxes&rdquo; (&ldquo;ASC 740-10&rdquo;), which requires, among other things, an
asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts
and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which
management believes it is more likely than not that the net deferred asset will not be realized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company follows the provisions of the ASC 740-10 related
to<I> Accounting for Uncertain Income Tax Positions.</I> When tax returns are filed, it is highly certain that some positions taken
would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the
position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10,
the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence,
management believes it is more likely than not that the position will be sustained upon examination, including the resolution of
appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that
meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent
likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax
positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits
in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities
upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the
Company has not recorded a liability for uncertain tax benefits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has adopted FASB ASC 740-10-25<I> Definition of
Settlement,</I> which provides guidance on how an entity should determine whether a tax position is effectively settled for the
purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the
completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively
settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than
not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. As of March
31, 2017, the tax years ended December 31, 2016, 2015 and 2014 are still subject to audit.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Income (loss) per common share</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Basic earnings per share is computed by dividing income (loss)
from continuing operations by the weighted average number of shares of common stock outstanding during the period. Diluted earnings
per share is computed by dividing the adjusted net income (loss) from operations for diluted earnings per share by the weighted
average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each
period. The effects of common stock equivalents and potentially dilutive securities outstanding during 2017 and 2016 are excluded
from the calculation of diluted income (loss) per common share because they are anti-dilutive.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 1 &ndash; BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company's common stock equivalents include the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">March 31, <BR>2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, <BR>2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Series A convertible preferred stock issued and outstanding</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">25,535,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">25,535,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Series B convertible preferred stock issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,144,240</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,144,240</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Options to purchase common stock issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,400,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Warrants to purchase common stock issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,098,330</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,098,330</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Warrants to purchase series A convertible preferred stock, issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,600,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,600,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px">Warrants to purchase series B convertible preferred stock, issued and outstanding</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">65,000,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">65,000,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">232,777,570</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">233,377,570</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Revenue recognition and deferred revenue</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company offers InsPro Enterprise<SUP>TM</SUP> on both a
licensed and an ASP basis. An InsPro Enterprise software license entitles the purchaser a perpetual license to a copy of the InsPro
Enterprise software installed at a single client location or hosted by InsPro Technologies. Alternatively, ASP hosting service
enables a client to lease the InsPro Enterprise software, paying only for that capacity required to support their business. ASP
and hosting clients access InsPro Enterprise installed on clients&rsquo; servers or on the Company&rsquo;s servers located at a
third party&rsquo;s site.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company&rsquo;s software maintenance fees apply to both
licensed and ASP clients. Maintenance fees cover periodic updates to the application and the InsPro Enterprise help desk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company&rsquo;s consulting and implementation services are
generally associated with the implementation of InsPro</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Enterprise for either an ASP or licensed client, and cover such
activity as InsPro Enterprise installation, configuration, modification of InsPro Enterprise functionality, client insurance plan
set-up, client insurance document design and system documentation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company&rsquo;s revenue is generally recognized under FASB
ASC 985-605 (&ldquo;ASC 985-605&rdquo;). For software arrangements involving multiple elements, which are license fees, professional
services, ASP services and maintenance services, the Company allocates revenue to each element based on the relative fair value
or the residual method, as applicable using vendor specific objective evidence to determine fair value, which is based on prices
charged when the element is sold separately. Software revenue accounted for under ASC 985-605 is recognized when persuasive evidence
of an arrangement exists, the software is delivered in accordance with all terms and conditions of the customer contracts, the
fee is fixed or determinable and collectability is probable. Revenue related to post-contract customer support (&ldquo;PCS&rdquo;),
including technical support and unspecified when-and-if available software upgrades, is recognized ratably over the PCS term. Under
ASC 985-605, if fair value does not exist for any undelivered element, revenue is not recognized until the earlier of (i)&nbsp;delivery
of such element or (ii)&nbsp;when fair value of the undelivered element is established, unless the undelivered element is a service,
in which case revenue is recognized as the service is performed once the service is the only undelivered element.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 1 &ndash; BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company recognizes revenue from software license agreements
when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and collectability
is probable. The Company considers fees relating to arrangements with payment terms extending beyond one year to not be fixed or
determinable and revenue for these arrangements is recognized as payments become due from the customer. In software arrangements
that include more than one InsPro Enterprise<SUP>TM</SUP> module, the Company allocates the total arrangement fee among the modules
based on the relative fair value of each of the modules.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">License revenue allocated to software products generally is
recognized upon delivery of the products or deferred and recognized in future periods to the extent that an arrangement includes
one or more elements to be delivered at a future date and for which fair values have not been established. Revenue allocated to
maintenance agreements is recognized ratably over the maintenance term and revenue allocated to training and other service elements
is recognized as the services are performed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Effective August 18, 2015, the Company entered into a five year
software and services reseller agreement (the &ldquo;Reseller Agreement&rdquo;) with an unaffiliated 3<SUP>rd</SUP> party (the
&ldquo;Reseller&rdquo;) whereby the Company granted the Reseller the exclusive right to market InsPro Enterprise to prospective
clients for their administration of long term care insurance products for an initial fee of $2,500,000 (the &ldquo;Reseller Fee&rdquo;).
Pursuant to the Reseller Agreement, the Reseller Fee is fully or partially refundable to the Reseller in the event that the Company
materially breaches the Reseller Agreement or the Company becomes insolvent, goes into liquidation or seeks protection under bankruptcy
during the term of the Reseller Agreement (each a &ldquo;Refund Event&rdquo;). The Reseller Fee was fully refundable if a Refund
Event occurred before August 31, 2016. A Refund Event did not occur as of December 31, 2016, and as a result the Company recognized
$500,000 of Reseller Fee as revenue in the year ended December 31, 2016. The Company shall refund the following amounts to the
Reseller if a Refund Event occurs between the following dates; $2,000,000 between September 1, 2016 and August 31, 2017, $1,500,000
between September 1, 2017 and August 31, 2018, and $1,000,000 between September 1, 2018 and August 31, 2019. As of March 31, 2017
the Company has recorded the $2,000,000 unearned portion of the Reseller Fee in deferred revenue ($500,000 included in current
liabilities and $1,500,000 included in long term liabilities).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The unearned portion of the Company&rsquo;s revenue, which is
revenue collected or billed but not yet recognized as earned, has been included in the consolidated balance sheet as a liability
for deferred revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">See Note 2 - Discontinued Operations - Revenue Recognition for
Discontinued Operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 1 &ndash; BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Cost of revenues</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">Cost of revenues includes
direct labor and associated costs for employees and independent contractors performing InsPro Enterprise<SUP>TM</SUP> design, development,
implementation and testing together with customer management, training and technical support, as well as a portion of facilities
costs and depreciation. The following table discloses cost of revenue as reported in the statement of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Three Months Ended March 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Compensation, employee benefits and related taxes</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,920,423</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">2,232,355</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Professional fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,914,984</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,012,354</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">88,149</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,214</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Rent, utilities, telephone and communications</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,488</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">137,670</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Other cost of revenues</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">78,925</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">96,976</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">4,108,969</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">5,579,569</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Selling, general and administrative expenses</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Selling, general and administrative expenses include all selling,
marketing, and other expenses not classified as cost of revenues. The following table discloses selling, general and administrative
expenses as reported in the statement of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Three Months Ended March 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Compensation, employee benefits and related taxes</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,132,958</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,008,087</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Advertising and other marketing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,735</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41,720</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34,789</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,421</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Rent, utilities, telephone and communications</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">99,513</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,932</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Professional fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">138,300</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">260,802</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px">Other general and administrative</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">182,202</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">193,174</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">1,596,497</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">1,630,136</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Advertising and other marketing</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Advertising and other marketing costs are expensed as incurred
and are reported in selling, general and administrative expenses. See the previous table under selling, general and administrative
expenses for advertising and other marketing expenses reported in the statement of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 1 &ndash; BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Concentrations of credit risk</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company maintains its cash and restricted cash in bank deposit
accounts, which exceed the federally insured limits as provided through the Federal Deposit Insurance Corporation (&ldquo;FDIC&rdquo;).
At March 31, 2017, the Company had $2,070,717 of cash in United States bank deposits, of which $500,976 was federally insured and
$1,569,741 was not federally insured.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table lists the percentage of the Company&rsquo;s
accounts receivable balance from the Company&rsquo;s clients representing 10% or more of the accounts receivable balances as of
the periods listed below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">March 31, 2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%">Client #1</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">28</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">30</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Client #2</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Client #3</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table lists the percentage of the Company&rsquo;s
revenue earned from the Company&rsquo;s clients representing 10% or more of the revenue earned in each of the periods listed below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the 3 Months Ended March 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%">Client #1</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">31</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">29</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Client #2</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Stock-based compensation</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company accounts for stock based compensation transactions
using a fair-value-based method and recognizes compensation cost for share-based payments to employees based on their grant-date
fair value from the beginning of the fiscal period in which the recognition provisions are first applied.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Non-employee stock based compensation</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The cost of stock based compensation awards issued to non-employees
for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services,
whichever is more readily determinable, based on their grant-date fair value from the beginning of the fiscal period in which the
recognition provisions are first applied.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Registration rights agreements</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">At March 31, 2017, the Company does not believe
that it will incur a penalty in connection with the Company&rsquo;s registration rights agreements. Accordingly, no liability in
respect thereof was recorded as of March 31, 2017. See Note 6 - Stockholders Deficit &ndash; Registration and Participation Rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 1 &ndash; BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Recent accounting pronouncements</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">From time to time, new accounting pronouncements are issued
by FASB, which are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that
the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company&rsquo;s consolidated
financial statements upon adoption.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In May 2014, the FASB issued Accounting Standards Update (&ldquo;ASU&rdquo;)
ASU No. 2014-09&nbsp;<I>Revenue from Contracts with Customers (Topic 606)</I>&nbsp;(&ldquo;ASU 2014-09&rdquo;), that outlines a
comprehensive five-step revenue recognition model based on the principle that an entity should recognize revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to
be entitled in exchange for those goods or services. In July 2015, the FASB approved a one-year deferral of the effective date
of ASU 2014-09 to the beginning of 2018 for public companies, with an option that would permit companies to adopt the standard
as early as the original effective date of 2017. The updated standard will replace most existing revenue recognition guidance in
U.S. GAAP. ASU 2014-09 may be adopted either retrospectively or on a modified retrospective basis whereby it would be applied to
new contracts and existing contracts with remaining performance obligations as of the effective date, with a cumulative catch-up
adjustment recorded to beginning retained earnings at the effective date for those contracts. The updated standard is effective
for us in the first quarter of 2018 and we do not plan to early adopt. We have not yet selected a transition method and we are
currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In November 2015, the FASB issued ASU No.&nbsp;2015-17&nbsp;&ldquo;Balance
Sheet Classification of Deferred Taxes&rdquo;, which requires that all deferred tax liabilities and assets be classified as noncurrent
amounts on the balance sheet. ASU 2015-17 will be effective for interim and annuals periods beginning after December&nbsp;15, 2016
and may be applied prospectively or retrospectively. Early adoption of the standard is permitted. The new standard is effective
for the Company at the beginning of fiscal year 2017. We are currently evaluating the impact of adopting this ASU on our consolidated
financial statements and do not expect adoption to have a material impact.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In February 2016, the FASB issued ASU No. 2016-02&nbsp;<I>Leases
(Topic 842)</I>&nbsp;(&ldquo;ASU 2016-02&rdquo;), which requires all leases with a term greater than 12 months to be recognized
on the balance sheet, while lease expenses would continue to be recognized in the statement of operations in a manner similar to
current accounting guidance. The new standard establishes a right-of-use model (ROU) asset and lease liability on the balance sheet
for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting
the pattern and classification of expense recognition in the statement of operations. ASU 2016-02 is effective for the Company
at the beginning of fiscal year 2019 and early adoption is permitted. Entities must adopt ASU 2016-02 on a modified retrospective
basis whereby it would be applied at the beginning of the earliest comparative year. The new standard is effective for us in the
first quarter of 2019 and we do not plan to early adopt. We are currently evaluating the impact of the adoption of ASU 2016-02
on our consolidated financial statements. Effective December 31, 2016, our only lease with a term greater than 12 months is for
our Radnor office, which expired on March 31, 2017. We believe our current lease for our Eddystone office, which was extended for
a 1 year term that expires on January 31, 2018, would continue to be accounted for as an operating lease under the new standard.
We may enter into a new lease for office space, which may have a term greater than 12 months, in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 1 &ndash; BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In June 2016, the FASB issued ASU No. 2016-13 &ldquo;Financial
Instruments &ndash; Credit Losses (Topic 326).&rdquo; For most financial assets, such as trade and other receivables, loans and
other instruments, this standard changes the current incurred loss model to a forward-looking expected credit loss model, which
generally will result in the earlier recognition of allowances for losses. The new standard is effective for the Company at the
beginning of fiscal year 2019. Entities are required to apply the provisions of the standard through a cumulative-effect adjustment
to retained earnings as of the effective date. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated
financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In August 2014, the FASB issued ASU No. 2014-15 &ldquo;Presentation
of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity&rsquo;s Ability to Continue
as a Going Concern&rdquo;. Under US GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing
financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this
presumption is commonly referred to as the going concern basis of accounting. If and when an entity&rsquo;s liquidation becomes
imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30,
Presentation of Financial Statements - Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there
may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations,
financial statements should continue to be prepared under the going concern basis of accounting, but the provisions in this ASU
should be followed to determine whether to disclose information about the relevant conditions and events. ASU No. 2014-15 was effective
for us as of December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In March 2016, the FASB issued ASU&nbsp;2016-09&nbsp;&ldquo;Improvements
to Employee Share-Based Payment Accounting (Topic 718)&rdquo;, which simplifies several aspects of the accounting for employee
share-based payment transactions, including the accounting for the related income taxes, forfeitures, statutory tax withholding
requirements and classification in the statement of cash flows. ASU 2016-09 is effective for annual reporting periods beginning
after December&nbsp;15, 2016, including interim periods within those annual reporting periods. Early adoption is permitted. The
new standard was effective for the Company at the beginning of fiscal year 2017 and there was no material impact of adopting this
ASU on our consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In August 2016, the FASB issued ASU 2016-15&nbsp;&ldquo;Classification
of Certain Cash Receipts and Cash Payments (Topic 230)&rdquo;, which provides guidance for eight specific cash flow issues with
the objective of reducing the existing diversity in practice. ASU 2016-15 is effective retrospectively for annual reporting periods
beginning after December 15, 2017, including interim periods within those annual reporting periods. Early adoption is permitted.
The new standard is effective for the Company at the beginning of fiscal year 2018. We are currently evaluating the impact of adopting
this ASU on our consolidated financial statements and do not expect adoption to have a material impact.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 1 &ndash; BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Liquidity</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the three months ended March 31, 2017, the Company&rsquo;s
net loss was $646,302 and cash used in operations was $1,044,732. As of March 31, 2017, the Company had $1,985,940 of cash, a working
capital deficit of $3,145,962 and the Company&rsquo;s shareholder deficit was $4,350,272. During 2016 the Company implemented cost
reduction initiatives, which resulted in the reduction of expenses in 2016 as compared to 2015. During the three months ended March
31, 2017, the Company implemented additional cost reduction initiatives, which resulted in the reduction of cost of revenues of
$1,470,600 and selling, general and administrative expenses of $33,639 as compared to the same period in 2016. On April 20, 2017,
the Company obtained $2,000,000 of cash from its largest stockholder, The Co-Investment Fund II, L.P. (&ldquo;Co-Investment&rdquo;),
which is described in Note 10 &ndash; Subsequent Events.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our liquidity needs for the next 12 months and beyond are principally
for the funding of our operations, payments on capital leases and the purchase of property and equipment. Based on the forgoing,
management believes the Company has sufficient funds to finance its operations over the next twelve months.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 2 &ndash; DISCONTINUED OPERATIONS</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has classified its former telesales call center
and external agent produced agency business as discontinued operations. During the first quarter of 2009, the Company ceased the
direct marketing and sale of health and life insurance and related products to individuals and families in its telesales call center.
The Company also determined to discontinue selling health and life insurance and related products to individuals and families through
its non-employee agents. On February 20, 2009, the Company entered into and completed the sale of its agency business to an unaffiliated
third party, pursuant to the terms of a client transition agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The financial position of discontinued
operations was as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">March 31, 2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Accounts receivable</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">7,216</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">8,636</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px">Other current assets</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Net current assets of discontinued operations</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">7,216</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">8,636</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The results of discontinued operations do not include any allocated
or common overhead expenses. The results of operations of discontinued operations were as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Three Months Ended March 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Revenues:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left">Commission and other revenue from carriers</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">2,378</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3,067</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">eHealth Agreement</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">15,934</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">16,148</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">18,312</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">19,215</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Operating expenses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px; text-indent: 11pt">Other general and administrative</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">6,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">6,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">6,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">6,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px">Income from discontinued operations</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">12,312</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">13,215</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 3 - PROPERTY AND EQUIPMENT</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property and equipment consisted of the
following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center; border-bottom: Black 2px solid">Useful <BR>Life <BR>(Years)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">March 31, 2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 55%; text-align: justify">Computer equipment and software</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 14%; text-align: center">3</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">4,509,487</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">4,419,412</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Office equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">4.6</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">145,228</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">158,732</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: justify">Office furniture and fixtures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">6.7</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">189,857</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 2px">Leasehold improvements</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-bottom: 2px">7.1</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">81,933</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">94,620</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,736,648</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,862,621</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: justify; padding-bottom: 2px">Less accumulated depreciation</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(4,321,412</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(4,349,661</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">415,236</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">512,960</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">The following table discloses depreciation expense
as reported in the statement of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 2px solid">For the Three Months Ended March 31,</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Depreciation included in cost of revenues</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">88,149</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">100,214</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px">Depreciation included in selling, general and administrative</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">34,789</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">25,421</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Total depreciation</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">122,938</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">125,635</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 4 &ndash; NOTES PAYABLE</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Notes payable at March 31, 2017, consist of a note payable for
insurance premium financing on one of the Company&rsquo;s insurance policies. The note commenced on May 3, 2016, has an annual
interest rate of 7.99% and consists of 11 monthly payments of principal and interest of $4,358 per month commencing on June 3,
2016 and ending on April 3, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Notes payable at December 31, 2016, consist of two notes payable
for insurance premium financing on two of the Company&rsquo;s insurance policies. The first note commenced on April 28, 2016, has
an annual interest rate of 8.75% and consists of 11 monthly payments of principal and interest of $7,456 per month commencing on
May 28, 2016 and ending on March 28, 2017. The second note commenced on May 3, 2016, has an annual interest rate of 7.99% and consists
of 11 monthly payments of principal and interest of $4,358 per month commencing on June 3, 2016 and ending on April 3, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 5 &ndash; TRANSACTIONS WITH RELATED PARTIES</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Co-Investment $2,000,000 funding Commitment</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 29, 2017, Co-Investment provided the Company with a
funding commitment letter (the &ldquo;Commitment Letter&rdquo;) whereby Co-Investment committed to purchase 1,000,000 shares of
the Company&rsquo;s new series C preferred stock, par value $0.001 per share, (&ldquo;Series C Preferred Stock&rdquo;) at a per
share purchase price of $2.00 per share, for an aggregate purchase price of $2,000,000 (the &ldquo;Commitment&rdquo;). See Note
10 &ndash; Subsequent Events. The Company intends to use the net proceeds of the Commitment for working capital purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Series C Preferred Stock will be entitled to vote as a single
class with the holders of the Company&rsquo;s common stock, with each share of Series C Preferred Stock having the right to 20
votes. Upon the liquidation, sale or merger of the Company, each share of Series C Preferred Stock is entitled to receive an amount
equal to the greater of (A) a liquidation preference equal to two and half (2.5) times the Series C Preferred Stock original issue
price, subject to certain customary adjustments, or (B) the amount such share of Series C Preferred Stock would receive if it participated
<I>pari</I> <I>passu</I> with the holders of common stock on an as-converted basis. The liquidation preference is calculated by
taking the product of the issued and outstanding shares of Series C Preferred stock times $5.00. Series C Preferred Stock is senior
to Series A Preferred Stock (as defined below) and the Series C Preferred Stock (as defined below) as it pertains to liquidation
preferances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Each share of Series C Preferred Stock becomes convertible into
20 shares of common stock, subject to adjustment and at the option of the holder of the Series C Preferred Stock. For so long as
any shares of Series C Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the Series
C Preferred Stock is required to approve (Y) any amendment to the Company&rsquo;s certificate of incorporation or bylaws that would
adversely alter the voting powers, preferences or special rights of the Series C Preferred Stock or (Z) any amendment to the Company&rsquo;s
certificate of incorporation to create any shares of capital stock that rank senior to the Series C Preferred Stock. In addition
to the voting rights described above, for so long as 1,000,000 shares of Series C Preferred Stock are outstanding, the vote or
consent of the holders of at least two-thirds of the shares of Series C Preferred Stock is required to effect or validate any merger,
sale of substantially all of the assets of the Company or other fundamental transaction, unless such transaction, when consummated,
will provide the holders of Series C Preferred Stock with an amount per share equal to two and a half (2.5) times the Series C
Preferred Stock original issue price in aggregate for all issued and outstanding Series C Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; STOCKHOLDERS&rsquo; DEFICIT</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Common Stock</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of March 31, 2017 and December 31, 2016, the Company was
authorized to issue 500,000,000 shares of common stock with a par value of $0.001 per share (&ldquo;Common Stock&rdquo;). As of
March 31, 2017 and December 31, 2016, the Company had 41,543,655 shares of its Common Stock issued and outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; STOCKHOLDERS&rsquo; DEFICIT (Continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has reserved shares of Common Stock, on an as-if-converted
basis, as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">March 31, 2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Exercise of options issued and outstanding to purchase common stock</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">3,400,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">4,000,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Issuance of common shares available under the 2010 Equity Compensation Plan</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,596,980</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24,996,980</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Exercise of warrants issued and outstanding to purchase common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,098,330</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,098,330</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Conversion of series A convertible preferred stock issued and outstanding into common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,535,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,535,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Exercise of warrants to purchase series A convertible preferred stock issued and outstanding and converted into common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,600,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,600,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Conversion of series B convertible preferred stock issued and outstanding into common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,144,240</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,144,240</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Exercise of warrants to purchase series B convertible preferred stock issued and outstanding and converted into common stock</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">65,000,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">65,000,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Total common stock reserved for issuance</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">258,374,550</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">258,374,550</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The above table includes Common Stock reserved for non exercisable,
unvested stock options and Common Stock reserved for the issuance of stock options in the future under the Company&rsquo;s 2010
Equity Compensation Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Series A Preferred Stock</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of March 31, 2017 and December 31, 2016, the Company&rsquo;s
board of directors has designated 3,437,500 shares of Series A Convertible Preferred Stock par value $0.001 per share (&ldquo;Series
A Preferred Stock&rdquo;). As of March 31, 2017 and December 31, 2016, the Company had 1,276,750 shares of its Series A Preferred
Stock issued and outstanding. As of March 31, 2017 and December 31, 2016, the Company has reserved 380,000 shares of Series A Preferred
Stock for the exercise of warrants issued and outstanding to purchase its Series A Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Series A Preferred Stock is entitled to vote as a single
class with the holders of the Company&rsquo;s Common Stock and preferred stock, with each share of Series A Preferred Stock having
the right to 20 votes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Upon the liquidation, sale or merger of the Company, each share
of Series A Preferred Stock is entitled to receive an amount equal to the greater of (A) a liquidation preference equal to two
and a half (2.5) times the Series A Preferred Stock original issue price, or $12,767,500, subject to certain customary adjustments,
or (B) the amount such share of Series A Preferred Stock would receive if it participated <I>pari</I> <I>passu</I> with the holders
of Common Stock on an as-converted basis. The liquidation preference is calculated by taking the product of the issued and outstanding
shares of Series A Preferred Stock times $10.00. Series A Preferred Stock is junior to Series B Convertible Preferred Stock par
value $0.001 per share (&ldquo;Series B Preferred Stock&rdquo;) and the Series C Preferred Stock as it pertains to liquidation
preferances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Each share of Series A Preferred Stock is convertible into 20
shares of Common Stock, subject to adjustment and at the option of the holder of the Series A Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; STOCKHOLDERS&rsquo; DEFICIT (Continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For so long as any shares of Series A Preferred Stock are outstanding,
the vote or consent of the holders of at least two-thirds of the Series A Preferred Stock is required to approve any amendment
to the Company&rsquo;s certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special
rights of the Series A Preferred Stock or any amendment to the Company&rsquo;s certificate of incorporation to create any shares
of capital stock that rank senior to the Series A Preferred Stock. In addition to the voting rights described above, for so long
as 1,000,000 shares of Series A Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the
shares of Series A Preferred Stock is required to effect or validate any merger, sale of substantially all of the assets of the
Company or other fundamental transaction, unless such transaction, when consummated, will provide the holders of Series A Preferred
Stock with an amount per share equal to two and a half (2.5) times the Series A Preferred Stock original issue price, or $12,767,500,
in aggregate for all issued and outstanding Series A Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Series B Preferred Stock</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of March 31, 2017 and December 31, 2016, the Company&rsquo;s
board of directors has designated 11,000,000 shares of Series B Preferred Stock. As of March 31, 2017 and December 31, 2016, the
Company had 5,307,212 of its Series B Preferred Stock issued and outstanding. As of March 31, 2017 and December 31, 2016, the Company
has reserved 3,250,000 shares of Series B Preferred Stock for the exercise of warrants issued and outstanding to purchase its Series
B Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Series B Preferred Stock is entitled to vote as a single
class with the holders of the Company&rsquo;s Common Stock and preferred stock, with each share of Series B Preferred Stock having
the right to 20 votes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of March 31, 2017 and December 31, 2016, upon the liquidation,
sale or merger of the Company, each share of Series B Preferred Stock is entitled to receive an amount equal to the greater of
(A) a liquidation preference equal to the Series B Preferred Stock original issue price, or $15,921,636, subject to certain customary
adjustments, or (B) the amount such share of Series B Preferred Stock would receive if it participated <I>pari</I> <I>passu</I>
with the holders of Common Stock and preferred stock on an as-converted basis. The liquidation preference is calculated by taking
the product of the issued and outstanding shares of Series B Preferred Stock times $3.00. Series B Preferred Stock is senior to
Series A Preferred Stock, and junior to the Series C Preferred Stock, as it pertains to liquidation preferances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Each share of Series B Preferred Stock is convertible into 20
shares of Common Stock, subject to adjustment and at the option of the holder of the Series B Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For so long as any shares of Series B Preferred Stock are outstanding,
the vote or consent of the holders of at least two-thirds of the Series B Preferred Stock is required to approve (Y) any amendment
to the Company&rsquo;s certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special
rights of the Series B Preferred Stock or (Z) any amendment to the Company&rsquo;s certificate of incorporation to create any shares
of capital stock that rank senior to the Series B Preferred Stock. In addition to the voting rights described above, for so long
as 1,000,000 shares of Series B Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the
shares of Series B Preferred Stock is required to effect or validate any merger, sale of substantially all of the assets of the
Company or other fundamental transaction, unless such transaction, when consummated, will provide the holders of Series B Preferred
Stock with an amount per share equal the Series B Preferred Stock original issue price, or $15,921,636, in aggregate for all issued
and outstanding Series B Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; STOCKHOLDERS&rsquo; DEFICIT (Continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On February 2, 2016 the Company filed a registration statement
for a rights offering on Form S-1/A, which the Commission declared effective on February 5, 2016, to distribute to shareholders
excluding residents of Arizona and California at no charge, one non-transferable subscription right for each 16,615 shares of our
Common Stock, 831 shares of our Series A Preferred Stock and 830 shares of our Series B Preferred Stock owned as of January 31,
2016 (the &ldquo;Record Date&rdquo;), either as a holder of record or, in the case of shares held of record by brokers, dealers,
custodian banks, or other nominees on shareholders&rsquo; behalf, as a beneficial owner of such shares. If the rights offering
was fully subscribed the gross proceeds from the rights offering would have been approximately $2.5&nbsp;million. This rights offering
was designed to give all of the holders of the Company&rsquo;s capital stock the opportunity to participate in an equity investment
in the Company on the same economic terms as the private placement completed by the Company for an aggregate of 1,163,141 shares
of Series B Preferred Stock and warrants to purchase 11,631,410 shares of Common Stock with certain accredited investors, including
Co-Investment and Donald Caldwell, who is the CEO and chairman of the board of directors of the Company, Edmond Walters, who is
a director of the Company, and Azeez Enterprises, LP, which is affiliated with Michael Azeez, who is a director of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The basic subscription right entitled the holder to purchase
one unit (&ldquo;Subscription Unit&rdquo;) at a subscription price of $240. A Subscription Unit consisted of 80 shares of Series
B Preferred Stock and a warrant to purchase 800 shares of Common Stock that expires on November 20, 2017 at an exercise price of
$0.15 per share. In the event that a holder of a Subscription Unit purchased all of the basic Subscription Units available to the
holder then pursuant to their basic subscription right, the holder had the option to choose to subscribe for a portion of any Subscription
Units that were not purchased by all other holders of Subscription Units through the exercise of their basic subscription rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Effective with the expiration of the subscription rights, which
occurred on March 14, 2016, holders of subscription rights exercised in aggregate 17 basic subscription rights and 0 over subscription
rights for a total 17 Subscription Units. The Company received $4,080 in gross proceeds as a result of the exercise of Subscription
Units. As a result of the exercise of 17 Subscription Units the Company issued effective on March 14, 2016 in aggregate 1,360 shares
of Series B Preferred Stock and of warrants to purchase in aggregate 13,600 shares of Common Stock that expires on November 20,
2017 at an exercise price of $0.15 per share (the &ldquo;2016 Warrants&rdquo;). Effective with the expiration of the subscription
rights all unexercised subscription rights expired.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company allocated $451 of the $4,080 proceeds received as
a result of the rights offering, which represent the fair value of the 2016 Warrants, to additional paid in capital using a Black-Scholes
option pricing model with the following assumptions: expected volatility of 259%, a risk-free interest rate of 0.51%, an expected
remaining term of 1.7 years and 0% dividend yield. The remaining $3,629 of the proceeds received was allocated to the Series B
Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Series C Preferred Stock</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">See Note 10 &ndash; Subsequent Events.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Stock Options</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the three months ended March 31, 2017, options for 600,000
common shares, which were previously granted to a former executive of the Company, expired in accordance with the terms of such
stock options.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; STOCKHOLDERS&rsquo; DEFICIT (Continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of March 31, 2017, there were 30,000,000 shares of our Common
Stock authorized to be issued under the Company&rsquo;s 2010 Equity Compensation Plan, of which 25,596,980 shares of our Common
Stock remain available for future stock option grants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company recorded compensation expense pertaining to employee
stock options and warrants in the amount of $85,090 for the three months ended March 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The value of equity compensation expense not yet expensed pertaining
to unvested equity compensation for both options to purchase common stock and Series A Preferred Stock was $53,603 as of March
31, 2017, which will be recognized over a weighted average 2.8 years in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A summary of the Company's outstanding stock options are as
follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Number</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Weighted</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Weighted</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Of Shares</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Average</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Weighted</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Average</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Aggregate</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Underlying</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Exercise</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Average</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Remaining</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Intrinsic</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Options</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Price</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Fair Value</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Contractual Life</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Value (1)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">(in years)</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 35%">Outstanding at December 31, 2016</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">4,000,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">0.10</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">0.06</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">3.44</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>For the period ended March 31, 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.125in">Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-left: 0.125in">Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px; padding-left: 0.125in">Expired</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(600,000</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">0.10</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">0.04</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4px">Outstanding at March 31, 2017</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">3,400,000</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">0.10</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">0.07</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">-</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">-</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4px">Outstanding and exercisable at March 31, 2017</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">1,516,666</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">0.10</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">0.10</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">3.34</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">-</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(1) The aggregate intrinsic value is based on the $0.0625 closing
price as of March 31, 2017, for the Company&rsquo;s Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Common Stock Warrants</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Outstanding warrants at March 31, 2017, have an average weighted
average remaining contractual life of 0.6 years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A summary of the status of the Company's outstanding common
stock warrants are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Weighted</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Common</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Average</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Stock</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Exercise</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Warrants</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Price</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Outstanding and exercisable at December 31, 2016</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">25,098,330</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">0.15</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>For the period ended March 31, 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Issued</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">Expired</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Outstanding and exercisable at March 31, 2017</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">25,098,330</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">0.15</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 6 &ndash; STOCKHOLDERS&rsquo; DEFICIT (Continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Series A Preferred Stock Warrants</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Outstanding warrants to purchase the Company&rsquo;s Series
A Preferred Stock at March 31, 2017, have a remaining contractual life of 0.5 year. A summary of the status of the Company's outstanding
Series A Preferred Stock warrants are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Weighted</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Preferred</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Average</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Stock</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Exercise</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Warrants</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Price</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Outstanding and exercisable at December 31, 2016</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">380,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">4.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>For the period ended March 31, 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">Expired</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Outstanding and exercisable at March 31, 2017</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">380,000</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">4.00</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Series B Preferred Stock Warrants</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Outstanding preferred stock warrants to purchase the Company&rsquo;s
Series B Preferred Stock at March 31, 2017 have a remaining contractual life of 2.1 years. A summary of the status of the Company's
outstanding Series B Preferred Stock warrants are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Weighted</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Preferred</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Average</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Stock</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">Exercise</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Warrants</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">Price</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 70%; text-align: left">Outstanding and exercisable at December 31, 2016</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">3,250,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>For the period ended March 31, 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">Expired</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Outstanding and exercisable at March 31, 2017</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">3,250,000</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">3.00</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Registration and Participation Rights</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of March 31, 2017, the Company has not received a demand
notice in connection with any of the Company&rsquo;s various registration rights agreements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 7 &ndash; CAPITAL LEASE OBLIGATIONS</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company&rsquo;s subsidiary, InsPro LLC, has entered into
several capital lease obligations to purchase equipment used for operations. The Company has the option to purchase the equipment
at the end of each lease agreement for one dollar. The underlying assets and related depreciation were included in the appropriate
fixed asset category, and related depreciation account.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Property and equipment includes the following amounts for leases
that have been capitalized:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">March 31, 2017</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 2px solid">December 31, 2016</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">Useful Life (Years)</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 55%; text-align: justify">Computer equipment and software</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 14%; text-align: center">3</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,576,226</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,576,226</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 2px">Leasehold improvements</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-bottom: 2px">3</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">15,011</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">15,011</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">1,591,237</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">1,591,237</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: justify; padding-bottom: 2px">Less accumulated depreciation</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2px">&nbsp;</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(1,334,741</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">(1,260,944</TD><TD STYLE="padding-bottom: 2px; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="padding-bottom: 4px">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">256,496</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">330,293</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Future minimum payments required under capital leases at March
31, 2017, are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 85%; text-align: left">2017</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">122,149</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2018</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">130,693</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">2019</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">30,307</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Total future payments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">283,149</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2px">Less amount representing interest</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">18,232</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Present value of future minimum payments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">264,917</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 2px">Less current portion</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">145,371</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left; padding-bottom: 4px">Long-term portion</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">119,546</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 8 &ndash; DEFINED CONTRIBUTION 401(k) PLAN</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company implemented a 401(k) plan on January 1, 2007. Eligible
employees contribute to the 401(k) plan. Employees become eligible after attaining age 19 and after 6 months of employment with
the Company. An employee may become a participant of the 401(k) plan on the first day of the month following the completion of
the eligibility requirements. Effective January 1, 2007 the Company implemented an elective contribution to the plan of 25% of
the employee&rsquo;s contribution up to 4% of the employee&rsquo;s compensation. The contributions are subject to a vesting schedule
and become fully vested after one year of service, retirement, death or disability, whichever occurs first. The Company made contributions
of $21,215 and $23,688 for the three months ended March 31, 2017 and 2016, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 9 &ndash; COMMITMENTS AND CONTINGENCIES</U></P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On July 7, 2006, the Company entered into a lease agreement
with Radnor Properties-SDC, L.P. (the &ldquo;Landlord&rdquo;) for the lease of 7,414 square feet of office space located in Radnor
Financial Center, Building B, 150 Radnor-Chester Road, Radnor, Pennsylvania. The term of the lease commenced on November 1, 2006,
which was the date the Company, with the Landlord&rsquo;s prior consent, assumed possession of the premises and the date the Landlord
tendered possession of the premises to the Company following the substantial completion of the improvements required to be made
by the Landlord under the lease agreement, and will expire on the last day of the 125<SUP>th</SUP> month following the commencement
of the lease term. The lease expired on March 31, 2017, in accordance with the terms of the lease.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 14, 2007, InsPro LLC entered into a lease agreement
(the &ldquo;Lease Agreement&rdquo;) with BPG Officer VI Baldwin Tower L.P. (&ldquo;BPG&rdquo;). On April 28, 2015, InsPro LLC and
BPG entered into a fifth amendment to the Lease Agreement whereby InsPro LLC and BPG agreed to amend the Lease Agreement to increase
the leased office space by 6,801 rentable square feet effective April 1, 2015, through March 31, 2016, at an incremental monthly
rent of $10,000. On June 9, 2016, InsPro LLC and BPG entered into a sixth amendment to the Lease Agreement whereby InsPro LLC and
BPG agreed to amend the Lease Agreement to extend the term through January 31, 2018 for 17,567 of rentable square feet at a monthly
cost of $28,546 for the period February 1, 2017 through January 31, 2018.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Future minimum payments required under operating leases and
service agreements at March 31, 2017, are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 40%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 85%; text-align: left">2017</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">517,618</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2018</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">266,591</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">2019</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">225,108</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2020</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,932</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 2px; text-align: left">thereafter</TD><TD STYLE="padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2px solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2px solid; text-align: right">-</TD><TD STYLE="padding-bottom: 2px; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="padding-bottom: 4px; text-align: left">Total</TD><TD STYLE="padding-bottom: 4px">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4px double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4px double; text-align: right">1,025,249</TD><TD STYLE="padding-bottom: 4px; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company leases certain real and personal property under
non-cancelable operating leases. Rent expense was $118,484 and $187,657 for the three months ended March 31, 2017 and 2016, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 10 &ndash; SUBSEQUENT EVENTS</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Private Placement</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On April 20, 2017, the Company completed a private placement
(the &ldquo;Private Placement&rdquo;) with Co-Investment, which hold more than 5% of our common stock. Donald Caldwell, who is
the CEO and chairman of the board of directors of the Company, is the CEO for Cross Atlantic Capital Partners, Inc., which is the
managing partner of Co-Investment. The Company issued and Co-Investment purchased 1,000,000 shares of our Series C Convertible
Preferred Stock at a per share price of $2.00 for an aggregate total investment of $2,000,000 pursuant to the terms of a securities
purchase agreement (the &ldquo;Purchase Agreement&rdquo;). The Company intends to use the net proceeds of the Private Placement
for working capital purposes. See Note 5 &ndash; Transactions With Related Parties for a description of the Series C Preferred
Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 10 &ndash; SUBSEQUENT EVENTS (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company agreed, pursuant to the terms of the Purchase Agreement,
that for a period of 90 days after the effective date (the &ldquo;Initial Standstill&rdquo;) of the Purchase Agreement, the Company
shall not, subject to certain exceptions, offer, sell, grant any option to purchase, or otherwise dispose of any equity securities
or equity equivalent securities, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument
that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, capital stock and
other securities of the Company. In addition, pursuant to the Purchase Agreement, the Company was permitted to sell up to an additional
500,000 shares of Series C Preferred Stock Units to other existing stockholders within 90 days following the Closing on substantially
the same terms and conditions described above and as set forth in the Purchase Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Purchase Agreement also provides for a customary participation
right for Co-Investment, subject to certain exceptions and limitations, which grants Co-Investment the right to participate in
any future capital raising financings of the Company occurring from the effective date of the Purchase Agreement until 24 months
after the effective date of the Purchase Agreement. Co-Investment may participate in such financings at a level based on Co-Investment&rsquo;s
ownership percentage of the Company on a fully-diluted basis prior to such financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In connection with the Private Placement, the board of directors
of the Company approved a Certificate of Designation of Series C Convertible Preferred Stock of the Company (the &ldquo;Certificate
of Designation&rdquo;) setting forth the rights, preferences and limitations of the Series C Preferred Stock. The Company&rsquo;s
board of directors has designated 4,000,000 shares of Series C Preferred stock. On April 19, 2017, the Company filed the Certificate
of Designation with the Secretary of State of the State of Delaware.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Certificate of Designation provides, among other things,
that upon the liquidation, sale or merger of the Company, the holders of shares of Series C Preferred Stock are entitled to receive
an amount equal to the greater of (A) a liquidation preference equal to two and a half (2.5) times the Series C Preferred Stock
original issue price, subject to certain customary adjustments, or (B) the amount such Series C Preferred Share would receive if
it participated <I>pari</I> <I>passu</I> with the holders of shares of Common Stock on an as-converted basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Each Series C Preferred Share is convertible into 20 shares
of Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For so long as any Series C Preferred Shares are outstanding,
the vote or consent of the holders of at least two-thirds of the Series C Preferred Shares is required to approve (Y) any amendment
to the Company&rsquo;s certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special
rights of the Series C Preferred Stock or (Z) any amendment to the Company&rsquo;s certificate of incorporation to create any shares
of capital stock that rank senior to the Series C Preferred Stock. In addition to the voting rights described above, for so long
as 1,000,000 Series C Preferred Shares are outstanding, the vote or consent of the holders of at least two-thirds of the Series
C Preferred Shares is required to effect or validate any merger, sale of substantially all of the assets of the Company or other
fundamental transaction, unless such transaction, when consummated, will provide the holders of Series C Preferred Stock with an
amount per share equal to two and a half (2.5) times the Series C Preferred Stock original issue price plus any declared but unpaid
dividends.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">March 31, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>NOTE 10 &ndash; SUBSEQUENT EVENTS (continued)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 11, 2017, the Company completed
a private placement (the &ldquo;Second Private Placement&rdquo;) with Azeez Enterprises, L.P., which hold more than 5% of our Series
C Preferred Stock. Michael Azeez is a member of the board of directors of the Company and is the managing partner of Azeez Enterprises,
L.P. The Company issued and Azeez Enterprises, L.P. purchased 75,000 shares of our Series C Convertible Preferred Stock at a per
share price of $2.00 for an aggregate total investment of $150,000 pursuant to the terms of a securities purchase agreement at
essentially the same terms as those contained in the Purchase Agreement (the &ldquo;Second Purchase Agreement&rdquo;). Also as
part of the Second Private Placement and Second Purchase Agreement with John Scarpa, which hold more than 5% of our Series B Preferred
Stock. The Company issued and John Scarpa purchased 75,000 shares of our Series C Convertible Preferred Stock at a per share price
of $2.00 for an aggregate total investment of $150,000 pursuant to the terms of the Second Purchase Agreement. The Company intends
to use the net proceeds of the Second Private Placement for working capital purposes.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Part II</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">INFORMATION NOT REQUIRED IN PROSPECTUS</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Item 13. Other Expenses of Issuance and Distribution</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The expenses payable
by us in connection with this registration statement are estimated as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 1.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="width: 85%; text-align: left">Commission Registration Fee</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">116</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accounting Fees and Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Legal Fees and Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">75,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Printing Fees and Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD STYLE="text-align: left">Blue Sky Fees and Expenses (including legal fees)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Miscellaneous</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">5,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: Azure">
    <TD>Total</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">107,616</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Item 14. Indemnification of Directors and Officers.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Section 145 of the
Delaware General Corporation Law provides, in general, that a corporation incorporated under the laws of the State of Delaware,
such as us, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another enterprise, against expenses (including attorneys&rsquo; fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding
if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person&rsquo;s
conduct was unlawful. In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses
(including attorneys&rsquo; fees) actually and reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter
as to which such person will have been adjudged to be liable to the corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably
entitled to indemnity for such expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our certificate of
incorporation and bylaws provide that we will indemnify our directors, officers, employees and agents to the extent and in the
manner permitted by the provisions of the Delaware General Corporation Law, as amended from time to time, subject to any permissible
expansion or limitation of such indemnification, as may be set forth in any stockholders&rsquo; or directors&rsquo; resolution
or by contract. We also have director and officer indemnification agreements with each of our executive officers and directors
which provide, among other things, for the indemnification to the fullest extent permitted or required by Delaware law, provided
that such indemnitee shall not be entitled to indemnification in connection with any &ldquo;claim&rdquo; (as such term is defined
in the agreement) initiated by the indemnitee against us or our directors or officers unless we join or consent to the initiation
of such claim, or the purchase and sale of securities by the indemnitee in violation of Section 16(b) of the Exchange Act.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Item 15. Recent Sales of Unregistered Securities</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the last three
years, we have issued the following securities that were not registered under the Securities Act:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On April 20, 2017,
the Company completed a private placement with The Co-Investment Fund II, L.P., a holder of more than 5% of our common stock on
an as converted basis (the &ldquo;<U>Investor</U>&rdquo;), for an aggregate of 1,000,000 shares of Series C Convertible Preferred
Stock. In the April Private Placement the Company sold to the Investor 1,000,000 shares of Series C Convertible Preferred Stock
at a per share price equal to $2.00. The sale was made pursuant to a Securities Purchase Agreement on April 20, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 11, 2017, the
Company entered into and completed a private placement with Azeez Enterprises, L.P., which is affiliated with Michael Azeez, who
is a director of the Company, and John Scarpa, who is a holder of more than 5% of our common stock on an as converted basis, for
an aggregate of 150,000 shares of Series C Convertible Preferred Stock. In the May Private Placement the Company issued 75,000
shares of Series C Convertible Preferred Stock to each of Azeez Enterprises, L.P. and John Scarpa. The sale was made pursuant to
a Securities Purchase Agreement on May 11, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No underwriters were
involved in the above sales of securities. The securities described above in this Item 15 were issued to investors in the United
States in reliance on the exemption from the registration requirements of the Securities Act, as set forth in Section 4(2) under
the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act relative to sales by an issuer not involving
any public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the last three
fiscal years, we also have issued the following securities that were not registered under the Securities Act:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of May 22, 2014,
we granted in aggregate warrants to purchase 1,140,000 shares of our Series B Convertible Preferred Stock<FONT STYLE="font-size: 10pt">
</FONT>at an exercise price of $3.00 per share, which expire on May 22, 2019. As of May 22, 2014, we granted warrants to purchase
150,000 shares of our Series A Convertible Preferred Stock at an exercise price of $4.00 per share, which expire on September 14,
2017. As of August 14, 2014, we granted warrants to purchase 30,000 shares of our Series B Convertible Preferred Stock at an exercise
price of $3.00 per share, which expire on May 22, 2019. As of November 13, 2015, we granted warrants to purchase 80,000 shares
of our Series B Convertible Preferred Stock at an exercise price of $3.00 per share, which expire on November 13, 2010. As of May
4, 2016, we granted warrants to purchase 2,000,000 shares of our Series B Convertible Preferred Stock at an exercise price of $3.00
per share, which expire on May 4, 2019.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Item 16. Exhibits and Financial Statement Schedules.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following is a
list of exhibits filed as part of this registration statement. Where so indicated by footnote, exhibits that were previously filed
are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">2.1</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Agreement and Plan of Merger, dated November 23, 2005, among Darwin Resources Corp., Health Benefits Direct Corporation, and HBDC II, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 30, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">2.2</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Agreement and Plan of Merger, dated as of September 21, 2007, by and among the Company, HBDC Acquisition, LLC, System Consulting Associates, Inc. and the shareholders of System Consulting Associates, Inc. party thereto (incorporated by reference from Exhibit 2.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on September 26, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.1</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 22, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.2</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on December 3, 2007).</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.3</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.3 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 30, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.4</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Merger of HBDC II, Inc. with and into Health Benefits Direct Corporation (incorporated by reference to Exhibit 3.4 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 30, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.5</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.5 to the Registrant&rsquo;s Registration Statement on Form SB-2, filed with the Commission on February 1, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.6</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Designation with respect to shares of Series A Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on January 21, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.7</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.7 to the Registrant&rsquo;s Annual Report on Form 10-K filed with the Commission on March 31, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.8</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Designation with respect to shares of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on October 1, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.9</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Designation with respect to shares of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on December 23, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.10</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation filed November 18, 2010 (incorporated by reference to Exhibit 3.10 to the Registrant&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.11</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation filed on November 24, 2010 (incorporated by reference to Exhibit 3.11 to the Registrant&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.12</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation filed on August 20, 2014 (incorporated by reference to Exhibit 3.12 to the Registrant&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed with the Commission on March 31, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.13</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation filed on August 19, 2015 (incorporated by reference to Exhibit 3.13 to the Registrant&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Commission on March 30, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.14</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Designation of Series B Convertible Preferred Stock with respect to the Series B Stock (incorporated by reference to Exhibit 3.14 to the Registrant&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the commission on March 30, 2017).</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.15</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Designation with respect to shares of Series C Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on April 21, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.1</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Common Stock Purchase Warrant Certificate (incorporated by reference to Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 30, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.2</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Warrant to Purchase Common Stock issued to Alvin H. Clemens (incorporated by reference to Exhibit 4.2 to the Registrant&rsquo;s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005, filed with the Commission on March 31, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.3</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated March 30, 2007, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference to Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 30, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.4</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated March 30, 2007, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference to Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 30, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.5</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 30, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.6</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.4 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 30, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.7</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated October 1, 2007, by and between Health Benefits Direct Corporation and Computer Command and Control Company (incorporated by reference from Exhibit 4.1 to the Company&rsquo;s Current Report on Form 8-K, filed with the Commission on October 4, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.8</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated October 1, 2007, by and among Health Benefits Direct Corporation and Robert J. Oakes, Jeff Brocco, Tim Savery and Lisa Roetz (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 4, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.9</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated March 31, 2008, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.10</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated March 31, 2008, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.11</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 31, 2008).</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.12</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Registration Rights Agreement, dated March 31, 2008, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.4 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.13</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Registration Rights Agreement, dated March 31, 2008, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.14</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Board Representation Agreement, dated March 31, 2008, between Health Benefits Direct Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.5 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.15</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated January 14, 2009, by and between Health Benefits Direct Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on January 21, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.16</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated January 14, 2009, by and between Health Benefits Direct Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on January 21, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.17</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Preferred Warrant (incorporated by reference from Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on January 21, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.18</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Subscription Rights Certificate (incorporated by reference from Exhibit 4.18 to the Registrant&rsquo;s Registration Statement on Form S-1, filed with the Commission on December 31, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.19</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference from Exhibit 4.19 to the Registrant&rsquo;s Registration Statement on Form S-1, filed with the Commission on December 31, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.20</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated September 30, 2010, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 1, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.21</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated September 30, 2010, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 1, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.22</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 1, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.23</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Board Representation Agreement, dated September 30, 2010, by and between Health Benefits Direct Corporation and Independence Blue Cross (incorporated by reference from Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 1, 2010).</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.24</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Addendum and Certificate of Adjustment to Warrant (incorporated by reference to Exhibit 10.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 1, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.25</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Addendum and Certificate of Adjustment to Warrant (incorporated by reference to Exhibit 10.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 1, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.26</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Note Conversion Agreement, dated December 22, 2010, by and between InsPro Technologies Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on December 23, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.27</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated December 22, 2010, by and between InsPro Technologies Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on December 23, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.28</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on December 23, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.29</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated November 20, 2012, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on November 26, 2012).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.30</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated November 20, 2012, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on November 26, 2012).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.31</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on November 26, 2012).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.32</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated September 12, 2013, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on September 12, 2013).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.33</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated September 12, 2014, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on September 12, 2013).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.34</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on September 12, 2013).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.35</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amended and Restated Loan and Security Agreement, dated as of December 2, 2014, by and among InsPro Technologies Corporation, InsPro Technologies, LLC, Atiam Technologies L.P. and Silicon Valley Bank (incorporated by reference from Exhibit 99.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on December 8, 2014).</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.36</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated September 18, 2015, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on September 24, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.37</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated September 18, 2015, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on September 24, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.38</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference from Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on September 24, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.39</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated October 6, 2015, by and between InsPro Technologies Corporation and the Investor signatory thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 7, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.40</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated October 6, 2015, by and between InsPro Technologies Corporation and the Investor signatory thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 7, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.41</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Warrant, dated October 6, 2015 (incorporated by reference from Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 7, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.42</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated April 20, 2017, by and among InsPro Technologies Corporation and the investor signatory thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on April 21, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.43</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated April 20, 2017, by and among InsPro Technologies Corporation and the investor signatory thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on April 21, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.44</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated May 11, 2017, by and among InsPro Technologies Corporation and the investors signatory thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on May 15, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.45</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated May 11, 2017, by and among InsPro Technologies Corporation and the investors signatory thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on May 15, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.46**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Subscription Rights Certificate</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">5.1**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Opinion of Morgan, Lewis &amp; Bockius LLP</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">8.1**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Opinion of Morgan, Lewis &amp; Bockius LLP regarding certain tax matters</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.1</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Health Benefits Direct Corporation Compensation Plan for Directors (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on March 20, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.2</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Lease Agreement, dated February 9, 2004, between Case Holding Co. and Platinum Partners, LLC (incorporated by reference to Exhibit 10.7 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 30, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.3</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Lease between Health Benefits Direct Corporation and FG2200, LLC, effective March 15, 2006 (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on March 6, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.4</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Employment Agreement, dated November 18, 2005, between Health Benefits Direct Corporation and Charles A. Eissa (incorporated by reference to Exhibit 10.14 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 30, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.5</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amendment 2008-1 to Employment Agreement, dated March 31, 2008, between Health Benefits Direct Corporation and Charles A. Eissa (incorporated by reference to Exhibit 10.4 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.6</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on January 17, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.7</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Contribution Agreement, dated September 9, 2005, among Health Benefits Direct Corporation, Marlin Capital Partners I, LLC, Scott Frohman, Charles A. Eissa, Platinum Partners II LLC and Dana Boskoff (incorporated by reference to Exhibit 10.22 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 30, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.8</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Employment Agreement, dated April 3, 2006, between HBDC II, Inc. and Ivan M. Spinner (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on April 6, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.9</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Health Benefits Direct Corporation 2008 Equity Compensation Plan (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.10</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Health Benefits Direct Corporation 2008 Equity Compensation Plan Form of Nonqualified Stock Option Grant (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on March 28, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.11</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Sublease, dated March 7, 2006, between Health Benefits Direct Corporation and World Travel Partners I, LLC Form of Nonqualified Stock Option Grant (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on May 19, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.12</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">First Amendment to Sublease, dated April 18, 2006, between Health Benefits Direct Corporation ad World Travel Partners I, LLC (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on May 19, 2006).</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.13</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Letter Agreement, dated April 18, 2006, among World Travel Partners I, LLC, Health Benefits Direct Corporation, and 1120 Avenue of the Americas, LLC (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on May 19, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.14</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Software and Services Agreement, dated May 31, 2006, among Health Benefits Direct Corporation, Insurint Corporation, and Realtime Solutions Group, L.L.C. (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on June 2, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.15</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Lease, dated July 7, 2006, between Health Benefits Direct Corporation and Radnor Properties-SDC, L.P. (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on July 10, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.16</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Separation Agreement, dated December 7, 2006, between Health Benefits Direct Corporation and Scott Frohman (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on December 11, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.17</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amendment No. 1 to Option, dated as of February 15, 2007, delivered by Health Benefits Direct Corporation to Daniel Brauser (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on February 16, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.18</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Consent and Lock-Up Agreement, dated April 5, 2007, between Health Benefits Direct Corporation and Scott Frohman (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on April 6, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.19</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Agreement to Transfer Partnership Interests, dated October 1, 2007, by and among HBDC Acquisition, LLC and the former partners of BileniaTech, L.P. (incorporated by reference from Exhibit 10.1 to the Company&rsquo;s Current Report on Form 8-K, filed with the Commission on October 4, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.20</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amended and Restated Employment Agreement, dated November 27, 2007, between Health Benefits Direct Corporation and Alvin H. Clemens (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on December 3, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.21</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amended and Restated Employment Agreement, dated November 27, 2007, between Health Benefits Direct Corporation and Anthony R. Verdi (incorporated by reference to Exhibit 10.2 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on December 3, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.22</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amendment 2008-1 to Amended and Restated Employment Agreement, dated March 31, 2008, between Health Benefits Direct Corporation and Anthony R. Verdi (incorporated by reference to Exhibit 10.3 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.23</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Client Transition Agreement, between Health Benefits Direct Corporation, HBDC II, Inc. and eHealthInsurance Services, Inc. (incorporated by reference to Exhibit 10.31 to the Registrant&rsquo;s Annual Report on Form 10-K filed with the Commission on March 31, 2009).</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.24</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Loan Agreement, dated December 22, 2009, by and among Health Benefits Direct Corporation, Insurance Specialist Group, Inc., HBDC II, Inc., Insurint Corporation, Platinum Partners, LLC, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on December 29, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.25</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Secured Promissory Note, dated December 22, 2009, by and among Health Benefits Direct Corporation, Insurance Specialist Group, Inc., HBDC II, Inc., Insurint Corporation, Platinum Partners, LLC, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.2 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on December 29, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.26</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">First Amendment to Loan Documents, dated June 15, 2010, by and among Health Benefits Direct Corporation, Insurance Specialist Group, Inc., HBDC II, Inc., Insurint Corporation, Platinum Partners, LLC, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on June 17, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.27</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Health Benefits Direct Corporation 2010 Equity Compensation Plan (incorporated by reference to Exhibit 10.27 to the Registrant&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.28</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">InsPro Technologies Corporation Amended and Restated Compensation Policy for Non-Employee Directors (incorporated by reference to Exhibit 99.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on December 16, 2011).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.29</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Loan and Security Agreement, dated as of October 3, 2012, by and among InsPro Technologies Corporation, InsPro Technologies, LLC, Atiam Technologies L.P. and Silicon Valley Bank (incorporated by reference to Exhibit 99.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 10, 2012).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.30</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Secured Convertible Promissory Note Purchase Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of January 30, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on February 3, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.31</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Secured Convertible Promissory Note due June 30, 2016 (incorporated by reference to Exhibit 10.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on February 3, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.32</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Security Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of January 30, 2015 (incorporated by reference to Exhibit 10.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on February 3, 2015).</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.33</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Subordination Agreement by and among The Co-Investment Fund II, L.P., Silicon Valley Bank, InsPro Technologies Corporation and InsPro Technologies, LLC dated as of January 30, 2015 (incorporated by reference to Exhibit 10.4 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on February 3, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.34</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Secured Convertible Promissory Note Purchase Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of March 27, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 30, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.35</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Secured Convertible Promissory Note due June 30, 2016 (incorporated by reference to Exhibit 10.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 30, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.36</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amended and Restated Security Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of March 27, 2015 (incorporated by reference to Exhibit 10.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 30, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">14</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amended and Restated Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on February 4, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">21*</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Subsidiaries of InsPro Technologies Corporation</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">23.1*</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Consent of Assurance Dimensions, Inc.</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">23.2**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Consent of Morgan, Lewis &amp; Bockius LLP (included in Exhibit 5.1 Opinion and Exhibit 8.1 Opinion)</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">99.1**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Instructions for Use of InsPro Technologies Corporation Subscription Rights Certificate</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">99.2**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Notice of Guaranteed Delivery</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">99.3**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Letter to Security Dealers, Commercial Banks, Trust Companies and Other Nominees</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">99.4**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Letter to Clients</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">99.5**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Notice to Stockholders of Subscription Rights</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">99.6**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Beneficial Owner Election Form</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">99.7**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Nominee Holder Certification</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 0pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">*</TD><TD>Filed herewith.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">**</TD><TD>To be filed by amendment.</TD>
</TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><B>Item 17. Undertakings.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The undersigned Registrant
hereby undertakes:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(1)&#9;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To file, during
any period in which offers or sales are being made, a post-effective amendment to this registration statement:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#9;To include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#9;To reflect in
the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set
forth in the &ldquo;Calculation of Registration Fee&rdquo; table in the effective registration statement;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To include
any material information with respect to the plan of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#9;That, for the
purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#9;To remove from
registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(4)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#9;That, for purposes
of determining any liability under the Securities Act of 1933, each filing of the registrant&rsquo;s annual report pursuant to
section 13(a)&#9;or section 15(d)&#9;of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan&rsquo;s annual report pursuant to section 15(d)of the Securities Exchange Act of 1934)&#9;that is incorporated by
reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(5)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#9;To supplement
the prospectus, after the expiration of the subscription period, to set forth the results of the subscription offer, the transactions
by the underwriters during the subscription period, the amount of unsubscribed securities to be purchased by the underwriters,
and the terms of any subsequent reoffering thereof. If any public offering by the underwriters is to be made on terms differing
from those set forth on the cover page of the prospectus, a post-effective amendment will be filed to set forth the terms of such
offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(6)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#9;Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(7)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#9;For the purpose
of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant
to rule 424(b)(1), or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the
time it was declared effective.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(8)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#9;For the purpose
of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">SIGNATURES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the requirements
of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-1 and authorizes this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Borough of Eddystone, Commonwealth of Pennsylvania, on this 15  day of June, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: 0in">&nbsp;</td>
    <td colspan="2" style="font-size: 10pt; text-align: left; text-indent: 0in">INSPRO TECHNOLOGIES CORPORATION</td>
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: 0in">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: 0in">&nbsp;</td>
    <td colspan="2" style="font-size: 10pt; text-align: left; text-indent: 0in">&nbsp;</td>
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: 0in">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="width: 7%; font-size: 10pt; text-align: left; text-indent: 0in">&nbsp;</td>
    <TD STYLE="width: 5%; font-size: 10pt; text-align: left; text-indent: 0in">By:</td>
    <TD STYLE="width: 38%; font-size: 10pt; text-align: left; text-indent: 0in; border-bottom: Black 1pt solid">/s/ Anthony R. Verdi</td>
    <TD STYLE="width: 50%; font-size: 10pt; text-align: left; text-indent: 0in">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: 0in">&nbsp;</td>
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: 0in">&nbsp;</td>
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: 0in">Anthony R. Verdi</td>
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: 0in">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="font-size: 10pt; text-align: justify; text-indent: 0in">&nbsp;</td>
    <TD STYLE="font-size: 10pt; text-align: justify; text-indent: 0in">&nbsp;</td>
    <TD STYLE="font-size: 10pt; text-align: justify; text-indent: 0in">Chief Financial Officer</td>
    <TD STYLE="font-size: 10pt; text-align: justify; text-indent: 0in">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: 0in">&nbsp;</td>
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: 0in">&nbsp;</td>
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: 0in">(Principal Financial and Accounting Officer)</td>
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: 0in">&nbsp;</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We, the undersigned
officers and directors of InsPro Technologies Corporation, hereby severally constitute and appoint Anthony R. Verdi our true and
lawful attorney with full power to him to sign for us and in our names in the capacities indicated below, the Registration Statement
on Form S-1 filed herewith and any and all subsequent amendments to said Registration Statement, and generally to do all such things
in our names and on our behalf in our capacities as officers and directors to enable InsPro Technologies Corporation to comply
with the provisions of the Securities Act of 1933, as amended, and all requirements of the Securities and Exchange Commission,
hereby ratifying and confirming our signatures as they may be signed by our said attorney, or any of them, to said Registration
Statement and any and all amendments thereto.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the requirements
of the Securities Act of 1933, this report has been signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 40%; border-bottom: Black 1pt solid; font-size: 10pt">/s/ Donald R. Caldwell</td>
    <TD STYLE="width: 60%; font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">Donald R. Caldwell</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">Chief Executive Officer (Principal Executive Officer) and Chairman</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">&nbsp;</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="border-bottom: Black 1pt solid; font-size: 10pt">/s/ Anthony R. Verdi</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">Anthony R. Verdi</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">Chief Financial Officer (Principal Financial and Accounting Officer) and Director</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">&nbsp;</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="border-bottom: Black 1pt solid; font-size: 10pt"></td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">Frederick C. Tecce</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">Director</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">&nbsp;</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="border-bottom: Black 1pt solid; font-size: 10pt">/s/ Michael Azeez</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">Michael Azeez</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">Director</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">&nbsp;</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="border-bottom: Black 1pt solid; font-size: 10pt">/s/ John Harrison</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">John Harrison</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">Director</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">&nbsp;</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="border-bottom: Black 1pt solid; font-size: 10pt">/s/ Kenneth Harvey</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">Kenneth Harvey</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">Director</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">&nbsp;</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="border-bottom: Black 1pt solid; font-size: 10pt"></td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">Alan Krigstein</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">Director</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">&nbsp;</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="border-bottom: Black 1pt solid; font-size: 10pt">/s/ Robert J. Oakes</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">Robert J. Oakes</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">Director</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 40%; border-bottom: Black 1pt solid; font-size: 10pt">&nbsp;</td>
    <TD STYLE="width: 60%; font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">Sanford Rich</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">Director</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">&nbsp;</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="border-bottom: Black 1pt solid; font-size: 10pt">&nbsp;</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">L. J. Rowell</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">Director</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">&nbsp;</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="border-bottom: Black 1pt solid; font-size: 10pt">/s/ Paul Soltoff</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">Paul Soltoff</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">Director</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">&nbsp;</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="border-bottom: Black 1pt solid; font-size: 10pt">/s/ Edmond Walters</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt">Edmond Walters</td>
    <TD STYLE="font-size: 10pt; padding-left: 5pt">Director</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">EXHIBIT INDEX</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">2.1</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Agreement and Plan of Merger, dated November 23, 2005, among Darwin Resources Corp., Health Benefits Direct Corporation, and HBDC II, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 30, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">2.2</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Agreement and Plan of Merger, dated as of September 21, 2007, by and among the Company, HBDC Acquisition, LLC, System Consulting Associates, Inc. and the shareholders of System Consulting Associates, Inc. party thereto (incorporated by reference from Exhibit 2.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on September 26, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.1</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 22, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.2</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on December 3, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.3</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.3 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 30, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.4</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Merger of HBDC II, Inc. with and into Health Benefits Direct Corporation (incorporated by reference to Exhibit 3.4 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 30, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.5</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.5 to the Registrant&rsquo;s Registration Statement on Form SB-2, filed with the Commission on February 1, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.6</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Designation with respect to shares of Series A Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on January 21, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.7</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.7 to the Registrant&rsquo;s Annual Report on Form 10-K filed with the Commission on March 31, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.8</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Designation with respect to shares of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on October 1, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.9</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Designation with respect to shares of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on December 23, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.10</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation filed November 18, 2010 (incorporated by reference to Exhibit 3.10 to the Registrant&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).</td></tr>
</table>
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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.11</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation filed on November 24, 2010 (incorporated by reference to Exhibit 3.11 to the Registrant&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.12</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation filed on August 20, 2014 (incorporated by reference to Exhibit 3.12 to the Registrant&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed with the Commission on March 31, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.13</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation filed on August 19, 2015 (incorporated by reference to Exhibit 3.13 to the Registrant&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Commission on March 30, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.14</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Designation of Series B Convertible Preferred Stock with respect to the Series B Stock (incorporated by reference to Exhibit 3.14 to the Registrant&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the commission on March 30, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.13</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Designation of Series B Convertible Preferred Stock with respect to the Series B Stock (incorporated by reference to Exhibit 3.13 to the Registrant&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the commission on March 30, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.14</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Amendment to Certificate of Incorporation filed on August 19, 2015 (incorporated by reference to Exhibit 3.13 to the Registrant&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Commission on March 30, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">3.15</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Certificate of Designation with respect to shares of Series C Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on April 21, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.1</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Common Stock Purchase Warrant Certificate (incorporated by reference to Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 30, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.2</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Warrant to Purchase Common Stock issued to Alvin H. Clemens (incorporated by reference to Exhibit 4.2 to the Registrant&rsquo;s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005, filed with the Commission on March 31, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.3</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated March 30, 2007, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference to Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 30, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.4</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated March 30, 2007, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference to Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 30, 2007).</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.5</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 30, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.6</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.4 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 30, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.7</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated October 1, 2007, by and between Health Benefits Direct Corporation and Computer Command and Control Company (incorporated by reference from Exhibit 4.1 to the Company&rsquo;s Current Report on Form 8-K, filed with the Commission on October 4, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.8</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated October 1, 2007, by and among Health Benefits Direct Corporation and Robert J. Oakes, Jeff Brocco, Tim Savery and Lisa Roetz (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 4, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.9</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated March 31, 2008, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.10</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated March 31, 2008, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.11</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.12</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Registration Rights Agreement, dated March 31, 2008, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.4 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.13</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Registration Rights Agreement, dated March 31, 2008, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.14</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Board Representation Agreement, dated March 31, 2008, between Health Benefits Direct Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.5 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.15</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated January 14, 2009, by and between Health Benefits Direct Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on January 21, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.16</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated January 14, 2009, by and between Health Benefits Direct Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on January 21, 2009).</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.17</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Preferred Warrant (incorporated by reference from Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on January 21, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.18</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Subscription Rights Certificate (incorporated by reference from Exhibit 4.18 to the Registrant&rsquo;s Registration Statement on Form S-1, filed with the Commission on December 31, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.19</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference from Exhibit 4.19 to the Registrant&rsquo;s Registration Statement on Form S-1, filed with the Commission on December 31, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.20</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated September 30, 2010, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 1, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.21</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated September 30, 2010, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 1, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.22</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 1, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.23</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Board Representation Agreement, dated September 30, 2010, by and between Health Benefits Direct Corporation and Independence Blue Cross (incorporated by reference from Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 1, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.24</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Addendum and Certificate of Adjustment to Warrant (incorporated by reference to Exhibit 10.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 1, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.25</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Addendum and Certificate of Adjustment to Warrant (incorporated by reference to Exhibit 10.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 1, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.26</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Note Conversion Agreement, dated December 22, 2010, by and between InsPro Technologies Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on December 23, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.27</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated December 22, 2010, by and between InsPro Technologies Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on December 23, 2010).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.28</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on December 23, 2010).</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.29</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated November 20, 2012, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on November 26, 2012).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.30</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated November 20, 2012, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on November 26, 2012).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.31</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on November 26, 2012).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.32</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated September 12, 2013, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on September 12, 2013).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.33</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated September 12, 2014, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on September 12, 2013).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.34</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on September 12, 2013).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.35</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amended and Restated Loan and Security Agreement, dated as of December 2, 2014, by and among InsPro Technologies Corporation, InsPro Technologies, LLC, Atiam Technologies L.P. and Silicon Valley Bank (incorporated by reference from Exhibit 99.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on December 8, 2014).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.36</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated September 18, 2015, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on September 24, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.37</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated September 18, 2015, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on September 24, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.38</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Warrant (incorporated by reference from Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on September 24, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.39</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated October 6, 2015, by and between InsPro Technologies Corporation and the Investor signatory thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 7, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.40</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated October 6, 2015, by and between InsPro Technologies Corporation and the Investor signatory thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 7, 2015).</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.41</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Warrant, dated October 6, 2015 (incorporated by reference from Exhibit 4.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 7, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.42</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated April 20, 2017, by and among InsPro Technologies Corporation and the investor signatory thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on April 21, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.43</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated April 20, 2017, by and among InsPro Technologies Corporation and the investor signatory thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on April 21, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.44</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Purchase Agreement, dated May 11, 2017, by and among InsPro Technologies Corporation and the investors signatory thereto (incorporated by reference from Exhibit 4.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on May 15, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.45</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Registration Rights Agreement, dated May 11, 2017, by and among InsPro Technologies Corporation and the investors signatory thereto (incorporated by reference from Exhibit 4.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on May 15, 2017).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">4.46**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Subscription Rights Certificate</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">5.1**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Opinion of Morgan, Lewis &amp; Bockius LLP</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">8.1**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Opinion of Morgan, Lewis &amp; Bockius LLP regarding certain tax matters</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.1</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Health Benefits Direct Corporation Compensation Plan for Directors (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on March 20, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.2</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Lease Agreement, dated February 9, 2004, between Case Holding Co. and Platinum Partners, LLC (incorporated by reference to Exhibit 10.7 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 30, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.3</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Lease between Health Benefits Direct Corporation and FG2200, LLC, effective March 15, 2006 (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on March 6, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.4</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Employment Agreement, dated November 18, 2005, between Health Benefits Direct Corporation and Charles A. Eissa (incorporated by reference to Exhibit 10.14 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 30, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.5</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amendment 2008-1 to Employment Agreement, dated March 31, 2008, between Health Benefits Direct Corporation and Charles A. Eissa (incorporated by reference to Exhibit 10.4 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on March 31, 2008).</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.6</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on January 17, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.7</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Securities Contribution Agreement, dated September 9, 2005, among Health Benefits Direct Corporation, Marlin Capital Partners I, LLC, Scott Frohman, Charles A. Eissa, Platinum Partners II LLC and Dana Boskoff (incorporated by reference to Exhibit 10.22 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on November 30, 2005).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.8</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Employment Agreement, dated April 3, 2006, between HBDC II, Inc. and Ivan M. Spinner (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on April 6, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.9</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Health Benefits Direct Corporation 2008 Equity Compensation Plan (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.10</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Health Benefits Direct Corporation 2008 Equity Compensation Plan Form of Nonqualified Stock Option Grant (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on March 28, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.11</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Sublease, dated March 7, 2006, between Health Benefits Direct Corporation and World Travel Partners I, LLC Form of Nonqualified Stock Option Grant (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on May 19, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.12</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">First Amendment to Sublease, dated April 18, 2006, between Health Benefits Direct Corporation ad World Travel Partners I, LLC (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on May 19, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.13</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Letter Agreement, dated April 18, 2006, among World Travel Partners I, LLC, Health Benefits Direct Corporation, and 1120 Avenue of the Americas, LLC (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on May 19, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.14</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Software and Services Agreement, dated May 31, 2006, among Health Benefits Direct Corporation, Insurint Corporation, and Realtime Solutions Group, L.L.C. (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on June 2, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.15</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Lease, dated July 7, 2006, between Health Benefits Direct Corporation and Radnor Properties-SDC, L.P. (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on July 10, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.16</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Separation Agreement, dated December 7, 2006, between Health Benefits Direct Corporation and Scott Frohman (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on December 11, 2006).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.17</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amendment No. 1 to Option, dated as of February 15, 2007, delivered by Health Benefits Direct Corporation to Daniel Brauser (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on February 16, 2007).</td></tr>
</table>
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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.18</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Consent and Lock-Up Agreement, dated April 5, 2007, between Health Benefits Direct Corporation and Scott Frohman (incorporated by reference to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on April 6, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.19</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Agreement to Transfer Partnership Interests, dated October 1, 2007, by and among HBDC Acquisition, LLC and the former partners of BileniaTech, L.P. (incorporated by reference from Exhibit 10.1 to the Company&rsquo;s Current Report on Form 8-K, filed with the Commission on October 4, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.20</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amended and Restated Employment Agreement, dated November 27, 2007, between Health Benefits Direct Corporation and Alvin H. Clemens (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on December 3, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.21</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amended and Restated Employment Agreement, dated November 27, 2007, between Health Benefits Direct Corporation and Anthony R. Verdi (incorporated by reference to Exhibit 10.2 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on December 3, 2007).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.22</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amendment 2008-1 to Amended and Restated Employment Agreement, dated March 31, 2008, between Health Benefits Direct Corporation and Anthony R. Verdi (incorporated by reference to Exhibit 10.3 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on March 31, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.23</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Client Transition Agreement, between Health Benefits Direct Corporation, HBDC II, Inc. and eHealthInsurance Services, Inc. (incorporated by reference to Exhibit 10.31 to the Registrant&rsquo;s Annual Report on Form 10-K filed with the Commission on March 31, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.24</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Loan Agreement, dated December 22, 2009, by and among Health Benefits Direct Corporation, Insurance Specialist Group, Inc., HBDC II, Inc., Insurint Corporation, Platinum Partners, LLC, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on December 29, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.25</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Secured Promissory Note, dated December 22, 2009, by and among Health Benefits Direct Corporation, Insurance Specialist Group, Inc., HBDC II, Inc., Insurint Corporation, Platinum Partners, LLC, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.2 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on December 29, 2009).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.26</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">First Amendment to Loan Documents, dated June 15, 2010, by and among Health Benefits Direct Corporation, Insurance Specialist Group, Inc., HBDC II, Inc., Insurint Corporation, Platinum Partners, LLC, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on June 17, 2010).</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.27</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Health Benefits Direct Corporation 2010 Equity Compensation Plan (incorporated by reference to Exhibit 10.27 to the Registrant&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.28</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">InsPro Technologies Corporation Amended and Restated Compensation Policy for Non-Employee Directors (incorporated by reference to Exhibit 99.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on December 16, 2011).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.29</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Loan and Security Agreement, dated as of October 3, 2012, by and among InsPro Technologies Corporation, InsPro Technologies, LLC, Atiam Technologies L.P. and Silicon Valley Bank (incorporated by reference to Exhibit 99.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on October 10, 2012).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.30</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Secured Convertible Promissory Note Purchase Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of January 30, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on February 3, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.31</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Secured Convertible Promissory Note due June 30, 2016 (incorporated by reference to Exhibit 10.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on February 3, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.32</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Security Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of January 30, 2015 (incorporated by reference to Exhibit 10.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on February 3, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.33</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Subordination Agreement by and among The Co-Investment Fund II, L.P., Silicon Valley Bank, InsPro Technologies Corporation and InsPro Technologies, LLC dated as of January 30, 2015 (incorporated by reference to Exhibit 10.4 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on February 3, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.34</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Secured Convertible Promissory Note Purchase Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of March 27, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 30, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.35</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Secured Convertible Promissory Note due June 30, 2016 (incorporated by reference to Exhibit 10.2 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 30, 2015).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">10.36</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amended and Restated Security Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of March 27, 2015 (incorporated by reference to Exhibit 10.3 to the Registrant&rsquo;s Current Report on Form 8-K, filed with the Commission on March 30, 2015).</td></tr>
</table>
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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 17%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Exhibit Number</b></td>
    <td style="width: 1%; font-size: 10pt">&nbsp;</td>
    <td style="width: 82%; border-bottom: Black 1pt solid; font-size: 10pt"><b>Description</b></td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">14</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Amended and Restated Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to the Registrant&rsquo;s Current Report on Form 8-K filed with the Commission on February 4, 2008).</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">21*</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Subsidiaries of InsPro Technologies Corporation</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">23.1*</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Consent of Assurance Dimensions, Inc.</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">23.2**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Consent of Morgan, Lewis &amp; Bockius LLP (included in Exhibit 5.1 Opinion and Exhibit 8.1 Opinion)</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">99.1**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Instructions for Use of InsPro Technologies Corporation Subscription Rights Certificate</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">99.2**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Notice of Guaranteed Delivery</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">99.3**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Letter to Security Dealers, Commercial Banks, Trust Companies and Other Nominees</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">99.4**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Letter to Clients</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">99.5**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Notice to Stockholders of Subscription Rights</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">99.6**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Beneficial Owner Election Form</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="font-size: 10pt; text-align: justify">99.7**</td>
    <td style="font-size: 10pt; text-align: justify">&nbsp;</td>
    <td style="font-size: 10pt; text-align: justify">Form of Nominee Holder Certification</td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">*</TD><TD>Filed herewith.</TD>
</TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">**</TD><TD>To be filed by amendment.</TD>
</TR></TABLE>

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[{"type": "S-1", "sequence": "1", "filename": "t1700378_s1.htm", "description": "FORM S-1", "secsgml_size_bytes": 1554275}]
{"company-data": {"conformed-name": "InsPro Technologies Corp", "cik": "0001309442", "assigned-sic": "7372", "irs-number": "980438502", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-218766", "film-number": "17913561"}, "business-address": {"street1": "1510 CHESTER PIKE", "street2": "SUIT 400", "city": "EDDYSTONE", "state": "PA", "zip": "19022", "phone": "484-654-2206"}, "mail-address": {"street1": "1510 CHESTER PIKE", "street2": "SUIT 400", "city": "EDDYSTONE", "state": "PA", "zip": "19022"}, "former-company": [{"former-conformed-name": "HEALTH BENEFITS DIRECT CORP", "date-changed": "20051201"}, {"former-conformed-name": "DARWIN RESOURCES CORP.", "date-changed": "20041123"}]}
As filed with the Securities and Exchange
Commission on June 15, 2017
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
InsPro
Technologies Corporation
(Exact name of registrant as specified in
charter)
Delaware
6411
98-0438502
(State or Other Jurisdiction of
(Primary Standard Industrial
(I.R.S. Employer
Incorporation or Organization)
Classification Code Number)
Identification No.)
1510 Chester Pike
Suite 400
Eddystone, Pennsylvania 19022
(484) 654-2200
(Address,
including zip code, and Telephone Number, including area code of Registrant's Principal Executive Offices)
Anthony R. Verdi
Chief Financial Officer
InsPro Technologies Corporation
1510 Chester Pike
Suite 400
Eddystone, Pennsylvania 19022
(484) 654-2200
(Name, Address, including zip code and Telephone
Number, including area code of Agent for Service)
Copy to:
James W. McKenzie, Jr., Esq.
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103
(215) 963-5000
Approximate Date
of Proposed Sale to the Public:
As soon as practicable after the effective date of this registration statement.
If any Securities being
registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933
check the following box:
¨
If this Form is filed
to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.
¨
Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated
filer,"  "smaller reporting company" and "emerging
growth company" in Rule 12b-2 of the Exchange Act. (Check one)
Large Accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
(Do not check if a smaller
reporting company)
Smaller reporting company
þ
Emerging growth company
                                         ☐
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities To Be Registered
Proposed Maximum Aggregate
Offering Price ($)
Amount of Registration
Fee ($)
(1)
Series C Convertible Preferred Stock, par value $0.001 per share
—
—
(2)
Units Consisting of 25 Shares of Series C Convertible Preferred Stock
—
—
Common Stock issuable upon the conversion of the Series C Convertible Preferred Stock
—
—
(3)
Total Registration Fee:
$
1,000,000
$
116.00
(1) Estimated solely for purposes of calculating the registration
fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.
(2) Estimated solely for purposes of calculating the registration
fee in accordance with Rule 457(i) under the Securities Act of 1933, as amended.
(3) Pursuant to Rule 457(i), no separate registration fee is
required for the common stock underlying the convertible preferred stock because the common stock is being registered on the same
registration statement as the convertible preferred stock.
Pursuant to Rule 429 under the Securities
Act of 1933, the prospectus included in this Registration Statement is a combined prospectus and also relates to (i) 33,550,000
shares of common stock previously registered under the Registrant's Registration Statement on Form SB-2 (File No. 333-133182);
(ii) 6,050,000 shares of common stock previously registered under the Registrant's Registration Statement on Form SB-2 (File
No. 333-142556), (iii) 1,089,913 shares of common stock previously registered under the Registrant's Registration Statement
on Form SB-2 on Form S-1 (File No. 333-149015), (iv) 5,000 units, 1,250,000 shares of Series A Convertible Preferred Stock and
warrants to purchase 25,000,000 shares of common stock previously registered under the Registrant's Registration Statement
on Form S-1 (File No. 333-162712), (iv) 2,500 units, 833,280 shares of Series B Convertible Preferred Stock and warrants to purchase
8,332,800 shares of common stock previously registered under the Registrant's Registration Statement on Form S-1 (File No.
333-185752) and (v) 10,415 units, 833,200 shares of Series B Convertible Preferred Stock and warrants to purchase 8,332,000 shares
of common stock previously registered under the Registrant's Registration Statement on Form S-1 (File No. 333-208804). Accordingly,
this Registration Statement, which is a new registration statement, also constitutes Post-Effective Amendment No. 4 to Registration
Statement No. 333-133182, Post-Effective Amendment No. 4 to Registration Statement No. 333-142556, Post-Effective Amendment No.
4 to Registration Statement No. 333-149015, Post-Effective Amendment No. 3 to Registration Statement No. 333-162712, Post-Effective
Amendment No. 2 to Registration Statement No. 333-185752 and Post-Effective Amendment No. 1 to Registration Statement No. 333-208804,
which post-effective amendments shall hereafter become effective concurrently with the effectiveness of this Registration Statement
and in accordance with Section 8(c) of the Securities Act of 1933. If securities previously registered under Registration Statement
No. 333-133182, Registration Statement No. 333-142556, Registration Statement No. 333-149015, Registration Statement No. 333-162712,
Registration Statement No. 333-185752 and Registration Statement No. 333-208804 are offered and sold before the effective date
of this Registration Statement, the amount of previously registered securities so sold will not be included in the prospectus hereunder.
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment
which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
Explanatory Note
InsPro Technologies
Corporation (the "Company") previously filed a Registration Statement on Form SB-2 (File No. 333-133 182) with the
U.S. Securities and Exchange Commission (the "Commission") on April 10, 2006, which was declared effective on July
7, 2006 (the "2006 Prior Registration Statement"). The 2006 Prior Registration Statement registered up to 33,550,000
shares of our common stock for resale by the selling stockholders named therein, including 8,650,000 shares of our common stock
issuable upon the exercise of warrants held by such selling stockholders.
The Company previously
filed a Registration Statement on Form SB-2 (File No. 333-142556) with the Commission on May 2, 2007, which was declared effective
on June 1, 2007 (the "2007 Prior Registration Statement"). The 2007 Prior Registration Statement registered up to 6,050,000
shares of our common stock for resale by the selling stockholders named therein, including 2,000,000 shares of our common stock
issuable upon the exercise of warrants held by such selling stockholders.
The Company previously
filed a Registration Statement on Form SB-2 on Form S-l (File No. 333-149015) with the Commission on February 1, 2008, which was
declared effective on April 22, 2008 (the "2008 Prior Registration Statement"). The 2008 Prior Registration Statement
registered up to 739,913 shares of our common stock for resale by the selling stockholders named therein, including 350,000 shares
of our common stock issuable upon the exercise of warrants held by such selling stockholders.
The Company previously
filed a Registration Statement on Form S-l (File No. 333-162712) with the Commission on January 14, 2010, which was declared effective
on January 22, 2010 (the "2010 Prior Registration Statement"). The 2010 Prior Registration Statement registered up
to 5,000 units, 1,250,000 shares of Series A Convertible Preferred Stock and warrants to purchase 25,000,000 shares of common stock.
The Company previously
filed a Registration Statement on Form S-1 (File No. 333-185752) with the Commission on February 8, 2013, which was declared effective
on February 12, 2013 (the "2013 Prior Registration Statement"). The 2013 Prior Registration Statement registered up
to 10,416 units, 833,280 shares of Series B Convertible Preferred Stock and warrants to purchase 8,332,800 shares of common stock.
The Company previously
filed a Registration Statement on Form S-1 (File No. 333-208804) with the Commission on February 2, 2016, which was declared effective
on February 5, 2016 (the "2016 Prior Registration Statement," and together with the 2006 Prior Registration Statement,
2007 Prior Registration Statement, 2008 Prior Registration Statement, the 2010 Prior Registration Statement, and the 2013 Prior
Registration Statement, the "Prior Registration Statements"). The 2016 Prior Registration Statement registered up to
10,415 units, 833,200 shares of Series B Convertible Preferred Stock and warrants to purchase 8,332,000 shares of common stock.
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus included in the 2016 Prior Registration Statement was a combined
prospectus and also related to 33,550,000 shares of common stock registered under the 2006 Prior Registration Statement, 6,050,000
shares of common stock registered under the 2007 Prior Registration Statement, 1,089,913 shares of common stock registered under
the 2008 Prior Registration Statement, 25,000,000 shares of common stock under the 2010 Prior Registration Statement and 8,332,800
shares of common stock under the 2013 Prior Registration Statement. Accordingly, the 2016 Prior Registration Statement also constituted
Post-Effective Amendment No. 3 to the 2006 Prior Registration Statement, Post-Effective Amendment No. 3 to the 2007 Prior Registration
Statement, Post-Effective Amendment No. 3 to the 2008 Prior Registration Statement, Post-Effective Amendment No. 2 to the 2010
Prior Registration Statement and Post-Effective Amendment No. 1 to the 2013 Prior Registration Statement.
Pursuant to Rule 429
under the Securities Act of 1933, the prospectus included in this Registration Statement is also a combined prospectus and also
relates to 33,550,000 shares of common stock registered under the 2006 Prior Registration Statement, 6,050,000 shares of common
stock registered under the 2007 Prior Registration Statement, 1,089,913 shares of common stock registered under the 2008 Prior
Registration Statement, the 5,000 units, 1,250,000 shares of Series A Convertible Preferred Stock and warrants to purchase 25,000,000
shares of common stock registered under the 2010 Prior Registration Statement, the 10,416 units, 833,280 shares of Series B Preferred
Stock and warrants to purchase 8,332,800 shares of common stock registered under the 2013 Prior Registration Statement, and 10,415
units, 833,200 shares of Series B Convertible Preferred Stock and warrants to purchase 8,332,000 shares of common stock registered
under the 2016 Prior Registration Statement. Accordingly, this Registration Statement, which is a new registration statement, also
constitutes Post-Effective Amendment No. 4 to the 2006 Prior Registration Statement, Post-Effective Amendment No. 4 to the 2007
Prior Registration Statement, Post-Effective Amendment No. 4 to the 2008 Prior Registration Statement, Post-Effective Amendment
No. 3 to the 2010 Prior Registration Statement, Post-Effective Amendment No. 2 to the 2013 Prior Registration Statement, and Post-Effective
Amendment No. 1 to the 2016 Prior Registration Statement and is being filed to, among other things: (i) include audited financial
statements for our fiscal year ended December 31, 2014 and to reflect additional information disclosed in our Annual Report on
Form 10-K (the "Annual Report") for our fiscal year ended December 31, 2016, filed with the Commission on March 30,
2017; (ii) include unaudited interim financial statements for our three months ended March 31, 2017 and to reflect additional information
disclosed in our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K filed with the Commission subsequent to our
Annual Report.
Accordingly, this Registration
Statement on Form S-l (i) carries forward from the Prior Registration Statements an aggregate of (a) 40,689,913 shares of our common
stock, which includes 11,000,000 shares of our common stock issuable upon the exercise of warrants, held by certain of the named
selling stockholders, (b) 5,000 units, 1,250,000 shares of our Series A Convertible Preferred Stock and 25,000,000 warrants to
purchase shares of our common stock, (c) 10,416 units, 833,280 shares of Series B Preferred Stock and warrants to purchase 8,332,800
shares of common stock, and (d) 10,415 units, 833,200 shares of our Series B Convertible Preferred Stock and warrants to purchase
8,332,000 shares of our common stock, and (ii) registers an additional 20,000 Units, 500,000 shares of our Series C Convertible
Preferred Stock. All filing fees payable in connection with the initial filing of the Prior Registration Statements were previously
paid at the time of the initial filing of the Prior Registration Statements. A registration fee of $116.00 in respect of the 500,000
shares of our Series C Convertible Preferred Stock being registered in this Registration Statement on Form S-l is being paid concurrently
with the filing of this Registration Statement on Form S-l.
The information in this prospectus
is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting
an offer to buy these securities in any state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
Subject to Completion
June 15, 2017
INSPRO TECHNOLOGIES CORPORATION
Up to 20,000 Units, 500,000 Shares
of Preferred Stock
We are distributing,
at no charge to the holders of our common stock, non-transferable subscription rights to subscribe for units, which we refer to
throughout this prospectus as Units, consisting of 25 shares of our Series C Convertible Preferred Stock. Our stockholders will
receive one subscription right for every 9,651 shares of our common stock, 483 shares of our Series A Convertible Preferred Stock
held, 483 shares of our Series B Convertible Preferred Stock held, and 483 shares of our Series C Convertible Preferred Stock held
of record as of 5:00 p.m., New York City time, on [___________], 201[_], the record date. Pursuant to the terms of this offering,
the rights may only be exercised for a maximum of 20,000 Units, or approximately $1,000,000 of gross subscription proceeds.
Each subscription right
entitles the holder to subscribe for one Unit at the subscription price of $50.00 per Unit, which we refer to as the basic subscription
right. In addition, rights holders who fully exercise their basic subscription rights will be entitled, subject to limitations,
to subscribe for additional Units that remain unsubscribed as a result of any unexercised basic subscription rights, which we refer
to as the over-subscription right, at the subscription price of $50.00 per Unit.
There is no minimum
number of Units you must purchase, but you may not purchase fractional Units. When determining the number of subscription rights
you will receive, divide the number of shares of our common stock you own by 9,651, the number of shares of our Series A Convertible
Preferred Stock you own by 483, the number of shares of our Series B Convertible Preferred Stock you own by 483, and the number
of shares of our Series C Convertible Preferred Stock you own by 483 and round down the sum of those amounts to the next whole
number. For example, if you own 100,000 shares of our common stock, 10,000 shares of our Series A Convertible Preferred Stock and
10,000 shares of our Series B Convertible Preferred Stock, you will receive 51 subscription rights (100,000 shares of common stock
divided by 9,651 = 10.36, 10,000 shares of Series A Convertible Preferred Stock divided by 483 = 20.70, 10,000 shares of Series
B Convertible Preferred Stock divided by 483 = 20.70, which sum = 51.76, rounded down to 51 subscription rights, the next whole
number), which will entitle you to subscribe for up to 51 Units under your basic subscription privilege.
This rights offering
was designed to give all of the holders of our capital stock the opportunity to participate in an equity investment in InsPro Technologies
Corporation on substantially the same economic terms as our last private placement in May 2017.
The subscription rights
will expire if they are not exercised by 5:00 p.m., New York City time, on [___________], 201[__], unless we extend the rights
offering period. Our board of directors may cancel the rights offering at any time prior to the expiration of the rights offering
for any reason and may extend or amend the rights offering for any reason. In the event we cancel the rights offering, all subscription
payments received by us will be returned, without interest or penalty, as soon as practicable.
The subscription rights
may not be sold, transferred or assigned, and will not be listed for trading on any stock exchange or on the Over-the-Counter Bulletin
Board ("OTCBB").
You should carefully
consider whether to exercise your subscription rights before the expiration date. All exercises of subscription rights are irrevocable.
This is not an underwritten offering. The Units are being offered directly by us without the services of an underwriter or selling
agent. Our board of directors is making no recommendation regarding your exercise of the subscription rights.
Our common stock is
quoted on the OTCBB under the symbol "ITCC.OB."
The average of the
bid and asked prices of our common stock on the OTCBB on June 14, 2017 was $0.04 per share.
INVESTING IN OUR SECURITIES
INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD READ THIS ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE SECTION ENTITLED "RISK FACTORS"
BEGINNING ON PAGE 11.
NEITHER THE SECURITIES
AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is                    ,
20[__]
Table
of Contents
Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
1
QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING
2
PROSPECTUS SUMMARY
8
RISK FACTORS
11
THE RIGHTS OFFERING
21
USE OF PROCEEDS
29
DILUTION
29
CAPITALIZATION
30
DESCRIPTION OF SECURITIES
30
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
34
BUSINESS
35
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
39
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
47
EXECUTIVE COMPENSATION
51
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
59
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
64
PLAN OF DISTRIBUTION
65
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
65
EXPERTS
71
TRANSFER AGENT AND REGISTRAR
71
LEGAL MATTERS
71
WHERE YOU CAN FIND MORE INFORMATION
71
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
72
FINANCIAL STATEMENTS
F-1
You should rely only
on the information contained in this prospectus. We have not authorized anyone to provide you with information different from the
information contained in this prospectus. We will not make an offer to sell these securities in any jurisdiction where offers and
sales are not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless
of when this prospectus is delivered or when any sale of our common stock occurs. All dollar amounts in this prospectus are in
U.S. dollars unless otherwise stated.
In this prospectus,
unless the context specifically indicates otherwise, all references to "the Company," "we," "us,"
and "our" refer to InsPro Technologies Corporation and its subsidiaries.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Certain of the statements
contained in this prospectus, including in the sections entitled "Questions and Answers About the Rights Offering,"
"Prospectus Summary," "Management's Discussion and Analysis of Financial Condition and Results of Operations,"
"Business" and elsewhere in this report are "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended. These statements are based on management's current expectations and are subject
to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained in the forward-looking
statements. The forward-looking statements herein include, among others, statements addressing management's views with respect
to future financial and operating results and costs associated with the Company's operations and other similar statements.
Various factors, including competitive pressures, market interest rates, regulatory changes, customer defaults or insolvencies,
litigation, acquisition of businesses that do not perform as we expect or that are difficult for us to integrate or control, adverse
resolution of any contract or other disputes with customers, could cause actual outcomes and results to differ materially from
those described in forward-looking statements.
The words "may,"
"will," "expect," "intend," "anticipate," "estimate," "believe,"
"continue" and similar expressions may identify forward-looking statements, but the absence of these words does not
necessarily mean that a statement is not forward-looking. While we believe that we have a reasonable basis for each forward-looking
statement contained in this prospectus, we caution you that these statements are based on a combination of facts and factors currently
known by us and projections of the future about which we cannot be certain. Many factors, including general business and economic
conditions, affect our ability to achieve our objectives. As a result of these factors, we cannot assure you that the forward-looking
statements in this prospectus will prove to be accurate. In addition, if our forward-looking statements prove to be inaccurate,
the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard
these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any
specified time frame, if at all. We may not update these forward-looking statements, even though our situation may change in the
future.
1
QUESTIONS AND ANSWERS ABOUT THE RIGHTS
OFFERING
The following are examples
of what we anticipate will be common questions about the rights offering. The answers are based on selected information included
elsewhere in this prospectus. The following questions and answers do not contain all of the information that may be important to
you and may not address all of the questions that you may have about the rights offering. This prospectus contains more detailed
descriptions of the terms and conditions of the rights offering and provides additional information about us and our business,
including potential risks related to the rights offering, the Units, and our business.
What is the rights offering?
We are distributing,
at no charge, to holders of our shares of capital stock, non-transferable subscription rights to subscribe for Units consisting
of 25 shares of our Series C Convertible Preferred Stock. You will receive one subscription right for every 9,651 shares of our
common stock, 483 shares of Series A Convertible Preferred Stock, 483 shares of Series B Convertible Preferred Stock, and 483 shares
of our Series C Convertible Preferred Stock held of record by you as of 5:00 p.m., New York City time, on [_________], 201[__],
the record date. Each subscription right entitles the holder to a basic subscription right and an over-subscription privilege,
which are described below. The shares of preferred stock as components of the Units in the rights offering do not currently trade
on the OTCBB or on any other exchange, and are only transferable to the extent permitted in the instruments governing such securities.
What is the basic subscription right?
The basic subscription
right gives our stockholders the opportunity to purchase Units at a subscription price of $50.00 per Unit for each 9,651 shares
of common stock, 483 shares of Series A Convertible Preferred Stock, 483 shares of Series B Convertible Preferred Stock, and 483
shares of Series C Convertible Preferred Stock you own. We have granted to you, as a stockholder of record on the record date,
one subscription right for each 9,651 shares of our common stock, 483 shares of Series A Convertible Preferred Stock, 483 shares
of Series B Convertible Preferred Stock, and 483 shares of Series C Convertible Preferred Stock you owned at that time.
There is no minimum
number of Units you must purchase, but you may not purchase fractional Units. When determining the number of subscription rights
you will receive, divide the number of shares of our common stock you own by 9,651, the number of shares of Series A Convertible
Preferred Stock you own by 483, the number of shares of Series B Convertible Preferred Stock you own by 483, and the number of
shares of Series C Convertible Preferred Stock you own by 483, and round down the sum of those amounts to the next whole number.
For example, if you own 100,000 shares of our common stock, 10,000 shares of our Series A Convertible Preferred Stock and 10,000
shares of our Series B Convertible Preferred Stock, you will receive 51 subscription rights (100,000 shares of common stock divided
by 9,651 = 10.36, 10,000 shares of Series A Convertible Preferred Stock divided by 483 = 20.70, 10,000 shares of Series B Convertible
Preferred Stock divided by 483 = 20.70, which sum = 51.76, rounded down to 51 subscription rights, the next whole number), which
will entitle you to subscribe for up to 51 Units under your basic subscription privilege.
You may exercise all
or a portion of your basic subscription right, or you may choose not to exercise any subscription rights at all. However, if you
exercise less than your full basic subscription right, you will not be entitled to purchase shares under your over-subscription
privilege.
If you hold an InsPro
Technologies Corporation stock certificate, the number of Units you may purchase pursuant to your basic subscription right is indicated
on the enclosed rights certificate. If you hold your shares in the name of a broker, dealer, custodian bank or other nominee who
uses the services of the Depository Trust Company ("DTC"), you will not receive a rights certificate. Instead, we will
issue one subscription right to your nominee record holder for each 9,651 shares of our common stock, 483 shares of Series A Convertible
Preferred Stock, 483 shares of Series B Convertible Preferred Stock, and 483 shares of Series C Convertible Preferred Stock that
you own at the record date. If you are not contacted by your nominee, you should contact your nominee as soon as possible.
2
What is the over-subscription privilege?
In the event that you
purchase all of the Units available to you pursuant to your basic subscription right, you may also choose to purchase any Units
that are not purchased by our other stockholders through the exercise of their basic subscription rights. You should indicate on
your rights certificate, or the form provided by your nominee if your shares are held in the name of a nominee, how many additional
Units you would like to purchase pursuant to your over-subscription privilege.
If sufficient Units
are available, we will seek to honor your over-subscription request in full. If, however, over-subscription requests exceed the
number of Units available, we will allocate the available Units pro rata among the stockholders exercising the over-subscription
privilege in proportion to the number of shares of capital stock owned by such stockholder on the record date, relative to the
number of shares owned on the record date by all stockholders exercising the over-subscription privilege. If this pro rata allocation
results in any stockholder receiving a greater number of Units than the stockholder subscribed for pursuant to the exercise of
the over-subscription privilege, then such stockholder will be allocated only that number of Units for which the stockholder oversubscribed,
and the remaining Units will be allocated among all other stockholders exercising the over-subscription privilege on the same pro
rata basis described above. The proration process will be repeated until all Units have been allocated.
In order to properly
exercise your over-subscription privilege, you must deliver the subscription payment related to your over-subscription privilege
prior to the expiration of the rights offering. Because we will not know the total number of unsubscribed Units prior to the expiration
of the rights offering, if you wish to maximize the number of Units you purchase pursuant to your over-subscription privilege,
you will need to deliver payment in an amount equal to the aggregate subscription price for the maximum number of Units that may
be available to you (i.e., for the maximum number of Units available to you, assuming you exercise all of your basic subscription
rights and are allotted the full amount of your over-subscription). See "The Rights Offering — The Subscription Rights
— Over-Subscription Privilege."
Any excess subscription
payments received by us will be returned, without interest or penalty, as soon as practicable.
Why are we conducting the rights offering?
We are conducting the
rights offering for the primary purpose of providing all of the holders of our capital stock the opportunity to participate in
an equity investment in InsPro Technologies Corporation on substantially the same economic terms as our last private placement
in May 2017, and the secondary purpose of raising equity capital to improve our capital position, to inject additional capital
into InsPro Technologies Corporation and to retain the remainder of any proceeds at InsPro Technologies Corporation for general
corporate purposes. See "Use of Proceeds."
This rights offering,
including the composition and price of the Units, was designed to give all of the holders of our capital stock the opportunity
to participate in an equity investment in InsPro Technologies Corporation on substantially the same economic terms as our last
private placement in May 2017.
How was the $50.00 per Unit subscription price determined?
The $50.00 per Unit
subscription price was determined by our board of directors based on the per share value of the Series C Convertible Preferred
Stock purchased by investors in our last private placement in May 2017. In May 2017, we sold shares of our Series C Convertible
Preferred Stock (each share of which is convertible, at the sole option of the holder, into 20 shares of our common stock). We
sold a total of 150,000 shares in that offering for an aggregate purchase price of $300,000.
In determining the
subscription price, our board of directors considered the overall economic value offered to investors in InsPro Technologies Corporation
in the last private placement. If an investor had invested in the last private placement, for every $50.00 invested, such investor
would have received 25 shares of Series C Convertible Preferred Stock. As a result, the Units offered in this rights offering consist
of 25 shares of our Series C Convertible Preferred Stock.
3
We did not seek or
obtain an opinion of financial advisors in establishing the subscription price. The subscription price will not necessarily be
related to our book value, tangible book value, net worth or any other established criteria of fair value.
What are the material terms of the Series C Convertible
Preferred Stock offered in this rights offering?
Each share of Series
C Convertible Preferred Stock offered in this rights offering is convertible, at the sole discretion of each holder of preferred
stock, into 20 shares of common stock, subject to certain adjustments. The holders of shares of our Series C Convertible Preferred
Stock are entitled to vote, with respect to any question upon which holders of our common stock are entitled to vote, together
with the holders of common stock as one class on an as-converted basis. At such time, if any, as our board of directors declares
a dividend or distribution on the common stock, the holders of preferred stock shall be entitled to receive, for each share of
Series C Convertible Preferred Stock held by them, a dividend or distribution in an amount equal to what such holder of preferred
stock would receive if their shares were converted into shares of common stock. We do not currently intend to pay any cash dividends
to the holders of shares of our common stock.
In addition, upon the
liquidation, sale or merger of InsPro Technologies Corporation, each share of our Series C Convertible Preferred Stock is entitled
to receive an amount equal to the greater of (i) a liquidation preference equal to two and a half (2.5) times the preferred stock
original issue price, subject to certain customary adjustments, or (ii) the amount such preferred stock would receive if it participated
pari passu with the holders of our common stock on an as-converted basis. For so long as any shares of Series C Convertible Preferred
Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series C Convertible Preferred
Stock is required to approve (i) any amendment to our certificate of incorporation or bylaws that would adversely alter the voting
powers, preferences or special rights of the Series C Convertible Preferred Stock or (ii) any amendment to our certificate of incorporation
to create any shares of capital stock that rank senior to the Series C Convertible Preferred Stock. In addition to the voting rights
described above, for so long as 1,000,000 shares of Series C Convertible Preferred Stock are outstanding, the vote or consent of
the holders of at least two-thirds of the Series C Convertible Preferred Stock is required to effect or validate any merger, sale
of substantially all of the assets of InsPro Technologies Corporation or other fundamental transaction, unless such transaction,
when consummated, will provide the holders of preferred stock with an amount per share equal to two and a half (2.5) times the
preferred stock original issue price plus any declared but unpaid dividends.
Am I required to exercise all of the subscription
rights I receive in the rights offering?
No. You may exercise
any number of your subscription rights, or you may choose not to exercise any subscription rights. If you do not exercise any subscription
rights, the number of shares of our common stock or preferred stock you own will not change. However, if you choose not to exercise
your subscription rights, your ownership interest in InsPro Technologies Corporation may be diluted by other stockholder purchases
(to the extent we receive any subscriptions in this rights offering). In addition, if you do not exercise your basic subscription
right in full, you will not be entitled to participate in the over-subscription privilege. See "Risk Factors — If you
do not exercise your subscription rights, your percentage ownership in InsPro Technologies Corporation will be diluted."
How soon must I act to exercise my subscription
rights?
If you received a rights
certificate and elect to exercise any or all of your subscription rights, we must receive your completed and signed rights certificate
and payments prior to the expiration of the rights offering, which is [_________], 201[_], at 5:00 p.m., Eastern Time. If you hold
your shares in the name of a broker, dealer, custodian bank or other nominee, your nominee may establish a deadline prior to 5:00
p.m. Eastern Time, on [_________], 201[_] by which you must provide it with your instructions to exercise your subscription rights.
Although our board of directors may, in its discretion, extend the expiration of the rights offering, we currently do not intend
to do so. Our board of directors may cancel or amend the rights offering at any time. In the event the rights offering is cancelled,
all subscription payments received will be returned, without interest or penalty, as soon as practicable.
4
Although we will make
reasonable attempts to provide this prospectus to our stockholders, the rights offering and all subscription rights will expire
at 5:00 p.m., Eastern Time on [_________], 201[_], whether or not we have been able to locate each person entitled to subscription
rights.
May I transfer my subscription rights?
No. You may not sell,
transfer or assign your subscription rights to anyone. Subscription rights will not be listed for trading on the OTCBB or any other
stock exchange or market. Rights certificates may only be completed by the stockholder who receives the certificate.
Are we requiring a minimum subscription to complete
the rights offering?
No. There is no individual
minimum purchase requirement in the rights offering and we are not requiring a minimum subscription to complete the rights offering.
However, because we are not issuing fractional Units, you must own at least 9,651 shares of our common stock, 483 shares of our
Series A Convertible Preferred Stock, 483 shares of our Series B Convertible Preferred Stock, or 483 shares of our Series C Convertible
Preferred Stock as of the record date in order to subscribe for one Unit in the rights offering.
In addition, our board
of directors reserves the right to cancel the rights offering for any reason.
Can the board of directors cancel, amend or extend
the rights offering?
Yes. Our board of directors
may decide to cancel, amend or terminate the rights offering at any time before the expiration of the rights offering and for any
reason. If our board of directors cancels or terminates the rights offering, any money received from subscribing stockholders will
be returned, without interest or penalty, as soon as practicable. We also reserve the right to amend or modify the terms of the
rights offering. We further have the right to extend the rights offering and the time for exercising your subscription rights,
although we do not presently intend to do so.
Has our board of directors made a recommendation
to our stockholders regarding the rights offering?
No. Our board of directors
is making no recommendation regarding your exercise of the subscription rights. Stockholders who exercise subscription rights risk
investment loss on new money invested. There is currently no public market for our shares of Series C Convertible Preferred Stock.
You are urged to make your decision based on your own assessment of our business and financial condition, our prospects for the
future, the terms of the rights offering and the information contained in, or incorporated by reference into, this prospectus.
See "Risk Factors" for a discussion of some of the risks involved in investing in our common stock.
How do I exercise my subscription rights if I own
shares in certificate form?
If you hold an InsPro
Technologies Corporation stock certificate and you wish to participate in the rights offering, you must take the following steps:
·
deliver payment to us before 5:00 p.m., Eastern Time, on [__________], 201[_]; and
·
deliver a properly completed and signed rights certificate to us before 5:00 p.m., Eastern Time, on [_________], 201[_].
In certain cases, you may be required to
provide additional documentation or signature guarantees.
Please follow the delivery
instructions on the rights certificate. You are solely responsible for completing delivery to us of your subscription documents,
rights certificate and payment. We urge you to allow sufficient time for delivery of your subscription materials to us so that
they are received by us by 5:00 p.m., Eastern Time, on [_________], 201[_].
WE WILL NOT ACCEPT ANY SUBSCRIPTIONS THAT WE RECEIVE
AFTER THIS TIME.
5
If you send a payment
that is insufficient to purchase the number of Units you request, or if the number of Units you request is not specified in the
forms, the payment received will be applied to exercise your subscription rights to the fullest extent possible based on the amount
of the payment received, subject to the availability of Units under the over-subscription privilege and the elimination of fractional
Units.
What should I do if I want to participate in the
rights offering, but my shares are held in the name of a broker, dealer, custodian bank or other nominee?
If you hold your shares
of common stock through a broker, dealer, custodian bank or other nominee, then your nominee is the record holder of the shares
you own. The record holder must exercise the subscription rights on your behalf. If you wish to purchase Units through the rights
offering, you should contact your broker, dealer, custodian bank or nominee as soon as possible. Please follow the instructions
of your nominee. Your nominee may establish a deadline that may be before the expiration date that we have established for the
rights offering.
When will I receive my new shares?
If you purchase Units
in the rights offering you will receive your new shares as soon as practicable after the closing of the rights offering.
After I send in my payment and rights certificate,
may I cancel my exercise of subscription rights?
No. All exercises of
subscription rights are irrevocable unless the rights offering is terminated, even if you later learn information that you consider
to be unfavorable to the exercise of your subscription rights. You should not exercise your subscription rights unless you are
certain that you wish to purchase Units in the rights offering.
Are there any conditions to completing the rights
offering?
No, there are no conditions
to completion of the rights offering.
What effects will the rights offering have on our
outstanding Series C Convertible Preferred Stock?
As of June 15, 2017,
we had 1,150,000 shares of Series C Convertible Preferred Stock issued and outstanding. The number of shares of our Series C Convertible
Preferred Stock that we will issue in this rights offering through the exercise of subscription rights will depend on the number
of Units that are subscribed for in the rights offering. We could, depending on the number of Units that are subscribed for in
the offering, have a maximum of 1,650,000 shares of Series C Convertible Preferred Stock outstanding after completion of the rights
offering.
The issuance of Units
in the rights offering will dilute, and thereby reduce, your proportionate ownership in InsPro Technologies Corporation. If you
fully exercise your basic subscription right and a certain level of your over-subscription privilege, your ownership interest will
be diluted to a lesser extent.
How much will InsPro Technologies Corporation receive
from the rights offering?
If all of the subscription
rights (including all over-subscription privileges) are exercised in full by our stockholders, we expect the gross proceeds from
the rights offering to be approximately $1,000,000. If no subscription rights are exercised by our stockholders, we would receive
no proceeds from the rights offering. We are offering shares in the rights offering to stockholders with no individual minimum
purchase requirement.
Are there risks in exercising my subscription rights?
Yes. The exercise of
your subscription rights involves risks. Exercising your subscription rights involves the purchase of additional shares of our
Series C Convertible Preferred Stock and should be considered as carefully as you would consider any other equity investment. Among
other things, you should carefully consider the risks described under the heading "Risk Factors" in this prospectus
and in the documents incorporated by reference in this prospectus.
6
If the rights offering is not completed, will my
subscription payment be refunded to me?
Yes. We will hold all
funds we receive in a segregated bank account until completion of the rights offering. If the rights offering is not completed,
all subscription payments received by us will be returned, without interest or penalty, as soon as practicable. If you own shares
in "street name," it may take longer for you to receive your subscription payment because we will return payments through
the record holder of your shares.
What fees or charges apply if I purchase Units in
the rights offering?
We are not charging
any fee or sales commission to issue subscription rights to you or to issue shares to you if you exercise your subscription rights.
If you exercise your subscription rights through a broker, dealer, custodian bank or other nominee, you are responsible for paying
any fees your record holder may charge you.
What are the material U.S. federal income tax consequences
of exercising my subscription rights?
It is the opinion of
our counsel, Morgan, Lewis & Bockius LLP, that you should not recognize income or loss for U.S. federal income tax purposes
in connection with the receipt or exercise of subscription rights in the rights offering. You should consult your tax advisor as
to your particular tax consequences resulting from the rights offering. For a detailed discussion, see "Material U.S. Federal
Income Tax Considerations."
To whom should I send my forms and payment?
If your shares are
held in the name of a broker, dealer or other nominee, then you should send your subscription documents, rights certificate and
subscription payment to that record holder. If you are the record holder, then you should send your subscription documents, rights
certificate and subscription payment by hand delivery, first class mail or courier service to:
InsPro Technologies Corporation
1510 Chester Pike
Suite 400
Eddystone, Pennsylvania 19022
Attn: Francis L. Gillan III
You are solely responsible
for completing delivery to us of your subscription documents, rights certificate and payment. We urge you to allow sufficient time
for delivery of your subscription materials to us.
Whom should I contact if I have other questions?
If you have any questions
regarding InsPro Technologies Corporation or the rights offering, please contact Francis L. Gillan III at (484) 654-2200. You may
also contact us with questions by electronic mail at
rightsoffering@inspro.com
.
If you have any questions
regarding completing a rights certificate or submitting payment in the rights offering, please contact Francis L. Gillan III at
(484) 654-2200 or by electronic mail at
rightsoffering@inspro.com
.
7
PROSPECTUS SUMMARY
This summary highlights
selected information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information
that you should consider before investing in our securities. You should read the entire prospectus carefully, including the "Risk
Factors" section, before making a decision to invest in our securities.
Our Business
We are a technology
company that provides software applications for use by insurance administrators in the insurance industry. Our business focuses
primarily on our InsPro Enterprise software application.
We acquired Atiam Technologies
L.P. on October 1, 2007. HBDC Acquisition, LLC, which changed its name to InsPro Technologies, LLC on May 14, 2009, develops, sells
and supports our InsPro Enterprise software application. InsPro Enterprise is a comprehensive, web-based insurance administration
software application, which was introduced by Atiam Technologies L.P. in 2004. InsPro Enterprise clients include insurance carriers
and third party administrators. We market InsPro Enterprise as a licensed software application, and we realize revenue from the
sale of the software licenses, application service provider fees, software maintenance fees and consulting and implementation services.
During 2005 through
October 1, 2007 our operations were primarily that of our former Telesales and Insurint businesses. We effectively sold our former
Telesales business in 2009 and our former Insurint business in 2010. Our former Telesales and Insurint businesses are now classified
as part of our discontinued operations.
Our common stock has
been quoted on the OTCBB since December 6, 2010 under the symbol ITCC.OB and from December 13, 2005 until December 3, 2010 under
the symbol HBDT.OB.
Summary of this Rights Offering
Securities Offered
We are distributing to you, at no charge, one non-transferable subscription right for each 9,651 shares of our common stock, 483 shares of Series A Convertible Preferred Stock, 483 shares of Series B Convertible Preferred Stock, and 483 shares of Series C Convertible Preferred Stock that you owned as of 5:00 p.m., Eastern Time, on [_________], 201[__], the record date, either as a holder of record or, in the case of shares held of record by brokers, dealers, custodian banks, or other nominees on your behalf, as a beneficial owner of such shares.  If the rights offering is fully subscribed, we expect the gross proceeds from the rights offering to be approximately $1,000,000.  This rights offering was designed to give all of the holders of our capital stock the opportunity to participate in an equity investment in InsPro Technologies Corporation on the same economic terms as the investment made by investors in our last private placement in May 2017.
Basic Subscription Right
The basic subscription right will entitle you to purchase one unit at a subscription price of $50.00.  A unit consists of 25 shares of our Series C Convertible Preferred Stock.  We refer to these units throughout this prospectus as "Units."
8
There is no minimum number of Units you must purchase, but you may not purchase fractional Units.  When determining the number of subscription rights you will receive, divide the number of shares of our common stock you own by 9,651, the number of shares of Series A Convertible Preferred Stock you own by 483, the number of shares of Series B Convertible Preferred Stock you own by 483, and the number of shares of Series C Convertible Preferred Stock you own by 483 and round down the sum of those amounts to the next whole number.  For example, if you own 100,000 shares of our common stock, 10,000 shares of our Series A Convertible Preferred Stock and 10,000 shares of our Series B Convertible Preferred Stock, you will receive 51 subscription rights (100,000 shares of common stock divided by 9,651 = 10.36, plus 10,000 shares of Series A Convertible Preferred Stock divided by 483 = 20.70, plus 10,000 shares of Series B Convertible Preferred Stock divided by 483 = 20.70, which sum = 51.76, rounded down to 51 subscription rights, the next whole number), which will entitle you to subscribe for up to 51 Units under your basic subscription privilege.
Over-Subscription Privilege
In the event that you purchase all of the Units available to you pursuant to your basic subscription right, you may also choose to subscribe for a portion of any Units that are not purchased by our stockholders through the exercise of their basic subscription rights. You may subscribe for these Units pursuant to your over-subscription privilege, subject to the limitations described below.
Subscription Price
$50.00 per Unit, payable in cash. To be effective, any payment related to the exercise of a subscription right must clear prior to the expiration of the rights offering.
Record Date
5:00 p.m., Eastern Time, on [_______], 201[__].
Expiration of the Rights Offering
5:00 p.m., Eastern Time, on [_______], 201[__].
Use of Proceeds
We intend to use the proceeds of the rights offering to improve our capital position and for general corporate purposes.
Non-Transferability of Rights
The subscription rights may not be sold, transferred or assigned and will not be listed for trading on the OTCBB or on any other stock exchange or market.
No Revocation
All exercises of subscription rights are irrevocable, even if you later learn of information that you consider to be unfavorable to the exercise of your subscription rights.  You should not exercise your subscription rights unless you are certain that you wish to purchase additional Units at a subscription price of $50.00 per full Unit.
Material U.S. Federal
Income Tax Consequences
It is the opinion of our counsel, Morgan, Lewis & Bockius LLP, that you should not recognize income or loss for U.S. federal income tax purposes in connection with the receipt or exercise of subscription rights in the rights offering.  You should consult your own tax advisor as to the tax consequences to you of the receipt, exercise or lapse of the subscription rights in light of your particular circumstances.
Extension, Cancellation and Amendment
Although we do not presently intend to do so, we have the option to extend the rights offering and the period for exercising your subscription rights. Our board of directors may cancel the rights offering at any time prior to the expiration date of the rights offering for any reason. In the event that the rights offering is cancelled, all subscription payments received by us will be returned, without interest or penalty, as soon as practicable. We also reserve the right to amend or modify the terms of the rights offering at any time.
Procedures for Exercising Rights
To exercise your subscription rights, you must take the following steps:
9
·
If you are a registered holder of our common stock or preferred stock, you must deliver payment and a properly completed rights certificate to us so that we receive these items before 5:00 p.m., Eastern Time, on [_______], 201[__].  You may deliver the documents and payments by hand delivery, first class mail or courier service. If first class mail is used for this purpose, we recommend using registered mail, properly insured, with return receipt requested.
·
If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, or if you would rather an institution conduct the transaction on your behalf, you should instruct your broker, dealer, custodian bank or other nominee to exercise your subscription rights on your behalf.  Please follow the instructions of your nominee, who may require that you meet a deadline earlier than 5:00 p.m., Eastern Time, on [_______], 201[__].
Shares Outstanding
Before the Rights Offering
1,150,000 shares of our Series C Convertible Preferred Stock were outstanding as of June 15, 2017.
Shares Outstanding After Completion of the Rights Offering
Assuming all Units are sold in the rights offering, we expect approximately 1,650,000 shares of our Series C Convertible Preferred Stock will be outstanding immediately after completion of the rights offering
Fees and Expenses
We will pay the expenses related to the rights offering.
The Over-the-Counter Bulletin Board
Our shares of common stock are currently listed for trading on the OTCBB under the ticker symbol "ITCC.OB ."
Risk Factors
Before you exercise your subscription rights to purchase shares of our common stock, you should carefully consider risks described in the section entitled "Risk Factors," beginning on page 11 of this prospectus.
Our Corporate Information
Our principal executive
offices are located at 1510 Chester Pike, Suite 400, Eddystone, Pennsylvania 19022. Our telephone number is (484) 654-2200. Our
website address is www.inspro.com. The information contained on our website is not incorporated by reference into, and does not
form any part of, this prospectus.
10
RISK FACTORS
Investing in our
securities involves significant risks. In addition to all of the other information contained in this prospectus, you should carefully
consider the risks and uncertainties described below before deciding to invest in our common stock and preferred stock. If any
of the following risks actually occur, they may materially harm our business, our financial condition or our results of operations.
In this event, the market price of our securities could decline and you could lose all or part of your investment.
Risks Related to the Rights Offering
If you do not exercise your subscription rights,
your percentage ownership in InsPro Technologies Corporation will be diluted.
Stockholders who do
not fully exercise their subscription rights should expect that they will, at the completion of this offering, own a smaller proportional
interest in our company than would otherwise be the case had they fully exercised their basic subscription and over-subscription
rights.
The subscription rights are not transferable, and
there is no market for the subscription rights.
You may not sell, give
away or otherwise transfer your subscription rights. The subscription rights are only transferable by operation of law. Because
the subscription rights are non-transferable, there is no market or other means for you to directly realize any value associated
with the subscription rights.
If we terminate this offering for any reason, we
will have no obligation other than to return subscription monies as soon as practicable.
We may decide, in our
sole discretion and for any reason, to cancel or terminate the rights offering at any time prior to the expiration date. If this
offering is cancelled or terminated, we will have no obligation with respect to subscription rights that have been exercised except
to return as soon as practicable, without interest, the subscription payments deposited with us. If we terminate this offering
and you have not exercised any subscription rights, such subscription rights will expire worthless.
The subscription price determined for this offering
is not an indication of the fair value of our common stock.
In determining the
subscription price, our board of directors considered the overall economic value offered to investors in InsPro Technologies Corporation
in our last private placement in May 2017. If an investor had invested in the last private placement, for every $50.00 invested,
such investor would have received 25 shares of Series C Convertible Preferred Stock. As a result, the Units offered in this rights
offering consist of 25 shares of our Series C Convertible Preferred Stock.
We did not seek or
obtain an opinion of financial advisors in establishing the subscription price. The subscription price will not necessarily be
related to our book value, tangible book value, net worth or any other established criteria of fair value and may or may not be
considered the fair value of our common stock to be offered in the rights offering. You should not assume or expect that, after
the rights offering, our shares of common stock will trade at or above the equivalent component of the subscription price in any
given time period.
We will have broad discretion in the use of the
net proceeds from this offering and may not use the proceeds effectively.
Although we plan to
use the proceeds of this offering for general corporate purposes, including working capital, we will not be restricted to such
use and will have broad discretion in determining how the proceeds of this offering will be used. Our discretion is not substantially
limited by the uses set forth in this prospectus in the section entitled "Use of Proceeds." While our board of directors
believes the flexibility in application of the net proceeds is prudent, the broad discretion it affords entails increased risks
to the investors in this offering. Investors in this offering have no current basis to evaluate the possible merits or risks of
any application of the net proceeds of this offering. Our stockholders may not agree with the manner in which we choose to allocate
and spend the net proceeds.
11
If you do not act on a timely basis and follow subscription
instructions, your exercise of subscription rights may be rejected.
Holders of subscription
rights who desire to purchase Units in this offering must act on a timely basis to ensure that all required forms and payments
are actually received by us prior to 5:00 p.m., New York City time, on the expiration date, unless extended, unless delivery of
the subscription rights certificate is effected pursuant to the guaranteed delivery procedures as described below. If you are a
beneficial owner of shares of capital stock and you wish to exercise your subscription rights, you must act promptly to ensure
that your broker, dealer, custodian bank or other nominee acts for you and that all required forms and payments are actually received
by your broker, dealer, custodian bank or other nominee in sufficient time to deliver such forms and payments to us to exercise
the subscription rights granted in this offering that you beneficially own prior to 5:00 p.m., New York City time on the expiration
date, as may be extended, unless delivery of the subscription rights certificate is effected pursuant to the guaranteed delivery
procedures as described below. We will not be responsible if your broker, dealer, custodian bank or other nominee fails to ensure
that all required forms and payments are actually received by us prior to 5:00 p.m., New York City time, on the expiration date.
If you fail to complete
and sign the required subscription forms, send an incorrect payment amount, or otherwise fail to follow the subscription procedures
that apply to your exercise in this rights offering, we may, depending on the circumstances, reject your subscription or accept
it only to the extent of the payment received. We do not undertake to contact you concerning an incomplete or incorrect subscription
form or payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine whether
a subscription exercise properly follows the subscription procedures.
You may not receive all of the Units for which you
subscribe pursuant to the over-subscription privilege.
Holders who fully exercise
their basic subscription rights will be entitled to subscribe for an additional amount of Units that are not purchased by our other
holders through the exercise of their basic subscription rights. Over-subscription rights will be allocated pro-rata among subscription
rights holders who over-subscribed, based on the number of shares of capital stock owned by such holders on the record date, relative
to the number of shares owned on the record date by all stockholders exercising the over-subscription privilege. You may not receive
any or all of the amount of Units for which you over-subscribed. If the prorated amount of Units allocated to you in connection
with your over-subscription right is less than your over-subscription request, then the excess funds held by us on your behalf
will be returned to you, without interest, as soon as practicable after the rights offering has expired and all prorating calculations
and reductions contemplated by the terms of the rights offering have been effected, and we will have no further obligations to
you.
If you make payment of the subscription price by
uncertified check, your check may not clear in sufficient time to enable you to purchase Units in this rights offering.
Any uncertified check
used to pay for Units to be issued in this rights offering must clear prior to the expiration date of this rights offering, and
the clearing process may require five or more business days. If you choose to exercise your subscription rights, in whole or in
part, and to pay for Units by uncertified check and your check has not cleared prior to the expiration date of this rights offering,
you will not have satisfied the conditions to exercise your subscription rights and will not receive the Units you wish to purchase.
12
The receipt of subscription rights may be treated
as a taxable distribution to you.
It is the opinion of
our counsel, Morgan, Lewis & Bockius LLP, that the distribution of the subscription rights in this rights offering should be
a non-taxable distribution under Section 305(a) of the Internal Revenue Code of 1986, as amended (the "Code"). Please
see the discussion on the "Material U.S. Federal Income Tax Considerations" below. This position is not binding on
the Internal Revenue Service, or the IRS, or the courts, however. If this rights offering is deemed to be part of a "disproportionate
distribution" under Section 305(b)(2) of the Code (or otherwise to be within one of the exceptions to Section 305(a) of the
Code set forth in Section 305(b) of the Code), your receipt of subscription rights in this offering may be treated as the receipt
of a taxable distribution to you equal to the fair market value of the subscription rights. Any such distribution would be treated
as dividend income to the extent of our current and accumulated earnings and profits, if any, with any excess being treated as
a return of capital to the extent thereof and then as capital gain. Each holder of capital stock is urged to consult his, her or
its own tax advisor with respect to the particular tax consequences of this rights offering.
Absence of a public trading market for the shares
of Series C Convertible Preferred Stock may limit the ability of a purchaser to resell the shares of Series C Convertible Preferred
Stock.
There is no established
trading market for the shares of our Series C Convertible Preferred Stock to be issued pursuant to this offering, and such securities
may not be widely distributed. There can be no assurance that a market will develop for the shares of Series C Convertible Preferred
Stock. Even if a market for these securities does develop, the price of the Series C Convertible Preferred Stock may fluctuate
and liquidity may be limited. If a market for these securities does not develop, then purchasers of the shares of Series C Convertible
Preferred Stock may be unable to resell the securities or sell them only at an unfavorable price for an extended period of time,
if at all. Future trading prices of the shares of Series C Convertible Preferred Stock will depend on many factors, including:
·
our operating performance and financial condition;
·
our ability to continue the effectiveness of the registration statement, of which this prospectus is a part, covering the shares
of Series C Convertible Preferred Stock and the common stock issuable upon exercise or conversion of these securities;
·
the interest of securities dealers in making a market; and
·
the market for similar securities.
Your ability to resell the securities you acquire
in the rights offering may be limited by state securities laws.
If you purchase securities
in the rights offering, you may not be able to resell the securities to other persons unless the securities are registered under
the securities laws of the states in which the potential purchasers reside or exemptions from registration requirements are available
in such states. We do not intend to register any of the securities for resale in any states or jurisdictions. Consequently, you
may only be able to sell the securities in those states where exemptions are available, such as an exemption for sales to institutional
investors.
Risks Relating to our Company and Industry
We have incurred significant operating losses since
our inception, which we anticipate will continue for the foreseeable future.
Since our inception,
we have incurred significant operating losses. As of March 31, 2017, we had an accumulated deficit of approximately $67.3 million.
We incurred operating losses of $646,302 for the three months ended March 31, 2017, approximately $2.7 million for the year ended
December 31, 2016, approximately $6.4 million for the year ended December 31, 2015, approximately $5.2 million for the year ended
December 31, 2014, approximately $1.7 million for the year ended December 31, 2013, approximately $7.9 million for the year ended
December 31, 2012, $6.9 million for the year ended December 31, 2011, $2.5 million for the year ended December 31, 2010, $6.3 million
for the year ended December 31, 2009, $9 million for the year ended December 31, 2008, $14.3 million for the year ended December
31, 2007, $14 million for the year ended December 31, 2006, $3.2 million for the year ended December 31, 2005 and approximately
$1.1 million for the period from our inception on January 27, 2004 through December 31, 2004. We expect to incur significant operating
expenses and capital expenditures relating to the development of our software-related business, particularly as we pursue growth
internally, expanding our marketing efforts, and further the development of our technologies. In addition, we will continue to
incur significant legal, accounting and other expenses associated with our status as a reporting company under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). As a result, we will need to generate significant revenues to achieve
profitability. Even if we achieve profitability, we may be unable to maintain or increase profitability on a quarterly or annual
basis. If we are unable to achieve and then maintain profitability, the market value of our stock will decline.
13
If we fail to increase our brand recognition, we
may face difficulty in attracting new customers.
We believe that establishing,
maintaining and enhancing our brand in a cost-effective manner is critical to achieving widespread acceptance of our current and
future products and services and is an important element in our efforts to maintain and expand our relationships with customers
and to grow our customer base, particularly in light of the competitive nature of our business. We believe that the importance
of brand recognition will increase as competition in our market develops. Some of our competitors already have well-established
brands in the individual health and life insurance market. Successful promotion of our brand will depend largely on our ability
to maintain a sizeable and active customer base, the success of our marketing efforts and our ability to provide high quality products
and reliable and useful service to our customers. There can be no assurance that brand promotion activities will yield increased
revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand. If we fail to successfully
promote and maintain our brand, or if we incur substantial expenses in an unsuccessful attempt to promote and maintain our brand,
we may fail to attract enough new customers or retain our existing customers to the extent necessary to realize a sufficient return
on our brand-building efforts, in which case our business, financial condition and results of operations could be materially harmed.
We may be unable to obtain additional capital when
necessary or on terms that are acceptable to us.
Since our inception,
we have used significant amounts of cash in our operations and in investing activities. As of March 31, 2017, we had a cash balance
of approximately $1.99 million. We used cash in operations of approximately $1.04 million for the three months ended March 31,
2017, net cash provided by operations was approximately $175,000 for the year ended December 31, 2016, cash used in operations
was approximately $3.64 million for the year ended December 31, 2015, net cash provided by operations was approximately $1.6 million
for the year ended December 31, 2014, cash used in operations was $1.9 million for the year ended December 31, 2013, $0.7 million
for the year ended December 31, 2012, $1.5 million for the year ended December 31, 2011, $4.8 million for the year ended December
31, 2010, $5.3 million for the year ended December 31, 2009, $8.4 million for the year ended December 31, 2008, $5.5 million for
the year ended December 31, 2007, approximately $6.5 million for the year ended December 31, 2006, $1.2 million for the year ended
December 31, 2005, and approximately $0.5 million for the period from our inception on January 27, 2004 through December 31, 2004.
We expect that we will
need significant additional cash resources to operate and expand our business in the future. Our future capital requirements will
depend on many factors, including our ability to maintain our existing cost structure and return on sales, and execute our business
and strategic plans as currently conceived. If these resources are insufficient to satisfy our cash requirements, we may seek to
sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities would result in
additional dilution to our stockholders. Additional indebtedness would result in debt service obligations and could result in operating
and financing covenants that would restrict our operations. In addition, financing might be unavailable in amounts or on terms
acceptable to us, if at all.
We are substantially dependent on our InsPro Enterprise
software application.
We derive virtually
all of our revenue from software license and maintenance revenue attributable to our InsPro Enterprise software application. Accordingly,
our future results depend on continued market acceptance of InsPro Enterprise, and any factor adversely affecting the market for
InsPro Enterprise could have a material adverse effect on our business, financial condition and operating results.
14
We may be unsuccessful in attracting or retaining
key technology, sales, marketing and other personnel or in retaining the members of our senior management team.
The success of our
business is dependent on our ability to attract and retain highly skilled managers and sales and marketing personnel and to retain
the members of our senior management team. Our inability to retain key personnel and attract additional qualified personnel could
harm our development and results of operations.
We may be unable to sufficiently protect our intellectual
property.
Our business and competitive
positions are dependent on our ability to use and protect our proprietary technologies. Our patent applications may not protect
our technologies because, among other things:
·
there is no guarantee that any pending patent applications will result in issued patents;
·
we may develop additional proprietary technologies that are not patentable;
·
there is no guarantee that any patent issued to us will provide us with any competitive advantage;
·
there is no guarantee that any patents issued to us will not be challenged, circumvented or invalidated by third parties; and
·
there is no guarantee that any patents previously issued to others or issued in the future will not have an adverse effect
on our ability to do business.
In addition, if we
are unable to protect and control unpatented trade secrets, know-how and other technological innovation, we may suffer competitive
harm. We also rely on trade secrets, know-how and technologies that are not protected by patents to maintain our competitive position.
Trade secrets are difficult to protect. To maintain the confidentiality of trade secrets and proprietary information, we generally
seek to enter into confidentiality agreements with our employees, consultants and collaborators upon the commencement of a relationship
with us. However, we at times do not obtain these agreements, nor can we guarantee that these agreements will provide meaningful
protection, that these agreements will not be breached or that we will have an adequate remedy for any such breach. In addition,
adequate remedies may not exist in the event of unauthorized use or disclosure of this information. Others may have developed,
or may develop in the future, substantially similar or superior know-how and technologies. The loss or exposure of our trade secrets,
know-how and other proprietary information, or independent development of similar or superior know-how, could harm our business,
financial condition and results of operations.
We may become subject to intellectual property rights
claims in the future, which are extremely costly to defend, could require us to pay significant damages and could limit our ability
to use the affected technologies.
Our commercial success
will depend in part on not infringing the patents or proprietary rights of third parties. Third parties could bring legal actions
against us claiming damages and seeking to enjoin us from using any technology found to be in violation of a third party's
rights. If we become involved in any litigation, it could consume a substantial portion of our resources, regardless of the outcome
of the litigation. If any of these actions are successful, in addition to any potential liability for damages, we could be required
to obtain a license to continue to use the affected technology, in which case we may be required to pay substantial fees. There
can be no assurance that any such license will be available on acceptable terms or at all.
If we are unable to satisfy regulatory requirements
relating to internal controls, or if our internal controls over financial reporting are not effective, our stock price could decline.
As directed by Section
404 of the Sarbanes-Oxley Act of 2002, the Securities and Exchange Commission (the "Commission"), adopted rules requiring
public companies to include a report of management on the company's internal controls over financial reporting in their annual
reports required by Section 13(a) of the Exchange Act. Ensuring that we have adequate internal financial and accounting controls
and procedures in place to help ensure that we can produce accurate financial statements on a timely basis is a costly and time-consuming
effort that needs to be re-evaluated frequently. Any failure to maintain the adequacy of our internal controls, or the resulting
inability to produce accurate financial statements on a timely basis, could increase our operating costs and harm our ability to
operate our business. In addition, investor perception that our internal controls are inadequate or that we are unable to produce
accurate financial statements on a consistent basis may adversely affect our stock price.
15
We may be unable to manage our growth effectively.
Our ability to compete
effectively and to manage our future growth, if any, requires us to:
·
continue to improve our financial and management controls and reporting systems and procedures to support the proposed expansion
of our business operations; and
·
locate or hire, at reasonable compensation rates, qualified personnel and other employees necessary to expand our capacity
in order to accommodate the proposed expansion of our business operations.
We may be unable to find or complete strategic acquisitions
of complementary businesses or technologies or to integrate acquired businesses or technologies.
Our business strategy
includes, among other things, achieving growth through the acquisition and integration into our business of complementary businesses
or technologies. We may be unable to find additional complementary businesses or technologies to acquire. Future acquisitions may
result in substantial per share financial dilution of our common stock from the issuance of equity securities. Completion of future
acquisitions also would expose us to potential risks, including risks associated with:
·
the assimilation of new operations, technologies and personnel;
·
unforeseen or hidden liabilities or other unanticipated events or circumstances;
·
the diversion of resources from our existing business;
·
the inability to generate sufficient revenue to offset the costs and expenses of acquisitions, which may result in the impairment
of assets acquired through acquisitions; and
·
the potential loss of, or harm to, relationships with our employees and customers as a result of the integration of new businesses.
Our operating results may fluctuate as a result
of factors beyond our control.
Our operating results
may fluctuate significantly in the future as a result of a variety of factors, many of which are beyond our control. These factors
include, but are not limited to:
·
capital expenditures for the development of our technologies;
·
marketing and promotional activities and other costs;
·
changes in operating expenses;
·
increased competition in our market; and
·
other general economic and seasonal factors.
16
Our business may be materially adversely impacted
by U.S. and global market and economic conditions, particularly adverse conditions in the insurance industry.
For the foreseeable
future, we expect to continue to derive most of our revenue from products and services we provide to the insurance industry. Given
the concentration of our business activities in the insurance industry, we may be particularly exposed to economic downturns in
this industry. U.S. and global market and economic conditions have been, and continue to be, disrupted and volatile. A poor economic
environment could result in significant decreases in demand for our products or could present difficulties in collecting accounts
receivables from our customers due to their deteriorating financial condition. Our existing customers may be acquired by or merged
into other institutions that use our competitors or decide to terminate their relationships with us for other reasons. As a result,
our sales could decline if an existing customer is merged with or acquired by another company or closed. All of these conditions
could adversely affect our operating results and financial position.
We may not be able to secure additional financing
to support capital requirements when needed.
We may need to raise
additional funds in the future in order to fund more aggressive promotion or more rapid market penetration, to develop new or enhanced
products, to respond to competitive pressures, to make acquisitions or for other purposes. Any required additional financing may
not be available on terms favorable to us, or at all, particularly in light of current conditions in the credit markets. If adequate
funds are not available on acceptable terms, we may be unable to meet our strategic business objectives or compete effectively,
and the future growth of our business could be adversely impacted. If additional funds are raised by our issuing equity securities,
stockholders may experience dilution of their ownership and economic interests, and the newly issued securities may have rights
superior to those of our common stock. If additional funds are raised by our issuing debt, we may be subject to significant market
risks related to interest rates, and operating risks regarding limitations on our activities.
The markets for our products are highly competitive
and are likely to become more competitive, and our competitors may be able to respond more quickly to new or emerging technology
and changes in customer requirements.
Our insurance software
business experiences competition from certain large hardware suppliers that sell systems and system components to independent agencies
and from small independent developers and suppliers of software, who sometimes work in concert with hardware vendors to supply
systems to independent agencies. Pricing strategies and new product introductions and other pressures from existing or emerging
competitors could result in a loss of customers or a rate of increase or decrease in prices for our services different than past
experience.
Some of our current
competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial
and marketing resources than we do.
If we infringe on the proprietary rights of others,
our business operations may be disrupted, and any related litigation could be time consuming and costly.
Third parties may claim
that we have violated their intellectual property rights. Any of these claims, with or without merit, could subject us to costly
litigation and divert the attention of key personnel. To the extent that we violate a patent or other intellectual property right
of a third party, we may be prevented from operating our business as planned, and we may be required to pay damages, to obtain
a license, if available, to use the right or to use a non-infringing method, if possible, to accomplish our objectives. The cost
of such activity could have a material adverse effect on our business.
17
If a third party infringes on our
proprietary rights, our business operations may be disrupted, and any related litigation could be time consuming and costly.
We rely on a combination of trademark, copyright
and trade secret laws in the United States and other jurisdictions as well as confidentiality procedures and contractual provisions
to protect our proprietary technology and our brand.
We may be unable to compete successfully against
new and existing competitors.
We operate in a highly
competitive market with few barriers to entry. We expect that competition will continue to intensify. Some of our competitors are
more established than we are, and have significantly greater financial, technical, marketing and other resources than we do. In
addition, many of our current and potential competitors can devote substantially greater resources than we can to promotion, website
development and systems development. Many of our competitors have greater name recognition and a larger customer base than we do.
These competitors may be able to respond more quickly to new or changing opportunities and customer requirements.
Technology and customer requirements evolve rapidly
in our industry, and if we do not continue to develop new products and enhance our existing products in response to these changes,
our business could be harmed.
Ongoing enhancements
to our products will be required to enable us to maintain our competitive position. We may not be successful in developing and
marketing enhancements to our products on a timely basis, and any enhancements we develop may not adequately address the changing
needs of the marketplace. Overlaying the risks associated with our existing products and enhancements are ongoing technological
developments and rapid changes in customer requirements. Our future success will depend upon our ability to develop and introduce
in a timely manner new products or upgrades to our existing products that take advantage of technological advances and respond
to new customer requirements. The development of new products is increasingly complex and uncertain, which increases the risk of
delays. We may not be successful in developing new or updated products incorporating new technology on a timely basis, and any
new products may not adequately address the changing needs of the marketplace. Failure to develop new products and product enhancements
that meet market needs in a timely manner could have a material adverse effect on our business, financial condition and operating
results.
Risks Relating to our Common Stock
Sales of substantial amounts of our common stock
in the public market could depress the market price of our common stock.
Our common stock currently
is quoted on the OTCBB, which is a limited and illiquid market. If our stockholders sell substantial amounts of our common stock
in the public market, including the shares being registered under this registration statement and shares issuable upon the exercise
of outstanding warrants and options, or the market perceives that such sales may occur, the market price of our common stock could
fall and we may be unable to sell our common stock in the future.
Our common stock may experience extreme price and
volume fluctuations, which could lead to costly litigation for us and make an investment in us less appealing.
The market price of
our common stock may fluctuate substantially due to a variety of factors, including:
·
our business strategy and plans;
·
changing factors related to doing business in various jurisdictions within the United States;
·
new regulatory pronouncements and changes in regulatory guidelines and timing of regulatory approvals;
·
general and industry-specific economic conditions;
18
·
additions to or departures of our key personnel;
·
variations in our quarterly financial and operating results;
·
changes in market valuations of other companies that operate in our business segments or in our industry;
·
lack of adequate trading liquidity;
·
announcements about our business partners;
·
changes in accounting principles; and
·
general market conditions.
The market prices of
the securities of early-stage companies, particularly companies like ours without consistent product revenues and earnings, have
been highly volatile and are likely to remain highly volatile in the future. This volatility has often been unrelated to the operating
performance of particular companies. In the past, companies that experience volatility in the market price of their securities
have often faced securities class action litigation. Whether or not meritorious, litigation brought against us could result in
substantial costs, divert our management's attention and resources and harm our financial condition and results of operations.
Our directors, executive officers and entities affiliated
with them beneficially own a substantial number of shares of our common stock, which gives them significant control over certain
major decisions.
As of June 15, 2017,
our executive officers and directors and entities affiliated with them beneficially owned, in the aggregate, approximately 98.8%
of our outstanding shares of common stock, 98.7% of our outstanding shares of Series A Convertible Preferred Stock, 55.3% of our
outstanding shares of Series B Convertible Preferred Stock and 93.5% of our outstanding shares of Series C Convertible Preferred
Stock based on a total of 41,543,655 shares of common stock, 1,276,750 shares of Series A Convertible Preferred Stock, 5,307,212
shares of Series B Convertible Preferred Stock and 1,150,000 shares of Series C Convertible Preferred Stock outstanding. These
executive officers, directors and their affiliates may have different interests than you. For example, they could act to delay
or prevent a change of control of us, even if such a change of control would benefit our other stockholders, could prevent or frustrate
attempts to replace or remove current management or could pursue strategies that are different from the wishes of other investors.
This significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors'
perception that conflicts of interest may exist or arise.
Transactions in which a privately-held company merges
into a largely inactive company with publicly traded stock are generally closely scrutinized by the Commission and we may encounter
difficulties or delays in obtaining future regulatory approvals.
Historically, the Commission
and Nasdaq and securities exchanges have disfavored transactions in which a privately-held company merges into a largely inactive
company with publicly traded stock, and there is a significant risk that we may encounter difficulties in obtaining the regulatory
approvals necessary to conduct future financing or acquisition transactions, or to eventually achieve our common stock being quoted
on Nasdaq or listed on a securities exchange. Effective August 22, 2005, the Commission adopted rules dealing with private company
mergers into dormant or inactive public companies. As a result, it is likely that we will be scrutinized carefully by the Commission
and possibly by the Financial Industry Regulatory Authority ("FINRA") or Nasdaq or a national securities exchange,
which could result in difficulties or delays in achieving Commission clearance of any future registration statements or other Commission
filings that we may pursue, in attracting FINRA-member broker-dealers to serve as market-makers in our stock, or in achieving admission
to Nasdaq or a national securities exchange. As a result, our financial condition and the value and liquidity of our shares may
be negatively impacted.
19
As a stock quoted on the OTCBB, our common stock,
which is deemed to be "penny stock," currently has limited liquidity.
Holders of shares of
our common stock, which are quoted on the OTCBB, may find that the liquidity of our common stock is impaired as compared with the
liquidity of securities listed on Nasdaq or one of the national or regional exchanges in the United States. This impairment of
liquidity may result from reduced coverage of us by security analysts and news media and lower prices for our common stock than
may otherwise be attained. In addition, our common stock is deemed to be "penny stock," as that term is defined in
rules under the Exchange Act. Penny stocks generally are equity securities that are not registered on certain national securities
exchanges or quoted by Nasdaq and have a price per share of less than $5.00. Penny stock may be difficult for investors to resell.
Federal rules and regulations impose additional sales practice requirements on broker-dealers who sell the stock to persons other
than established customers and accredited investors. For transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of these securities and obtain the purchaser's written consent to the transaction
prior to the sale. Prior to the sale, broker-dealers must also deliver to the potential purchaser a disclosure schedule prescribed
by the Commission, describing the penny stock market and disclose the commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally, broker-dealers must deliver to penny stock investors monthly
statements disclosing recent price information for penny stocks held in the account and information on the limited market in penny
stocks. These additional requirements restrict the ability of broker-dealers to sell our common stock and make it more difficult
for investors to dispose of our common stock in the secondary market and may also adversely affect the price of our common stock.
20
THE RIGHTS OFFERING
The Subscription Rights
We are distributing,
at no charge to the holders of our capital stock, non-transferable subscription rights to subscribe for units, which we refer to
throughout this prospectus as Units, consisting of 25 shares of our Series C Convertible Preferred Stock. Our stockholders will
receive one subscription right for every 9,651 shares of our common stock, 483 shares of Series A Convertible Preferred Stock,
483 shares of Series B Convertible Preferred Stock, and 483 shares of Series C Convertible Preferred Stock held of record as of
5:00 p.m., New York City time, on [_______], 201[__], the record date. Pursuant to the terms of this offering, the rights may only
be exercised for a maximum of 20,000 Units, or approximately $1,000,000 of gross subscription proceeds.
Each subscription right
entitles the holder to a basic subscription right and an over-subscription privilege.
Basic Subscription
Right
. With your basic subscription right, you may purchase one Unit, consisting of 25 shares of our Series C Convertible
Preferred Stock, subject to delivery of the required documents and payment of the subscription price of $50.00 per Unit, prior
to the expiration of the rights offering. You may exercise all or a portion of your basic subscription right, or you may choose
not to exercise any of your subscription rights. If you do not exercise your basic subscription rights in full, you will not be
entitled to purchase any shares under your over-subscription privilege. There is no minimum number of Units you must purchase,
but you may not purchase fractional Units. When determining the number of subscription rights you will receive, divide the number
of shares of our common stock you own by 9,651, the number of shares of Series A Convertible Preferred Stock you own by 483, the
number of shares of Series B Preferred Stock you own by 483, and the number of shares of Series C Preferred Stock you own by 483,
and round down the sum of those amounts to the next whole number. For example, if you own 100,000 shares of our common stock, 10,000
shares of our Series A Convertible Preferred Stock and 10,000 shares of our Series B Convertible Preferred Stock, you will receive
51 subscription rights (100,000 shares of common stock divided by 9,651 = 10.36, 10,000 shares of Series A Convertible Preferred
Stock divided by 483 = 20.70, 10,000 shares of Series B Convertible Preferred Stock divided by 483 = 20.70, which sum = 51.76,
rounded down to 51 subscription rights, the next whole number), which will entitle you to subscribe for up to 30 Units under your
basic subscription privilege.
Any excess subscription
payments received by us will be returned, without interest, as soon as practicable following the expiration of the rights offering.
We will deliver certificates
representing shares of our Series C Convertible Preferred Stock or credit your account at your record holder with shares of our
Series C Convertible Preferred Stock that you purchased with the basic subscription rights as soon as practicable after the rights
offering has expired.
Over-Subscription
Privilege
. If you purchase all of the Units available to you pursuant to your basic subscription right, you may also choose
to purchase a portion of any Units that are not purchased by other stockholders through the exercise of their basic subscription
rights. If sufficient Units are available, we will seek to honor the over-subscription requests in full. If, however, over-subscription
requests exceed the number of Units available, we will allocate the available Units pro rata among the stockholders exercising
the over-subscription privilege in proportion to the number of shares of capital stock owned by such stockholder on the record
date, relative to the number of shares owned on the record date by all stockholders exercising the over-subscription privilege.
If this pro rata allocation results in any stockholder receiving a greater number of Units than the stockholder subscribed for
pursuant to the exercise of the over-subscription privilege, then such stockholder will be allocated only that number of Units
for which the stockholder oversubscribed, and the remaining Units will be allocated among all other stockholders exercising the
over-subscription privilege on the same pro rata basis described above. The proration process will be repeated until all Units
have been allocated.
In order to properly
exercise your over-subscription privilege, you must deliver the subscription payment related to your over-subscription privilege
prior to the expiration of the rights offering. Because we will not know the total number of unsubscribed Units prior to the expiration
of the rights offering, if you wish to maximize the number of Units you purchase pursuant to your over-subscription privilege,
you will need to deliver payment in an amount equal to the aggregate subscription price for the maximum number of Units that may
be available to you (i.e., for the maximum number of Units available to you, assuming you exercise all of your basic subscription
right and are allotted the full amount of your over-subscription without reduction).
21
We can provide no assurances
that you will actually be entitled to purchase the number of Units issuable upon the exercise of your over-subscription right in
full at the expiration of the rights offering. We will not be able to satisfy any orders for Units pursuant to the over-subscription
privilege if all of our stockholders exercise their basic subscription rights in full, and we will only honor an over-subscription
privilege to the extent sufficient Units are available following the exercise of subscription rights pursuant to the basic subscription
rights.
To the extent the aggregate
subscription price of the actual number of unsubscribed Units available to you pursuant to the over-subscription privilege is less
than the amount you actually paid in connection with the exercise of the over-subscription privilege, you will be allocated only
the number of unsubscribed Units available to you, and any excess subscription payments will be returned to you, without interest
or penalty, as soon as practicable.
To the extent the amount
you actually paid in connection with the exercise of the over-subscription privilege is less than the aggregate subscription price
of the maximum number of unsubscribed Units available to you pursuant to the over-subscription privilege, you will be allocated
the number of unsubscribed Units for which you actually paid in connection with the over-subscription privilege and subject to
the elimination of any fractional Units.
Any excess subscription
payments received by us will be returned, without interest or penalty, as soon as practicable.
We will deliver certificates
representing shares of our of Series C Convertible Preferred Stock or credit the account of your record holder with shares of our
of Series C Convertible Preferred Stock that you purchased with the over-subscription privilege as soon as practicable after the
expiration of the rights offering.
Reasons for the Rights Offering
We are engaging in
the rights offering to give all of the holders of our capital stock the opportunity to participate in an equity investment in InsPro
Technologies Corporation on substantially the same economic terms as our last private placement in May 2017 and to raise capital
to improve our overall capital position. Our board of directors has chosen to raise capital through a rights offering to give our
stockholders the best opportunity to limit ownership dilution by participating in the rights offering on a pro-rata basis. In addition,
this rights offering, including the composition and price of the Unit, was designed to give all of the holders of our capital stock
the opportunity to participate in an equity investment in InsPro Technologies Corporation on substantially the same economic terms
as our last private placement in May 2017.
Effect of Rights Offering on Existing Stockholders
The ownership interests
and voting interests of the existing stockholders that do not exercise their basic subscription privileges will be diluted. See
"Questions and Answers Related to the Rights Offering."
Method of Exercising Subscription Rights
The exercise of subscription
rights is irrevocable and may not be cancelled or modified. You may exercise your subscription rights as follows:
Subscription
by Registered Holders
. If you hold an InsPro Technologies Corporation stock certificate, the number of Units you may purchase
pursuant to your basic subscription right is indicated on the enclosed rights certificate. You may exercise your subscription rights
by properly completing and executing the rights certificate and forwarding it, together with your full payment, to us at the address
set forth below under "— Delivery of Subscription Payments," to be received prior to 5:00 p.m., Eastern Time,
on [_______], 201[__].
22
Subscription
by Beneficial Owners
. If you are a beneficial owner of shares of our capital stock that are registered in the name of a
broker, custodian bank or other nominee, you will not receive a rights certificate. Instead, the DTC will issue one subscription
right to the nominee record holder for each 9,651 shares of our common stock, 483 shares of Series A Convertible Preferred Stock,
483 shares of Series B Convertible Preferred Stock, and 483 shares of Series C Convertible Preferred Stock that you own at the
record date. If you are not contacted by your nominee, you should promptly contact your nominee in order to subscribe for Units
in the rights offering.
Payment Method
Payments must be made
in full in U.S. currency by:
·
check or bank draft payable to InsPro Technologies Corporation, drawn upon a U.S. bank; or
·
wire transfer of immediately available funds to an account maintained by InsPro Technologies Corporation for purposes of this
rights offering.
Payment received after
the expiration of the rights offering will not be honored, and we will return your payment to you, without interest, as soon as
practicable. We will be deemed to receive payment upon:
·
clearance of any uncertified check deposited by us into our account designated for the rights offering;
·
receipt by us of any certified check or bank draft, drawn upon a U.S. bank; or
·
receipt of collected funds in our account designated for the rights offering.
If you elect to exercise
your subscription rights, we urge you to consider using a certified or cashier's check, money order or wire transfer of funds
to ensure that we receive your funds prior to the expiration of the rights offering. If you send an uncertified check, payment
will not be deemed to have been received by us until the check has cleared. If you send a certified check or bank draft, drawn
upon a U.S. bank, or wire or transfer funds directly to our account, payment will be deemed to have been received by us immediately
upon receipt of such instruments or wire transfer.
Any personal check
used to pay for Units must clear the appropriate financial institutions prior to 5:00 p.m., Eastern Time, on [_______], 201[__],
which is the expiration of the rights offering. The clearinghouse may require five or more business days. Accordingly, holders
that wish to pay the subscription price by means of an uncertified personal check are urged to make payment sufficiently in advance
of the expiration of the rights offering to ensure such payment is received and clears by such date.
You should read the
instruction letter accompanying the rights certificate carefully and strictly follow it. We will not consider your subscription
received until we have received delivery of a properly completed and duly executed rights certificate and payment of the full subscription
amount. The risk of delivery of all documents and payments is borne by you or your nominee, not by InsPro Technologies Corporation.
The method of delivery
of rights certificates and payment of the subscription amount to us will be at the risk of the holders of subscription rights.
If sent by mail, we recommend that you send those certificates and payments by overnight courier or by registered mail, properly
insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to us and clearance
of payment prior to the expiration of the rights offering.
Unless a rights certificate
provides that the shares of preferred stock are to be delivered to the record holder of such rights or such certificate is submitted
for the account of a bank or a broker, signatures on such rights certificate must be guaranteed by an "eligible guarantor
institution," as such term is defined in Rule 17Ad-15 of the Exchange Act.
23
Medallion Guarantee May Be Required
Your signature on your
rights certificate must be guaranteed by an eligible institution, such as a member firm of a registered national securities exchange
or a member of the Financial Industry Regulatory Authority, Inc., or a commercial bank or trust company having an office or correspondent
in the United States, unless:
·
you provide on the rights certificate that shares are to be delivered to you as record holder of those subscription rights;
or
·
you are an eligible institution.
Missing or Incomplete Subscription Information
If you hold your shares
of capital stock in the name of a custodian bank, broker, dealer or other nominee, the nominee will exercise the subscription rights
on your behalf in accordance with your instructions. Your nominee may establish a deadline that may be before the 5:00 p.m., Eastern
Time [_______], 201[__] expiration date that we have established for the rights offering. If you send a payment that is insufficient
to purchase the number of Units you requested, or if the number of Units you requested is not specified in the forms, the payment
received will be applied to exercise your subscription rights to the fullest extent possible based on the amount of the payment
received, subject to the availability of Units under the over-subscription privilege and the elimination of fractional Units. Any
excess subscription payments received by us will be returned, without interest, as soon as practicable following the expiration
of the rights offering.
Expiration Date and Cancellation Rights
The subscription period,
during which you may exercise your subscription rights, expires at 5:00 p.m., Eastern Time, on [_______], 201[__], which is the
expiration date of the rights offering. If you do not exercise your subscription rights prior to that time, your subscription rights
will expire and will no longer be exercisable. We will not be required to issue shares of our Series C Convertible Preferred Stock
to you if we receive your rights certificate or your subscription payment after that time. We have the option to extend the rights
offering without notice to you, although we do not presently intend to do so. We may extend the expiration of the rights offering
at any time prior to the scheduled expiration of the rights offering. If we elect to extend the expiration of the rights offering,
we will issue a press release announcing such extension no later than 9:00 a.m., Eastern Time, on the next business day after the
most recently announced expiration of the rights offering. We reserve the right to amend or modify the terms of the rights offering.
If you hold your shares
of capital stock in the name of a broker, dealer, custodian bank or other nominee, the nominee will exercise the subscription rights
on your behalf in accordance with your instructions. Please note that the nominee may establish a deadline that may be before the
5:00 p.m., Eastern Time, [_______], 201[__], expiration date that we have established for the rights offering.
We may cancel the rights
offering at any time for any reason prior to the time the rights offering expires. If we cancel the rights offering, we will issue
a press release notifying stockholders of the cancellation and all subscription payments received by us will be returned, without
interest or penalty, as soon as practicable.
Determination of Subscription Price
The $50.00 per Unit
subscription price was determined by our board of directors based on the per share value of the Series C Convertible Preferred
Stock purchased by investors in our last private placement in May 2017. In May 2017 we sold shares of our Series C Convertible
Preferred Stock (each share of which is convertible, at the sole option of the holder, into 20 shares of our common stock) at a
per share price of $2.00. We sold a total of 150,000 shares of Series C Convertible Preferred Stock in that offering for an aggregate
purchase price of $300,000.
24
In determining the
subscription price, our board of directors considered the overall economic value offered to investors in InsPro Technologies Corporation
in the last private placement. If an investor had invested in the last private placement, for every $50.00 invested, such investor
would have received 25 shares of Series C Convertible Preferred Stock. As a result, the Units offered in this rights offering consist
of 25 shares of our Series C Convertible Preferred Stock.
We did not seek or
obtain an opinion of financial advisors in establishing the subscription price. The subscription price will not necessarily be
related to our book value, tangible book value, net worth or any other established criteria of fair value.
There is currently
no market for our shares of Series C Convertible Preferred Stock and, unless you choose to convert any shares of preferred stock
you purchase in this offering into shares of common stock, you will not be able to re-sell such shares. We urge you to obtain a
current quote for our common stock and perform an independent assessment of our Series C Convertible Preferred Stock before exercising
your subscription rights and to make your own assessment of our business and financial condition, our prospects for the future,
and the terms of this rights offering.
Terms of Series C Convertible Preferred Stock
Each share of Series
C Convertible Preferred Stock offered in this rights offering is convertible, at the sole discretion of each holder of preferred
stock, into 20 shares of common stock, subject to certain adjustments. The holders of shares of our Series C Convertible Preferred
Stock are entitled to vote, with respect to any question upon which holders of our common stock are entitled to vote, together
with the holders of common stock as one class on an as-converted basis. At such time, if at all, as our board of directors declares
a dividend or distribution on the common stock, the holders of preferred stock shall be entitled to receive, for each share of
Series C Convertible Preferred Stock held by them, a dividend or distribution in an amount equal to what such holder of preferred
stock would receive if their shares were converted into shares of common stock. We do not currently intend to pay any cash dividends
to the holders of shares of our common stock.
In addition, upon the
liquidation, sale or merger of InsPro Technologies Corporation, each share of our Series C Convertible Preferred Stock is entitled
to receive an amount equal to the greater of (i) a liquidation preference equal to two and a half (2.5) times the preferred stock
original issue price, subject to certain customary adjustments, or (ii) the amount such preferred stock would receive if it participated
pari passu with the holders of our common stock on an as-converted basis. For so long as any shares of Series C Convertible Preferred
Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series C Convertible Preferred
Stock is required to approve (i) any amendment to our certificate of incorporation or bylaws that would adversely alter the voting
powers, preferences or special rights of the Series C Convertible Preferred Stock or (ii) any amendment to our certificate of incorporation
to create any shares of capital stock that rank senior to the Series C Convertible Preferred Stock. In addition to the voting rights
described above, for so long as 1,000,000 shares of Series C Convertible Preferred Stock are outstanding, the vote or consent of
the holders of at least two-thirds of the preferred stock is required to effect or validate any merger, sale of substantially all
of the assets of InsPro Technologies Corporation or other fundamental transaction, unless such transaction, when consummated, will
provide the holders of Series C Convertible Preferred Stock with an amount per share equal to two and a half (2.5) times the preferred
stock original issue price plus any declared but unpaid dividends.
Withdrawal, Amendment and Termination
We reserve the right
to withdraw the rights offering at any time for any reason. We also may amend or terminate the rights offering at any time before
its completion if our board of directors decides to do so in its sole discretion. If we terminate the rights offering, all affected
subscription rights will expire without value, and all excess subscription payments received by us will be returned, without interest,
as soon as practicable.
Delivery of Subscription Payments
The address to which
rights certificates and payments, other than wire transfers, should be mailed or delivered is provided below. If sent by mail,
we recommend that you send documents and payments by overnight courier or by registered mail, properly insured, with return receipt
requested, and that a sufficient number of days be allowed to ensure delivery.
25
InsPro Technologies Corporation
1510 Chester Pike
Suite 400
Eddystone, PA 19022
Attn: Francis L. Gillan III
If you deliver subscription
documents or rights certificates in a manner different than that described in this prospectus, we may not honor the exercise of
your subscription rights.
If you have any questions
regarding completing a rights certificate, submitting payment in the rights offering, or questions or requests regarding InsPro
Technologies Corporation or the rights offering in general, please call Francis L. Gillan III, at (484) 654-2200. You may also
contact us with questions by electronic mail at
rightsoffering@inspro.com
.
Fees and Expenses
We will pay the fees
and expenses of collecting the subscription payments and distributing the share certificates associated with the Units. You are
responsible for paying any other commissions, fees, taxes or other expenses that you may incur in connection with the exercise
of your subscription rights.
No Fractional Shares
All Units will be sold
at a purchase price of $50.00 per Unit. We will not issue fractional Units. Fractional Units resulting from the exercise of the
basic subscription rights and the over-subscription privileges will be eliminated by rounding down to the nearest whole Unit. Any
excess subscription payments received by us will be returned, without interest, as soon as practicable.
Notice to Nominees
If you are a broker,
custodian bank or other nominee holder that holds shares of our capital stock for the account of others on the record date, you
should notify the beneficial owners of the shares for whom you are the nominee of the rights offering as soon as possible to learn
their intentions with respect to exercising their subscription rights. You should obtain instructions from the beneficial owners
of our capital stock. If a registered holder of our capital stock so instructs, you should complete the rights certificate and
submit it to us with the proper subscription payment by the expiration date. You may exercise the number of subscription rights
to which all beneficial owners in the aggregate otherwise would have been entitled had they been direct holders of our capital
stock on the record date, provided that you, as a nominee record holder, make a proper showing to us by submitting the form entitled
"Nominee Holder Certification," which is provided with your rights offering materials. If you did not receive this
form, you should contact us to request a copy.
Beneficial Owners
If you are a beneficial
owner of shares of our capital stock and will receive your subscription rights through a broker, custodian bank or other nominee,
we will ask your nominee to notify you of the rights offering. If you wish to exercise your subscription rights, you will need
to have your nominee act for you, as described above. To indicate your decision with respect to your subscription rights, you should
follow the instructions of your nominee. If you wish instead to obtain a separate rights certificate, you should contact your nominee
as soon as possible and request that a rights certificate be issued to you. You should contact your nominee if you do not receive
notice of the rights offering, but you believe you are entitled to participate in the rights offering. We are not responsible if
you do not receive the notice by mail or otherwise from your nominee or if you receive notice without sufficient time to respond
to your nominee by the deadline established by your nominee, which may be before the 5:00 p.m., Eastern Time, [_______], 2017,
expiration date.
26
Non-Transferability of Subscription Rights
The subscription rights
granted to you are non-transferable and, therefore, you may not sell, transfer or assign your subscription rights to anyone. We
will not be listing shares of our Series C Convertible Preferred Stock or the subscription rights for trading on OTCBB or any other
stock exchange or market.
Validity of Subscriptions
We will resolve all
questions regarding the validity and form of the exercise of your subscription rights, including time of receipt and eligibility
to participate in the rights offering. Our determination will be final and binding. Once made, subscriptions and directions are
irrevocable, and we will not accept any alternative, conditional or contingent subscriptions or directions. We reserve the absolute
right to reject any subscriptions or directions not properly submitted or the acceptance of which would be unlawful. You must resolve
any irregularities in connection with your subscriptions before the subscription period expires, unless waived by us in our sole
discretion. We shall not be under any duty to notify you or your representative of defects in your subscriptions. A subscription
will be considered accepted, subject to our right to withdraw or terminate the rights offering, only when a properly completed
and duly executed rights certificate and any other required documents and the full subscription payment have been received by us.
Our interpretations of the terms and conditions of the rights offering will be final and binding.
Escrow Arrangements; Return of Funds
We will hold funds
received in payment for Units in a segregated account pending completion of the rights offering. We will hold this money in escrow
until the rights offering is completed or is withdrawn and cancelled. If the rights offering is cancelled for any reason, all subscription
payments received by us will be returned, without interest or penalty, as soon as practicable.
Stockholder Rights
You will have no rights
as a holder of the shares of our Series C Convertible Preferred Stock you purchase in the rights offering until certificates representing
the shares of our Series C Convertible Preferred Stock are issued to you.
No Revocation or Change
Once you submit the
rights certificate or have instructed your nominee of your subscription request, you are not allowed to revoke or change the exercise
or request a refund of monies paid. All exercises of subscription rights are irrevocable, even if you learn information about us
that you consider to be unfavorable. You should not exercise your subscription rights unless you are certain that you wish to purchase
Units at the subscription price.
Material U.S. Federal Income Tax Treatment of Rights
Distribution
It is the opinion of
our counsel, Morgan, Lewis & Bockius LLP, that you should not recognize income or loss upon receipt or exercise of these subscription
rights to purchase shares of our Series C Convertible Preferred Stock for the reasons described below in "Material U.S. Federal
Income Tax Considerations."
No Recommendation to Rights Holders
Our board of directors
is making no recommendation regarding your exercise of the subscription rights. Stockholders who exercise subscription rights risk
investment loss on new money invested. You are urged to make your decision based on your own assessment of our business and financial
condition, our prospects for the future and the terms of this rights offering. Please see "Risk Factors" for a discussion
of some of the risks involved in investing in our common and preferred stock.
27
Shares of Our Series C Convertible Preferred Stock
Outstanding After the Rights Offering
As of June 15, 2017,
1,150,000 shares of our Series C Convertible Preferred Stock were issued and outstanding. Assuming no other transactions by us
involving our Series C Convertible Preferred Stock, if the rights offering is fully subscribed through the exercise of the subscription
rights, then an additional 500,000 shares of our Series C Convertible Preferred Stock will be issued and outstanding after the
closing of the rights offering, for a total of 1,650,000 shares of Series C Convertible Preferred Stock outstanding.
28
USE OF PROCEEDS
Although the actual
amount will depend on participation in the rights offering, we expect that the net proceeds from the rights offering will be approximately
$892,384. We intend to use the proceeds of the rights offering for general corporate and working capital purposes, including for
the purpose of funding current operations, discontinued operations and future commitments. Obtaining funding through the rights
offering will allow us additional timing flexibility before we need to raise funds through additional financings or other methods.
To the extent that
we raise less than $892,384 in net proceeds in the rights offering, we anticipate reducing the amounts of proceeds to be allocated
to the foregoing uses on a pro rata basis.
DILUTION
Purchasers of Units
in the rights offering will experience an immediate dilution of the net tangible book value per share of our common stock. Our
net tangible book value as of March 31, 2017 was approximately $(4,350,272), or $(0.0251) per share of our common stock (based
upon 41,354,655 shares of our common stock outstanding, as adjusted for 25,535,000 shares of common stock underlying the 1,276,750
shares of our Series A Convertible Preferred Stock and the 106,144,240 shares of common stock underlying the 5,307,212 shares of
our Series B Convertible Preferred Stock outstanding). Net tangible book value per share is equal to our total net tangible book
value, which is our total tangible assets less our total liabilities, divided by the number of shares of our outstanding common
stock. Dilution per share equals the difference between the amount per share of common stock paid by purchasers of Units in the
rights offering and the net tangible book value per share of our common stock immediately after the rights offering.
Based on the aggregate
offering of a maximum of 20,000 Units and after deducting estimated offering expenses payable by us of approximately $107,616,
and the application of the estimated $892,384 of net proceeds from the rights offering, our pro forma net tangible book value as
of March 31, 2017 would have been approximately $(3,457,888) or $(0.0189) per share. This represents an immediate increase in pro
forma net tangible book value to existing stockholders of $0.0062 per share and an immediate dilution to purchasers in the rights
offering of $0.0938 per share.
The following table
illustrates this per-share dilution (assuming a fully subscribed for rights offering of 20,000 Units at the subscription price
of $50.00 per Unit but excluding any issuance of shares of common stock to holders of warrants):
Price per unit
$
50.00
Net tangible book value per common share prior to the rights offering
$
(0.0251
)
Increase per common share attributable to the rights offering
$
0.0062
Pro forma net tangible book value per common share after the rights offering
$
(0.0189
)
Dilution in net tangible book value per common share to purchasers
$
0.0938
29
CAPITALIZATION
The following table
sets forth our capitalization, cash and cash equivalents:
·
on an actual basis as of March 31, 2017; and
·
on a pro forma as adjusted basis to give effect to the sale of maximum of 20,000 Units in this rights offering (but excluding
any issuance of shares of common stock to holders of warrants), assuming a subscription price of $50.00 per Unit, and our receipt
of the net proceeds of $892,384 from that sale after deducting estimated offering expenses payable by us.
This table should be
read in conjunction with our "Management's Discussion and Analysis or Plan of Operation" and our consolidated
financial statements and the related notes included elsewhere in this prospectus.
March 31, 2017
(Unaudited)
Actual
Pro Forma
As Adjusted (1)
Cash
$
1,985,940
$
2,878,324
Total assets
$
6,539,410
$
7,431,794
Total liabilities
$
10,889,682
$
10,889,682
Net tangible book value
$
(4,350,272
)
$
(3,457,888
)
Total shareholders' equity
$
(4,350,272
)
$
(3,457,888
)
Total liabilities and shareholders' equity
$
6,539,410
$
7,431,794
(1) Assumes the rights offering is fully
subscribed for, of which no assurances can be given.
DESCRIPTION OF SECURITIES
Our authorized capital
stock consists of 500,000,000 shares of common stock, par value $0.001 per share, and 20,000,000 shares of preferred stock, par
value $0.001 per share, 3,437,500 of which are designated as Series A Convertible Preferred Stock, 11,000,000 of which are designated
as Series B Convertible Preferred Stock, and 4,000,000 of which are designated as Series C Convertible Preferred Stock. As of March
31, 2017, we had 1,276,750 shares of Series A Convertible Preferred Stock currently issued and outstanding, 380,000 shares of Series
A Convertible Preferred Stock reserved for issuance underlying currently issued and outstanding warrants. As of March 31, 2017,
we had 5,307,212 shares of Series B Convertible Preferred Stock currently issued and outstanding and 3,250,000 shares of Series
B Convertible Preferred Stock reserved for issuance under currently issued and outstanding warrants. As of March 31, 2017, none
of our shares of preferred stock were designated as Series C Convertible Preferred Stock. As of March 31, 2017, we had 41,543,655
shares of common stock issued and outstanding, 25,098,330 shares of common stock reserved for issuance underlying currently issued
and outstanding warrants, 3,400,000 shares of common stock reserved for issuance underlying currently issued and outstanding options,
and 25,596,980 shares of common stock reserved for issuance under certain of our existing equity compensation plans.
Common Stock
Holders of shares of
our common shares are entitled to one vote per share on all matters to be voted upon by the stockholders and are not entitled to
cumulative voting for the election of directors. Holders of common stock are entitled to receive ratably such dividends, if any,
as may be declared from time to time by our board of directors out of funds legally available therefore, subject to the rights
of the preferred stockholders. We do not currently intend to pay any cash dividends to the holders of common stock. In the event
that we liquidate, dissolve or wind up the Company, the holders of common stock are entitled to share ratably in all assets remaining
after payment of liabilities and the preferences of preferred stockholders. Our common stock has no preemptive, conversion or other
subscription rights. There are no redemption or sinking fund provisions applicable to common shares.
30
Series A Convertible Preferred Stock
Each share of Series
A Convertible Preferred Stock is convertible, at the sole discretion of each holder of Series A Convertible Preferred Stock, into
20 shares of common stock, subject to certain adjustments. The holders of shares of our Series A Convertible Preferred Stock are
entitled to vote, with respect to any question upon which holders of our common stock are entitled to vote, together with the holders
of common stock as one class on an as-converted basis. At such time, if any, as our board of directors declares a dividend or distribution
on the common stock, the holders of Series A Convertible Preferred Stock shall be entitled to receive, for each share of Series
A Convertible Preferred Stock held by them, a dividend or distribution in an amount equal to what such holder of Series A Convertible
Preferred Stock would receive if their shares were converted into shares of common stock. We do not currently intend to pay any
cash dividends to the holders of shares of our common stock.
In addition, upon the
liquidation, sale or merger of InsPro Technologies Corporation, each share of our Series A Convertible Preferred Stock is entitled
to receive an amount equal to the greater of (i) a liquidation preference equal to two and a half (2.5) times the Series A Convertible
Preferred Stock original issue price, subject to certain customary adjustments, or (ii) the amount such preferred stock would receive
if it participated pari passu with the holders of our common stock on an as-converted basis. For so long as any shares of Series
A Convertible Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series
A Convertible Preferred Stock is required to approve (i) any amendment to our certificate of incorporation or bylaws that would
adversely alter the voting powers, preferences or special rights of the Series A Convertible Preferred Stock or (ii) any amendment
to our certificate of incorporation to create any shares of capital stock that rank senior to the Series A Convertible Preferred
Stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series A Convertible Preferred Stock
are outstanding, the vote or consent of the holders of at least two-thirds of the Series A Convertible Preferred Stock is required
to effect or validate any merger, sale of substantially all of the assets of InsPro Technologies Corporation or other fundamental
transaction, unless such transaction, when consummated, will provide the holders of Series A Convertible Preferred Stock with an
amount per share equal to two and a half (2.5) times the Series A Convertible Preferred Stock original issue price.
In the event of (i)
the sale of all or substantially all of the assets of InsPro Technologies Corporation, (ii) any tender offer or exchange pursuant
to which the holders of a majority of common stock exchange such shares for other securities, cash or property or (iii) any reclassification
of the common stock pursuant to which the shares of common stock are effectively converted or exchanges for other securities, cash
or property, if we do not effect a dissolution within 90 days after such event, the holder of a majority of the shares of Series
A Convertible Preferred Stock may require, within 120 days of such event, to redeem all outstanding shares of Series A Convertible
Preferred Stock at a price per share equal to two and a half (2.5) times the Series A Convertible Preferred Stock original issue
price, subject to certain customary adjustments.
Except as noted above
our shares of Series A Convertible Preferred Stock have no other conversion, preemptive or other subscription rights. There are
no sinking fund provisions applicable to preferred stock.
Series B Convertible Preferred Stock
Each share of Series
B Convertible Preferred Stock is convertible, at the sole discretion of each holder of Series B Convertible Preferred Stock, into
20 shares of common stock, subject to certain adjustments. The holders of shares of our Series B Convertible Preferred Stock are
entitled to vote, with respect to any question upon which holders of our common stock are entitled to vote, together with the holders
of common stock as one class on an as-converted basis. At such time, if any, as our board of directors declares a dividend or distribution
on the common stock, the holders of Series B Convertible Preferred Stock shall be entitled to receive, for each share of Series
B Convertible Preferred Stock held by them, a dividend or distribution in an amount equal to what such holder of Series B Convertible
Preferred Stock would receive if their shares were converted into shares of common stock. We do not currently intend to pay any
cash dividends to the holders of shares of our common stock.
31
In addition, upon the
liquidation, sale or merger of InsPro Technologies Corporation, each share of our Series B Convertible Preferred Stock is entitled
to receive an amount equal to the greater of (i) a liquidation preference equal to the Series B Convertible Preferred Stock original
issue price, subject to certain customary adjustments, or (ii) the amount such Series B Convertible Preferred Stock would receive
if it participated pari passu with the holders of our common stock on an as-converted basis. For so long as any shares of Series
B Convertible Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series
B Convertible Preferred Stock is required to approve (i) any amendment to our certificate of incorporation or bylaws that would
adversely alter the voting powers, preferences or special rights of the Series B Convertible Preferred Stock or (ii) any amendment
to our certificate of incorporation to create any shares of capital stock that rank senior to the Series B Convertible Preferred
Stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series B Convertible Preferred Stock
are outstanding, the vote or consent of the holders of at least two-thirds of the Series B Convertible Preferred Stock is required
to effect or validate any merger, sale of substantially all of the assets of InsPro Technologies Corporation or other fundamental
transaction, unless such transaction, when consummated, will provide the holders of Series B Convertible Preferred Stock with an
amount per share equal to the Series B Convertible Preferred Stock original issue price, plus any declared but unpaid dividends.
Except as noted above
our shares of Series B Convertible Preferred Stock have no other conversion, preemptive or other subscription rights. There are
no sinking fund provisions applicable to Series B Convertible Preferred Stock.
Series C Convertible Preferred Stock
Each share of Series
C Convertible Preferred Stock is convertible, at the sole discretion of each holder of Series C Convertible Preferred Stock, into
20 shares of common stock, subject to certain adjustments. The holders of shares of our Series C Convertible Preferred Stock are
entitled to vote, with respect to any question upon which holders of our common stock are entitled to vote, together with the holders
of common stock as one class on an as-converted basis. At such time, if any, as our board of directors declares a dividend or distribution
on the common stock, the holders of Series C Convertible Preferred Stock shall be entitled to receive, for each share of Series
C Convertible Preferred Stock held by them, a dividend or distribution in an amount equal to what such holder of Series C Convertible
Preferred Stock would receive if their shares were converted into shares of common stock. We do not currently intend to pay any
cash dividends to the holders of shares of our common stock.
In addition, upon the
liquidation, sale or merger of InsPro Technologies Corporation, each share of our Series C Convertible Preferred Stock is entitled
to receive an amount equal to the greater of (i) a liquidation preference equal to two and a half (2.5) times the Series C Convertible
Preferred Stock original issue price, subject to certain customary adjustments, or (ii) the amount such preferred stock would receive
if it participated pari passu with the holders of our common stock on an as-converted basis. For so long as any shares of Series
C Convertible Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series
C Convertible Preferred Stock is required to approve (i) any amendment to our certificate of incorporation or bylaws that would
adversely alter the voting powers, preferences or special rights of the Series C Convertible Preferred Stock or (ii) any amendment
to our certificate of incorporation to create any shares of capital stock that rank senior to the Series C Convertible Preferred
Stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series C Convertible Preferred Stock
are outstanding, the vote or consent of the holders of at least two-thirds of the Series C Convertible Preferred Stock is required
to effect or validate any merger, sale of substantially all of the assets of InsPro Technologies Corporation or other fundamental
transaction, unless such transaction, when consummated, will provide the holders of Series C Convertible Preferred Stock with an
amount per share equal to two and a half (2.5) times the Series C Convertible Preferred Stock original issue price.
In the event of (i)
the sale of all or substantially all of the assets of InsPro Technologies Corporation, (ii) any tender offer or exchange pursuant
to which the holders of a majority of common stock exchange such shares for other securities, cash or property or (iii) any reclassification
of the common stock pursuant to which the shares of common stock are effectively converted or exchanges for other securities, cash
or property, if we do not effect a dissolution within 90 days after such event, the holder of a majority of the shares of Series
C Convertible Preferred Stock may require, within 120 days of such event, to redeem all outstanding shares of Series C Convertible
Preferred Stock at a price per share equal to two and a half (2.5) times the Series C Convertible Preferred Stock original issue
price, subject to certain customary adjustments.
Except as noted above
our shares of Series C Convertible Preferred Stock have no other conversion, preemptive or other subscription rights. There are
no sinking fund provisions applicable to preferred stock.
32
Warrants
As of June 15, 2017,
there were outstanding warrants to purchase up to 25,098,330 shares of our common stock at an exercise price per share of $0.15.
As of June 15, 2017,
there were outstanding warrants to purchase up to 380,000 shares of our Series A Convertible Preferred Stock at an exercise price
per share of $4.00.
As of June 15, 2017,
there were outstanding warrants to purchase up to 3,250,000 shares of our Series B Convertible Preferred Stock at an exercise price
per share of $3.00.
Prior to exercise,
the warrants do not confer upon holders any voting or any other rights as a stockholder.
33
MARKET FOR OUR COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Market Information
Our common stock has
been quoted on the OTCBB since December 6, 2010 under the symbol ITCC.OB and from December 13, 2005 until December 3, 2010 under
the symbol HBDT.OB. Prior to December 13, 2005, there was no active market for our common stock.
The following table
sets forth the high and low bid prices for our common stock for the periods indicated, as reported by the OTCBB. The prices state
inter-dealer quotations, which do not include retail mark-ups, mark-downs or commissions. Such prices do not necessarily represent
actual transactions.
High
Low
2015:
First quarter, ended March 31, 2015
$
0.090
$
0.040
Second quarter, ended June 30, 2015
$
0.075
$
0.030
Third quarter, ended September 30, 2015
$
0.060
$
0.030
Fourth quarter, ended December 31, 2015
$
0.0625
$
0.015
2016:
First quarter, ended March 31, 2016
$
0.045
$
0.031
Second quarter, ended June 30, 2016
$
0.042
$
0.025
Third quarter, ended September 30, 2016
$
0.100
$
0.038
Fourth quarter, ended December 31, 2016
$
0.090
$
0.023
2017:
First quarter, ended March 31, 2017
$
0.0724
$
0.0280
Second quarter, through [________], 2017
$
0.0650
$
0.0400
Holders of Record
Based on information
furnished by our transfer agent, as of June 15, 2017, we had approximately 109 holders of record of our common stock.
Dividends
We have not declared any cash dividends
on our common stock during the last two fiscal years.
34
BUSINESS
Overview
We are a technology
company that provides software applications for use by insurance administrators in the insurance industry. Our business focuses
primarily on our InsPro Enterprise software application.
We acquired Atiam Technologies,
L.P. on October 1, 2007. HBDC Acquisition, LLC, which changed its name to InsPro Technologies, LLC ("InsPro LLC") on
May 14, 2009, develops, sells and supports our InsPro Enterprise software application. InsPro Enterprise is a comprehensive, web-based
insurance administration software application, which was introduced by Atiam Technologies, L.P. in 2004. InsPro Enterprise clients
include insurance carriers and third party administrators. We market InsPro Enterprise as a licensed software application, and
we realize revenue from the sale of the software licenses, application service provider fees, software maintenance fees and consulting
and implementation services.
During 2005 through
October 1, 2007 our operations were primarily that of our former Telesales and Insurint businesses. We effectively sold our former
Telesales business in 2009 and our former Insurint business in 2010. Our former Telesales and Insurint businesses are now classified
as part of our discontinued operations.
InsPro Enterprise
Product Evolution and Development
InsPro LLC and its
predecessor, Systems Consulting Associates, Inc., or SCA, was founded in 1986 by Robert J. Oakes as a programming and consulting
services company. In 1988, SCA entered into a long-term contract with Provident Mutual Insurance Company to develop, maintain,
install, support and enhance IMACS, which was an insurance direct marketing and administration software system. IMACS was the precursor
of InsPro Enterprise. InsPro LLC dedicated four years, from 2001 to 2005, to developing its principal product, InsPro Enterprise,
which is a comprehensive, scalable and modular web-based insurance marketing, claims administration and policy servicing platform.
Product and Services
We offer InsPro Enterprise
on both a licensed and an Application Service Provider ("ASP") basis. InsPro is an insurance administration and marketing
system that supports group and individual business lines, and efficiently processes agent, direct market, worksite and web site
generated business.
During the three months ended March 31,
2017, we earned $5,046,766 in revenue of which 31% was earned from Trustmark Insurance Company, 20% earned from various subsidiaries
of Cap Gemini S.A. During 2016, we earned $21,830,928 in revenue of which 30% was earned from Trustmark Insurance Company, 16%
earned from various subsidiaries of Cap Gemini S.A. and 14% from Cigna Corporate Services, LLC.
InsPro Enterprise incorporates
a modular design, which enables the customer to purchase only the functionality needed, thus minimizing the customer's implementation
cost and time necessary to implement InsPro Enterprise. InsPro Enterprise can be rapidly tailored to the requirements of a wide
range of customers from the largest insurance companies and marketing organizations to the smallest third party administrators,
operating in environments ranging from a single server environment to the mainframe installations. InsPro Enterprise currently
supports a wide range of insurance distribution channels, including the Internet, traditional direct marketing, agent-generated,
individual and group plans, worksite and association-booked business, and supports underwritten as well as guaranteed issue insurance
products including long term care, Medicare supplement, critical illness, long and short term disability, whole and term life,
comprehensive major, hospital indemnity and accidental death and dismemberment.
35
An InsPro Enterprise
software license entitles the purchaser to a perpetual license to a copy of the InsPro Enterprise software installed at a single
client location, which may be used to drive a production and model office instance of the application. The ASP Hosting Service
enables a client to lease InsPro Enterprise, paying only for that capacity required to support their business. ASP hosting clients
access an instance of InsPro Enterprise installed on our servers located at InsPro LLC's offices or at a third party's
site. The ASP Hosting Service can also enable a client to outsource their application management of their perpetually licensed
InsPro Enterprise software to InsPro LLC.
Software maintenance
fees apply to both licensed and ASP clients. Maintenance fees cover periodic updates to the application and the InsPro Enterprise
Help Desk.
Consulting and implementation
services are generally associated with the implementation of an InsPro Enterprise instance for either an ASP or licensed client,
and cover such activity as InsPro Enterprise installation, configuration, modification of InsPro Enterprise functionality, client
insurance plan set-up, client insurance document design and system documentation.
InsPro Enterprise software
agreements with our clients often involve multiple elements. We allocate revenue to each element based on the relative fair value
or the residual method, as applicable using vendor specific objective evidence to determine fair value, which is based on prices
charged when the element is sold separately. Software revenue is recognized when persuasive evidence of an arrangement exists,
the software is delivered in accordance with all terms and conditions of the customer contracts, the fee is fixed or determinable
and collectability is probable. Maintenance revenue, which pertains to post-contract customer support including technical support
and unspecified when-and-if available software upgrades, is recognized ratably over the maintenance agreement term. If fair value
does not exist for any undelivered element, revenue is not recognized until the earlier of (i) delivery of such element or (ii)
when fair value of the undelivered element is established, unless the undelivered element is a service, in which case revenue is
recognized as the service is performed once the service is the only undelivered element.
Sales, Marketing and Operations
InsPro LLC markets
its products and services directly to prospective insurance carriers and third party administrators via trade shows, advertising
in industry publications and direct mail.
InsPro LLC also provides
professional services to its clients, which include InsPro system implementation, legacy system migration to InsPro, InsPro application
management, web development, InsPro help desk and 24x7 hosting service support.
Competition
The market for insurance
policy administration systems and services is very competitive, rapidly evolving, highly fragmented and subject to technological
change. Many of our competitors are more established than we are and have greater name recognition, a larger customer base and
greater financial, technical and marketing resources than InsPro LLC.
InsPro LLC is focused
on the group voluntary (workplace) life and health products, senior health, disability, affinity, long term care and association
segments of the insurance industry. InsPro LLC competes with such concerns as Synnex Corporation (Genelco Software), Computer Sciences
Corporation (FutureFirst), LifePro and Fiserv Inc. (ID3), as well as with such smaller enterprises as Management Data, Inc. To
compete we use best practice technologies and methods incorporated into InsPro Enterprise, which provides customers with a user-friendly,
flexible, modular and cost-effective insurance administrative software system. InsPro Enterprise's modular design, scalability
and ASP hosting service option makes InsPro Enterprise a compelling insurance administrative system for clients ranging from small
third party administrators to the largest insurance carriers.
36
Employees
As of June 15, 2017
we had 62 full time and 1 part time employees for a total of 63 employees. None of our employees are members of any labor union
and we are not a party to any collective bargaining agreement. We believe that the relationship between our management and our
employees is good.
Intellectual Property and Proprietary Rights
We rely on a combination
of trademark, copyright and trade secret laws in the United States and other jurisdictions as well as confidentiality procedures
and contractual provisions to protect our proprietary technology and our brand.
Corporate Information
We were incorporated
under the laws of the state of Nevada on October 21, 2004 as Darwin Resources Corp., or Darwin-NV, an exploration stage company
engaged in mineral exploration. On November 22, 2005, Darwin-NV merged with and into its newly-formed wholly-owned subsidiary,
Darwin Resources Corp., a Delaware corporation, or Darwin-DE, solely for the purpose of changing the company's state of incorporation
from Nevada to Delaware. On November 23, 2005, HBDC II, Inc., a newly-formed wholly-owned subsidiary of Darwin-DE, was merged with
and into Health Benefits Direct Corporation, a privately-held Delaware corporation engaged in direct marketing and distribution
of health and life insurance and related products primarily over the Internet, and the name of the resulting entity was changed
from Health Benefits Direct Corporation to HBDC II, Inc. Following this merger, Darwin-DE changed its name to Health Benefits Direct
Corporation and, as a result, HBDC II, Inc. became our wholly-owned subsidiary. On November 29, 2010, Health Benefits Direct Corporation
changed its name to InsPro Technologies Corporation.
Our principal executive
offices are located at 1510 Chester Pike, Suite 400, Eddystone, Pennsylvania 19022. Our telephone number is (484) 654-2200. The
principal offices of our wholly-owned subsidiary, InsPro LLC, are located at 1510 Chester Pike, Suite 400, Eddystone, PA 19022
and its web site is www.inspro.com.
Investor Information
All periodic and current
reports, registration statements and other material that we are required to file with the Commission, including our annual report
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant
to Section 13(a) of the Exchange Act, may be obtained free of charge by writing to us at InsPro Technologies Corporation, 1510
Chester Pike, Suite 400, Eddystone, Pennsylvania 19022 or e-mailing us at
finance@inspro.com
. Such documents are available
as soon as reasonably practicable after electronic filing of the material with the Commission. Our Internet websites and the information
contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.
The public may also
read and copy any materials we have filed with the Commission at the Commission's Public Reference Room at 100 F Street,
NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission
at 1-800-SEC-0330. The Commission maintains an Internet site, www.sec.gov, which contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the Commission.
Properties
We do not own any real
estate.
We lease approximately
17,567 square feet of space in Eddystone, Pennsylvania. We lease this office space under a lease agreement with BPG Officer VI
Baldwin Tower L.P. The term of this lease commenced on August 1, 2007, and will expire on January 31, 2018. The monthly rent increases
every 12 months, starting at approximately $8,500 and ending at approximately $28,546.
37
Legal Proceedings
We are involved in
various investigations, claims and lawsuits arising in the normal conduct of our business, none of which, in our opinion, will
harm our business. We cannot assure that we will prevail in any litigation. Regardless of the outcome, any litigation may require
us to incur significant litigation expense and may result in significant diversion of our attention.
38
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
Overview
The current operations
of InsPro Technologies Corporation (the "Company", "we", "us" or "our") consist
of the operations of our wholly owned InsPro Technologies, LLC subsidiary ("InsPro LLC").
InsPro Enterprise is
a comprehensive, web-based insurance administration software application. InsPro Enterprise was introduced by Atiam Technologies,
L.P. (now InsPro LLC) in 2004. InsPro Enterprise clients include health insurance carriers and third party administrators. We market
InsPro Enterprise as a licensed software application, and we realize revenue from the sale of the software licenses, application
service provider fees, software maintenance fees and professional services.
Critical Accounting Policies
Financial Reporting
Release No. 60, which was released by the Securities and Exchange Commission (the "Commission"), encourages all companies
to include a discussion of critical accounting policies or methods used in the preparation of financial statements. Our consolidated
financial statements include a summary of the significant accounting policies and methods used in the preparation of the consolidated
financial statements. Management believes the following critical accounting policies affect the significant judgments and estimates
used in the preparation of the consolidated financial statements.
Use of Estimates –
Management's Discussion and Analysis is based upon the Company's consolidated financial statements, which have been
prepared in accordance with United States generally accepted accounting principles ("US GAAP"). The preparation of
financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from those estimates. Significant estimates in 2017 and 2016
include the allowance for doubtful accounts, stock-based compensation, the useful lives and valuation of property and equipment,
and deferred revenue. Actual results may differ from these estimates under different assumptions or conditions.
The Company offers
InsPro Enterprise on a licensed and an application service provider ("ASP") basis. An InsPro Enterprise software license
entitles the purchaser a perpetual license to a copy of the InsPro Enterprise installed at a single client location, which may
be used to drive a production and model office instance of the application. The ASP hosting service enables a client to lease the
InsPro Enterprise, paying only for that capacity required to support their business. ASP clients access an instance of InsPro Enterprise
installed on clients' servers or on the Company's servers located at a third party's site.
Software maintenance
fees apply to both licensed and ASP clients. Maintenance fees cover periodic updates to the application and the InsPro Enterprise
Help Desk.
Professional services
are generally associated with the implementation of InsPro Enterprise instance for either an ASP or licensed client, and cover
such activity as InsPro Enterprise installation, configuration, modification of InsPro Enterprise functionality, client insurance
plan set-up, client insurance document design and system documentation.
The Company's
revenue is generally recognized under FASB ASC 985-605 ("ASC 985-605"). For software arrangements involving multiple
elements, we allocate revenue to each element based on the relative fair value or the residual method, as applicable using vendor
specific objective evidence to determine fair value, which is based on prices charged when the element is sold separately. Software
revenue accounted for under ASC 985-605 is recognized when persuasive evidence of an arrangement exists, the software is delivered
in accordance with all terms and conditions of the customer contracts, the fee is fixed or determinable and collectability is probable.
Revenue related to post-contract customer support ("PCS"), including technical support and unspecified when-and-if
available software upgrades, is recognized ratably over the PCS term. Under ASC 985-605, if fair value does not exist for any undelivered
element, revenue is not recognized until the earlier of (i) delivery of such element or (ii) when fair value of the undelivered
element is established, unless the undelivered element is a service, in which case revenue is recognized as the service is performed
once the service is the only undelivered element.
39
We recognize revenues
from software license agreements when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee
is fixed or determinable, and collectability is probable. We consider fees relating to arrangements with payment terms extending
beyond one year to not be fixed or determinable and revenue for these arrangements is recognized as payments become due from the
customer. In software arrangements that include more than one InsPro Enterprise module, we allocate the total arrangement fee among
the modules based on the relative fair value of each of the modules.
License revenue allocated
to software products generally is recognized upon delivery of the products or deferred and recognized in future periods to the
extent that an arrangement includes one or more elements to be delivered at a future date and for which fair values have not been
established. Revenue allocated to maintenance agreements is recognized ratably over the maintenance term and revenue allocated
to training and other service elements is recognized as the services are performed.
The unearned portion
of the Company's revenue, which is revenue collected or billed but not yet recognized as earned, has been included in the
consolidated balance sheet as a liability for deferred revenue.
We review the carrying
value of property and equipment and intangible assets for impairment at least annually or whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparison
of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are
considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property,
if any, exceeds its fair market value.
RESULTS OF OPERATIONS FOR THREE MONTHS
ENDED MARCH 31, 2017 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2016
Revenues
For the three months ended March 31, 2017
("First Quarter 2017"), we earned revenues of $5,046,766 compared to $6,797,271 for the three months ended March 31,
2016 ("First Quarter 2016"), a decrease of $1,750,505 or 25.8%. Revenues include the following:
For the Three Months Ended March 31,
Increase (Decrease)
2017
2016
Dollars
Percentage
Professional services, gross
$
2,798,251
$
4,627,058
$
(1,828,807
)
-39.5
%
ASP revenue
1,815,840
1,690,149
125,691
7.4
%
Sales of software licenses
-
10,000
(10,000
)
-100.0
%
Maintenance revenue
432,675
452,064
(19,389
)
-4.3
%
Sub-leasing and other revenue
-
18,000
(18,000
)
-100.0
%
Total
$
5,046,766
$
6,797,271
$
(1,750,505
)
-25.8
%
·
In First Quarter 2017 our professional services revenue, gross decreased primarily as a result of lower post implementation
services to a large existing client and lower implementation services to the Company's largest client. Implementation services
included assisting clients in setting up their insurance products in InsPro Enterprise, providing modifications to InsPro Enterprise's
functionality to support the client's business, interfacing InsPro Enterprise with the client's other systems, automation
of client correspondence to their customers and data conversion from the client's existing systems to InsPro Enterprise.
Post implementation services include these same services to existing clients supporting their ongoing utilization of InsPro Enterprise.
40
·
In First Quarter 2017 our ASP revenue increased as a result of increased fees from ongoing and recent implementations of InsPro
Enterprise from several existing clients. ASP hosting service enables a client to either lease InsPro Enterprise software, paying
only for that capacity required to support their business, or for a client to outsource the operation of their licensed InsPro
Enterprise installation to the Company. ASP hosting clients' access InsPro Enterprise installed on clients' servers
or on the Company's servers located at a third party's site.
·
In First Quarter 2016 we earned $10,000 of license fee revenue, which pertained to the re-sale of third party software licenses
to a client in the process of implementing InsPro Enterprise.
·
In First Quarter 2017 our maintenance revenue decreased as a result of the loss of fees from 2 former clients.
·
In First Quarter 2016 sub-leasing and other revenue consisted of reimbursements of office and administrative expenses pertaining
to various agreements with related and unrelated parties pertaining to our former Radnor office.
Cost of Revenues
Cost of revenues consisted of the following:
For the Three Months Ended March 31,
Increase (Decrease)
2017
2016
Dollars
Percentage
Compensation, employee benefits and related taxes
$
1,920,423
$
2,232,355
$
(311,932
)
-14.0
%
Professional fees
1,914,984
3,012,354
(1,097,370
)
-36.4
%
Depreciation
88,149
100,214
(12,065
)
-12.0
%
Rent, utilities, telephone and communications
106,488
137,670
(31,182
)
-22.6
%
Other cost of revenues
78,925
96,976
(18,051
)
-18.6
%
$
4,108,969
$
5,579,569
$
(1,470,600
)
-26.4
%
·
In First Quarter 2017 our salaries, employee benefits and related taxes component of cost of revenues decreased as compared
to First Quarter 2016 primarily as a result of decreased employee staffing.
·
In First Quarter 2017 our professional fees component of cost of revenues decreased as compared to First Quarter 2016 as a
result of decreased utilization of several outside consulting firms, which were assisting us with modifications to InsPro Enterprise's
functionality and new clients' implementations of InsPro Enterprise
TM,
combined with decreased recruiting expenses.
·
In First Quarter 2017 our depreciation expense component of cost of revenues decreased as compared to First Quarter 2016 as
a result of certain assets having been fully depreciated in accordance with the original depreciation schedule for such assets.
·
In First Quarter 2017 our rent, utilities, telephone and communications component of cost of revenues decreased as compared
to First Quarter 2016 primarily due to lower rented space pertaining to our Eddystone office.
41
·
In First Quarter 2017 our other cost of revenues component of cost of revenues decreased as compared to First Quarter 2016
primarily due to lower allowance for doubtful collection expense and lower cost of 3
rd
party
l
icensed
software resold to clients. Other cost of revenues consisted of the cost of 3
rd
party licensed software resold to clients,
equipment sold to clients, computer processing incurred primarily to provide ASP hosting services, hardware and software, travel
and entertainment, and office expenses.
Gross Profit (Loss)
As a result of the aforementioned factors,
we reported a gross profit of $937,797 in First Quarter 2017, as compared to a gross profit of $1,217,702 in First Quarter 2016.
The results from operations in First Quarter 2017 were unfavorably impacted by lower professional services revenue partially offset
by lower IT consulting expenses in First Quarter 2017 as compared to First Quarter 2016.
Selling, General and Administrative Expenses
Selling, marketing and administrative expenses
consisted of the following:
For the Three Months Ended March 31,
Increase (Decrease)
2017
2016
Dollars
Percentage
Compensation, employee benefits and related taxes
$
1,132,958
$
1,008,087
$
124,871
12.4
%
Advertising and other marketing
8,735
41,720
(32,985
)
-79.1
%
Depreciation
34,789
25,421
9,368
36.9
%
Rent, utilities, telephone and communications
99,513
100,932
(1,419
)
-1.4
%
Professional fees
138,300
260,802
(122,502
)
-47.0
%
Other general and administrative
182,202
193,174
(10,972
)
-5.7
%
$
1,596,497
$
1,630,136
$
(33,639
)
-2.1
%
·
In First Quarter 2017 our salaries, employee benefits and related taxes increased as compared to First Quarter 2016 primarily
due to severance expense pertaining to the termination of a former executive in First Quarter 2017.
·
In First Quarter 2017 our advertising and other marketing expenses decreased as compared to First Quarter 2016 primarily as
a result of decreased marketing activities.
·
In First Quarter 2017 our depreciation expense increased as compared to First Quarter 2016 as a result of a greater percentage
allocated to selling, general and administrative expense and a lesser percentage of depreciation allocated to cost of revenues.
·
In First Quarter 2017 our rent, utilities, telephone and communications expense decreased as compared to First Quarter 2016
due to lower rented space pertaining to our Eddystone office.
·
In First Quarter 2017 our professional fees decreased as compared
to First Quarter 2016 primarily due to lower legal expenses in part due to the company's rights offering in First Quarter
2016.
42
Operating loss from continuing operations
As a result of the aforementioned factors,
we reported a loss from continuing operations of $658,700 in First Quarter 2017, as compared to a loss of $412,434 in First Quarter
2016.
Other income (expenses)
Interest expense increased in the First Quarter 2017 as compared
to the in the First Quarter 2016 primarily due to interest on capital leases. Interest expense is attributable to interest on the
capital leases and note payable for premium financing on a portion of the Company's insurance coverages.
Gain on the sale of equipment in First Quarter 2017 is attributable
to the sale of furniture and fixtures from the Company's former Radnor office.
Gain on discontinued operations
Results from discontinued operations consisted of the following:
For the Three Months Ended March 31,
Increase (Decrease)
2017
2016
Dollars
Percentage
Revenues:
Commission and other revenue from carriers
$
2,378
$
3,067
$
(689
)
-22.5
%
eHealth Agreement
15,934
16,148
(214
)
-1.3
%
18,312
19,215
(903
)
-4.7
%
Operating expenses:
Other general and administrative
6,000
6,000
-
0.0
%
6,000
6,000
-
0.0
%
Income from discontinued operations
$
12,312
$
13,215
$
(903
)
-6.8
%
Revenues and income from discontinued operations in the First
Quarter 2017 decreased as compared to the First Quarter 2016 due to the declines in our discontinued telesales call center produced
agency business. We reported a gain from discontinued operations of $0 per share in First Quarter 2017 and First Quarter 2016.
On February 20, 2009, the Company entered into and completed
the sale of its agency business to eHealth Insurance Services, Inc. The Company earns renewal commissions from certain insurance
companies and a transition policy commission pursuant to a client transition agreement with eHealth Insurance Services, Inc.
Net loss
As a result of these factors discussed
above, we reported a net loss of $646,302, or $0.02 net income per share, in First Quarter 2017, as compared to a net loss of $403,197,
or $0.01 net loss per share in First Quarter 2016.
43
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2017, we had a cash balance of $1,985,940 and a
working capital deficit of $3,145,962.
Net cash used by operations was $1,044,732 in First Quarter
2017 as compared to $499,293 in First Quarter 2016. Impacting our cash flow from operations was our net loss of $646,302 in First
Quarter 2017 as compared to our net loss of $403,197 in First Quarter 2016 and:
·
Increases in accounts receivable of $1,413,358 in First Quarter 2017, which is primarily the result of increased billings to
clients primarily for professional services.
·
Increases in prepaid expenses of $128,404 in First Quarter 2017, which is primarily the result of annual software maintenance
fees, which were paid in First Quarter 2017.
·
Decreases in accounts payable of $136,597 in First Quarter 2017, which is primarily the result of payments of amounts to outside
IT consulting firms that were incurred prior to 2017.
·
Increases in accrued expenses of $140,069 in First Quarter 2017, which is primarily the result of accrued severance expense
pertaining to the termination of a former executive in First Quarter 2017.
·
Increases in deferred revenue of $935,272 in First Quarter 2017, which is primarily the result of annual maintenance fees and
to a lesser extent professional services, which were not earned in First Quarter 2017.
In addition to cash used in operating activities, we incurred
the following non-cash gain and expenses, which were included in our net loss, including:
·
Recorded depreciation expense of $122,938 and $125,635 in First Quarter 2017 and First Quarter 2016, respectively.
·
Recorded stock-based compensation expense of $85,090 and $164,246 in First Quarter 2017 and First Quarter 2016, respectively.
Net cash used by investing activities in First Quarter 2017
was $19,834 as compared to $10,188 in First Quarter 2016.
44
Net cash used in financing activities in First Quarter 2017
was $111,111 as compared to $78,618 in First Quarter 2016.
·
On February 2, 2016 the Company filed a registration statement for a rights offering on Form S-1/A, which the Commission declared
effective on February 5, 2016, to distribute to shareholders excluding residents of Arizona and California at no charge, one non-transferable
subscription right for each 16,615 shares of our Common Stock, 831 shares of our Series A Preferred Stock and 830 shares of our
Series B Preferred Stock owned as of January 31, 2016 (the "Record Date"), either as a holder of record or, in the
case of shares held of record by brokers, dealers, custodian banks, or other nominees on shareholders' behalf, as a beneficial
owner of such shares. The basic subscription right entitled the holder to purchase one unit ("Subscription Unit") at
a subscription price of $240. A Subscription Unit consisted of 80 shares of Series B Preferred Stock and a warrant to purchase
800 shares of Common Stock that expires on November 20, 2017 at an exercise price of $0.15 per share. Effective with the expiration
of the subscription rights, which occurred on March 14, 2016, holders of subscription rights exercised in aggregate 17 basic subscription
rights and 0 over subscription rights for a total 17 Subscription Units. The Company received $4,080 in gross proceeds as a result
of the exercise of Subscription Units. As a result of the exercise of 17 Subscription Units the Company issued effective on March
14, 2016 in aggregate 1,360 shares of Series B Preferred Stock and warrants to purchase in aggregate 13,600 shares of Common Stock
that expires on November 20, 2017 at an exercise price of $0.15 per share (the "2016 Warrants"). Effective with the
expiration of the subscription rights all unexercised subscription rights expired.
·
Payments on notes payable pertain to notes payable, which we entered into in order to finance two of the Company's corporate
insurance premiums.
·
InsPro LLC has entered into various capital lease obligations to purchase equipment used for operations.
Off-Balance Sheet Arrangements
We do not currently have any relationships with unconsolidated
entities or financial partnerships, such as entities referred to as structured finance or special purpose entities, which would
have been established for the purpose of facilitating off-balance sheet or other contractually narrow or limited purposes.
Impact of Inflation and Changing Prices
We believe that inflation has not had a material impact on our
results of operation.
45
Liquidity and Other Considerations
As indicated in the accompanying financial statements during
the three months ended March 31, 2017, the Company's net loss was $646,302 and cash used in operations was $1,044,732. As
of March 31, 2017, the Company had $1,985,940 of cash, a working capital deficit of $3,145,962 and the Company's shareholder
deficit was $4,350,272. During 2016 the Company implemented cost reduction initiatives, which resulted in the reduction of expenses
in 2016 as compared to 2015. During the three months ended March 31, 2017, the Company implemented additional cost reduction initiatives,
which resulted in the reduction of cost of revenues of $1,470,600 and selling, general and administrative expenses of $33,639 as
compared to the same period in 2016. Management believes these actions will reduce expenses in 2017 as compared to 2016. On March
29, 2017, the Company obtained a $2,000,000 funding commitment from its largest stockholder The Co-Investment Fund II, L.P. This
funding closed on April 20, 2017, and is described in Note 10 – Subsequent Events.
Our liquidity needs for the next twelve months and beyond are
principally for the funding of our operations, payments on capital leases and the purchase of property and equipment. Based on
the forgoing, management believes the Company has sufficient funds to finance its operations over the next twelve months.
46
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
The following table
sets forth the name, age and position of each of our executive officers and directors.
Directors serve until
the next annual meeting of stockholders, until their successors are elected or appointed or qualified, or until their prior resignation
or removal. Our executive officers are appointed by, and serve at the discretion of, our board of directors.
Name
Age
Position
Donald R. Caldwell
70
Chief Executive Officer and Chairman
John Harrison
73
Director
Michael Azeez
59
Director
Kenneth Harvey
56
Director
Alan Krigstein
64
Director
Robert Oakes
58
Director
Sanford Rich
59
Director
L.J. Rowell
84
Director
Paul Soltoff
62
Director
Frederick C. Tecce
80
Director
Anthony R. Verdi
68
Chief Financial Officer and Director
Edmond J. Walters
55
Director
Michael Azeez
,
59, has served as one of our directors since December, 2011. Mr. Azeez is a managing member of Azeez Investors, LLC. Mr. Azeez
co-founded Unitel in 1988 and served its President from 1988 until 2002. Mr. Azeez served in various executive positions at American
Cellular Network Corporation from 1982 until 1988 and his positions included Vice President, General Manager of various divisions
and as assistant to the President. Mr. Azeez is a member of the board of directors of Acrometis Strategic Software Services, which
provides software solutions to insurance companies for workers compensation claims management. Mr. Azeez is a member of the board
of directors of the Friends of Yemin Orde. Mr. Azeez is the Chairman and founder of the Sam Azeez Museum of Woodbine Heritage.
Mr. Azeez's significant executive and business development experience in the telecommunications industry and his civic service
for various non-profit organizations qualifies him to be a member of our board of directors.
Donald R. Caldwell
,
70, has served as one of our directors and as one of the Co-Chairmen of our board of directors from April 2008 through November
24, 2009, as our Chairman since November 24, 2009 and as our Chief Executive Officer since January 26, 2015. Mr. Caldwell founded
Cross Atlantic in 1999, and presently serves as its Chairman and Chief Executive Officer and serves on its Audit and Nominating
and Governance committees. He has served as a director at Rubicon Technology, Inc. since 2001 and chairs its Compensation Committee.
He served on the board of directors at Diamond Management & Technology Consultants, Inc. (NASDAQ) from 1994 until its sale
to PriceWaterhouse in 2010 and served as a member of its Compensation Committee, Audit Committee and as the lead Director since
2006. Mr. Caldwell has been a director of Quaker Chemical Corporation (NYSE:KWR), a provider of process chemicals and chemical
specialties, since 1997 and was appointed as lead director in May 2016. He also serves as Chairman of Quaker's Executive
Committee and a member of its Compensation and Audit Committees. He is a member of the Compensation Committee and a director of
Voxware, Inc., a supplier of voice driven solutions. Mr. Caldwell has been a director, Chairman of the Audit Committee and member
of the Compensation Committee of Lighting Gaming, Inc. since 2005. Mr. Caldwell was a director of Amber Road, Inc. (NYSE:AMBR)
and served on the Nominating and Governance Committee and Compensation Committee from 2005 until his resignation on December 31,
2016. Mr. Caldwell was a director and member of the Risk Management Committee and Chairman of the Audit Committee of Fox Chase
Bancorp, Inc. (NASDAQ:FXCB), a stock holding company of Fox Chase Bank, from October 2014 until it was acquired by Univest Corporation
of Pennsylvania on July 1, 2016. Mr. Caldwell was a director of Kanbay International, Inc. from 1999 through 2007 when it was purchased
by Capgemini. From 1996 to 1999, Mr. Caldwell was President and Chief Operating Officer and a director of Safeguard Scientifics,
Inc. Mr. Caldwell was a Certified Public Accountant in the State of New York. Mr. Caldwell's experience serving as a director
and officer of numerous public companies qualifies him to be a member of our board of directors.
47
John Harrison
,
73, has served as one of our directors since November 2005. He is a founding Partner and Executive Director of The Keystone Equities
Group, Inc., a full service investment banking group and a registered NASD broker-dealer founded in 2003. Mr. Harrison also is
a Managing Director of Covenant Partners, a hedge fund that invests in direct marketing services companies. In 1999, Mr. Harrison
became a founding Partner of Emerging Growth Equities, Ltd., a full service investment banking and brokerage firm focused on raising
capital for emerging technology companies addressing high-growth industry sectors. From 1985 to 2000, Mr. Harrison served as President
of DiMark, a direct marketing agency that was subsequently acquired by Harte-Hanks in 1996. He also has held senior management
positions with CUNA Mutual, RLI Insurance and CNA Insurance where he directed their direct marketing practice. Mr. Harrison was
Chairman of Professional Insurance Marketing Association (PIMA) and Chairman of the DMA Financial Services Council. Mr. Harrison's
extensive experience in the financial and insurance sectors qualifies him to be a member of our board of directors.
Kenneth M. Harvey
,
56, has served as a director since May 2014. Mr. Harvey has served as a director of Amber Road, Inc. (NYSE: AMBR), a provider of
cloud-based global trade management solutions, since 2008. From 1989 until 2011, Mr. Harvey was employed by HSBC—Global Bank,
serving as Chief Information Officer/Chief Operating Officer from 2008 to 2011 and as group general manager and Chief Information
Officer from 2004 to 2007. He was president of HSBC Technology and Services, a wholly-owned subsidiary of HSBC, from 2003 to 2004.
Since 2012, Mr. Harvey served as a Director of CLS Group Holdings AG. From 2012 to 2014 he was the Chairman of the Technology and
Operations Committee and from 2014 Mr. Harvey has served as Chairman of the Board and a member of the Chairman's Committee,
which serves as the Compensation and Compliance Committees. Mr. Harvey also serves on the Senior Advisory Board of Oliver Wyman;
a global management consulting firm. Mr. Harvey also served as director of CLS Bank International since 2011, and served as a director
of Kanbay, Inc. from 2004 until 2007 and Vertical Networks, Inc. from 2002 until 2004. Mr. Harvey's experience as an executive
in the information technology field qualifies him to be a member of our board of directors.
Alan Krigstein
,
64, has served as a director since June 2014. Mr. Krigstein was Executive Vice President and Chief Financial Officer of Independence
Blue Cross, a health insurer organization and independent licensee of the Blue Cross and Blue Shield Association from 2009 through
2017. Mr. Krigstein previously served as Senior Vice President and Chief Financial Officer of AmeriHealth Mercy Family of Companies
from 1994 to 2009. Mr. Krigstein also serves as trustee and member of the audit committee of Plan Investment Fund, Inc., a mutual
fund company that is open only to members and licensees of the Blue Cross and Blue Shield Association and certain related organizations,
from 2011 to the present. Mr. Krigstein's experience as an executive in the health insurance field qualifies him to be a
member of our board of directors.
Robert J. Oakes
,
58, has served as one of our directors since August 2008. He has served as the President and CEO of our InsPro Technologies, LLC
subsidiary since our acquisition of the subsidiary on October 1, 2007 through January 26, 2015 and as our Vice Chairman since January
26, 2015. From 1986 until 2007 Mr. Oakes was President and Chief Executive Officer of the general partner of Atiam Technologies
L.P. (now known as InsPro Technologies, LLC), a software development and servicing company that developed, expanded and serviced
products to serve the insurance and financial services markets. Mr. Oakes founded InsPro Technologies, LLC under the name "Atiam"
in 1986 and led the company's effort to design and develop its flagship product, InsPro Enterprise. InsPro Enterprise is
a state-of-the-art Insurance, Marketing, Administration and Claim System that provides end-to-end insurance processing, technology
and support, for a broad range of life, health and disability products. Mr. Oakes' experience in the development of our flagship
product and his management of InsPro Technologies, LLC through January 26, 2015, qualifies him to be a member of our board of directors.
48
Sanford Rich
,
59, has served as one of our directors since April 2006. Mr. Rich is currently the Executive Director at New York City Board of
Education Retirement System since January 2016.  Mr. Rich was Chief of Negotiations and Restructuring at the Pension Benefit
Guaranty Corporation, a U.S. government agency, from November 2012 to January 2016. He is a director and the Audit Committee Chairman
at Aspen Group Inc., an online for profit university. Mr. Rich served as director and Chief Executive Officer at In the Car, LLC
from October 2011 to November 2012. Mr. Rich was a FINRA Registered Managing Director with Whitemarsh Capital Advisors LLC, a broker-dealer,
from February 2009 through December 2014. Mr. Rich served as a director, audit committee chairman and Commission qualified audit
committee financial expert of Interclick, Inc. from 2007 to 2010. From 1995 to May 2008, Mr. Rich was director, Senior Vice President
and Portfolio Manager at GEM Capital Management Inc. From 1993 to 1995, Mr. Rich was a Managing Director of High Yield Finance,
Capital Markets & North American Loan Syndicate, Sales and Trading at Citicorp Securities. From 1985 to 1993, he served as
Managing Director of Debt Capital Markets at Merrill Lynch. From 1978 to 1985, Mr. Rich held various Analyst positions in numerous
companies, including Cypress Capital Management, Inc. (Vice President and Analyst from 1983 to 1985), FIAMCO (Distressed/High Yield
Bond Analyst from 1981 to 1983), Progressive Corporation (Financial Analyst from 1980 to 1981) and Prescott, Ball and Turben (Distressed/High
Yield Bond Analyst from 1978 to 1980). Mr. Rich's 30+ years of experience in the financial sector qualifies him to be a member
of our board of directors.
L.J. Rowell
,
84, has served as one of our directors since April 2006. He is a past President (1984-1996), Chief Executive Officer (1991-1996)
and Chairman of the Board (1993-1996) of Provident Mutual Life Insurance Company, where he also held various other executive and
committee positions from 1980 until his retirement in 1996. Mr. Rowell served on the board of directors of the PMA Group from 1992
until 2009. Mr. Rowell served on the board of directors of the Southeast Pennsylvania Chapter of the American Red Cross, the American
College, The Foundation at Paoli, and The Milton S. Hershey Medical Center. Mr. Rowell also has served on the Board of Trustees
of The Pennsylvania State University as a business and industry trustee since 1992. In 1991, he served as the Chairman of the Major
Business Division for the United Way of Southeastern Pennsylvania. Mr. Rowell also has served as Chairman of The American Red Cross
Ad Blood Campaign and has previously served on its Major Contributions Donor Campaign. Mr. Rowell's extensive experience
in the health insurance industry and his civic service for various health care organizations qualifies him to be a member of our
board of directors.
Paul Soltoff
,
62, has served as one of our directors since November 2005. He is currently Managing Partner of RobPet, LLC since 2015, and Managing
Partner of Paul Soltoff Advisors, LLC since 2016. He served as Chairman and Chief Executive Officer of Acquirgy, Inc. from 2009
to 2014. He served as Chairman and Chief Executive Officer of SendTec, Inc. from its inception in February 2000 through 2009. From
1997 until February 2000, Mr. Soltoff served as Chief Executive Officer of Soltoff Direct Corporation, a specialized direct marketing
consulting company. From September 2004 until October 2005, Mr. Soltoff served as a director of theglobe.com. Mr. Soltoff's
experience as an officer and director in the Internet marketing sector qualifies him to be a member of our board of directors.
Frederick C.
Tecce
, 80, has served as one of our directors since August 2016 and he previously served as one of our directors from August
2, 2007 through August 14. 2012. He has also served on the board of several publicly traded companies as well as numerous privately
held companies. In addition, he served on the Board of Independence Blue Cross for 2 different terms. On a day to day basis, he
serves as Of Counsel to the law firm of Buchanan Ingersoll and Rooney as well as being Of Counsel and Partner to Cross Atlantic
Capital Partners. In addition to his pursuits in the private sector, Mr. Tecce has also served in the public sector where he was
appointed by Pennsylvania Governor Tom Ridge to serve on the transition team. His board experience includes being an active member
of the Board of the $50 billion Public School Employees Retirement Systems (PSERS), where he held the title of chairman of the
Finance Committee for 6 years until his retirement in 2001. Mr. Tecce also served in the federal sector as a member of the Federal
Judicial Nominating Committee. He has served in a management position in several for-profit businesses, some of which he has founded.
Mr. Tecce's numerous legal, business and government experiences qualify him to be a member of our board of directors.
Anthony R. Verdi
,
68, has served as one of our directors since June 2008, as our Chief Financial Officer and Assistant Secretary since November 2005,
as our Chief Operating Officer since April 2008, as Acting Principal Executive Officer from June 20, 2008 through May 18, 2011
and as Principal Executive Officer from May 18, 2011 through January 26, 2015. From 2001 until November 2005, Mr. Verdi provided
consulting services to life, health and property and casualty insurance company agency and venture capital clients. Mr. Verdi served
as Chief Operating Officer of Provident American Corporation and Chief Financial Officer of HealthAxis, Inc. From January 1990
until December 1998, Mr. Verdi served as Chief Financial Officer of Provident American Corporation. From July 1986 until January
1990, he was the Vice President and Controller of InterCounty Hospitalization and Health Plans, a nonprofit group medical insurer.
From April 1971 until July 1986, he served in various finance and accounting capacities for the Academy Insurance Group, ultimately
serving as the Assistant Controller. Mr. Verdi's extensive experience in the health insurance industry and his financial
and accounting background qualifies him to be a member of our board of directors.
49
Edmond J. Walters
,
55, has served as one of our directors since April 2008. Mr. Walters is Founder and was the Chief Executive Officer of eMoney Advisor,
a wealth planning and management solutions provider for financial advisors that Mr. Walters founded in 2000 and is now a wholly-owned
subsidiary of Commerce Bancorp. Prior to forming eMoney Advisor in 2000, Mr. Walters spent more than 20 years in the financial
services industry, advising high net worth clients. From 1983 to 1992 he was associated with Kistler, Tiffany & Company in
Wayne, PA. In 1992, Walters helped found the Wharton Business Group, a financial advising firm, in Malvern, PA. Mr. Walters'
20+ years of experience in the financial sector qualify him to be a member of our board of directors.
Board Independence
The Board has determined
that Messrs. Azeez, Harrison, Harvey, Krigstein, Rich, Rowell, Soltoff, Tecce and Walters are "independent" directors
as defined by Rule 4200(a)(15) of the NASDAQ listing standards and as defined by Rule 10A-3(b)(1)(ii) promulgated by the Commission.
50
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table
summarizes the compensation paid to, awarded to or earned during the fiscal years ended December 31, 2016 and 2015 by our Principal
Executive Officer and each of our three other most highly compensated executive officers whose total salary and bonus exceeded
$100,000 for services rendered to us in all capacities during 2016 and 2015. The executive officers listed in the table below are
referred to in this report as our "named executive officers". There were no non-equity incentive plan compensation
or non-qualified deferred compensation earnings for any of the named executive officers for the fiscal years ended December 31,
2016 and December 31, 2015.
Name and Principal Position
Fiscal
Year
Salary ($)
Bonus ($)
(6)
Stock
Awards
($)
Option
Awards ($)
(7)
All Other
Compensation
($) (8)
Total ($)
Donald R. Caldwell (1)
2016
1
-
-
-
9,370
9,371
Chief Executive Officer,
2015
1
-
-
-
9,669
9,670
Chairman of the Board of Directors
Anthony R. Verdi (2)
2016
300,000
-
-
-
16,296
316,296
Chief Executive Officer,
2015
258,333
-
-
-
16,331
274,664
Chief Financial Officer & Chief
Operating Officer
Robert J. Oakes (3)
2016
300,000
50,000
-
-
18,764
368,764
President & Chief Executive Officer of
2015
300,000
-
-
-
16,416
316,416
InsPro Technologies, LLC
Mark Daley (4)
2016
250,000
-
-
-
6,894
256,894
Chief Revenue Officer of
2015
245,833
50,000
-
112,000
7,986
415,819
InsPro Technologies, LLC
John Keddy (5)
2016
-
-
-
-
-
-
Chief Information Officer of
2015
140,477
-
-
112,000
15,770
268,247
InsPro Technologies, LLC
(1)         Mr.
Caldwell has served as one of our directors and as one of the Co-Chairman of our board of directors from April 2008 through November
24, 2009, as our Chairman since November 24, 2009 and as our Chief Executive Officer and Chairman since January 26, 2015. Mr. Caldwell's
compensation received in 2014 was that of a non-employee director and is included in the tables and disclosures with all other
non-employee directors.
Mr. Caldwell has assigned all of his compensation to the Co-Investment Fund II, L.P.
(2)         Mr.
Verdi was appointed as our Chief Financial Officer on November 10, 2005, Chief Operating Officer on April 1, 2008, interim Principal
Executive Officer on June 20, 2008 and Principal Executive Officer on May 18, 2011 and effective January 26, 2015 serves as Chief
Financial Officer.
(3)         Mr.
Oakes was appointed as President of our subsidiary InsPro Technologies, LLC on October 1, 2007 concurrently with the closing of
our acquisition of InsPro and effective January 26, 2015 serves as Vice Chairman of our board of directors.
51
(4)         Mr.
Daley was appointed Chief Revenue Officer of our subsidiary InsPro Technologies, LLC on June 2, 2014. Mr. Daley's employment
terminated effective March 8, 2017, and all amounts owed to Mr. Daley pursuant to his employment agreement will be paid to him
during 2017.
(5)         Mr.
Keddy was appointed Chief Information Officer of our subsidiary InsPro Technologies, LLC on September 24, 2014. Mr. Keddy resigned
effective July 17, 2015, and all amounts owed to Mr. Keddy pursuant to his employment agreement were paid to him.
(6)         Mr.
Daley received variable compensation based on license fee revenue recognized in accordance with his variable compensation arrangement.
Mr. Oakes received a one-time discretionary bonus.
(7)         Represents
the aggregate grant date fair value of the stock option or warrants to purchase the Company's Series B Convertible Preferred
Stock as of the date of grant using the Black-Scholes option-pricing model. Fair value is estimated based on an expected life of
five years, an assumed dividend yield of 0% and the assumptions below.
Name
Fiscal Year
Fair Value
at Date of
Grant ($)
Number of
Options
Granted (#)
Option
Exercise
Price ($)
Closing
Stock
    Price
on the Date
of Grant ($)
Date of
Grant
Expected
Volatility
Risk Free
Interest
Rate
Expected
Life in
Years
Assumed
Dividend
Yield
Donald R. Caldwell
2016
-
-
-
-
-
-
-
-
-
2015
-
-
-
-
-
-
-
-
-
Anthony R. Verdi
2016
-
-
-
-
-
-
-
-
-
2015
-
-
-
-
-
-
-
-
-
Robert J. Oakes
2016
-
-
-
-
-
-
-
-
-
2015
-
-
-
-
-
-
-
-
-
Mark Daley (a)
2016
-
-
-
-
-
-
-
-
-
2015
112,000
80,000
$
4.000
1.400
3/27/2015
779
%
0.120
%
5.0
0.0
%
John Keddy (a)
2016
-
-
-
-
-
-
-
-
-
2015
112,000
80,000
$
4.000
1.400
3/27/2015
779
%
0.120
%
5.0
0.0
%
(a)         On
March 27, 2015, the board of directors of the Company granted warrants to purchase 80,000 shares of Series A Preferred Stock at
an exercise price equal to $4.00 per share to Messrs. Daley and Keddy. The warrants are immediately exercisable, non-transferrable
and expire on May 22, 2019, however the warrants to Mr. Keddy expired in 2015 and the warrants to Mr. Daley will expire in 2017
as a result of the termination of their employment in accordance with the terms of the warrants.
(8)         All
other compensation paid to our named executive officers in the fiscal year ended December 31, 2016 consisted of the following:
52
Name
Payments for
Auto and
Equipment ($)
(a)
Company Paid
Health,     Life and
Disabilitly
Insurance ($) (b)
Company
Matching of
Employee
401(k)
Contributions
(c)
Board of
Directors
Meeting Fees (d)
Total ($)
Donald R. Caldwell
-
-
-
9,370
9,370
Anthony R. Verdi
13,200
619
2,477
-
16,296
Robert J. Oakes
1,200
14,914
2,650
-
18,764
Mark Daley
1,200
3,182
2,512
-
6,894
John Keddy
-
-
-
-
-
(a)
Payments for auto and equipment represent monthly allowances for auto, cell phones and other equipment.
(b)
Company-paid health, life and disability insurance represent the cost of company-paid insurance premiums covering the named
executive officers and, in the case of health insurance premiums, their dependents. The Company paid approximately 71% of the health
insurance and 100% of the life and disability insurance premiums for the named executive officers. Health insurance premiums vary
based on several factors, including the coverage selected and the age of the named executive officer and the number of their covered
dependents.
(c)
Company matching of employee 401(k) contributions represents 25% of the employee's contribution up to 4% of the employee's
compensation, which were fully vested for Messrs. Daley, Verdi and Oakes and unvested for Mr. Keddy.
(d)
Mr. Caldwell received board and committee meeting fees at the rates specified in the Company's non-employee director
compensation plan. Mr. Caldwell has assigned all of his compensation to the Co-Investment Fund II, L.P.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information
for the outstanding equity awards held by our named executive officers for the year ended December 31, 2016. There have been no
stock awards granted. The information below pertains to stock options, which were granted under the 2010 Equity Compensation Plan,
a warrant to purchase 150,000 shares of the Company's Series A Convertible Preferred Stock, which was issued to Mr. Oakes
on August 18, 2010, a warrant to purchase 150,000 shares of the Company's Series A Convertible Preferred Stock, which was
issued to Mr. Verdi on September 14, 2011, warrants to purchase 300,000 shares of the Company's Series B Convertible Preferred
Stock were issued to Mr. Oakes and Mr. Verdi on May 22, 2014, and a warrant to purchase 80,000 shares of the Company's Series
A Convertible Preferred Stock, which was issued to Mr. Daley on March 27, 2015.
53
Option Awards
Name
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
Option
Exercise
Price
($)
Option
Expiration
Date
Donald R. Caldwell
-
-
-
-
-
Anthony R. Verdi
300,000
-
-
3.00
5/22/2019
150,000
-
-
4.00
9/14/2017
Robert J. Oakes
300,000
-
-
3.00
5/22/2019
150,000
-
-
4.00
9/14/2017
Mark Daley
600,000
1,200,000
-
-
8/19/2019
-
80,000
-
4.00
3/27/2020
John Keddy
-
-
-
-
-
Compensation Committee Interlocks and Insider Participation
No members of our compensation committee
are currently, or have been, employed by us as officers or employees. None of our executive officers currently serve, or in the
past three years have served, as a member of the board of directors, compensation committee or other board committee performing
equivalent functions of another entity that has one or more executive officers serving on our board or compensation committee.
Employment, Severance and Other Agreements
Donald R. Caldwell
Our board of directors appointed Mr. Caldwell
Chief Executive Officer and Chairman of our board of directors on January 26, 2015, with an annual salary of $1. Mr. Caldwell is
employed as an at-will employee.
Anthony R. Verdi
Pursuant to an amended and restated employment
agreement Mr. Verdi serves as our Chief Financial Officer and Chief Operating Officer. His amended and restated employment agreement
automatically renewed for a one year term on March 31, 2016, and, if not terminated, will automatically renew for one year periods.
His annual base salary was $225,000 per year from March 31, 2008 through May 30, 2011 and was then increased by the board of directors
to $250,000 effective June 1, 2011 and increased to $300,000 effective November 1, 2015. He is entitled to receive such bonus compensation
as a majority of our board of directors may determine from time to time.
In the event of Mr. Verdi's termination
without cause or for good reason, he or his estate would receive his then current base annual salary, plus unpaid accrued employee
benefits, which is primarily accrued vacation, plus the continuation of his employee benefits for a period of 18 months, less all
applicable taxes. In the event of his voluntary termination, death or disability, he or his estate would receive unpaid accrued
employee benefits, plus the continuation of his employee benefits for a period of one month, less all applicable taxes.
54
Robert J. Oakes
Pursuant to an amended and restated employment
agreement with InsPro Technologies, LLC, Mr. Oakes serves as Vice Chairman of the board of directors. Pursuant to his employment
agreement, his annual base salary was $250,000 per year through September 30, 2011. On April 7, 2011, Mr. Oakes received an increase
in his base compensation pursuant to his employment agreement to $300,000 retroactive to July 1, 2010, upon InsPro Technologies,
LLC achievement of one calendar quarter of positive operating cash flow, which occurred during the calendar quarter ended March
31, 2011. Mr. Oakes was entitled to bonus compensation equal to 100% of the InsPro Technologies, LLC's net income up to a
maximum of $100,000 in 2010 and $100,000 in 2011. Mr. Oakes is entitled to such fringe benefits as are available to other executives
of the Company. Mr. Oakes employment agreement was automatically extended for an additional one year term on March 25, 2014 and
will be annually automatically extended thereafter unless either party provides written notification to the other party of non-renewal
no later than 60 days prior to the termination date of the agreement.
In the event of Mr. Oakes's termination
without cause or for good reason, he or his estate would receive his then current base annual salary, plus unpaid accrued employee
benefits, which is primarily accrued vacation, plus the continuation of his employee benefits for a period of 12 months, less all
applicable taxes. In the event of his voluntary termination, death or disability, he or his estate would receive unpaid accrued
employee benefits, plus the continuation of his employee benefits for a period of one month, less all applicable taxes.
Pursuant to Mr. Oakes employment agreement,
he is subject to a non-competition and non-solicitation provision during the term of his employment agreement and for a period
of one year following his termination.
Mark Daley
Mr. Daley served as InsPro Technologies,
LLC's Chief Revenue Officer from June 2, 2014 until March 8, 2017. His employment agreement commenced for a one year term
on November 15, 2015, was automatically renewed on November 15, 2016, and was terminated effective March 8, 2017. His annual base
salary was $200,000 per year from June 2, 2014 through January 31, 2015 and was then increased by the board of directors to $250,000
effective February 1, 2015. Pursuant to his employment agreement, his annual base salary was $250,000 per year.
As a result of Mr. Daley's termination
without cause or for good reason, he or his estate will receive his then current base annual salary, plus unpaid accrued employee
benefits, which is primarily accrued vacation, for a period of six months, less all applicable taxes during 2017.
Mr. Daley was entitled to variable incentive
compensation based on a percentage of new sales pursuant to a written variable compensation arrangement with InsPro Technologies,
LLC.
Pursuant to Mr. Daley's employment
agreement, he is subject to a non-competition and non-solicitation provision during the term of his employment agreement and for
a period of six months following his termination.
John Keddy
Pursuant to an employment agreement with
InsPro Technologies, LLC Mr. Keddy serves as InsPro Technologies, LLC's Chief Information Officer effective September 25,
2014. Pursuant to his employment agreement, his annual base salary is $250,000 per year plus such fringe benefits as are available
to other executives of the Company. His employment agreement has a term of one year and automatically renewed for a one year term
on each anniversary unless either party provides written notification to the other party of non-renewal no later than 30 days prior
to the termination date of the agreement. Mr. Keddy resigned effective July 17, 2015.
Pursuant to his written offer of employment
Mr. Keddy was entitled to receive a $40,000 one-time sign-on bonus, receive up to $3,500 per week for up to 10 weeks effective
September 25, 2014, as reimbursement for out-of-pocket temporary housing costs, receive up to $12,000 for reimbursement of reasonable
moving expenses and be eligible to participate in the Company's management bonus program beginning on January 1, 2015.
55
Pursuant to Mr. Keddy's employment
agreement, he is subject to a non-competition and non-solicitation provision during the term of his employment agreement and for
a period of 6 months following his termination.
Compensation of Directors
The following table sets forth information
concerning the compensation of all individuals who served on our board of directors during the fiscal year ended December 31, 2016.
There were no option awards and no non-equity incentive plan compensation or nonqualified deferred compensation earnings paid to
any of our directors for the year ended December 31, 2016. Directors who are employees receive no additional or special compensation
for serving as directors. All compensation for Messrs. Caldwell, Oakes and Verdi is included in the Summary Compensation Table.
Mr. Caldwell was appointed Chief Executive Officer of the Company on January 26, 2015. Messrs. Adamsky, Tecce and Caldwell have
assigned all of their compensation to The Co-Investment Fund II, L.P. Messrs. Tecce and Caldwell are stockholders, directors and
officers of Co-Invest II Capital Partners, Inc., which is the general partner of Co-Invest Management II, L.P., which is the general
partner of The Co-Investment Fund II, L.P. Mr. Adamsky was an officer of Co-Invest II Capital Partners, Inc.
Name
Fees Earned or
Paid in Cash
($) (1)
Stock Awards
($)
Option
Awards
($)
Total
($)
Brian Adamsky
(2)
4,500
-
-
4,500
Michael Azeez
6,000
-
-
6,000
John Harrison
6,000
-
-
6,000
Kenneth Harvey
6,000
-
-
6,000
Alan Krigstein
(3)
-
-
-
-
Sanford Rich
8,000
-
-
8,000
L.J. Rowell
6,500
-
-
6,500
Paul Soltoff
6,000
-
-
6,000
Frederick Tecce
(2)
-
Edmond Walters
6,000
-
-
6,000
(1)
Represents board and committee meeting fees paid to our directors under our Non-Employee Director Compensation Plan.
(2)
Messrs. Adamsky, Caldwell and Tecce have assigned all of their board compensation to The Co-Investment Fund II, L.P. Mr. Tecce
received no cash compensation during 2016.
(3)
Mr. Krigstein has assigned his equity compensation to Independence Blue Cross, LLC and he has declined all cash compensation.
56
The following table sets forth information concerning the aggregate
number of options and warrants available, which are options or warrants issued, outstanding and exercisable, for non-employee directors
as of December 31, 2016.
Aggregate Number of
Options/Warrants Available as
of December 31, 2016
Brian Adamsky (a)
-
Michael Azeez (b)
30,000
Donald Caldwell (a)
-
John Harrison (b)
30,000
Kenneth Harvey (b)
300,000
Alan Krigstein (c)
-
Sanford Rich (b)
30,000
L.J. Rowell  (b)
30,000
Paul Soltoff (b)
30,000
Frederick Tecce (a)
-
Edmond Walters (b)
30,000
(a)
Messrs. Adamsky, Caldwell and Tecce have assigned all of their board compensation to The Co-Investment Fund II, L.P.
(b)
Represents warrants to purchase shares of the Company's Series B Convertible Preferred Stock.
(c)
Mr. Krigstein has assigned his equity compensation to Independence Blue Cross, LLC.
Director Compensation Plan
Directors who are employees receive no additional
or special compensation for serving as directors. Non- employee directors receive the following compensation under the terms of
our Non Employee Director Compensation Plan, which was amended on December 13, 2011, to remove all equity compensation and annual
cash retainer components from the plan and to increase the per Board meeting cash fee effective January 2, 2012:
The compensation of the Company's non-employee directors
is as follows:
·
$1,500 meeting fee for each director for each meeting of the Board attended in person or via conference telephone.
·
$500 meeting fee for each committee member for each meeting of a committee of the Board, attended in person or via conference
telephone.
57
We also purchase directors' and officers' liability
insurance for the benefit of our directors and officers as a group. We also reimburse our non-employee directors for their reasonable
out-of-pocket expenses incurred in attending meetings of our board of directors or its committees in accordance with the Company's
expense reimbursement policies in effect from time to time. No fees are payable to directors for attendance at specially called
meetings of the board.
58
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table shows information known
by us with respect to the beneficial ownership of our common stock, Series A Convertible Preferred Stock, Series B Convertible
Preferred Stock and Series C Convertible Preferred Stock as of June 15, 2017, for each of the following persons:
·
our directors;
·
our named executive officers;
·
all of our directors, director nominees and executive officers as a group; and
·
each person or group of affiliated persons or entities known by us to beneficially own 5% or more of our common stock, Series
A Convertible Preferred Stock, Series B Convertible Preferred Stock or Series C Convertible Preferred Stock .
The number of shares beneficially owned,
beneficial ownership and percentage ownership are determined in accordance with the rules of the Commission. Under these rules,
beneficial ownership includes (i) any shares as to which the individual or entity has sole or shared voting power or investment
power and (ii) any shares that an individual or entity has the right to acquire beneficial ownership of within 60 days of June
15, 2017 through the exercise of any warrant, stock option or other right. In computing the number of shares beneficially owned
by a person and the percentage ownership of that person, shares underlying options and warrants that are exercisable within 60
days of June 15, 2017 are considered to be outstanding. To our knowledge, except as indicated in the footnotes to the following
table and subject to community property laws where applicable, the persons named in this table have sole voting and investment
power with respect to all shares shown as beneficially owned by them. The following table is based on 25,084,730 shares of Common
Stock, 1,276,750 shares of Series A Convertible Preferred Stock, 5,307,212 shares of Series B Convertible Preferred Stock and
1,150,000 shares of Series C Preferred Stock outstanding as of June 15, 2017. Unless otherwise indicated, the address of all
individuals and entities listed below is InsPro Technologies Corporation, 1510 Chester Pike, 400 Baldwin Tower, Eddystone, Pennsylvania
19022.
Name of Beneficial Owner
Number of Shares
Beneficially
Owned
Title of Class
Percent of
Shares
Beneficially
Owned
Directors and Executive Officers:
Brian Adamsky
-
Common Stock
*
Michael Azeez
16,599,990 (4)(5)(13)(21)
Common Stock
26.7
%
463,333(4)(7)
Series B Preferred Stock
8.7
%
75,000(4)
Series C Preferred Stock
6.5
%
Donald R. Caldwell
106,199,770  (1)(2)
Common Stock
92.7
%
1,250,000 (2)
Series A Preferred Stock
97.9
%
1,887,186 (2)(3)
Series B Preferred Stock
35.2
%
1,000,000 (2)(3)
Series C Preferred Stock
87.0
%
Mark Daley
-
Common Stock
*
Robert J. Oakes
9,026,813 (6)
Common Stock
16.9
%
151,250 (8)
Series A Preferred Stock
10.6
%
300,000 (10)
Series B Preferred Stock
5.4
%
59
Name of Beneficial Owner
Number of Shares
Beneficially
Owned
Title of Class
Percent of
Shares
Beneficially
Owned
John Harrison
770,000  (14)
Common Stock
1.8
%
1,250
Series A Preferred Stock
*
30,000 (7)
Series B Preferred Stock
*
Kenneth Harvey
6,000,000 (11)
Common Stock
12.6
%
300,000 (10)
Series B Preferred Stock
5.4
%
John Keddy
-
Common Stock
*
Alan Krigstein
-
Common Stock
*
L. J. Rowell
815,600 (12)
Common Stock
1.9
%
30,000 (7)
Series B Preferred Stock
*
Sanford Rich
715,000  (14)
Common Stock
1.7
%
1,250
Series A Preferred Stock
*
30,000 (7)
Series B Preferred Stock
*
Paul Soltoff
805,000  (14)
Common Stock
1.9
%
1,250
Series A Preferred Stock
*
30,000 (7)
Series B Preferred Stock
*
Frederick Tecce
105,688,674  (1)(2)
Common Stock
92.2
%
1,250,000 (2)
Series A Preferred Stock
97.9
%
1,887,186 (2)(3)
Series B Preferred Stock
35.2
%
1,000,000 (2)(3)
Series C Preferred Stock
87.0
%
Anthony R. Verdi
9,085,000  (9)(15)
Common Stock
18.0
%
151,250(8)
Series A Preferred Stock
10.6
%
300,000 (10)
Series B Preferred Stock
5.4
%
Edmond Walters
5,771,613(20)
Common Stock
12.2
%
196,666 (7)
Series B Preferred Stock
3.7
%
All directors and executive officers as a group (15 persons)
155,391,700 (1)(2) (4)(5)(6)(9)(11)
(12)(13)(14)(15)
(20)(21)(21)
Common Stock
98.8
%
1,556,250(2)(8)
Series A Preferred Stock
98.7
%
1,075,000 (2)(3)(4)(7)(10)
Series B Preferred Stock
55.3
%
60
Name of Beneficial Owner
Number of Shares
Beneficially
Owned
Title of Class
Percent of
Shares
Beneficially
Owned
Holders of More than Five Percent of Our Common Stock, Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C Convertible Preferred Stock:
The Co-Investment Fund II, L. P.
105,688,674 (16)
Common Stock
92.2
%
1,250,000
Series A Preferred Stock
97.9
%
1,887,186 (3)
Series B Preferred Stock
35.2
%
1,000,000
Series C Preferred Stock
87.0
%
Independence Blue Cross
58,933,330 (17)
Common Stock
58.7
%
2,530,000 (7)
Series B Preferred Stock
47.4
%
Azeez Investors, LLC
9,999,990 (5)
Common Stock
19.4
%
283,333
Series B Preferred Stock
5.3
%
Azeez Enterprises, LP
6,000,000 (13)(21)
Common Stock
12.6
%
150,000
Series B Preferred Stock
2.8
%
75,000
Series C Preferred Stock
6.5
%
Scarpa Family Trust, 2005
8,000,010 (18)
Common Stock
15.2
%
216,667
Series B Preferred Stock
6.9
%
John Scarpa
6,000,000 (23)(21)
Common Stock
12.6
%
150,000
Series B Preferred Stock
2.8
%
75,000
Series C Preferred Stock
6.5
%
Trustmark Insurance Company
40,000,000 (24)
Common Stock
49.1
%
2,000,000 (22)
Series B Preferred Stock
27.4
%
Alvin H. Clemens
2,929,080 (19)
Common Stock
7.1
%
* Less than 1%
(1)
Includes 12,646,874 shares of common stock, 10,298,080 shares underlying warrants, which are convertible within 60 days of
June 15, 2017, 25,000,000 shares underlying 1,250,000 shares of Series A Preferred Stock, which are convertible, at the sole
option of the holder, into twenty shares of our common stock per share of Series A Preferred Stock, 36,543,720 shares underlying
1,827,186 shares of Series B Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common
stock per share of Series B Preferred Stock, and 20,000,000 shares underlying 1,000,000 shares of Series C Preferred Stock, which
are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series C Preferred Stock, which
are beneficially owned by The Co-Investment Fund II, L. P. ("Co-Investment")), designee of Cross Atlantic Capital Partners,
Inc. Also includes 1,200,000 shares underlying warrants which are exercisable within 60 days of June 15, 2017, to purchase 60,000
shares of Series B Preferred Stock, which are also convertible, at the sole option of the holder, into 20 shares of our common
stock per share of Series B Preferred Stock, which are beneficially owned by Co-Investment.
61
(2)
Represents securities owned by Co-Investment, the designee of Cross Atlantic Capital Partners, Inc., of which Brian Adamsky
was secretary, treasurer and chief financial officer, Frederick Tecce is counsel and partner and of which Donald R. Caldwell is
managing partner. Mr. Caldwell is also a shareholder, director and officer of Co-Invest II Capital Partners, Inc., which is the
general partner of Co-Invest Management II, L.P., which is the general partner of Co-Investment. Mr. Adamsky, Mr. Tecce and Mr.
Caldwell disclaim beneficial ownership of these securities, except to the extent of their pecuniary interest therein.
(3)
Includes 60,000 underlying shares underlying warrants which are exercisable within 60 days of June 15, 2017, which are
beneficially owned by Co-Investment.
(4)
Includes securities owned by Azeez Investors, LLC and Azeez Enterprises, LP. Mr. Azeez is a managing member of Azeez Investors,
LLC and Azeez Enterprises, LP. Mr. Azeez disclaims beneficial ownership of these securities, except to the extent of his pecuniary
interest therein.
(5)
Includes 600,000 shares underlying a warrant which is exercisable within 60 days of March 28, 2016, to purchase 30,000
shares of Series B Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares of our common stock
per share of Series B Preferred Stock. Includes 8,666,660 shares underlying 433,333 shares of Series B Preferred Stock, which are
convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Preferred Stock.
(6)
Includes 3,000,000 shares underlying a warrant which is exercisable within 60 days of June 15, 2017, to purchase 150,000
shares of Series A Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares of our common stock
per share of Series A Preferred Stock. Includes 25,000 shares underlying 1,250 shares of Series A Preferred Stock, which are convertible,
at the sole option of the holder, into 20 shares of our common stock per share of Series A Preferred Stock. Includes 6,000,000
shares underlying a warrant which is exercisable within 60 days of June 15, 2017, to purchase 300,000 shares of Series B
Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series
B Preferred Stock.
(7)
Includes 30,000 shares underlying warrants, which are exercisable within 60 days of June 15, 2017.
(8)
Includes 150,000 shares underlying warrants which are exercisable within 60 days of June 15,
2017.
(9)
Includes 25,000 shares underlying 1,250 shares of Series A Preferred Stock, which are convertible, at the sole option of the
holder, into 20 shares of our common stock per share of Series A Preferred Stock.
(10)
Includes 300,000 shares underlying warrants, which are exercisable within 60 days of June 15, 2017.
(11)
Includes 6,000,000 shares underlying a warrant which is
exercisable within 60 days of June 15, 2017, to purchase 300,000 shares of Series B Preferred Stock which are also convertible,
at the sole option of the holder, into 20 shares of our common stock per share of Series B Preferred Stock.
(12)
Includes 600,000 shares underlying a warrant which is exercisable
within 60 days of June 15, 2017, to purchase 30,000 shares of Series B Preferred Stock which are also convertible, at the
sole option of the holder, into 20 shares of our common stock per share of Series B Preferred Stock.
(13)
Includes 3,000,000 shares underlying 150,000 shares of
Series B Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share
of Series B Preferred Stock. Includes 1,500,000 shares underlying a warrant which is exercisable within 60 days of June 15,
2017.
(14)
Includes 25,000 shares underlying 1,250 shares of Series
A Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series
A Preferred Stock. Includes 600,000 shares underlying a warrant which is exercisable within 60 days of June 15, 2017, to
purchase 30,000 shares of Series B Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares
of our common stock per share of Series B Preferred Stock.
62
(15)
Includes 3,000,000 shares underlying a warrant which is
exercisable within 60 days of June 15, 2017, to purchase 150,000 shares of Series A Preferred Stock, which are also convertible,
at the sole option of the holder, into 20 shares of our common stock per share of Series A Preferred Stock. Includes 6,000,000
shares underlying a warrant which is exercisable within 60 days of June 15, 2017, to purchase 300,000 shares of Series
B Preferred Stock, which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share
of Series B Preferred Stock.
(16)
Includes 8,333,330 shares underlying warrants, which are
exercisable within 60 days of June 15, 2017. Includes 25,000,000 shares underlying 1,250,000 shares of Series A Preferred Stock,
which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series A Preferred Stock.
Includes 36,543,720 shares underlying 1,827,186 shares of Series B Preferred Stock, which are convertible, at the sole option
of the holder, into 20 shares of our common stock per share of Series B Preferred Stock. Includes 20,000,000 shares underlying
1,000,000 shares of Series C Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common
stock per share of Series C Preferred Stock. Also includes 1,200,000 shares underlying warrants which are exercisable within 60
days of June 15, 2017, to purchase 60,000 shares of Series B Preferred Stock, which are also convertible, at the sole option
of the holder, into 20 shares of our common stock per share of Series B Preferred Stock, which are beneficially owned by Co-Investment.
(17)
Includes 8,333,330 shares underlying warrants which are
exercisable within 60 days of June 15, 2017. Includes 50,000,000 shares underlying 2,500,000 shares of Series B Preferred
Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Preferred
Stock.
(18)
Includes 3,666,670 shares underlying warrants which are
exercisable within 60 days of June 15, 2017. Includes 7,333,340 shares underlying 366,667 shares of Series B Preferred
Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Preferred
Stock.
(19)
Includes 1,000,000 shares of common stock held by The Clemens-Beaver
Creek Limited Partnership, of which Alvin H. Clemens is the general partner. Also includes 100,000 shares held by Mr. Clemens's
minor children.
(20)
Includes 1,666,660 shares underlying warrants which are
exercisable within 60 days of June 15, 2017. Includes 3,333,320 shares underlying 166,666 shares of Series B Preferred
Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Preferred
Stock. Includes 600,000 shares underlying a warrant which is exercisable within 60 days of June 15, 2017, to purchase 30,000
shares of Series B Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares of our common
stock per share of Series B Preferred Stock.
(21)
Includes 1,500,000 shares underlying 75,000 shares of Series
C Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series
C Preferred Stock.
(22)
Includes 2,000,000 shares underlying warrants, which are
exercisable within 60 days of June 15, 2017.
(23)
Includes 1,500,000 shares underlying warrants which are
exercisable within 60 days of June 15, 2017. Includes 3,000,000 shares underlying 150,000 shares of Series B Preferred
Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Preferred
Stock.
(24)
Includes 40,000,000 shares underlying a warrant which is
exercisable within 60 days of June 15, 2017, to purchase 2,000,000 shares of Series B Preferred Stock which are also convertible,
at the sole option of the holder, into 20 shares of our common stock per share of Series B Preferred Stock.
63
TRANSACTIONS WITH RELATED PERSONS,
PROMOTERS AND CERTAIN CONTROL PERSONS
From the beginning of our last fiscal year
until the date of this proxy statement, there has been no transaction, nor is there any transaction currently proposed, to which
we were, are, or would be a participant, in which the amount involved exceeded or would exceed the lesser of $120,000 or one percent
of the average of our total assets at year end for the last two completed fiscal years and in which any of our directors or executive
officers, any holder of more than 5% of our common stock or any member of the immediate family of any of these persons or entities
had or will have a direct or indirect material interest, other than the transactions described below.
We believe that we have executed all of
the transactions described below on terms no less favorable to us than we could have obtained from unaffiliated third parties.
It is our intention to ensure that all future transactions between us and our officers, directors and principal stockholders and
their affiliates are approved by a majority of our board of directors, including a majority of the independent and disinterested
members of our board of directors, and are on terms no less favorable to us than those that we could obtain from unaffiliated third
parties.
·
On April 20, 2017, the Company completed a private placement (the "
April Private Placement
") with The Co-Investment
Fund II, L.P., a holder of more than 5% of our common stock on an as converted basis (the "
Investor
"), for an
aggregate of 1,000,000 shares of Series C Convertible Preferred Stock. In the April Private Placement the Company sold to the Investor
1,000,000 shares of Series C Convertible Preferred Stock at a per share price equal to $2.00.
·
On May 11, 2017, the Company entered into and completed a private placement (the "
May Private Placement
")
with Azeez Enterprises, L.P., which is affiliated with Michael Azeez, who is a director of the Company, and John Scarpa, who is
a holder of more than 5% of our common stock on an as converted basis, for an aggregate of 150,000 shares of Series C Convertible
Preferred Stock. In the May Private Placement the Company issued 75,000 shares of Series C Convertible Preferred Stock to each
of Azeez Enterprises, L.P. and John Scarpa.
64
PLAN OF DISTRIBUTION
On or about [_______],
201[__], we will distribute the rights, rights certificates and copies of this prospectus to individuals who owned shares of capital
stock on [_______], 201[__]. If you wish to exercise your rights and purchase Units, you should complete the rights certificate
and return it with payment for the shares, to us at the following address:
InsPro Technologies Corporation
1510 Chester Pike
Suite 400
Eddystone, Pennsylvania 19022
Attn: Francis L. Gillan III
See further the section
of this prospectus entitled "The Rights Offering." If you have any questions, you should contact Francis L. Gillan
III, at (484) 654-2200 or by electronic mail at
rightsoffering@inspro.com
.
We do not know of any
existing agreements between any stockholder, broker, dealer, underwriter or agent relating to the sale or distribution of the Series
C Convertible Preferred Stock underlying the rights.
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a
discussion of the material U. S. federal income tax consequences to U.S. holders, as defined below, of the receipt, ownership and
exercise (or expiration) of the subscription rights distributed in the subscription rights offering; the ownership and disposition
of Series C Convertible Preferred Stock received upon exercise of the subscription rights; the conversion of Series C Convertible
Preferred Stock and ownership of common stock upon conversion of the Series C Convertible Preferred Stock. The legal conclusions
with respect to matters of U.S. federal income tax law identified in this section, "Material U.S. Federal Income Tax Considerations,"
are the opinion of our counsel, Morgan, Lewis & Bockius LLP. In this section, all references to "we" and "our"
refer to the Company and not to Morgan, Lewis & Bockius LLP.
This discussion is
based on the Code, Treasury regulations promulgated thereunder, and administrative and judicial interpretations thereof, all as
in effect as of the date hereof and all of which are subject to change, possibly with retroactive effect. This discussion is not
binding on the Internal Revenue Service, the ("IRS"), or the courts. Accordingly, no assurance can be given that the
tax consequences described herein will not be challenged by the IRS or that such a challenge would not be sustained by a court.
No ruling has been sought from the IRS as to the U.S. federal income tax consequences set forth in this discussion.
This discussion does
not address all aspects of U.S. federal income taxation that may be applicable to holders in light of their particular circumstances
or to holders subject to special treatment under the U.S. federal income tax laws, including, but not limited to, financial institutions,
brokers and dealers in securities or currencies, insurance companies, regulated investment companies, real estate investment trusts,
tax-exempt organizations, persons who hold their shares as part of a straddle, hedge, conversion or other risk-reduction transaction,
persons liable for the alternative minimum tax, persons who have received their common stock pursuant to which the subscription
rights in this rights offering have been granted through the exercise of employee stock options or otherwise as compensation for
services, partnerships or other entities treated as partnerships for U.S. federal income tax purposes, U.S. expatriates, and persons
whose functional currency is not the U.S. dollar and foreign taxpayers. This discussion does not describe any tax consequences
arising out of the tax laws of any state, local or foreign jurisdiction, or any U.S. federal tax considerations other than income
taxation (such as alternative minimum, estate or gift taxation). This discussion is limited to U.S. holders which hold our shares
as capital assets and does not address U.S. holders which beneficially hold our shares through either a "foreign financial
institution" (as such term is defined in Section 1471(d)(4) of the Code) or certain other non-U.S. entities specified in
Section 1472 of the Code. For purposes of this discussion, a "U.S. holder" is a holder that is, for U.S. federal income
tax purposes:
·
a citizen or resident of the United States;
65
·
a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under
the laws of the United States or any political subdivision thereof;
·
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
·
a trust if (i) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more "United
States persons" (within the meaning of the Code) have the authority to control all substantial decisions of the trust or
(ii) has a valid election in effect under applicable Treasury regulations to be treated as a United States person.
If a partnership (including
any entity treated as a partnership for U.S. federal income tax purposes) receives the subscription rights or holds shares of Series
C Convertible Preferred Stock upon exercise of the subscription rights or the oversubscription privilege, the tax treatment of
a partner in a partnership generally will depend upon the status of the partner and the activities of the partnership. Such a partner
or partnership should consult its own tax advisor as to the U.S. federal income tax consequences of the receipt and ownership of
the subscription rights or the ownership of shares of Series C Convertible Preferred Stock received upon exercise of the subscription
rights or, if applicable, upon exercise of the oversubscription privilege.
YOU SHOULD CONSULT
YOUR TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO YOU OF YOUR RECEIPT, OWNERSHIP, AND EXERCISE OF THE SUBSCRIPTION RIGHTS,
THE OWNERSHIP AND DISPOSITION OF SERIES C CONVERTIBLE PREFERRED STOCK, AND THE OWNERSHIP AND DISPOSITION OF COMMON STOCK RECEIVED
UPON THE CONVERSION OF SERIES C CONVERTIBLE PREFERRED STOCK, INCLUDING THE APPLICABILITY OF ANY FEDERAL ESTATE OR GIFT TAX LAWS
OR ANY STATE, LOCAL OR FOREIGN TAX LAWS.
Receipt of the
Subscription Rights
Each subscription right
entitles an eligible stockholder the right to purchase for $50.00 one Unit, consisting of 25 shares of our Series C Convertible
Preferred Stock. Generally, the distribution of stock by a corporation to its stockholders with respect their stock is not taxable
to such stockholders pursuant to Section 305(a) of the Code. For such purpose, a distribution of rights to acquire stock of the
distributing corporation constitutes a distribution of stock. However, if a distribution of stock or rights to acquire stock is
within one of several exceptions to the general rule of Section 305(a) set forth in Section 305(b) of the Code, the distribution
may be taxable to the stockholders of the distributing corporation as described below.
Many of the exceptions
to the general rule of Section 305(a) set forth in Section 305(b) involve preferred stock, such as the distribution of convertible
preferred stock in certain circumstances pursuant to Section 305(b)(5). Treasury regulations define preferred stock not for its
preferred rights and privileges, but its inability to participate in corporate growth to any significant extent. It is the opinion
of Morgan, Lewis & Bockius LLP that the Series C Convertible Preferred Stock should not be preferred stock for tax purposes
based on certain features of the preferred stock, including its right to participate in dividends on an as converted basis and
the right to a distribution in a liquidation or other capital event on an as converted basis if such distribution would be greater
than the liquidation preference right associated with the Series C Convertible Preferred Stock, as well as based on certain representations
relied upon in rendering the opinion, and, accordingly, that none of the Section 305(b) exceptions that apply to preferred stock
for tax purposes should apply to the rights offering and that the rights offering should be evaluated for Section 305 purposes
as if we have only one outstanding class of stock. However, the application of the Code Section 305 rules to the rights offering
(and any interest therein or obtained thereby) is uncertain. This opinion is not binding on the IRS or any court and there can
be no assurance that the IRS or a court will agree with this opinion. The remainder of this discussion assumes that the Series
C Convertible Preferred Stock is not treated as preferred stock for tax purposes.
66
Section 305(b)(2) is
an exception to the general rule of Section 305(a) that applies to a "disproportionate distribution." Pursuant to Section
305(b)(2), a distribution (or a series of distributions of which such a distribution is one) of stock rights constitutes a "disproportionate
distribution," and is therefore taxable, if the distribution results in (i) the receipt of property by some stockholders,
and (ii) an increase in the proportionate interest of other stockholders in the assets or earnings and profits of the distributing
corporation. For this purpose, the term "property" means money, securities and any other property, except that such
term does not include stock in the corporation making the distribution or rights to acquire such stock. A "series of distributions"
encompasses all distributions of stock made or deemed made by a corporation which have the result of receipt of cash or property
by some stockholders and an increase in the proportionate interests of other stockholders. It is not necessary for a distribution
of stock to be considered as one of a series of distributions that such distribution be pursuant to a plan to distribute cash and
property to some stockholders and to increase the proportionate interests of the other stockholders, rather it is sufficient if
there is a distribution (or a deemed distribution) having such effect. In addition, there is no requirement that both elements
of Section 305(b)(2) of the Code occur in the form of a distribution or series of distributions as long as the result is that some
stockholders receive cash and property and other stockholders' proportionate interests increase. Under the applicable Treasury
regulations, where the receipt of cash or property occurs more than 36 months following a distribution or series of distributions
of stock, or where a distribution is made more than 36 months following the receipt of cash or property, such distribution or distributions
will be presumed not to result in the receipt of cash or property by some stockholders and an increase in the proportionate interest
of other stockholders, unless the receipt of cash or property by some stockholders and the distribution or series of distributions
are made pursuant to a plan.
It is the opinion of
Morgan, Lewis & Bockius LLP that the distribution of subscription rights in the rights offering should not constitute an increase
in the proportionate interest of some stockholders in the assets or earnings and profits of the Company for the purpose of Section
305(b)(2) based on the fact that all of our stockholders will receive rights in the rights offering based upon their respective
ownership of our stock, as well as based on certain representations relied upon in rendering the opinion, and, accordingly, that
the rights offering should not constitute part of a "disproportionate distribution," pursuant to Section 305(b)(2)
of the Code. However, the application of the Code Section 305 rules to the rights offering (and any interest therein or obtained
thereby) is uncertain. This opinion is not binding on the IRS or any court and there can be no assurance that the IRS or a court
will agree with this opinion. The remainder of this discussion assumes that Section 305(b)(2) does not apply to the subscription
rights offering.
Subject to the foregoing,
it is the opinion of Morgan, Lewis & Bockius LLP that you should not recognize taxable income for U.S. federal income tax purposes
in connection with the receipt of the subscription right in the rights offering and the remainder of this discussion so assumes.
Morgan, Lewis & Bockius LLP is unable to opine at a higher level of certainty on this matter due to the aforementioned uncertainty
associated with the application of the Code Section 305 rules to the rights offering (and any interest therein or obtained thereby).
In the event the IRS successfully asserts or a court determines that your receipt of subscription rights is currently taxable pursuant
to Section 305(b)(2) of the Code, the discussion under the heading "Alternative Treatment of Subscription Rights" describes
the tax consequences that will result from such a determination.
Tax Basis and Holding Period of the Subscription Rights
Your tax basis of the
subscription rights for U.S. federal income tax purposes will depend on the fair market value of the subscription rights you receive
and the fair market value of your existing shares of stock on the date you receive the subscription rights. The tax basis of the
subscription rights received by you in the subscription rights offering will be zero unless either (i) the fair market value of
the subscription rights on the date such subscription rights are distributed is equal to at least 15% of the fair market value
on such date of the shares with respect to which they are received or (ii) you elect to allocate part of the tax basis of such
shares to the subscription rights. If either (i) or (ii) is true, then, if you exercise the subscription rights, your tax basis
in your shares will be allocated between the subscription rights and the shares with respect to which the subscription rights were
received in proportion to their respective fair market values on the date the subscription rights are distributed.
We have not obtained
an independent appraisal of the valuation of the subscription rights and, therefore, you should consult with your tax advisor to
determine the proper allocation of basis between the subscription rights and the shares with respect to which the subscription
rights are received.
Your holding period
for the subscription rights will include your holding period for the shares with respect to which the subscription rights were
received.
67
Expiration of the Subscription Rights
If you allow subscription
rights received in the subscription rights offering to expire, you will not recognize any gain or loss. If you have tax basis in
the subscription rights, the tax basis of the shares owned by you with respect to which such subscription rights were distributed
will be restored to the tax basis of such shares immediately prior to the receipt of the subscription rights in the subscription
rights offering.
Alternative Treatment
of Subscription Rights
Receipt
.
If the IRS were to successfully assert that the distribution of the subscription rights in the rights offering resulted in a "disproportionate"
distribution or is otherwise taxable pursuant to Section 305(b)(2), each holder would be considered to have received a distribution
with respect to such holder's stock in an amount equal to the fair market value of the subscription rights received by such
holder on the date of the distribution. This distribution generally would be taxed as dividend income to the extent of your ratable
share of our current and accumulated earnings and profits. The amount of any distribution in excess of our earnings and profits
will be applied to reduce, but not below zero, your tax basis in your stock, and any excess generally will be taxable to you as
capital gain (long-term, if your holding period with respect to your capital stock is more than one year as of the date of distribution,
and otherwise short-term). Your tax basis in the subscription rights received pursuant to the rights offering would be equal to
their fair market value on the date of distribution and the holding period for the rights would begin upon receipt.
Expiration
.
Assuming the receipt of subscription rights in the rights offering is a taxable event, if your subscription rights lapse without
being exercised, you will recognize a capital loss equal to your tax basis in such expired subscription rights. The deductibility
of capital losses is subject to limitations.
Exercise of the
Subscription Rights; Tax Basis and Holding Period of the Shares
Generally, you will
not recognize any gain or loss upon the exercise of the subscription rights received in the subscription rights offering by purchasing
Unit(s) for $50.00 per Unit. The tax basis of the Series C Convertible Preferred Stock acquired will be the sum of (i) the subscription
price of the Series C Convertible Preferred Stock, plus (ii) the tax basis of the subscription rights, if any.
The holding period
for the Series C Convertible Preferred Stock acquired through exercise of the subscription rights will begin on the date the subscription
rights are exercised.
Taxation of Series C Convertible Preferred
Stock
Distributions
.
Generally, any distribution with respect to the Series C Convertible Preferred Stock that is paid out of our current or accumulated
earnings and profits, as determined for U.S. federal income tax purposes, will constitute a dividend and will be includible in
gross income by you when paid. Distributions with respect to the Series C Convertible Preferred Stock in excess of our current
or accumulated earnings and profits would be treated first as a non-taxable return of capital to the extent of your basis in the
Series C Convertible Preferred Stock (thus reducing such tax basis dollar-for-dollar), and thereafter as capital gain, which will
be long-term capital gain if the your holding period for such stock at the time of distribution exceeds one year.
Sale, Exchange
or Other Disposition
. Upon a sale, exchange or other disposition of the Series C Convertible Preferred Stock (not including
a conversion of the Series C Convertible Preferred Stock into our common stock), you generally will recognize capital gain or loss
equal to the difference between the amount realized (not including any amount attributable to declared and unpaid dividends, which
generally will be taxable as described above, under "— Taxation of Series C Convertible Preferred Stock — Distributions,"
to holders that have not previously included such dividends in income) and your tax basis in the Series C Convertible Preferred
Stock so disposed. Such capital gain or loss generally will be long-term capital gain or loss if your holding period for such stock
at the time of disposition exceeds one year. The deductibility of capital losses is subject to limitations.
68
Adjustment of
the Conversion Rate
. The conversion rate of the Series C Convertible Preferred Stock is subject to adjustment. Treasury
regulations promulgated under Section 305 of the Code could, under certain circumstances, treat a U.S. holder of the Series C Convertible
Preferred Stock as having received a constructive distribution includable in such U.S. holder's income in the manner described
above under "— Taxation of Series C Convertible Preferred Stock — Distributions" if and to the extent that
certain adjustments in the conversion rate (or failures to adjust) increase the proportionate interest of a U.S. holder in our
earnings and profits or assets. Thus, under certain circumstances, U.S. holders may recognize income in the event of a constructive
distribution even though they may not receive any cash or property. Adjustments to the conversion rate made pursuant to a bona
fide reasonable adjustment formula which has the effect of preventing dilution in the interest of the U.S. holders of the Series
C Convertible Preferred Stock, however, will generally not be considered to result in a constructive dividend distribution.
Conversion of
the Series C Convertible Preferred Stock into Our Common Stock
. You generally will not recognize any gain or loss in respect
of the receipt of our common stock upon the conversion of the Series C Convertible Preferred Stock. The tax basis of our common
stock that you receive on conversion will equal the tax basis of the Series C Convertible Preferred Stock converted (reduced by
the portion of tax basis allocated to any fractional common share exchanged for cash, as described below), and the holding period
of such common stock received on conversion will generally include the period during which you held the Series C Convertible Preferred
Stock prior to conversion.
Cash received in lieu
of a fractional common share will generally be treated as a payment in a taxable exchange for such fractional common share, and
capital gain or loss will be recognized on the receipt of cash in an amount equal to the difference between the amount of cash
received and the amount of tax basis allocable to the fractional common share. Any cash received attributable to any declared and
unpaid dividends on the Series C Convertible Preferred Stock will be treated as described above under "— Taxation of
Series C Convertible Preferred Stock — Distributions."
Taxation of Common Stock
Distributions
.
Distributions received with respect to our common stock will be treated as described above under "— Taxation of
Series C Convertible Preferred Stock — Distributions."
Sale, Exchange or Other Disposition
.
Upon a sale, exchange or other disposition of our common stock, you generally will recognize capital gain or loss in the manner
described above under "— Taxation of Series C Convertible Preferred Stock — Sale, Exchange or Other Disposition."
Additional Medicare Tax on Net Investment Income
An additional 3.8% tax will be imposed on
the "net investment income" of certain U.S. citizens and resident aliens, and on the undistributed "net investment
income" of certain estates and trusts. Among other items, "net investment income" generally includes gross income
from dividends and net gain from the disposition of property, such as our capital stock, less certain deductions. You should consult
your tax advisor with respect to this additional tax.
Information Reporting and Backup Withholding
In general, payments made to you of proceeds
from the sale or other disposition of Series C Convertible Preferred Stock or our common stock, or of dividends on our stock may
be subject to information reporting to the IRS and possible U.S. federal backup withholding at the then applicable backup withholding
rate (currently at 28%). Backup withholding will not apply if you furnish a correct taxpayer identification number (certified on
the IRS Form W-9 or valid substitute Form W-9) or otherwise establish that you are exempt from backup withholding.
Backup withholding is not an additional
tax.
69
Amounts withheld as backup withholding may
be credited against your U.S. federal income tax liability. You may obtain a refund of any excess amounts withheld under the backup
withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.
You should consult
your own tax advisor regarding your qualification for an exemption from backup withholding and the procedures for obtaining such
an exemption, if applicable.
70
EXPERTS
Our consolidated financial
statements as of and for the years ended December 31, 2015 and 2016 included in this prospectus and in the registration statement
of which this prospectus is a part have been audited by D'Arelli Pruzansky, P.A., independent registered public accountants,
to the extent and for the periods set forth in their report and are incorporated in this prospectus in reliance upon the report
given upon the authority of D'Arelli Pruzansky, P.A. as experts in auditing and accounting.
TRANSFER AGENT AND REGISTRAR
The transfer agent
and registrar for our common stock is Pacific Stock Transfer Company, whose address is 6725 Via Austi Parkway, Suite 300, Las Vegas,
NV 89119, and whose phone number is (702) 361-3033.
LEGAL MATTERS
The validity of the
securities being offered by this prospectus have been passed upon for us by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania.
CHANGE IN ACCOUNTANTS
Prior to May 3, 2017, D'Arelli Pruzansky,
P.A. was engaged by the Company as the Company's independent registered public accounting firm. On May 3, 2017, the practice
of D'Arelli Pruzansky, P.A. was combined with Assurance Dimensions, Inc., and the professional staff and partners of D'Arelli
Pruzansky, P.A. joined Assurance Dimensions, Inc.
On May 11, 2017, the Company formally engaged
Assurance Dimensions, Inc. to serve as the Company's independent registered public accounting firm. The engagement was due
to the merger of our existing certifying accountant, D'Arelli Pruzansky, P.A., and Assurance Dimensions, Inc. The decision
to engage Assurance Dimensions, Inc. as our independent registered public accounting firm was approved by the Company's Audit
Committee on May 11, 2017.
D'Arelli Pruzansky, P.A.'s reports
on the Company's consolidated financial statements as of and for the fiscal year ended December 31, 2016 did not contain
an adverse opinion of disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with
the Commission a registration statement on Form S-1, including exhibits, schedules and amendments filed with this registration
statement, under the Securities Act with respect to offers and resales of shares of our common stock by the selling stockholders
identified in this prospectus. This prospectus, which constitutes part of the registration statement, does not include all of the
information contained in the registration statement and its exhibits and schedules. You should refer to the registration statement
and its exhibits and schedules for additional information. Whenever we make reference in this prospectus to any of our contracts,
agreements or other documents, the references are not necessarily complete and you should refer to the exhibits filed with the
registration statement for copies of the actual contract, agreement or other document. Statements contained in this prospectus
as to the contents of any contract or other document referred to in this prospectus are not necessarily complete and, where that
contract is an exhibit to the registration statement, each statement is qualified in all respects by reference to the exhibit to
which the reference relates.
You can read the registration
statement and our other filings with the Commission, over the Internet at the Commission's website at http://www.sec.gov.
You also may read and copy any document that we file with the Commission at its public reference room at Headquarters Office, 100
F Street, N.E., Washington, D.C. 20549.
71
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers or persons controlling us
pursuant to the foregoing provisions, we have been informed that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
72
FINANCIAL STATEMENTS
TABLE OF CONTENTS
Page Number
Management's Report on Internal Control Over Financial Reporting
F-2
Report of Independent Registered Public Accounting Firm
F-3
Consolidated Balance Sheets at December 31, 2016 and December 31, 2015
F-4
Consolidated Statements of Operations for the Years Ended December 31, 2016 and December 31, 2015
F-5
Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2016 and December 31, 2015
F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016 and December 31, 2015
F-7
Notes to Consolidated Financial Statements
F-8 – F-36
Consolidated Balance Sheets as of March 31, 2017 (UNAUDITED) and December 31, 2016
F-37
Consolidated Statements of Operations (UNAUDITED) for the three months ended March 31, 2017 and 2016
F-38
Consolidated Statements of Cash Flows (UNAUDITED) for the three months ended March 31, 2017 and 2016
F-39
Notes to Consolidated UNAUDITED Financial Statements
F-40 – F-60
F-
1
Management Report on Internal Control
over Financial Reporting
Disclosure Controls
and Procedures.
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting for the Company. Under the supervision of our
Principal Officer and Chief Financial Officer, our management conducted an assessment of the effectiveness of our disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended)
as of the end of the period covered by this report. Based on that assessment, the Principal Executive Officer and Chief Financial
Officer has concluded that our disclosure controls and procedures were effective for their intended purposes as of December 31,
2014.
Internal Control
over Financial Reporting.
The Company's
internal control over financial reporting is a process to provide reasonable assurance that the information required to be disclosed
by the Company in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported
within the time periods specified in the Commission's rules and is accumulated and communicated to management, including
the Company's principal executive and principal financial officers, or person performing similar functions, as appropriate
to allow timely decisions regarding required recording and disclosure.
A control system,
no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. 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. 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, control may become 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 not be detected.
As of December 31,
2016 management conducted an assessment of the effectiveness of the Company's internal control over financial reporting based
on the criteria for effective internal control over financial reporting established in "Internal Control — Integrated
Framework," issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on that assessment,
our Principal Executive Officer and Chief Financial Officer has concluded that our internal control over financial reporting was
effective as of December 31, 2016.
Changes in internal
control over financial reporting.
There have not been
any changes in the Company's internal control over financial reporting during the Company's last fiscal year to which
this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
F-
2
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors
InsPro Technologies Corporation
Eddystone, Pennsylvania
We have audited the accompanying consolidated
balance sheets of InsPro Technologies Corporation and Subsidiaries as of December 31, 2016 and 2015, the related consolidated statements
of operations, changes in shareholders' (deficit) equity and cash flows for each of the two years in the period ended December
31, 2016. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits.
We conducted our audits
in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the
consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position
of InsPro Technologies Corporation and Subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their
cash flows for each of the two years in the period ended December 31, 2016, in conformity with accounting principles generally
accepted in the United States of America
/s/ D'Arelli Pruzansky
Certified Public Accountants
Coconut Creek, Florida
March 30, 2017
F-
3
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2016
December 31, 2015
ASSETS
CURRENT ASSETS:
Cash
$
3,161,617
$
3,398,293
Accounts receivable, net
2,333,817
3,959,437
Prepaid expenses
225,439
179,700
Other current assets
30,520
4,954
Assets of discontinued operations
8,636
15,212
Total current assets
5,760,029
7,557,596
Property and equipment, net
512,960
747,937
Other assets
-
40,000
Total assets
$
6,272,989
$
8,345,533
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes payable
$
39,194
$
27,474
Accounts payable
5,460,035
5,410,146
Accrued expenses
436,516
497,088
Current portion of capital lease obligations
188,025
227,880
Deferred revenue
2,285,140
2,680,361
Total current liabilities
8,408,910
8,842,949
LONG TERM LIABILITIES:
Deferred revenue
1,500,000
2,000,000
Capital lease obligations
153,139
149,892
Total long term liabilities
1,653,139
2,149,892
Total liabilities
10,062,049
10,992,841
COMMITMENTS AND CONTINGENCIES: (See Note 9)
SHAREHOLDERS' DEFICIT:
Preferred stock ($.001 par value; 20,000,000 shares authorized)
Series A convertible preferred stock; 3,437,500 shares designated, 1,276,750 shares issued and outstanding (liquidation value $12,767,500)
2,864,104
2,864,104
Series B convertible preferred stock; 11,000,000 shares designated, 5,307,212 and 5,305,852 shares issued and outstanding (liquidation value $15,921,636 and $15,917,556)
11,689,019
11,689,018
Common stock ($.001 par value; 500,000,000 shares authorized, 41,543,655 shares issued and outstanding)
41,543
41,543
Additional paid-in capital
48,268,968
46,742,784
Accumulated deficit
(66,652,694
)
(63,984,757
)
Total shareholders' deficit
(3,789,060
)
(2,647,308
)
Total liabilities and shareholders' deficit
$
6,272,989
$
8,345,533
See accompanying notes to consolidated financial
statements.
F-
4
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31,
2016
2015
Revenues, net of $1,299,963 of stock based fees paid to a client during the year ended December 31, 2016
$
21,830,928
$
21,377,557
Cost of revenues
19,070,205
21,702,984
Gross profit (loss)
2,760,723
(325,427
)
Selling, general and administrative expenses
5,473,566
6,099,564
Operating gain (loss) from continuing operations
(2,712,843
)
(6,424,991
)
Other income (expense):
Gain on the sale of equipment
-
17,738
Interest expense
(25,249
)
(125,012
)
Total other income (expense)
(25,249
)
(107,274
)
Gain (loss) from continuing operations
(2,738,092
)
(6,532,265
)
Income from discontinued operations
70,155
155,797
Net income (loss)
$
(2,667,937
)
$
(6,376,468
)
Net income (loss) per common share - basic and diluted:
Income (loss) from operations
$
(0.06
)
$
(0.15
)
Income from discontinued operations
-
-
Net income (loss) per common share
$
(0.06
)
$
(0.15
)
Weighted average common shares outstanding - basic and diluted
41,543,655
41,543,655
See accompanying notes to consolidated financial
statements.
F-
5
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2016
and 2015
Series A Preferred Stock,
Series B Preferred Stock,
Common Stock, $.001
$.001 Par Value
$.001 Par Value
Par Value
Total
Number
                                         of
Shares
Amount
Number
                                         of
Shares
Amount
Number
                                         of
Shares
Amount
Additional
Paid-in
                                         Capital
Accumulated
Deficit
Shareholders'
(Deficit)
Balance - December 31, 2014
1,276,750
$
2,864,104
3,809,378
$
7,709,919
41,543,655
$
41,543
$
45,738,974
$
(57,608,289
)
$
(1,253,749
)
Amortization of deferred compensation
259,048
259,048
Net loss for the period
(6,376,468
)
(6,376,468
)
Preferred stock and warrants issued in private placements
1,496,474
3,979,099
497,310
4,476,409
Fair value of warrant liability whose anti-dilution provisions expired during the period
5,760
5,760
Warrants issued to executives as compensation
51,200
51,200
Warrants amended to extend the expiration date issued to an executive as compensation
190,492
190,492
Balance - December 31, 2015
1,276,750
$
2,864,104
5,305,852
$
11,689,018
41,543,655
$
41,543
$
46,742,784
$
(63,984,757
)
$
(2,647,308
)
Amortization of deferred compensation
74,762
74,762
Net loss for the period
(2,667,937
)
(2,667,937
)
Preferred stock and warrants issued in rights offering
1,360
1
4,079
4,080
Warrants issued to client as compensation
1,299,963
1,299,963
Warrants amended to extend the expiration date issued to executives as compensation
147,380
147,380
Balance - December 31, 2016
1,276,750
$
2,864,104
5,307,212
$
11,689,019
41,543,655
$
41,543
$
48,268,968
$
(66,652,694
)
$
(3,789,060
)
See accompanying notes to consolidated financial
statements.
F-
6
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year Ended December 31,
2016
2015
Cash Flows From Operating Activities:
Net loss
$
(2,667,937
)
$
(6,376,468
)
Less: income from discontinued operations
(70,155
)
(155,797
)
Loss from continuing operations
(2,738,092
)
(6,532,265
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
501,463
599,930
Stock-based compensation
222,142
500,739
Stock based fees paid to client as a reduction to revenue
1,299,963
-
(Gain) on the sale of used equipment
-
(17,738
)
Changes in assets and liabilities:
Accounts receivable
1,625,620
(1,714,625
)
Prepaid expenses
78,886
141,528
Other current assets
14,434
(2,158
)
Other assets
-
10,000
Accounts payable
49,889
576,018
Accrued interest on secured note from related party
-
89,425
Accrued expenses
(60,572
)
123,778
Deferred revenue
(895,221
)
2,428,673
Net cash provided by (used in) continuing operations
98,512
(3,796,695
)
Income from discontinued operations
70,155
155,797
Changes in assets of discontinued operations
6,576
4,571
Net cash provided by discontinued operations
76,731
160,368
Net cash provided by (used in) operating activities
175,243
(3,636,327
)
Cash Flows From Investing Activities:
Purchase of property and equipment
(34,351
)
(139,862
)
Proceeds from the sale of equipment
-
79,053
Net cash used in investing activities
(34,351
)
(60,809
)
Cash Flows From Financing Activities:
Gross proceeds from sale of preferred stock and warrants
4,080
1,899,999
Fees paid in connection with sale of preferred stock and warrants
-
(13,013
)
Payments on notes payable
(112,905
)
(521,855
)
Gross proceeds from secured note from related party
-
2,000,000
Gross proceeds loan payable to related party
-
500,000
Payments on capital leases
(268,743
)
(200,703
)
Net cash (used in) provided by financing activities
(377,568
)
3,664,428
Net (decrease) in cash
(236,676
)
(32,708
)
Cash - beginning of the period
3,398,293
3,431,001
Cash - end of the period
$
3,161,617
$
3,398,293
Supplemental Disclosures of Cash Flow Information
Cash payments for interest
$
25,249
$
125,012
Non cash investing and financing activities:
Acquisition of equipment acquired through capital leases
$
232,135
$
164,880
Fair value of warrant liability whose anti-dilution provisions expired during the period
$
-
$
5,760
Issuance of preferred stock and warrants valued at the amounts owed on secured notes plus accrued interest from related party and loan from related party
$
-
$
2,589,425
See accompanying notes to consolidated financial
statements.
F-
7
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 1 –
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Organization
InsPro Technologies Corporation (the "Company", "ITCC", "we", "us" or "our")
is a technology company that provides software applications for use by insurance administrators in the insurance industry. Our
business focuses primarily on our InsPro Enterprise
TM
software application, which was introduced in 2004.
The Company offers InsPro Enterprise on both a licensed and
an application service provider ("ASP") basis. InsPro Enterprise is an insurance administration and marketing system
that supports group and individual business lines, and efficiently processes agent, direct market, worksite and web site generated
business. InsPro Technologies' clients include insurance carriers and third party administrators. The Company realizes revenue
from the sale of software licenses, application service provider fees, hosting fees, software maintenance fees and consulting and
implementation services.
Basis of presentation and principles of consolidation
The consolidated financial statements are prepared in accordance
with generally accepted accounting principles in the United States of America ("US GAAP"). The consolidated financial
statements of the Company include the Company and its wholly-owned subsidiaries. All material inter-company balances and transactions
have been eliminated.
Use of estimates
The preparation of financial statements in conformity with US
GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates. Significant estimates in 2014 and 2013 include the warrant liability, allowance for
doubtful accounts, valuation allowance on deferred tax asset, stock-based compensation, the useful lives and valuation of property
and equipment and intangible assets, and deferred revenue.
Cash and cash equivalents
The Company had no cash equilavents during the two years ended
December 31, 2016. The Company considers all liquid debt instruments with original maturities of three months or less to be cash
equivalents.
Accounts receivable
The Company has a policy of establishing an allowance for uncollectible
accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically
reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other
factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged
to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. At December
31, 2016 and 2015, the Company has established, based on a review of its outstanding balances, an allowance for doubtful accounts
in the amount of $0 and $140,946, respectively.
Fair value of financial instruments
The carrying amounts of financial instruments,
including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, notes payable and capital lease obligations
approximated fair value as of December 31, 2016, and December 31, 2015, because of the relatively short-term maturity of these
instruments and their market interest rates.
F-
8
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 1 –
BASIS OF PRESENTATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company follows Financial Accounting
Standards Board ("FASB") ASC 820, "Fair Value Measurements and Disclosures" ("ASC 820"), for
assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be
applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework
for measuring fair value, and expands disclosure about such fair value measurements.
Property and equipment
Property and equipment are carried at cost.
The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are
retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses
are included in income in the year of disposition. In accordance with Statement of Financial Accounting Standards ASC 360, "Accounting
for the Impairment or Disposal of Long-Lived Assets," the Company examines the possibility of decreases in the value of fixed
assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.
Impairment of long-lived assets
The Company periodically reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company
recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset.
The amount of impairment is measured as the difference between the asset's estimated fair value and its book value.
Income taxes
The Company accounts for income taxes pursuant to the provisions
of ASC 740-10, "
Accounting for Income Taxes
," which requires, among other things, an asset and liability approach
to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and
liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely
than not that the net deferred asset will not be realized.
The Company follows the provisions of ASC 740 -10 related to,
Accounting for Uncertain Income Tax Positions.
When tax returns are filed, it is highly certain that some positions taken would
be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position
taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit
of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management
believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or
litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the
more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely
of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions
taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the
accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon
examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company
has not recorded a liability for uncertain tax benefits.
F-
9
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 1 –
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
The Company has adopted ASC 740-10-25
Definition of Settlement,
which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing
previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion of an examination
by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize
the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on
the basis of its technical merits and the statute of limitations remains open. The Company has not yet filed its tax returns for
the tax year ended December 31, 2016. As of December 31, 2016, the tax years ended December 31, 2015, 2014 and 2013 are still subject
to audit.
Income (loss) per common share
Basic earnings per share is computed by dividing income (loss)
from continuing operations by the weighted average number of shares of common stock outstanding during the period. Diluted earnings
per share is computed by dividing the adjusted net loss from operations for diluted earnings per share by the weighted average
number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.
The effects of common stock equivalents and potentially dilutive securities outstanding during 2016 and 2015 are excluded from
the calculation of diluted loss per common share because it is anti-dilutive.
The Company's common stock equivalents
include the following:
December 31,
2016
December 31,
2015
Series A convertible preferred stock issued and outstanding
25,535,000
25,535,000
Series B convertible preferred stock issued and outstanding
106,144,240
106,117,040
Options to purchase common stock issued and outstanding
4,000,000
2,975,000
Warrants to purchase common stock issued and outstanding
25,098,330
25,084,730
Warrants to purchase series A convertible preferred stock, issued and outstanding
7,600,000
7,600,000
Warrants to purchase series B convertible preferred stock, issued and outstanding
65,000,000
25,000,000
233,377,570
192,311,770
Revenue recognition
Revenue for the year ended
December 31, 2016, include a reduction in the amount of $1,299,963 for stock based fees paid to a client. See Note 6 - Stockholders'
Deficit – Series B Preferred Stock Warrants.
The Company offers InsPro
Enterprise
TM
on both a licensed and an ASP basis. An InsPro Enterprise software license entitles the purchaser a perpetual
license to a copy of the InsPro Enterprise software installed at a single client location or hosted by InsPro Technologies. Alternatively,
ASP hosting service enables a client to lease the InsPro Enterprise software, paying only for that capacity required to support
their business. ASP and hosting clients access InsPro Enterprise installed on InsPro Technologies owned servers located at InsPro
Technologies' offices or at a third party's site.
The Company's software maintenance fees
apply to both licensed and ASP clients. Maintenance fees cover periodic updates to the application and the InsPro Enterprise help
desk.
F-
10
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 1 –
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
The Company's consulting and implementation services are
generally associated with the implementation of InsPro Enterprise for either an ASP or licensed client, and cover such activity
as InsPro Enterprise installation, configuration, modification of InsPro Enterprise functionality, client insurance plan set-up,
client insurance document design and system documentation. Professional services revenue also consists of post implementation activities
for clients pertaining to their InsPro Enterprise installation.
The Company's revenue is generally recognized under Accounting
Standards Codification 985-605, Software Revenue Recognition. For software arrangements involving multiple elements, which are
the sale of software licenses, professional services, ASP services and maintenance services, the Company allocates revenue to each
element based on the specific objective evidence of selling price of each deliverable, which is based on prices charged when the
element is sold separately. Software revenue accounted for under ASC 985-605 is recognized when persuasive evidence of an arrangement
exists, the software is delivered in accordance with all terms and conditions of the customer contracts, the fee is fixed or determinable
and collectability is probable. Revenue related to post-contract customer support ("PCS"), including technical support
and unspecified when-and-if available software upgrades, is recognized ratably over the PCS term. Under ASC 985-605, if fair value
does not exist for any undelivered element, revenue is not recognized until the earlier of (i) delivery of such element or
(ii) when fair value of the undelivered element is established, unless the undelivered element is a service, in which case
revenue is recognized as the service is performed once the service is the only undelivered element.
The Company recognizes revenue from software license agreements
when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and collectability
is probable. The Company considers fees relating to arrangements with payment terms extending beyond one year to not be fixed or
determinable and revenue for these arrangements is recognized as payments become due from the customer. In software arrangements
that include more than one InsPro Enterprise
TM
module, the Company allocates the total arrangement fee among the modules
based on the relative fair value of each of the modules.
License revenue allocated to software products generally is
recognized upon delivery of the products or deferred and recognized in future periods to the extent that an arrangement includes
one or more elements to be delivered at a future date and for which fair values have not been established. Revenue allocated to
maintenance agreements is recognized ratably over the maintenance term and revenue allocated to training and other service elements
is recognized as the services are performed.
Effective August 18, 2015, the Company entered into a five year
software and services reseller agreement (the "Reseller Agreement") with an unaffiliated 3
rd
party (the
"Reseller") whereby the Company granted the Reseller the exclusive right to market InsPro Enterprise to prospective
clients for their administration of long term care insurance products for an initial fee of $2,500,000 (the "Reseller Fee").
Pursuant to the Reseller Agreement, the Reseller Fee is fully or partially refundable to the Reseller in the event that the Company
materially breaches the Reseller Agreement or the Company becomes insolvent, goes into liquidation or seeks protection under bankruptcy
during the term of the Reseller Agreement (each a "Refund Event"). The Reseller Fee was fully refundable if a Refund
Event occurred before August 31, 2016. A Refund Event did not occur as of December 31, 2016, and as a result the Company recognized
$500,000 of Reseller Fee as revenue in the year ended December 31, 2016. The Company shall refund the following amounts to the
Reseller if a Refund Event occurs between the following dates; $2,000,000 between September 1, 2016 and August 31, 2017, $1,500,000
between September 1, 2017 and August 31, 2018, and $1,000,000 between September 1, 2018 and August 31, 2019. As of December 31,
2016 the Company has recorded the $2,000,000 Reseller Fee in deferred revenue ($500,000 included in short term liabilities and
$1,500,000 included in long term liabilities).
F-
11
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 1 –
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
The unearned portion of the Company's revenue, which is
revenue collected but not yet recognized as earned, has been included in the consolidated balance sheet as a liability for deferred
revenue.
See Note 2 - Discontinued Operations - Revenue Recognition for
Discontinued Operations.
Cost of revenues
Cost of revenues includes
direct labor and associated costs for employees and independent contractors performing InsPro Enterprise
™
design,
development, implementation and testing together with customer management, training and technical support, as well as a portion
of facilities costs. For the years ended December 31, 2016 and 2015, cost of revenues consisted of the following:
For the Year Ended December 31,
2016
2015
Compensation, employee benefits and related taxes
$
7,519,551
$
8,034,470
Professional fees
10,317,169
11,973,271
Depreciation
382,876
490,551
Rent, utilities, telephone and communications
443,348
486,976
Other cost of revenues
407,261
717,716
$
19,070,205
$
21,702,984
Selling, general and
administrative expenses
Selling, general and administrative
expenses include all selling, marketing, and other expenses not classified as cost of revenues. The following table discloses selling,
general and administrative expenses as reported in the statement of operations.
For the Year Ended December 31,
2016
2015
Compensation, employee benefits and related taxes
$
3,337,346
$
3,336,287
Advertising and other marketing
140,552
148,880
Depreciation
118,587
109,379
Rent, utilities, telephone and communications
405,032
364,569
Professional fees
709,383
927,623
Other general and administrative
762,666
1,212,826
$
5,473,566
$
6,099,564
Advertising and other marketing
Advertising and other marketing costs are expensed as incurred
and are reported in selling, general and administrative expenses. See the previous table under selling, general and administrative
expenses for advertising and other marketing expenses reported in the statement of operations.
F-
12
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Concentrations of credit risk
The Company maintains its cash and restricted cash in bank deposit
accounts, which exceed the federally insured limits as provided through the Federal Deposit Insurance Corporation ("FDIC").
At December 31, 2016 and 2015, the Company had $3,195,018 and $3,398,293 of cash in United States bank deposits, of which $500,930
and $500,050 was federally insured and $2,694,088 and $2,898,243 was not federally insured, respectively
The following table lists the percentage of the Company's
accounts receivable balance from the Company's InsPro Enterprise clients representing 10% or more of the accounts receivable
balances as of the periods listed below.
December 31, 2016
December 31, 2015
Client #1
30
%
32
%
Client #2
12
%
17
%
Client #3
13
%
13
%
Client #4
-
11
%
The following table lists the percentage of the Company's
revenue earned from the Company's InsPro Enterprise
™
clients representing 10% or more of the revenue earned
in each of the periods listed below.
For the Year Ended December 31,
2016
2015
Client #1
30
%
28
%
Client #2
16
%
12
%
Client #3
14
%
-
Stock-based compensation
The Company accounts for stock based compensation transactions
using a fair-value-based method and recognizes compensation cost for share-based payments to employees based on their grant-date
fair value from the beginning of the fiscal period in which the recognition provisions are first applied.
Non-employee stock based compensation
The cost of stock based compensation awards issued to non-employees
for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services,
whichever is more readily determinable, based on their grant-date fair value from the beginning of the fiscal period in which the
recognition provisions are first applied.
F-
13
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Recent accounting pronouncements
From time to time, new accounting pronouncements are issued
by the Financial Accounting Standards Board ("FASB"), which are adopted by the Company as of the specified effective
date. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective,
will not have a material impact on the Company's consolidated financial statements upon adoption.
In May 2014, the FASB issued Accounting Standards Update ("ASU")
ASU No. 2014-09,
Revenue from Contracts with Customers (Topic 606)
("ASU 2014-09"), that outlines a
comprehensive five-step revenue recognition model based on the principle that an entity should recognize revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to
be entitled in exchange for those goods or services. In July 2015, the FASB approved a one-year deferral of the effective date
of ASU 2014-09 to the beginning of 2018 for public companies, with an option that would permit companies to adopt the standard
as early as the original effective date of 2017. The updated standard will replace most existing revenue recognition guidance in
U.S. GAAP. ASU 2014-09 may be adopted either retrospectively or on a modified retrospective basis whereby it would be applied to
new contracts and existing contracts with remaining performance obligations as of the effective date, with a cumulative catch-up
adjustment recorded to beginning retained earnings at the effective date for those contracts. The updated standard is effective
for us in the first quarter of 2018 and we do not plan to early adopt. We have not yet selected a transition method and we are
currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.
In November 2015, the FASB issued ASU No. 2015-17, "Balance
Sheet Classification of Deferred Taxes", which requires that all deferred tax liabilities and assets be classified as noncurrent
amounts on the balance sheet. ASU 2015-17 will be effective for interim and annuals periods beginning after December 15, 2016
and may be applied prospectively or retrospectively. Early adoption of the standard is permitted. The new standard is effective
for the Company at the beginning of fiscal year 2017. We are currently evaluating the impact of adopting this ASU on our consolidated
financial statements and do not expect adoption to have a material impact.
In February 2016, the FASB issued ASU No. 2016-02,
Leases
(Topic 842)
("ASU 2016-02"), that requires all leases with a term greater than 12 months to be recognized on
the balance sheet, while lease expenses would continue to be recognized in the statement of operations in a manner similar to current
accounting guidance. The new standard establishes a right-of-use model (ROU) asset and lease liability on the balance sheet for
all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting
the pattern and classification of expense recognition in the statement of operations. ASU 2016-02 is effective for the Company
at the beginning of fiscal year 2019 and early adoption is permitted. Entities must adopt ASU 2016-02 on a modified retrospective
basis whereby it would be applied at the beginning of the earliest comparative year. The new standard is effective for us in the
first quarter of 2019 and we do not plan to early adopt. We are currently evaluating the impact of the adoption of ASU 2016-02
on our consolidated financial statements. Effective December 31, 2016, our only lease with a term greater than 12 months is for
our Radnor office, which will expire on March 31, 2017. We believe our current lease for our Eddystone office, which was extended
for a 1 year term that expires on January 31, 2018, would continue to be accounted for as an operating lease under the new standard.
We may enter into a new lease for office space, which may have a term greater than 12 months, in the future.
In June 2016, the FASB issued ASU No. 2016-13, "Financial
Instruments – Credit Losses (Topic 326)." For most financial assets, such as trade and other receivables, loans and
other instruments, this standard changes the current incurred loss model to a forward-looking expected credit loss model, which
generally will result in the earlier recognition of allowances for losses. The new standard is effective for the Company at the
beginning of fiscal year 2019. Entities are required to apply the provisions of the standard through a cumulative-effect adjustment
to retained earnings as of the effective date. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated
financial statements.
F-
14
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
In August 2014, the FASB issued ASU No. 2014-15, "Presentation
of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as
a Going Concern". Under US GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing
financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this
presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent,
financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation
of Financial Statements - Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there may be conditions
or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial
statements should continue to be prepared under the going concern basis of accounting, but the provisions in this ASU should be
followed to determine whether to disclose information about the relevant conditions and events. ASU No. 2014-15 was effective for
us as of December 31, 2016.
In March 2016, the FASB issued ASU 2016-09, "Improvements
to Employee Share-Based Payment Accounting (Topic 718)", which simplifies several aspects of the accounting for employee
share-based payment transactions, including the accounting for the related income taxes, forfeitures, statutory tax withholding
requirements and classification in the statement of cash flows. ASU 2016-09 is effective for annual reporting periods beginning
after December 15, 2016, including interim periods within those annual reporting periods. Early adoption is permitted. The
new standard is effective for the Company at the beginning of fiscal year 2017. We are currently evaluating the impact of adopting
this ASU on our consolidated financial statements and do not expect adoption to have a material impact.
In August 2016, the FASB issued ASU 2016-15, "Classification
of Certain Cash Receipts and Cash Payments (Topic 230)", which provides guidance for eight specific cash flow issues with
the objective of reducing the existing diversity in practice. ASU 2016-15 is effective retrospectively for annual reporting periods
beginning after December 15, 2017, including interim periods within those annual reporting periods. Early adoption is permitted.
The new standard is effective for the Company at the beginning of fiscal year 2018. We are currently evaluating the impact of adopting
this ASU on our consolidated financial statements and do not expect adoption to have a material impact.
Liquidity
During the year ended December 31, 2016, the Company's
net loss was $2,667,937 and cash used primarily to fund financing activities resulted in a net decrease in cash of $236,676. As
of December 31, 2016, the Company had $3,161,617 of cash, a working capital deficit of $2,648,881 and the Company's shareholder
deficit was $3,789,060. During 2016 the Company implemented cost reduction initiatives, which resulted in the reduction of expenses
in 2016 as compared to 2015. During the first quarter of 2017 the Company implemented additional cost reduction initiatives, which
management believes will reduce expenses in 2017 as compared to 2016. The Company has obtained a $2,000,000 funding commitment
from its largest stockholder Co-Investment Fund II, L.P., which is described in Note 11 – Subsequent Events.
Our liquidity needs for the next twelve months and beyond are
principally for the funding of our operations, payments on capital leases and the purchase of property and equipment. Based on
the forgoing, management believes the Company has sufficient funds to finance its operations over the next twelve months.
F-
15
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 2 –
DISCONTINUED OPERATIONS
The Company has classified its former telesales call center
and external agent produced agency business as discontinued operations. During the first quarter of 2009, the Company ceased the
direct marketing and sale of health and life insurance and related products to individuals and families in its telesales call center.
The Company also determined to discontinue selling health and life insurance and related products to individuals and families through
its non-employee agents. On February 20, 2009, the Company entered into and completed the sale of the agency business to an unaffiliated
third party, pursuant to the terms of a client transition agreement.
Revenue Recognition for Discontinued Operations
Our discontinued operations generate revenue primarily from
transition policy commissions pursuant to the client transition agreement and renewal commissions paid to the Company by insurance
companies based upon the insurance policies sold to consumers by the Company's telesales call center.
We recognize commissions and other revenue from carriers after
we receive notice that the insurance carrier has received payment of the related premium. The Company recognizes as revenue commission
payments received in connection with the client transition agreement upon the Company's notification of such amounts.
The financial position of discontinued
operations was as follows:
December 31, 2016
December 31, 2015
Accounts receivable
$
8,636
$
15,212
Net current assets of discontinued operations
$
8,636
$
15,212
The results of discontinued operations do not include any allocated
or common overhead expenses. The results of operations of discontinued operations were as follows:
For the Year Ended December 31,
2016
2015
Revenues:
Commission and other revenue from carriers
$
10,016
$
18,499
Transition policy commission pursuant to the Agreement
88,006
165,044
98,022
183,543
Operating expenses:
Other general and administrative
27,867
27,746
27,867
27,746
Income from discontinued operations
$
70,155
$
155,797
F-
16
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 3 -
PROPERTY AND EQUIPMENT
Property and equipment consisted of the
following:
Useful
Life
(Years)
December 31,
2016
December 31,
2015
Computer equipment and software
3
$
4,419,412
$
4,152,927
Office equipment
4.6
158,732
158,732
Office furniture and fixtures
6.7
189,857
189,857
Leasehold improvements
5.4
94,620
94,620
4,862,621
4,596,136
Less accumulated depreciation
(4,349,661
)
(3,848,199
)
$
512,960
$
747,937
The following table discloses
depreciation expense as reported in the statement of operations.
For the Year Ended December 31,
2016
2015
Depreciation included in cost of revenues
$
382,876
$
490,551
Depreciation included in selling, general and administrative
118,587
109,379
Total depreciation
$
501,463
$
599,930
NOTE 4 –
NOTES PAYABLE
Notes payable at December 31, 2016, consist of two notes payable
for insurance premium financing on two of the Company's insurance policies. The first note commenced on April 28, 2016, has
an annual interest rate of 8.75% and consists of 11 monthly payments of principal and interest of $7,456 per month commencing on
May 28, 2016 and ending on March 28, 2017. The second note commenced on May 3, 2016, has an annual interest rate of 7.99% and consists
of 11 monthly payments of principal and interest of $4,358 per month commencing on June 3, 2016 and ending on April 3, 2017.
Notes payable at December 31, 2015, consist of two notes payable
for insurance premium financing on two of the Company's insurance policies. The first note commenced on April 28, 2015, has
an annual interest rate of 7.50% and consists of 11 monthly payments of principal and interest of $7,566 per month commencing on
May 28, 2015 and ending on March 28, 2016. The second note commenced on May 3, 2015, has an annual interest rate of 7.99% and consists
of 11 monthly payments of principal and interest of $4,396 per month commencing on June 3, 2015 and ending on April 3, 2016.
F-
17
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 5 –
RELATED PARTY TRANSACTIONS
September 2015 Private Placement
On September 18, 2015, the Company completed a private placement
(the "Private Placement") with certain accredited investors (collectively the "Investors"), including The
Co-Investment Fund II, L.P., which hold more than 5% of our common stock ("Co-Investment") and Donald Caldwell, who
is the CEO and chairman of the board of directors of the Company and managing partner of Co-Investment; Edmond Walters, who is
a director of the Company, and Azeez Enterprises, LP, which is affiliated with Michael Azeez, who is a director of the Company,
for an aggregate of 1,163,141 shares of our Series B Convertible Preferred Stock and warrants to purchase 11,631,410 shares of
our common stock (the "2015 Warrants"). The Company sold to the Investors 1,163,141 units ("Units") at
a per Unit price of $3.00, for an aggregate total investment of $3,489,423, and each unit consisted of one share of Series B Convertible
Preferred Stock and a warrant to purchase 10 shares of our Common Stock at an initial exercise price of $0.15 per share ("Warrant
Shares"), subject to adjustment pursuant to the terms of a securities purchase agreement (the "Purchase Agreement").
The Company intends to use the net proceeds of the Private Placement for working capital purposes. See Note 6 - Shareholders'
Deficit – Series B Preferred Stock and Common Stock Warrants. In the Private Placement the Company issued; 696,475 shares
of Series B Preferred Stock and a warrant to purchase 6,964,750 shares of our Common Stock to Co-Investment, 166,666 shares of
Series B Preferred Stock and a warrant to purchase 1,666,660 shares of our Common Stock to Edmond Walters, 150,000 shares of Series
B Preferred Stock and a warrant to purchase 1,500,000 shares of our Common Stock to Azeez Enterprises, and 150,000 shares of Series
B Preferred Stock and a warrant to purchase 1,500,000 shares of our Common Stock to an unrelated third party.
The Company agreed, pursuant to the terms of the Purchase Agreement,
that for a period of 90 days after the effective date (the "Initial Standstill") of the Purchase Agreement, the Company
shall not, subject to certain exceptions, offer, sell, grant any option to purchase, or otherwise dispose of any equity securities
or equity equivalent securities, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument
that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, capital stock and
other securities of the Company. In addition, pursuant to the Purchase Agreement, the Company was permitted to sell up to an additional
1,000,000 Units to Independence Blue Cross within 90 days following the Closing on substantially the same terms and conditions
described above and as set forth in the Purchase Agreement.
The Purchase Agreement also provides for a customary participation
right for the Investors, subject to certain exceptions and limitations, which grants the Investors the right to participate in
any future capital raising financings of the Company occurring from the effective date of the Purchase Agreement until 24 months
after the effective date of the Purchase Agreement. The Investors may participate in such financings at a level based on the Investors'
ownership percentage of the Company on a fully-diluted basis prior to such financing.
Secured Convertible Promissory Note to Co-Investment Fund
II, LP.
On January 30, 2015, the Company and InsPro LLC issued a Secured
Convertible Promissory Note ("Note") to Co-Investment, pursuant to a Secured Convertible Promissory Note Purchase Agreement
(the "Note Purchase Agreement"). In connection with the Note Purchase Agreement, the Company, InsPro LLC (collectively
the "Borrowers") and Co-Investment entered into a Security Agreement (the "Security Agreement", and together
with the Note and the Note Purchase Agreement, the "Financing Agreements"). Pursuant to the terms and subject to the
conditions set forth in the Financing Agreements, Co-Investment provided a loan in the amount of $1,000,000 ("Loan")
to the Company and InsPro LLC, which is secured by all assets of the Company and InsPro LLC other than copyright applications,
copyright registration, patents, patent applications, trademarks, services markets and other intellectual property ("Collateral").
Pursuant to the Note, interest in the amount of 8% per annum, calculated on a 365 or 366 day year, as the case may be, and the
principal amount of $1,000,000 and accrued interest will be paid on or before June 30, 2016. Co-Investment has the right to convert
principal and accrued interest into the equity securities of the Company in the event that the Company issues and sells equity
securities to investors on or before the repayment in full of the Note in an equity financing resulting in gross proceeds to the
Company of at least $1,000,000.
F-
18
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 5 – EQUITY TRANSACTIONS AND LOANS FROM RELATED
PARTIES (continued)
Pursuant to the Security Agreement, the Borrowers shall not,
without Co-Investment's prior consent, sell, lease or otherwise dispose of any equipment or fixtures constituting Collateral.
In addition, the Borrowers will furnish Co-Investment with such information and documents regarding the Collateral and their financial
condition, business, assets and liabilities as is reasonably requested by Co-Investment.
In connection with the Financing Agreements, Co-Investment entered
into a Subordination Agreement ("Subordination Agreement") with SVB, the terms of such agreement were approved by the
Company, InsPro LLC and Atiam Technologies L.P. Pursuant to the Subordination Agreement, Co-Investment agreed, among other things,
that all obligations under the Loan Agreement and any other obligations to SVB would be senior to the outstanding indebtedness
under the Financing Agreements.
On March 27, 2015, the Borrowers issued a second Secured Convertible
Promissory Note (the "Second Note") in the amount of $1,000,000 to Co-Investment pursuant to a second Secured Convertible
Promissory Note Purchase Agreement (the "Second Note Purchase Agreement"). The terms of the Second Note are essentially
identical to the terms of the Note and the terms of the Second Note Purchase Agreement are essentially identical to the terms of
the Note Purchase Agreement.
Pursuant to the terms of the Purchase Agreement,
the Company and Co-Investment agreed that, effective at the closing of the Private Placement on September 18, 2015, (i) the Note
and Second Note (collectively, "Notes") were amended such that the entire principal amount of the Notes plus accrued
interest as of the closing was converted into 696,475 Units that consisted of 696,475 shares of Series B Preferred Stock and a
warrant to purchase 6,964,750 shares of our Common Stock , (ii) the Notes were converted in accordance with the terms thereof by
the issuance of the Units to Co-Investment under the Purchase Agreement, (iii) all amounts owed to Co-Investment by the Company
under borrowings by the Company, whether evidenced orally or in writing, including without limitation, the Notes and any unpaid
principal balance, any interest owed and any penalties or additional fees owed to Co-Investment (collectively, "Existing
Indebtedness"), was fully paid and satisfied by the Company, and the Existing Indebtedness was cancelled, and (iv) the Notes
and any other agreements entered into in connection with the Notes were amended to give effect to the foregoing.
Loan Payable to Related Party
On March 17, 2015, the Company received a loan from Edmond Walters,
a current director of the Company, in the amount of $500,000 (the "Walters Loan"). The Walters Loan was a pre-payment
by Mr. Walters in connection with any future issuance of equity securities of the Company, and is convertible into equity securities
of the Company in connection with any such future issuance of equity securities as agreed to by the Company and Mr. Walters. The
Loan from Mr. Walters is refundable to Mr. Walters on demand, without interest, if the Company does not consummate an equity financing
within a time period to be determined by the Company and Mr. Walters.
Pursuant to the terms of the Purchase Agreement,
the Company and Edmond Walters agreed that, effective at the closing on September 18, 2015, (i) the Walters Loan was converted
by the issuance of the 166,666 Units that consisted of 166,666 shares of Series B Preferred Stock and a warrant to purchase 1,666,660
shares of our Common Stock to Edmond Walters under the Purchase Agreement, (ii) all amounts owed to Edmond Walters by the Company
under borrowings by the Company, whether evidenced orally or in writing, including without limitation, the Walters Loan and any
unpaid principal balance, any interest owed and any penalties or additional fees owed to Edmond Walters (collectively, "Walters
Existing Indebtedness"), was fully paid and satisfied by the Company, and the Walters Existing Indebtedness was cancelled,
and (iii) the Walters Loan and any agreements entered into in connection with the Loan were amended to give effect to the foregoing.
F-
19
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 5 – EQUITY TRANSACTIONS AND LOANS FROM RELATED
PARTIES (continued)
IBC Private Placement
On October 6, 2015, the Company entered into and completed a
private placement (the "IBC Private Placement") with Independence Blue Cross, LLC, a Pennsylvania limited liability
company, which hold more than 5% of our common stock ( "IBC"), for an aggregate of 333,333 shares of its Series B Preferred
Stock and a warrant (the "IBC Warrant") to purchase 3,333,330 shares of the Company's Common Stock, pursuant
to the terms of a securities purchase agreement (the "IBC Purchase Agreement").
Pursuant to the IBC Purchase Agreement, the Company agreed to
sell to IBC 333,333 Units in the IBC Private Placement at a per Unit purchase price equal to $3.00. Each Unit sold in the IBC Private
Placement consisted of one share of Series B Preferred Stock and an IBC Warrant to purchase ten shares of Common Stock at an initial
exercise price of $0.15 per share, subject to adjustment. The gross proceeds from the closing of the IBC Private Placement were
$999,999 and the Company intends to use the net proceeds of the Private Placement for working capital purposes.
The Company also agreed, pursuant to the terms of the IBC Purchase
Agreement, that for a period of 90 days after the effective date of the Purchase Agreement, the Company shall not, subject to certain
exceptions, offer, sell, grant any option to purchase, or otherwise dispose of any equity securities or equity equivalent securities,
including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible
into or exchangeable for, or otherwise entitles the holder thereof to receive, capital stock and other securities of the Company.
The IBC Purchase Agreement also provides for a customary participation
right for the Investor, subject to certain exceptions and limitations, which grants the Investor the right to participate in any
future capital raising financings of the Company occurring from the effective date of the Purchase Agreement until 24 months after
the effective date of the Purchase Agreement. IBC may participate in such financings at a level based on the Investor's ownership
percentage of the Company on a fully-diluted basis prior to such financing.
NOTE 6 –
SHAREHOLDERS' (DEFICIT) EQUITY
Common Stock
As of December 31, 2016 and 2015, the Company was
authorized to issue 500,000,000 shares of common stock with a par value of $0.001 per share ("Common Stock"). As of
December 31, 2016 and 2015, the Company had 41,543,655 shares of its Common Stock issued and outstanding.
F-
20
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 6 – SHAREHOLDERS' DEFICIT (continued)
The Company has reserved shares of Common Stock, on
an as-if-converted basis, as follows:
December 31, 2016
December 31, 2015
Exercise of options issued and outstanding to purchase common stock
4,000,000
2,975,000
Issuance of common shares available under the 2010 Equity Compensation Plan
24,996,980
26,021,980
Exercise of warrants issued and outstanding to purchase common stock
25,098,330
25,084,730
Conversion of series A convertible preferred stock issued and outstanding into common stock
25,535,000
25,535,000
Exercise of warrants to purchase series A convertible preferred stock issued and outstanding and converted into common stock
7,600,000
7,600,000
Conversion of series B convertible preferred stock issued and outstanding into common stock
106,144,240
106,117,040
Exercise of warrants to purchase series B convertible preferred stock issued and outstanding and converted into common stock
65,000,000
25,000,000
Total common stock reserved for issuance
258,374,550
218,333,750
The above table includes common stock reserved for non-exercisable
stock options and common stock reserved for the issuance of stock options in the future under the Company's 2010 Equity Compensation
Plan.
Series A Convertible Preferred Stock
As of December 31, 2016 and 2015, the Company's board
of directors has designated 3,437,500 shares of Series A Convertible Preferred Stock with a par value of $0.001 per share ("Series
A Preferred Stock"). As of December 31, 2016 and 2015, the Company had 1,276,750 shares of its Series A Preferred Stock issued
and outstanding. As of December 31, 2016 and 2015, the Company has reserved 380,000 shares of Series A Preferred Stock for the
exercise of warrants issued and outstanding to purchase its Series A Preferred Stock.
The Series A Preferred Stock is entitled to vote as a single
class with the holders of the Company's common stock, with each share of Series A Preferred Stock having the right to 20
votes. Upon the liquidation, sale or merger of the Company, each share of Series A Preferred Stock is entitled to receive an amount
equal to the greater of (A) a liquidation preference equal to two and a half (2.5) times the Series A Preferred Stock original
issue price or $12,767,500, subject to certain customary adjustments, or (B) the amount such share of Series A Preferred Stock
would receive if it participated
pari
passu
with the holders of common stock on an as-converted basis. The liquidation
preference is calculated by taking the product of the issued and outstanding shares of Series A Preferred stock times $10.00. Each
share of Series A Preferred Stock becomes convertible into 20 shares of common stock, subject to adjustment and at the option of
the holder of the Series A Preferred Stock. For so long as any shares of Series A Preferred Stock are outstanding, the vote or
consent of the holders of at least two-thirds of the Series A Preferred Stock is required to approve (Y) any amendment to the Company's
certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special rights of the Series
A Preferred Stock or (Z) any amendment to the Company's certificate of incorporation to create any shares of capital stock
that rank senior to the Series A Preferred Stock. In addition to the voting rights described above, for so long as 1,000,000 shares
of Series A Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series
A Preferred Stock is required to effect or validate any merger, sale of substantially all of the assets of the Company or other
fundamental transaction, unless such transaction, when consummated, will provide the holders of Series A Preferred Stock with an
amount per share equal to two and a half (2.5) times the Series A Preferred Stock original issue price or $12,767,500 in aggregate
for all issued and outstanding Series A Preferred Stock.
F-
21
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 6 – SHAREHOLDERS' DEFICIT (continued)
Series B Convertible Preferred Stock
As of December 31, 2016 and 2015, the Company's board
of directors has designated 11,000,000 shares of Series B Convertible Preferred Stock with a par value of $0.001 per share ("Series
B Preferred Stock"). As of December 31, 2016 and 2015, the Company had 5,307,212 and 5,305,852 of its Series B Preferred
Stock issued and outstanding, respectively. As of December 31, 2016 and 2015, the Company has reserved 1,250,000 and 1,170.000
shares of Series B Preferred Stock for the exercise of warrants issued and outstanding to purchase its Series B Preferred Stock,
respectively.
The Series B Preferred Stock is entitled to vote as a single
class with the holders of the Company's common and preferred stock, with each share of Series B Preferred Stock having the
right to 20 votes. Upon the liquidation, sale or merger of the Company, each share of Preferred Stock is entitled to receive an
amount equal to the greater of (A) a liquidation preference equal to the Series B Preferred Stock original issue price or $15,921,636
and $15,917,556 as of December 31, 2016 and 2015, respectively, subject to certain customary adjustments, or (B) the amount such
share of Series B Preferred Stock would receive if it participated
pari
passu
with the holders of common and preferred
stock on an as-converted basis. The liquidation preference is calculated by taking the product of the issued and outstanding shares
of Series B Preferred stock times $3.00. Each share of Series B Preferred Stock becomes convertible into 20 shares of common stock,
subject to adjustment and at the option of the holder of the Series B Preferred Stock. For so long as any shares of Series B Preferred
Stock are outstanding, the vote or consent of the holders of at least two-thirds of the Series B Preferred Stock is required to
approve (Y) any amendment to the Company's certificate of incorporation or bylaws that would adversely alter the voting powers,
preferences or special rights of the Series B Preferred Stock or (Z) any amendment to the Company's certificate of incorporation
to create any shares of capital stock that rank senior to the Series B Preferred Stock. In addition to the voting rights described
above, for so long as 1,000,000 shares of Series B Preferred Stock are outstanding, the vote or consent of the holders of at least
two-thirds of the shares of Series B Preferred Stock is required to effect or validate any merger, sale of substantially all of
the assets of the Company or other fundamental transaction, unless such transaction, when consummated, will provide the holders
of Series B Preferred Stock with an amount per share equal the Series B Preferred Stock original issue price in aggregate for all
issued and outstanding Series B Preferred Stock.
2015
On September 18, 2015, pursuant to the Purchase Agreement, the
Company sold to the investors 1,163,141 Units in the Private Placement at a per Unit purchase price equal to $3.00. Each Unit sold
in the Private Placement consisted of one share of Series B Preferred Stock and a warrant to purchase ten shares of Common Stock
at an initial exercise price of $0.15 per share, subject to adjustment. See Note 5 – Equity Transactions and Loans from Related
Parties – September 2015 Private Placement.
The Company allocated $364,928 of the $3,489,423 proceeds received
as a result of the Private Placement, which represent the fair value of the Warrant Shares, to additional paid in capital using
a Black-Scholes option pricing model with the following assumptions: expected volatility of 422%, a risk-free interest rate of
0.10%, an expected term of 2.1 years and 0% dividend yield. The remaining $3,124,495 of the proceeds received was allocated to
the Series B Preferred Stock less $13,013 of legal expenses incurred as a result of the September 2015 Private Placement.
On October 6, 2015, pursuant to the IBC Purchase Agreement,
the Company sold to IBC 333,333 Units in the IBC Private Placement at a per Unit purchase price equal to $3.00. Each Unit sold
in the IBC Private Placement consisted of one share of Series B Preferred Stock and a warrant to purchase ten shares of Common
Stock at an initial exercise price of $0.15 per share, subject to adjustment. See Note 5 – Equity Transactions and Loans
from Related Parties – IBC Private Placement.
F-
22
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 6 – SHAREHOLDERS' DEFICIT (continued)
The Company allocated $132,382 of the $999,999 proceeds received
as a result of the Private Placement, which represent the fair value of the IBC Warrant shares, to additional paid in capital using
a Black-Scholes option pricing model with the following assumptions: expected volatility of 397%, a risk-free interest rate of
0.70%, an expected term of 2.1 years and 0% dividend yield. The remaining $867,617 of the proceeds received was allocated to the
Series B Preferred Stock.
2016
On February 2, 2016 the Company filed a registration statement
for a rights offering on Form S-1/A, which the Commission declared effective on February 5, 2016, to distribute to shareholders
excluding residents of Arizona and California at no charge, one non-transferable subscription right for each 16,615 shares of our
Common Stock, 831 shares of our Series A Preferred Stock and 830 shares of our Series B Preferred Stock owned as of January 31,
2016 (the "Record Date"), either as a holder of record or, in the case of shares held of record by brokers, dealers,
custodian banks, or other nominees on shareholders' behalf, as a beneficial owner of such shares. If the rights offering
was fully subscribed the gross proceeds from the rights offering would have been approximately $2.5 million. This rights offering
was designed to give all of the holders of the Company's capital stock the opportunity to participate in an equity investment
in the Company on the same economic terms as the Private Placement.
The basic subscription right entitled the holder to purchase
one unit ("Subscription Unit") at a subscription price of $240. A Subscription Unit consisted of 80 shares of Series
B Preferred Stock and a warrant to purchase 800 shares of Common Stock that expires on November 20, 2017 at an exercise price of
$0.15 per share. In the event that a holder of a Subscription Unit purchased all of the basic Subscription Units available to the
holder then pursuant to their basic subscription right, the holder had the option to choose to subscribe for a portion of any Subscription
Units that were not purchased by all other holders of Subscription Units through the exercise of their basic subscription rights.
Effective with the expiration of the subscription rights, which
occurred on March 14, 2016, holders of subscription rights exercised in aggregate 17 basic subscription rights and 0 over subscription
rights for a total 17 Subscription Units. The Company received $4,080 in gross proceeds as a result of the exercise of Subscription
Units. As a result of the exercise of 17 Subscription Units the Company issued effective on March 14, 2016 in aggregate 1,360 shares
of Series B Preferred Stock and of warrants to purchase in aggregate 13,600 shares of Common Stock that expires on November 20,
2017 at an exercise price of $0.15 per share (the "2016 Warrants"). Effective with the expiration of the subscription
rights all unexercised subscription rights expired.
The Company allocated $451 of the $4,080 proceeds received as
a result of the rights offering, which represent the fair value of the 2016 Warrants, to additional paid in capital using a Black-Scholes
option pricing model with the following assumptions: expected volatility of 259%, a risk-free interest rate of 0.51%, an expected
term of 1.7 years and 0% dividend yield. The remaining $3,629 of the proceeds received was allocated to the Series B Preferred
Stock.
Stock Options
2015
During 2015, options to purchase 4,450,000 shares of the Company's
Common Stock, which were previously granted to directors and current and former employees of the Company, expired in accordance
with the terms of such options.
F-
23
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 6 – SHAREHOLDERS' DEFICIT (continued)
On March 27, 2015, the Company granted to an executive of the
Company an option to purchase a total of 200,000 shares of the Company's Common Stock, which vests as follows: 66,666 shares
of Common Stock on March 27, 2016 and 66,667 shares of Common Stock on March 27 of each of 2017 and 2018. This option has a five
year term and an exercise price of $0.10 per share, which exceeded the $0.067 closing price of one share of the Company's
Common Stock as quoted on the OTCBB on March 27, 2015. The fair value of the option granted was estimated on the date of the grant
to be $14,000 using the Black-Scholes option-pricing model based on the following assumptions: expected volatility: 792%, risk-free
interest rate: 0.12%, expected life in years: 5 based on the contract life of the option grant, and assumed dividend yield: 0%.
The Company recorded compensation expense pertaining to this option in salaries, commission and related taxes of $3,565 in the
year ended December 31, 2015.
On November 13, 2015, the Company granted to an executive of
the Company an option to purchase a total of 500,000 shares of the Company's Common Stock, which vests as follows: 125,000
shares of Common Stock on March 13 of each year from 2016 through 2018. This option has a five year term and an exercise price
of $0.10 per share, which exceeded the $0.032 closing price of one share of the Company's Common Stock as quoted on the OTCBB
on November 13, 2015. The fair value of the option granted was estimated on the date of the grant to be $16,000 using the Black-Scholes
option-pricing model based on the following assumptions: expected volatility: 778%, risk-free interest rate: 0.3%, expected life
in years: 5 based on the contract life of the option grant, and assumed dividend yield: 0%. The Company recorded compensation expense
pertaining to this option in salaries, commission and related taxes of $1,600 in the year ended December 31, 2015.
The Company recorded compensation expense pertaining to employee
stock options and warrants in salaries, commission and related taxes of $500,739 for the year ended December 31, 2015, which included
$125,667 of expense pertaining to stock options, $133,381 of expense pertaining to warrants to purchase Series A Preferred Stock,
$51,200 of expense pertaining to warrants to purchase Series B Preferred Stock, and $190,491 of expense pertaining to an amended
and restated warrant to purchase Series A Preferred Stock. See Note 6 – Stockholders Deficit – Series A Preferred Stock
warrants and Series B Preferred Stock warrants.
2016
On March 31, 2016, the Company granted two executives of the
Company options to purchase a total of 1,000,000 shares of the Company's Common Stock, which vest as follows: 250,000 shares
of Common Stock on March 31 of each year from 2017 to 2020. Such options have a five year term and an exercise price of $0.10 per
share, which exceeded the $0.04 closing price of one share of the Company's Common Stock as quoted on the OTCBB on March
31, 2016. The fair value of the options granted was estimated on the date of the grant to be $40,000 using the Black-Scholes option-pricing
model based on the following assumptions: expected volatility: 724%, risk-free interest rate: 0.38%, expected life in years: 5
based on the contract life of the option grant, and assumed dividend yield: 0%. The Company recorded compensation expense pertaining
to these options in salaries, commission and related taxes of $7,500 in the year ended December 31, 2016.
On May 20, 2016, the Company granted to an executive of the
Company options to purchase a total of 500,000 shares of the Company's Common Stock, which vest as follows: 125,000 shares
of Common Stock on May 20 of each year from 2017 to 2020. Such options have a five year term and an exercise price of $0.10 per
share, which exceeded the $0.04 closing price of one share of the Company's Common Stock as quoted on the OTCBB on May 20,
2016. The fair value of the options granted was estimated on the date of the grant to be $16,000 using the Black-Scholes option-pricing
model based on the following assumptions: expected volatility: 710%, risk-free interest rate: 0.32%, expected life in years: 5
based on the contract life of the option grant, and assumed dividend yield: 0%. The Company recorded compensation expense pertaining
to these options in salaries, commission and related taxes of $2,664 in the year ended December 31, 2016.
F-
24
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 6 – SHAREHOLDERS' DEFICIT (continued)
During the year ended December 31, 2016, 475,000 options, which
were previously granted to directors and a former employee of the Company, expired in accordance with the terms of such stock options.
The Company recorded compensation expense pertaining to employee
stock options and warrants in the amount of $222,142 for the year ended December 31, 2016, which included $74,762 of expense pertaining
to stock options and $147,380 of expense pertaining to the amendment of warrants to purchase Series A Preferred Stock. See Note
6 – Stockholders Deficit – Series A Preferred Stock Warrants.
The value of equity compensation expense not yet expensed pertaining
to unvested equity compensation was $138,694 as of December 31, 2016, which will be recognized over a weighted average 2.6 years
in the future.
As of December 31, 2016, there were 30,000,000 shares of our
Common Stock authorized to be issued under the 2010 Equity Compensation Plan, of which 24,996,980 shares of our common stock remain
available for future stock option grants.
A summary of the Company's outstanding stock options as
of and for the years ended December 31, 2016 and 2015 are as follows:
Number
Weighted
Weighted
Of Shares
Average
Weighted
Average
Aggregate
Underlying
Exercise
Average
Remaining
Intrinsic
Options
Price
Fair Value
Contractual Life
Value (1)
(in years)
Outstanding at December 31, 2014
6,725,000
$
0.46
$
0.30
1.66
$
-
For the period ended December 31, 2015
Granted
700,000
0.10
0.07
Exercised
-
-
-
Expired
(4,450,000
)
0.10
0.10
Outstanding at December 31, 2015
2,975,000
0.90
0.54
2.53
0.00
For the period ended December 31, 2016
Granted
1,500,000
0.10
0.04
Exercised
-
-
-
Expired
(475,000
)
3.58
2.94
Outstanding at December 31, 2016
4,000,000
$
0.10
$
0.06
-
$
-
Outstanding and exercisable at December 31, 2016
1,516,666
$
0.10
$
0.10
3.44
$
-
(1)
The aggregate intrinsic value is based on the $0.0375 closing price as of December 31, 2016 for the Company's Common
Stock.
Common Stock Warrants
2015
During 2015, warrants to purchase 35,353,790 shares of the Company's
Common Stock expired in accordance with the terms of such warrants.
F-
25
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 6 – SHAREHOLDERS' DEFICIT (continued)
The 2015 Warrants provide that the holders thereof shall have
the right at any time prior to the earlier of (i) ten business days' after the Company has properly provided written notice
to all such holders of a Call Event (as defined below) and (ii) November 20, 2017, to acquire up to a total of 11,631,410 shares
of Common Stock of the Company upon the payment of $0.15 per Share (the "Exercise Price"). See Note 5 – Equity
Transactions and Loans from Related Parties – September 2015 Private Placement.
The IBC Warrant provides that the holders thereof shall have
the right at any time prior to the earlier of (i) ten business days' after the Company has properly provided written notice
to all such holders of a Call Event and (ii) November 20, 2017, to acquire up to a total of 3,333,330 shares of Common Stock of
the Company (each an "IBC Warrant Share") upon the payment of $0.15 per Warrant Share (the "Exercise Price").
The Company also has the right upon a Call Event to call the outstanding IBC Warrant, in which case such IBC Warrant will expire
if not exercised within ten business days thereafter. See Note 5 – Equity Transactions and Loans from Related Parties –
IBC Private Placement.
The Company also has the right, at any point after which the
volume weighted average trading price per share of the Common Stock for a minimum of 20 consecutive trading days is equal to at
least eight times the Exercise Price per share, provided that certain other conditions have been satisfied (a "Call Event"),
to call the outstanding 2015 Warrants and IBC Warrant, in which case such 2015 Warrants and IBC Warrant will expire if not exercised
within ten business days thereafter.
The Company determined the 2015 Warrants and the IBC Warrant
qualify for a scope exception under ASC 815 as they were determined to be indexed to the Company's stock.
2016
On March 14, 2016, the 2016 Warrants were issued in connection
with the rights offering. See Note 6 – Stockholders Deficit – Series B Convertible Preferred Stock. The Company determined
the 2016 Warrants qualify for a scope exception under ASC 815 as they were determined to be indexed to the Company's stock.
A summary of the status of the Company's outstanding common
stock warrants as of and for the years ended December 31, 2016 and 2015 are as follows:
Weighted
Common
Average
Stock
Exercise
Warrants
Price
Outstanding and exercisable at December 31, 2014
45,473,780
$
0.15
For the year ended December 31, 2015
Issued
14,964,740
0.15
Exercised
-
-
Expired
(35,353,790
)
0.15
Outstanding and exercisable at December 31, 2015
25,084,730
0.15
For the year ended December 31, 2016
Issued
13,600
0.15
Exercised
-
-
Expired
-
-
Outstanding and exercisable at December 31, 2016
25,098,330
$
0.15
Outstanding common stock warrants at December 31, 2016, have
a weighted average remaining contractual life of 0.9 years.
F-
26
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 6 – SHAREHOLDERS' DEFICIT (continued)
Series A Preferred Stock warrants
2015
On March 27, 2015, the Company granted to two executives of
the Company warrants to purchase a total of 160,000 shares of the Company's Series A Preferred Stock, which in total vests
as follows: 40,000 shares of Series A Preferred Stock on March 27 of each year from 2016 through 2019. These warrants each have
a five year term and an exercise price of $4.00 per share. The fair value of these warrants granted were estimated on the date
of the grant to be $224,000 using the Black-Scholes option-pricing model based on the following assumptions: expected volatility:
768%, risk-free interest rate: 0.12%, expected life in years: 5 based on the contract life of the warrant grant, and assumed dividend
yield: 0%. During the year ended December 31, 2015, one of the two executives resigned and warrants to purchase a total of 80,000
shares of the Company's Series A Preferred Stock expired in accordance with the terms of such warrants. The Company recorded
compensation expense pertaining to these warrants in salaries, commission and related taxes of $133,381 in the year ended December
31, 2015.
2016
On March 31, 2016, the Company amended and restated a warrant
to purchase a total of 150,000 shares of the Company's Series A Preferred Stock originally granted to Mr. Robert J. Oakes
on August 18, 2010, and also amended and restated a warrant to purchase a total of 150,000 shares of the Company's Series
A Preferred Stock originally granted to Mr. Anthony R. Verdi on September 14, 2011 (collectively the "Original Warrants").
Immediately prior to March 31, 2016, the Original Warrants had an expiration date of September 14, 2016 and the Original Warrants
were amended and restated to have an expiration date of September 14, 2017 (as amended, the "Amended and Restated Warrants").
The Amended and Restated Warrants are fully exercisable and have an exercise price of $4.00 per share. The fair value of the amendment
to the Amended and Restated Warrants was estimated on the date of the amendment to be the difference between the value of the Amended
and Restated Warrants immediately before and after the change in the expiration date. The fair value of the Amended and Restated
Warrants was estimated on the date of the amendment before the change in the expiration date to be $2,224 using the Black-Scholes
option-pricing model based on the following assumptions: expected volatility: 111%, risk-free interest rate: 0.38%, expected life
in years: 0.5 based on the contract life of the warrant grant, and assumed dividend yield: 0%. The fair value of the Amended and
Restated Warrants was estimated on the date of the amendment after the change in the expiration date to be $149,605 using the Black-Scholes
option-pricing model based on the following assumptions: expected volatility: 263%, risk-free interest rate: 0.38%, expected life
in years: 1.5 based on the contract life of the warrant grant, and assumed dividend yield: 0%. The Company recorded compensation
expense pertaining to the Amended and Restated Warrant in salaries, commission and related taxes of $147,380 in the year ended
December 31, 2016.
Outstanding warrants to purchase the Company's Series
A Preferred Stock at December 31, 2016, have a remaining contractual life of 0.7 years.
F-
27
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 6 – SHAREHOLDERS' DEFICIT (continued)
A summary of the status of the Company's outstanding Series
A Preferred Stock warrants as of and for the years ended December 31, 2016 and 2015 are as follows:
Weighted
Preferred
Average
Stock
Exercise
Warrants
Price
Outstanding and exercisable at December 31, 2014
300,000
$
4.00
For the year ended December 31, 2015
Granted
160,000
4.00
Exercised
-
-
Expired
(80,000
)
-
Outstanding and exercisable at December 31, 2015
380,000
4.00
For the year ended December 31, 2016
Granted
-
-
Exercised
-
-
Expired
-
-
Outstanding and exercisable at December 31, 2016
380,000
$
4.00
Series B Preferred Stock Warrants
2015
On November 13, 2015, the Company granted to two executives
of the Company warrants to purchase a total of 80,000 shares of the Company's Series B Preferred Stock, which were immediately
exercisable. These warrants each have a five year term and an exercise price of $3.00 per share. The fair value of these warrants
granted were estimated on the date of the grant to be $51,200 using the Black-Scholes option-pricing model based on the following
assumptions: expected volatility: 778%, risk-free interest rate: 0.3%, expected life in years: 5 based on the contract life of
the warrant grant, and assumed dividend yield: 0%. The Company recorded compensation expense pertaining to these warrants in salaries,
commission and related taxes of $51,200 in the year ended December 31, 2015.
2016
On April 4, 2016, the Company entered into an agreement with
an existing client, which among other things, included a provision that the Company issue a warrant to the client to purchase 2,000,000
shares of the Company's Series B Preferred Stock, which is immediately exercisable (the "2016 Series B Warrants").
The 2016 Series B Warrants have a three year term, a cashless exercise provision and an exercise price of $3.00 per share. On May
4, 2016 the Company issued the 2016 Series B Warrant to the client. The fair value of the 2016 Series B Warrants was estimated
on April 4, 2016, which was the date of the agreement with the client, to be $1,299,963 using the Black-Scholes option-pricing
model based on the following assumptions: expected volatility: 503%, risk-free interest rate: 0.38%, expected life in years: 3
based on the contract life of the 2016 Series B Warrants, and assumed dividend yield: 0%. The Company determined the 2016 Series
B Warrants qualify for a scope exception under ASC 815 as they were determined to be indexed to the Company's stock. The
Company recorded the fair value of the 2016 Series B Warrant as an increase to additional paid in capital and a reduction to revenue
in the nine months ended September 30, 2016, in the amount of $1,299,963.
Outstanding Series B Warrants at December 31, 2016, have a remaining
contractual life of 2.5 years.
F-
28
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 6 – SHAREHOLDERS' DEFICIT (continued)
A summary of the status of the Company's outstanding Series
B Warrants as of and for the period ended December 31, 2016, are as follows:
Weighted
Preferred
Average
Stock
Exercise
Warrants
Price
Outstanding and exercisable at December 31, 2014
1,170,000
$
3.00
For the year ended December 31, 2015
Granted
80,000
3.00
Exercised
-
-
Expired
-
-
Outstanding and exercisable at December 31, 2015
1,250,000
$
3.00
For the year ended December 31, 2016
Granted
2,000,000
3.00
Exercised
-
-
Expired
-
-
Outstanding and exercisable at December 31, 2016
3,250,000
$
3.00
Registration and Participation Rights
In connection with the Company's acquisition of Atiam
Technologies L. P., the Company and certain owners of Atiam Technologies L.P. entered into a registration rights agreement.
In connection with the Company's 2008 private placement,
the Company and the participating investors also entered into a Registration Rights Agreement (the "2008 Registration Rights
Agreement"). Under the terms of the 2008 Registration Rights Agreement, the Company agreed to prepare and file with the SEC,
a registration statement on Form S-1 covering the resale of the shares and the warrant shares, which was filed with the SEC on
February 1, 2008 and declared effective by the SEC on April 22, 2008. Subject to limited exceptions, the Company also agreed to
use its reasonable best efforts to keep the registration statement effective under the Securities Act until the date that all of
the registrable securities covered by the registration statement have been sold or may be sold without volume restrictions pursuant
to Rule 144(b)(i)) promulgated under the Securities Act. The 2008 Registration Rights Agreement also provides for payment of partial
damages to the investors under certain circumstances relating to failure to file or obtain or maintain effectiveness of the registration
statement, subject to adjustment.
F-
29
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 6 – SHAREHOLDERS' DEFICIT (continued)
In connection with the Company's 2009 private placement,
the Company and the participating investor also entered into a Registration Rights Agreement (the "2009 Registration Rights
Agreement"). Under the terms of the 2009 Registration Rights Agreement, the Company agreed to prepare and file with the SEC,
within 30 days following the receipt of a demand notice of a holder of registrable securities, a registration statement on
Form S-1 covering the resale of the shares and the warrant shares. Subject to limited exceptions, the Company also agreed to use
its reasonable best efforts to cause the registration statement to be declared effective under the Securities Act, and to use its
reasonable best efforts to keep the registration statement effective under the Securities Act until the date that all of the registrable
securities covered by the registration statement have been sold or may be sold without volume restrictions pursuant to Rule 144(b)(i)
promulgated under the Securities Act. In addition, if the Company proposes to register any of its securities under the Securities
Act in connection with the offering of such securities for cash, the Company shall, at such time, promptly give each holder of
registrable securities notice of such intent, and such holders shall have the option to register their registrable securities on
such additional registration statement. The 2009 Registration Rights Agreement also provides for payment of partial damages to
the investor under certain circumstances relating to failure to file or obtain or maintain effectiveness of the Registration Statement,
subject to adjustment.
In connection with the Company's 2010 private placement,
the Company and the participating investors also entered into a Registration Rights Agreement (the "2010 Registration Rights
Agreement"), which provided the investors with demand and "piggyback" registration rights on substantially the
same terms as the 2009 Registration Rights Agreement.
In connection with Co-Investment's note conversion, the
Company and Co-Investment also entered into a Registration Rights Agreement (the "December 2010 Registration Rights Agreement"),
in substantially the same form as the 2010 Registration Rights Agreement.
In connection with the 2012 private placement, the 2013 Private
Placement, the Private Placement and the IBC Private Placement, the Company and the participating investors also entered into registration
rights agreements, in substantially the same form as the 2010 Registration Rights Agreement.
As of December 31, 2016, the Company has not received a demand
notice in connection with any registration rights agreement. At December 31, 2016, the Company does not believe that it is probable
that the Company will incur a penalty in connection with the Company's registration rights agreements. Accordingly no liability
was recorded as of December 31, 2016.
F-
30
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 7 –
CAPITAL LEASE OBLIGATIONS
InsPro LLC has entered into several capital lease obligations
to purchase equipment used for operations. InsPro LLC has the option to purchase the equipment at the end of the lease agreements
for one dollar. The underlying assets and related depreciation were included in the appropriate fixed asset category, and related
depreciation account.
Property and equipment includes the following amounts for leases
that have been capitalized as of December 31, 2016 and 2015:
December 31, 2016
December 31, 2015
Useful Life (Years)
Computer equipment and software
3
$
1,576,226
$
1,344,091
Phone System
3
15,011
15,011
1,591,237
1,359,102
Less accumulated depreciation
(1,260,944
)
(990,007
)
$
330,293
$
369,095
Future minimum payments required under capital leases at December
31, 2016 are as follows:
2017
$
203,110
2018
130,693
2019
30,307
Total future payments
364,110
Less amount representing interest
22,946
Present value of future minimum payments
341,164
Less current portion
188,025
Long-term portion
$
153,139
NOTE 8 –
DEFINED CONTRIBUTION 401(k) PLAN
The Company implemented a 401(k) plan on January 1, 2007. Eligible
employees contribute to the 401(k) plan. Employees become eligible after attaining age 19 and after 3 months of employment with
the Company. The employee may become a participant of the 401(k) plan on the first day of the month following the completion of
the eligibility requirements. Effective January 1, 2007 the Company implemented an elective contribution to the plan of 25% of
the employee's contribution up to 4% of the employee's compensation (the "Contribution"). The Contributions
are subject to a vesting schedule and become fully vested after one year of service, retirement, death or disability, whichever
occurs first. The Company made contributions of $79,080 and $82,462 for the years ended December 31, 2016 and 2015, respectively.
F-
31
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 9 –
COMMITMENTS AND CONTINGENCIES
Employment and Separation Agreements
On March 31, 2008, Anthony R. Verdi,
our Chief Financial Officer, was also appointed to the position of Chief Operating Officer, effective April 8, 2008. Mr. Verdi
was appointed to the board on June 20, 2008, and was appointed our Principal Executive Officer on May 18, 2011 through January
26, 2015.
Mr. Verdi's amended and restated
employment agreement automatically renewed for a one year term on March 31, 2015, and, if not terminated, will automatically renew
for one year periods. His annual base salary was $225,000 per year from March 31, 2008 through May 30, 2011 and was then increased
by the board of directors to $250,000 effective June 1, 2011 and again increased to $300,000 effective November 1, 2015. He is
entitled to receive such bonus compensation as a majority of our board of directors may determine from time to time.
If we terminate Mr. Verdi's employment
for cause or Mr. Verdi terminates his employment agreement without good reason, Mr. Verdi will be entitled to receive (i) all accrued
and unpaid salary and vacation pay through the date of termination and (ii) continued participation for one month in our benefit
plans. Otherwise if we terminate Mr. Verdi's employment or Mr. Verdi terminates his employment agreement for good reason
including his permanent disability he will be entitled to receive 18 months' base salary at the then current rate, payable
in accordance with our usual practices, continued participation for 18 months in our benefit plans and payment, within a commercially
reasonable time and on a prorated basis, of any bonus or other payments earned in connection with our bonus plan existing at the
time of termination. In addition, if Mr. Verdi's employment is terminated in accordance with the foregoing sentence within
two months prior to, or 24 months following, a change in control (as described in the employment agreement), Mr. Verdi will be
entitled to receive 18 months' base salary at the then current rate upon the date of termination, regardless of our usual
practices, and all stock options held by Mr. Verdi at the date of termination will immediately become 100% vested and all restrictions
on such options will lapse.
If Mr. Verdi's employment is
terminated due to a permanent disability we may credit any such amounts against any proceeds paid to Mr. Verdi with respect to
any disability policy maintained and paid for by us for Mr. Verdi's benefit. If Mr. Verdi dies during the term of his employment
agreement, the employment agreement will automatically terminate and Mr. Verdi's estate or beneficiaries will be entitled
to receive (i) three months' base salary at the then current rate, payable in a lump sum and (ii) continued participation
for one year in our benefit plans.
Pursuant to an amended and restated written employment agreement
with InsPro LLC, Mr. Robert J. Oakes serves as Vice Chairman of the board of directors. Pursuant to his employment agreement, his
annual base salary was $250,000 per year through September 30, 2011. On April 7, 2011, Mr. Oakes received an increase in his base
compensation pursuant to his employment agreement to $300,000 retroactive to July 1, 2010, upon InsPro LLC achievement of one calendar
quarter of positive operating cash flow, which occurred during the calendar quarter ended March 31, 2011. Mr. Oakes was entitled
to bonus compensation equal to 100% of the InsPro LLC's net income up to a maximum of $100,000 in 2010 and $100,000 in 2011.
Mr. Oakes is entitled to such fringe benefits as are available to other executives of the Company. Mr. Oakes employment agreement
was automatically extended for an additional one year term on March 25, 2016 and will be annually automatically extended thereafter
unless either party provides written notification to the other party of non-renewal no later than 60 days prior to the termination
date of the agreement.
In the event of Mr. Oakes's termination
without cause or for good reason, he or his estate would receive his then current base annual salary, plus unpaid accrued employee
benefits, which is primarily accrued vacation, plus the continuation of his employee benefits for a period of 12 months, less all
applicable taxes. In the event of his voluntary termination, death or disability, he or his estate would receive unpaid accrued
employee benefits, plus the continuation of his employee benefits for a period of one month, less all applicable taxes.
F-
32
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 9 – COMMITMENTS AND CONTINGENCIES (continued)
As of December 31, 2016, the Company
has employment agreements with the Chief Revenue Officer, which commenced in 2016 for a one year term that will automatically renew
for a one year term in 2017, and four vice presidents of the Company, which automatically renewed each for a one year term in 2016.
These employment agreements provide that these executives will be compensated at an aggregate annual base salary of $1,011,000
with bonus compensation at the discretion of the Company's board of directors. These agreements may be terminated by the
Company for "cause" (as such term is defined in the agreements) and without "cause" upon 30 days'
notice. These agreements may be terminated by the Company without "cause", in which case the terminated employee will
be entitled to their base salary for a period of six months. In the event of termination without cause or for good reason, these
executives would receive their then current base annual salary for a period of six months, plus unpaid accrued employee benefits,
which is primarily accrued vacation, less all applicable taxes. In the event of the voluntary termination of any of these executives',
death or disability, they or their estate would receive unpaid accrued employee benefits, less all applicable taxes. These agreements
also contain non-competition and non-solicitation provisions for the duration of the agreements plus a period of six months after
termination of employment.
Operating Leases
On July 7, 2006, the Company entered into a lease agreement
with Radnor Properties-SDC, L.P. (the "Landlord") for the lease of 7,414 square feet of office space located in Radnor
Financial Center, Building B, 150 Radnor-Chester Road, Radnor, Pennsylvania. The term of the lease commenced on November 1, 2006,
which was the date the Company, with the Landlord's prior consent, assumed possession of the premises and the date the Landlord
tendered possession of the premises to the Company following the substantial completion of the improvements required to be made
by the Landlord under the lease agreement, and will expire on the last day of the 125
th
month following the commencement
of the lease term, which is March 31, 2017. The annual rent increases every 12 months, starting at approximately $161,592
plus a proportionate share of the Landlord's building expenses after the second month and ending at approximately $258,378
plus a proportionate share of the Landlord's building expenses. Under the terms of the lease agreement, rent is waived for
the first five months of the lease term with respect to 5,238 square feet and for the first twelve months for the remaining 2,176
square feet. The Company recorded a liability for deferred rent in the amount of $7,564 as of December 31, 2016, which is included
in accrued liabilities on the consolidated balance sheet.
The Company paid the Landlord a security deposit of $110,000
under the lease (the "Security Deposit") during the third quarter of 2006, which is accounted for as a deposit in other
assets. The Company will not earn interest on the Security Deposit. The Security Deposit will decrease and the Landlord will return
to the Company $10,000 on the third anniversary of the commencement date of the lease and on each anniversary thereafter until
the required Security Deposit has been reduced to $20,000. The Security Deposit will be returned to the Company 30 days after the
end of the lease provided the Company has complied with all provisions of the lease. The balance of the Security Deposit is $30,000
as of December 31, 2016.
On September 14, 2007, InsPro LLC entered into a lease agreement
with BPG Officer VI Baldwin Tower L.P. ("BPG") for approximately 5,524 square feet of office space at Baldwin Towers
in Eddystone, Pennsylvania. On March 26, 2008, and again on December 2, 2008, the Company and BPG agreed to amend the lease to
increase the leased office space by 1,301 and 6,810 square feet, respectively (as amended the "BPG Lease"). The original
term of the lease commenced on October 1, 2007 and expired on January 31, 2013. The annual rent increases every 12 months,
starting at approximately $102,194 plus a proportionate share of landlord's building expenses and ending at approximately
$286,335 plus a proportionate share of landlord's building expenses.
F-
33
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 9 – COMMITMENTS AND CONTINGENCIES (continued)
On March 15, 2012, InsPro LLC and BPG agreed to amend the BPG
Lease to extend its term to January 31, 2017, and after BPG completes certain building improvements InsPro Technologies will move
from its current location to another floor of the same building and lease 17,567 square feet of furnished office space from BPG.
Effective April 1, 2015, InsPro LLC and BPG agreed to amend the BPG Lease to lease 6,810 square feet of furnished office space
from BPG on another floor of the same building. The Company's monthly rent shall be $24,887 per month commencing with InsPro
Technologies' occupancy of the new office space, which occurred in June 2012 through January 31, 2013. InsPro Technologies'
monthly rent increased to $25,619 per month February 1, 2013 through January 31, 2014, increased to $26,351 per month February
1, 2014 through January 31, 2015, increased to $27,082 per month February 1, 2015 through March 31, 2015, increased to $37,082
through January 31, 2016, will increase to $37,814 per month February 1, 2016 through March 31, 2016, and will decrease to $27,814
per month from April 1, 2016 through January 31, 2017. On June 9, 2016, InsPro LLC and BPG entered into a sixth amendment to the
Lease Agreement whereby InsPro LLC and BPG agreed to amend the Lease Agreement to extend the term through January 31, 2018 for
17,567 of rentable square feet at a monthly cost of $28,546 for the period February 1, 2017 through January 31, 2018.
The Company leases certain real and personal property under
non-cancelable operating leases. Rent expense was $613,250 and $664,995 for the years ended December 31, 2016 and 2015, respectively.
Future minimum payments required under operating leases and
service agreements at December 31, 2016 are as follows:
2017
$
638,946
2018
257,591
2019
225,108
thereafter
-
Total
$
1,121,645
NOTE 10 -
INCOME TAXES
The Company has net operating loss carry forwards for federal
income tax purposes of approximately $50,600,000 at December 31, 2016, the unused portion of which expires in years 2026 through
2036. The Company accounts for income taxes under Accounting Standards Codification 740, Income Taxes "ASC 740". ASC
740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial
statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and
tax credit carry forwards. ASC 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of
realization of deferred tax assets. Internal Revenue Code Section 382 "IRC 382" places a limitation on the amount of
taxable income that can be offset by carry forwards after a change in control (generally greater than a 50% change in ownership).
The issuance of the Company's Series A Preferred Stock on January 15, 2009 resulted in a change of control as defined under
IRC 382.
F-
34
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 10 - INCOME TAXES (continued)
The table below summarizes the differences
between the Company's effective tax rate and the statutory federal rate as follows for the periods ended December 31, 2016
and 2015:
2016
2015
Computed "expected" expense (benefit)
$
(933,778
)
$
(2,231,764
)
State tax expense (benefit), net of federal effect
(80,038
)
(191,294
)
Amortization/impairment of acquisition related assets
(5,002
)
(5,002
)
Stock based compensation
84,414
190,281
Stock based fees paid to client
493,986
-
Other permanent differences
14,917
5,995
Increase in valuation allowance
425,501
2,231,784
$
-
$
-
Deferred tax assets and liabilities are
provided for significant income and expense items recognized in different years for tax and financial reporting purposes. The components
of the net deferred tax assets for the years ended December 31, 2016 and 2015 were as follows:
2016
2015
Deferred tax assets:
Net operating loss carry forward
$
19,227,610
$
18,868,252
Depreciation
88,909
52,177
Compensation expense
64,230
61,683
Deferred revenue
686,297
648,288
All Miscellaneous Other
2,874
14,019
Total deferred tax asset
20,069,920
19,644,419
Deferred tax liabilities
-
-
Net deferred tax asset
20,069,920
19,644,419
Less: valuation allowance
(20,069,920
)
(19,644,419
)
$
-
$
-
The Company has fully reserved the deferred tax asset in excess
of the deferred tax liabilities due to the limitation on taxable income that can be offset by net operating loss carry forwards
in future periods under IRC section 382 as a result of changes in control and substantial uncertainty of the realization of any
tax assets in future periods. The valuation allowance was increased by $425,501 from the prior year.
F-
35
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
December 31, 2016 and 2015
NOTE 11 –
SUBSEQUENT EVENTS
Co-Investment $2,000,000 funding
Commitment
On March 29, 2017, Co-Investment provided the Company with a
funding commitment letter (the "Commitment Letter") whereby Co-Investment committed to purchase 1,000,000 shares of
the Company's new series C preferred stock, par value $0.001 per share, ("Series C Preferred Stock") at a per
share purchase price of $2.00 per share for an aggregate purchase price of $2,000,000 (the "Commitment"). The Company
anticipates Co-Investment will fulfill the Commitment in April as soon as practical. The Company intends to use the net proceeds
of the Commitment for working capital purposes.
The Series C Preferred Stock will be entitled to vote as a single
class with the holders of the Company's common stock, with each share of Series C Preferred Stock having the right to 20
votes. Upon the liquidation, sale or merger of the Company, each share of Series C Preferred Stock is entitled to receive an amount
equal to the greater of (A) a liquidation preference equal to two and half (2.5) times the Series C Preferred Stock original issue
price, subject to certain customary adjustments, or (B) the amount such share of Series C Preferred Stock would receive if it participated
pari
passu
with the holders of common stock on an as-converted basis. The liquidation preference is calculated by
taking the product of the issued and outstanding shares of Series C Preferred stock times $5.00. Each share of Series C Preferred
Stock becomes convertible into 20 shares of common stock, subject to adjustment and at the option of the holder of the Series C
Preferred Stock. For so long as any shares of Series C Preferred Stock are outstanding, the vote or consent of the holders of at
least two-thirds of the Series C Preferred Stock is required to approve (Y) any amendment to the Company's certificate of
incorporation or bylaws that would adversely alter the voting powers, preferences or special rights of the Series C Preferred Stock
or (Z) any amendment to the Company's certificate of incorporation to create any shares of capital stock that rank senior
to the Series C Preferred Stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series C
Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series C Preferred
Stock is required to effect or validate any merger, sale of substantially all of the assets of the Company or other fundamental
transaction, unless such transaction, when consummated, will provide the holders of Series C Preferred Stock with an amount per
share equal to two and a half (2.5) times the Series C Preferred Stock original issue price in aggregate for all issued and outstanding
Series C Preferred Stock.
F-
36
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2017
December 31, 2016
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash
$
1,985,940
$
3,161,617
Accounts receivable, net
3,747,175
2,333,817
Prepaid expenses
353,843
225,439
Other current assets
30,000
30,520
Assets of discontinued operations
7,216
8,636
Total current assets
6,124,174
5,760,029
Property and equipment, net
415,236
512,960
Total assets
$
6,539,410
$
6,272,989
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes payable
$
4,330
$
39,194
Accounts payable
5,323,438
5,460,035
Accrued expenses
576,585
436,516
Current portion of capital lease obligations
145,371
188,025
Deferred revenue
3,220,412
2,285,140
Total current liabilities
9,270,136
8,408,910
LONG TERM LIABILITIES:
Deferred revenue
1,500,000
1,500,000
Capital lease obligations
119,546
153,139
Total long term liabilities
1,619,546
1,653,139
Total liabilities
10,889,682
10,062,049
COMMITMENTS AND CONTINGENCIES: (See Note 9)
SHAREHOLDERS' DEFICIT:
Preferred stock ($.001 par value; 20,000,000 shares authorized)
Series A convertible preferred stock; 3,437,500 shares designated, 1,276,750 shares issued and outstanding (liquidation value $12,767,500)
2,864,104
2,864,104
Series B convertible preferred stock; 11,000,000 shares designated, 5,307,212 shares issued and outstanding (liquidation value $15,921,636)
11,689,019
11,689,019
Common stock ($.001 par value; 500,000,000 shares authorized, 41,543,655 shares issued and outstanding)
41,543
41,543
Additional paid-in capital
48,354,058
48,268,968
Accumulated deficit
(67,298,996
)
(66,652,694
)
Total shareholders' deficit
(4,350,272
)
(3,789,060
)
Total liabilities and shareholders' deficit
$
6,539,410
$
6,272,989
See accompanying notes to unaudited consolidated
financial statements.
F-
37
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31,
2017
2016
(Unaudited)
(Unaudited)
Revenues
$
5,046,766
$
6,797,271
Cost of revenues
4,108,969
5,579,569
Gross profit
937,797
1,217,702
Selling, general and administrative expenses
1,596,497
1,630,136
Operating loss from continuing operations
(658,700
)
(412,434
)
Other income (expense):
Gain on the sale of equipment
5,380
-
Interest expense
(5,294
)
(3,978
)
Total other income (expense)
86
(3,978
)
Loss from continuing operations
(658,614
)
(416,412
)
Income from discontinued operations
12,312
13,215
Net loss
$
(646,302
)
$
(403,197
)
Net income (loss) per common share - basic and diluted:
Income (loss) from operations
$
(0.02
)
$
(0.01
)
Income from discontinued operations
-
-
Net income (loss) per common share
$
(0.02
)
$
(0.01
)
Weighted average common shares outstanding - basic and diluted
41,543,655
41,543,655
See accompanying notes to unaudited consolidated
financial statements.
F-
38
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31,
2017
2016
(Unaudited)
(Unaudited)
Cash Flows From Operating Activities:
Net loss
$
(646,302
)
$
(403,197
)
Less: income from discontinued operations
(12,312
)
(13,215
)
Loss from continuing operations
(658,614
)
(416,412
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
122,938
125,635
Stock-based compensation
85,090
164,246
(Gain) on the sale of used equipment
(5,380
)
-
Changes in assets and liabilities:
Accounts receivable
(1,413,358
)
(2,024,034
)
Prepaid expenses
(128,404
)
(18,093
)
Other current assets
520
2,290
Accounts payable
(136,597
)
734,519
Accrued expenses
140,069
64,802
Deferred revenue
935,272
848,911
Net cash (used in) provided by continuing operations
(1,058,464
)
(518,136
)
Income from discontinued operations
12,312
13,215
Changes in assets of discontinued operations
1,420
5,628
Net cash provided by discontinued operations
13,732
18,843
Net cash (used in) provided by operating activities
(1,044,732
)
(499,293
)
Cash Flows From Investing Activities:
Purchase of property and equipment
(25,214
)
(10,188
)
Proceeds from the sale of equipment
5,380
-
Net cash used in investing activities
(19,834
)
(10,188
)
Cash Flows From Financing Activities:
Gross proceeds from sale of preferred stock and warrants
-
4,080
Payments on notes payable
(34,864
)
(27,474
)
Payments on capital leases
(76,247
)
(55,224
)
Net cash (used in) provided by financing activities
(111,111
)
(78,618
)
Net (decrease) in cash
(1,175,677
)
(588,099
)
Cash - beginning of the period
3,161,617
3,398,293
Cash - end of the period
$
1,985,940
$
2,810,194
Supplemental Disclosures of Cash Flow Information
Cash payments for interest
$
5,294
$
3,978
Non cash investing and financing activities:
Acquisition of equipment acquired through capital leases
$
-
$
131,078
See accompanying notes to unaudited consolidated
financial statements.
F-
39
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 1 – BASIS OF PRESENTATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
InsPro Technologies Corporation (the "Company",
"ITCC", "we", "us" or "our") is a technology company that provides software applications
for use by insurance administrators in the insurance industry. Our business focuses primarily on our InsPro Enterprise
TM
software application, which was introduced in 2004.
The Company offers InsPro Enterprise on both a licensed and
an Application Service Provider ("ASP") basis. InsPro Enterprise is an insurance administration and marketing system
that supports group and individual business lines, and efficiently processes agent, direct market, worksite and web site generated
business. InsPro Technologies' clients include insurance carriers and third party administrators. The Company realizes revenue
from the sale of software licenses, application service provider fees, hosting fees, software maintenance fees and consulting and
implementation services.
Basis of presentation and principles of consolidation
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP")
for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, the consolidated
financial statements do not include all of the information and footnotes required by US GAAP for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments
are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial
statements for the year ended December 31, 2016 and notes thereto and other pertinent information contained in our Annual Report
on Form 10-K as filed with the Securities and Exchange Commission (the "Commission").
The consolidated financial statements of
the Company include the Company and its wholly owned subsidiaries. All material inter-company balances and transactions have been
eliminated.
Use of estimates
The preparation of financial statements in conformity with US
GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates. Significant estimates in 2017 and 2016 include the allowance for doubtful accounts,
stock-based compensation, the useful lives and valuation of property and equipment, and deferred revenue.
Cash and cash equivalents
The Company considers all liquid debt instruments with original
maturities of three months or less to be cash equivalents.
F-
40
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Accounts receivable and allowance for uncollectable accounts
The Company has a policy of establishing an allowance for uncollectible
accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically
reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other
factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged
to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. At March
31, 2017 and December 31, 2016, the Company has established, based on a review of its outstanding balances, an allowance for doubtful
accounts in the amounts of $0.
Fair value of financial instruments
The carrying amounts of financial instruments,
including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and capital leases approximated fair
value as of March 31, 2017 and December 31, 2016, because of the relatively short-term maturity of these instruments and their
market interest rates.
The Company follows Financial Accounting
Standards Board ("FASB") ASC 820, "Fair Value Measurements and Disclosures" ("ASC 820"), for
assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be
applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework
for measuring fair value, and expands disclosure about such fair value measurements.
Property and equipment
Property and equipment are carried at cost.
The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are
retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses
are included in income in the year of disposition. In accordance with Statement of Financial Accounting Standards ASC 360, "Accounting
for the Impairment or Disposal of Long-Lived Assets," the Company examines the possibility of decreases in the value of fixed
assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.
Impairment of long-lived assets
The Company periodically reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company
recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset.
The amount of impairment is measured as the difference between the asset's estimated fair value and its book value.
F-
41
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Income taxes
The Company accounts for income taxes pursuant to the provisions
of FASB ASC 740-10, "Accounting for Income Taxes" ("ASC 740-10"), which requires, among other things, an
asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts
and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which
management believes it is more likely than not that the net deferred asset will not be realized.
The Company follows the provisions of the ASC 740-10 related
to
Accounting for Uncertain Income Tax Positions.
When tax returns are filed, it is highly certain that some positions taken
would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the
position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10,
the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence,
management believes it is more likely than not that the position will be sustained upon examination, including the resolution of
appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that
meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent
likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax
positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits
in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities
upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the
Company has not recorded a liability for uncertain tax benefits.
The Company has adopted FASB ASC 740-10-25
Definition of
Settlement,
which provides guidance on how an entity should determine whether a tax position is effectively settled for the
purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the
completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively
settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than
not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. As of March
31, 2017, the tax years ended December 31, 2016, 2015 and 2014 are still subject to audit.
Income (loss) per common share
Basic earnings per share is computed by dividing income (loss)
from continuing operations by the weighted average number of shares of common stock outstanding during the period. Diluted earnings
per share is computed by dividing the adjusted net income (loss) from operations for diluted earnings per share by the weighted
average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each
period. The effects of common stock equivalents and potentially dilutive securities outstanding during 2017 and 2016 are excluded
from the calculation of diluted income (loss) per common share because they are anti-dilutive.
F-
42
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
The Company's common stock equivalents include the following:
March 31,
2017
December 31,
2016
Series A convertible preferred stock issued and outstanding
25,535,000
25,535,000
Series B convertible preferred stock issued and outstanding
106,144,240
106,144,240
Options to purchase common stock issued and outstanding
3,400,000
4,000,000
Warrants to purchase common stock issued and outstanding
25,098,330
25,098,330
Warrants to purchase series A convertible preferred stock, issued and outstanding
7,600,000
7,600,000
Warrants to purchase series B convertible preferred stock, issued and outstanding
65,000,000
65,000,000
232,777,570
233,377,570
Revenue recognition and deferred revenue
The Company offers InsPro Enterprise
TM
on both a
licensed and an ASP basis. An InsPro Enterprise software license entitles the purchaser a perpetual license to a copy of the InsPro
Enterprise software installed at a single client location or hosted by InsPro Technologies. Alternatively, ASP hosting service
enables a client to lease the InsPro Enterprise software, paying only for that capacity required to support their business. ASP
and hosting clients access InsPro Enterprise installed on clients' servers or on the Company's servers located at a
third party's site.
The Company's software maintenance fees apply to both
licensed and ASP clients. Maintenance fees cover periodic updates to the application and the InsPro Enterprise help desk.
The Company's consulting and implementation services are
generally associated with the implementation of InsPro
Enterprise for either an ASP or licensed client, and cover such
activity as InsPro Enterprise installation, configuration, modification of InsPro Enterprise functionality, client insurance plan
set-up, client insurance document design and system documentation.
The Company's revenue is generally recognized under FASB
ASC 985-605 ("ASC 985-605"). For software arrangements involving multiple elements, which are license fees, professional
services, ASP services and maintenance services, the Company allocates revenue to each element based on the relative fair value
or the residual method, as applicable using vendor specific objective evidence to determine fair value, which is based on prices
charged when the element is sold separately. Software revenue accounted for under ASC 985-605 is recognized when persuasive evidence
of an arrangement exists, the software is delivered in accordance with all terms and conditions of the customer contracts, the
fee is fixed or determinable and collectability is probable. Revenue related to post-contract customer support ("PCS"),
including technical support and unspecified when-and-if available software upgrades, is recognized ratably over the PCS term. Under
ASC 985-605, if fair value does not exist for any undelivered element, revenue is not recognized until the earlier of (i) delivery
of such element or (ii) when fair value of the undelivered element is established, unless the undelivered element is a service,
in which case revenue is recognized as the service is performed once the service is the only undelivered element.
F-
43
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
The Company recognizes revenue from software license agreements
when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and collectability
is probable. The Company considers fees relating to arrangements with payment terms extending beyond one year to not be fixed or
determinable and revenue for these arrangements is recognized as payments become due from the customer. In software arrangements
that include more than one InsPro Enterprise
TM
module, the Company allocates the total arrangement fee among the modules
based on the relative fair value of each of the modules.
License revenue allocated to software products generally is
recognized upon delivery of the products or deferred and recognized in future periods to the extent that an arrangement includes
one or more elements to be delivered at a future date and for which fair values have not been established. Revenue allocated to
maintenance agreements is recognized ratably over the maintenance term and revenue allocated to training and other service elements
is recognized as the services are performed.
Effective August 18, 2015, the Company entered into a five year
software and services reseller agreement (the "Reseller Agreement") with an unaffiliated 3
rd
party (the
"Reseller") whereby the Company granted the Reseller the exclusive right to market InsPro Enterprise to prospective
clients for their administration of long term care insurance products for an initial fee of $2,500,000 (the "Reseller Fee").
Pursuant to the Reseller Agreement, the Reseller Fee is fully or partially refundable to the Reseller in the event that the Company
materially breaches the Reseller Agreement or the Company becomes insolvent, goes into liquidation or seeks protection under bankruptcy
during the term of the Reseller Agreement (each a "Refund Event"). The Reseller Fee was fully refundable if a Refund
Event occurred before August 31, 2016. A Refund Event did not occur as of December 31, 2016, and as a result the Company recognized
$500,000 of Reseller Fee as revenue in the year ended December 31, 2016. The Company shall refund the following amounts to the
Reseller if a Refund Event occurs between the following dates; $2,000,000 between September 1, 2016 and August 31, 2017, $1,500,000
between September 1, 2017 and August 31, 2018, and $1,000,000 between September 1, 2018 and August 31, 2019. As of March 31, 2017
the Company has recorded the $2,000,000 unearned portion of the Reseller Fee in deferred revenue ($500,000 included in current
liabilities and $1,500,000 included in long term liabilities).
The unearned portion of the Company's revenue, which is
revenue collected or billed but not yet recognized as earned, has been included in the consolidated balance sheet as a liability
for deferred revenue.
See Note 2 - Discontinued Operations - Revenue Recognition for
Discontinued Operations.
F-
44
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Cost of revenues
Cost of revenues includes
direct labor and associated costs for employees and independent contractors performing InsPro Enterprise
TM
design, development,
implementation and testing together with customer management, training and technical support, as well as a portion of facilities
costs and depreciation. The following table discloses cost of revenue as reported in the statement of operations.
For the Three Months Ended March 31,
2017
2016
Compensation, employee benefits and related taxes
$
1,920,423
$
2,232,355
Professional fees
1,914,984
3,012,354
Depreciation
88,149
100,214
Rent, utilities, telephone and communications
106,488
137,670
Other cost of revenues
78,925
96,976
$
4,108,969
$
5,579,569
Selling, general and administrative expenses
Selling, general and administrative expenses include all selling,
marketing, and other expenses not classified as cost of revenues. The following table discloses selling, general and administrative
expenses as reported in the statement of operations.
For the Three Months Ended March 31,
2017
2016
Compensation, employee benefits and related taxes
$
1,132,958
$
1,008,087
Advertising and other marketing
8,735
41,720
Depreciation
34,789
25,421
Rent, utilities, telephone and communications
99,513
100,932
Professional fees
138,300
260,802
Other general and administrative
182,202
193,174
$
1,596,497
$
1,630,136
Advertising and other marketing
Advertising and other marketing costs are expensed as incurred
and are reported in selling, general and administrative expenses. See the previous table under selling, general and administrative
expenses for advertising and other marketing expenses reported in the statement of operations.
F-
45
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Concentrations of credit risk
The Company maintains its cash and restricted cash in bank deposit
accounts, which exceed the federally insured limits as provided through the Federal Deposit Insurance Corporation ("FDIC").
At March 31, 2017, the Company had $2,070,717 of cash in United States bank deposits, of which $500,976 was federally insured and
$1,569,741 was not federally insured.
The following table lists the percentage of the Company's
accounts receivable balance from the Company's clients representing 10% or more of the accounts receivable balances as of
the periods listed below.
March 31, 2017
December 31, 2016
Client #1
28
%
30
%
Client #2
26
%
12
%
Client #3
15
%
13
%
The following table lists the percentage of the Company's
revenue earned from the Company's clients representing 10% or more of the revenue earned in each of the periods listed below.
For the 3 Months Ended March 31,
2017
2016
Client #1
31
%
29
%
Client #2
20
%
23
%
Stock-based compensation
The Company accounts for stock based compensation transactions
using a fair-value-based method and recognizes compensation cost for share-based payments to employees based on their grant-date
fair value from the beginning of the fiscal period in which the recognition provisions are first applied.
Non-employee stock based compensation
The cost of stock based compensation awards issued to non-employees
for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services,
whichever is more readily determinable, based on their grant-date fair value from the beginning of the fiscal period in which the
recognition provisions are first applied.
Registration rights agreements
At March 31, 2017, the Company does not believe
that it will incur a penalty in connection with the Company's registration rights agreements. Accordingly, no liability in
respect thereof was recorded as of March 31, 2017. See Note 6 - Stockholders Deficit – Registration and Participation Rights.
F-
46
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Recent accounting pronouncements
From time to time, new accounting pronouncements are issued
by FASB, which are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that
the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's consolidated
financial statements upon adoption.
In May 2014, the FASB issued Accounting Standards Update ("ASU")
ASU No. 2014-09
Revenue from Contracts with Customers (Topic 606)
("ASU 2014-09"), that outlines a
comprehensive five-step revenue recognition model based on the principle that an entity should recognize revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to
be entitled in exchange for those goods or services. In July 2015, the FASB approved a one-year deferral of the effective date
of ASU 2014-09 to the beginning of 2018 for public companies, with an option that would permit companies to adopt the standard
as early as the original effective date of 2017. The updated standard will replace most existing revenue recognition guidance in
U.S. GAAP. ASU 2014-09 may be adopted either retrospectively or on a modified retrospective basis whereby it would be applied to
new contracts and existing contracts with remaining performance obligations as of the effective date, with a cumulative catch-up
adjustment recorded to beginning retained earnings at the effective date for those contracts. The updated standard is effective
for us in the first quarter of 2018 and we do not plan to early adopt. We have not yet selected a transition method and we are
currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.
In November 2015, the FASB issued ASU No. 2015-17 "Balance
Sheet Classification of Deferred Taxes", which requires that all deferred tax liabilities and assets be classified as noncurrent
amounts on the balance sheet. ASU 2015-17 will be effective for interim and annuals periods beginning after December 15, 2016
and may be applied prospectively or retrospectively. Early adoption of the standard is permitted. The new standard is effective
for the Company at the beginning of fiscal year 2017. We are currently evaluating the impact of adopting this ASU on our consolidated
financial statements and do not expect adoption to have a material impact.
In February 2016, the FASB issued ASU No. 2016-02
Leases
(Topic 842)
("ASU 2016-02"), which requires all leases with a term greater than 12 months to be recognized
on the balance sheet, while lease expenses would continue to be recognized in the statement of operations in a manner similar to
current accounting guidance. The new standard establishes a right-of-use model (ROU) asset and lease liability on the balance sheet
for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting
the pattern and classification of expense recognition in the statement of operations. ASU 2016-02 is effective for the Company
at the beginning of fiscal year 2019 and early adoption is permitted. Entities must adopt ASU 2016-02 on a modified retrospective
basis whereby it would be applied at the beginning of the earliest comparative year. The new standard is effective for us in the
first quarter of 2019 and we do not plan to early adopt. We are currently evaluating the impact of the adoption of ASU 2016-02
on our consolidated financial statements. Effective December 31, 2016, our only lease with a term greater than 12 months is for
our Radnor office, which expired on March 31, 2017. We believe our current lease for our Eddystone office, which was extended for
a 1 year term that expires on January 31, 2018, would continue to be accounted for as an operating lease under the new standard.
We may enter into a new lease for office space, which may have a term greater than 12 months, in the future.
F-
47
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
In June 2016, the FASB issued ASU No. 2016-13 "Financial
Instruments – Credit Losses (Topic 326)." For most financial assets, such as trade and other receivables, loans and
other instruments, this standard changes the current incurred loss model to a forward-looking expected credit loss model, which
generally will result in the earlier recognition of allowances for losses. The new standard is effective for the Company at the
beginning of fiscal year 2019. Entities are required to apply the provisions of the standard through a cumulative-effect adjustment
to retained earnings as of the effective date. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated
financial statements.
In August 2014, the FASB issued ASU No. 2014-15 "Presentation
of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue
as a Going Concern". Under US GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing
financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this
presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes
imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30,
Presentation of Financial Statements - Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there
may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations,
financial statements should continue to be prepared under the going concern basis of accounting, but the provisions in this ASU
should be followed to determine whether to disclose information about the relevant conditions and events. ASU No. 2014-15 was effective
for us as of December 31, 2016.
In March 2016, the FASB issued ASU 2016-09 "Improvements
to Employee Share-Based Payment Accounting (Topic 718)", which simplifies several aspects of the accounting for employee
share-based payment transactions, including the accounting for the related income taxes, forfeitures, statutory tax withholding
requirements and classification in the statement of cash flows. ASU 2016-09 is effective for annual reporting periods beginning
after December 15, 2016, including interim periods within those annual reporting periods. Early adoption is permitted. The
new standard was effective for the Company at the beginning of fiscal year 2017 and there was no material impact of adopting this
ASU on our consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15 "Classification
of Certain Cash Receipts and Cash Payments (Topic 230)", which provides guidance for eight specific cash flow issues with
the objective of reducing the existing diversity in practice. ASU 2016-15 is effective retrospectively for annual reporting periods
beginning after December 15, 2017, including interim periods within those annual reporting periods. Early adoption is permitted.
The new standard is effective for the Company at the beginning of fiscal year 2018. We are currently evaluating the impact of adopting
this ASU on our consolidated financial statements and do not expect adoption to have a material impact.
F-
48
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Liquidity
During the three months ended March 31, 2017, the Company's
net loss was $646,302 and cash used in operations was $1,044,732. As of March 31, 2017, the Company had $1,985,940 of cash, a working
capital deficit of $3,145,962 and the Company's shareholder deficit was $4,350,272. During 2016 the Company implemented cost
reduction initiatives, which resulted in the reduction of expenses in 2016 as compared to 2015. During the three months ended March
31, 2017, the Company implemented additional cost reduction initiatives, which resulted in the reduction of cost of revenues of
$1,470,600 and selling, general and administrative expenses of $33,639 as compared to the same period in 2016. On April 20, 2017,
the Company obtained $2,000,000 of cash from its largest stockholder, The Co-Investment Fund II, L.P. ("Co-Investment"),
which is described in Note 10 – Subsequent Events.
Our liquidity needs for the next 12 months and beyond are principally
for the funding of our operations, payments on capital leases and the purchase of property and equipment. Based on the forgoing,
management believes the Company has sufficient funds to finance its operations over the next twelve months.
NOTE 2 – DISCONTINUED OPERATIONS
The Company has classified its former telesales call center
and external agent produced agency business as discontinued operations. During the first quarter of 2009, the Company ceased the
direct marketing and sale of health and life insurance and related products to individuals and families in its telesales call center.
The Company also determined to discontinue selling health and life insurance and related products to individuals and families through
its non-employee agents. On February 20, 2009, the Company entered into and completed the sale of its agency business to an unaffiliated
third party, pursuant to the terms of a client transition agreement.
The financial position of discontinued
operations was as follows:
March 31, 2017
December 31, 2016
Accounts receivable
$
7,216
$
8,636
Other current assets
-
-
Net current assets of discontinued operations
$
7,216
$
8,636
The results of discontinued operations do not include any allocated
or common overhead expenses. The results of operations of discontinued operations were as follows:
For the Three Months Ended March 31,
2017
2016
Revenues:
Commission and other revenue from carriers
$
2,378
$
3,067
eHealth Agreement
15,934
16,148
18,312
19,215
Operating expenses:
Other general and administrative
6,000
6,000
6,000
6,000
Income from discontinued operations
$
12,312
$
13,215
F-
49
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the
following:
Useful
Life
(Years)
March 31, 2017
December 31, 2016
Computer equipment and software
3
$
4,509,487
$
4,419,412
Office equipment
4.6
145,228
158,732
Office furniture and fixtures
6.7
-
189,857
Leasehold improvements
7.1
81,933
94,620
4,736,648
4,862,621
Less accumulated depreciation
(4,321,412
)
(4,349,661
)
$
415,236
$
512,960
The following table discloses depreciation expense
as reported in the statement of operations.
For the Three Months Ended March 31,
2017
2016
Depreciation included in cost of revenues
$
88,149
$
100,214
Depreciation included in selling, general and administrative
34,789
25,421
Total depreciation
$
122,938
$
125,635
NOTE 4 – NOTES PAYABLE
Notes payable at March 31, 2017, consist of a note payable for
insurance premium financing on one of the Company's insurance policies. The note commenced on May 3, 2016, has an annual
interest rate of 7.99% and consists of 11 monthly payments of principal and interest of $4,358 per month commencing on June 3,
2016 and ending on April 3, 2017.
Notes payable at December 31, 2016, consist of two notes payable
for insurance premium financing on two of the Company's insurance policies. The first note commenced on April 28, 2016, has
an annual interest rate of 8.75% and consists of 11 monthly payments of principal and interest of $7,456 per month commencing on
May 28, 2016 and ending on March 28, 2017. The second note commenced on May 3, 2016, has an annual interest rate of 7.99% and consists
of 11 monthly payments of principal and interest of $4,358 per month commencing on June 3, 2016 and ending on April 3, 2017.
F-
50
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 5 – TRANSACTIONS WITH RELATED PARTIES
Co-Investment $2,000,000 funding Commitment
On March 29, 2017, Co-Investment provided the Company with a
funding commitment letter (the "Commitment Letter") whereby Co-Investment committed to purchase 1,000,000 shares of
the Company's new series C preferred stock, par value $0.001 per share, ("Series C Preferred Stock") at a per
share purchase price of $2.00 per share, for an aggregate purchase price of $2,000,000 (the "Commitment"). See Note
10 – Subsequent Events. The Company intends to use the net proceeds of the Commitment for working capital purposes.
The Series C Preferred Stock will be entitled to vote as a single
class with the holders of the Company's common stock, with each share of Series C Preferred Stock having the right to 20
votes. Upon the liquidation, sale or merger of the Company, each share of Series C Preferred Stock is entitled to receive an amount
equal to the greater of (A) a liquidation preference equal to two and half (2.5) times the Series C Preferred Stock original issue
price, subject to certain customary adjustments, or (B) the amount such share of Series C Preferred Stock would receive if it participated
pari
passu
with the holders of common stock on an as-converted basis. The liquidation preference is calculated by
taking the product of the issued and outstanding shares of Series C Preferred stock times $5.00. Series C Preferred Stock is senior
to Series A Preferred Stock (as defined below) and the Series C Preferred Stock (as defined below) as it pertains to liquidation
preferances.
Each share of Series C Preferred Stock becomes convertible into
20 shares of common stock, subject to adjustment and at the option of the holder of the Series C Preferred Stock. For so long as
any shares of Series C Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the Series
C Preferred Stock is required to approve (Y) any amendment to the Company's certificate of incorporation or bylaws that would
adversely alter the voting powers, preferences or special rights of the Series C Preferred Stock or (Z) any amendment to the Company's
certificate of incorporation to create any shares of capital stock that rank senior to the Series C Preferred Stock. In addition
to the voting rights described above, for so long as 1,000,000 shares of Series C Preferred Stock are outstanding, the vote or
consent of the holders of at least two-thirds of the shares of Series C Preferred Stock is required to effect or validate any merger,
sale of substantially all of the assets of the Company or other fundamental transaction, unless such transaction, when consummated,
will provide the holders of Series C Preferred Stock with an amount per share equal to two and a half (2.5) times the Series C
Preferred Stock original issue price in aggregate for all issued and outstanding Series C Preferred Stock.
NOTE 6 – STOCKHOLDERS' DEFICIT
Common Stock
As of March 31, 2017 and December 31, 2016, the Company was
authorized to issue 500,000,000 shares of common stock with a par value of $0.001 per share ("Common Stock"). As of
March 31, 2017 and December 31, 2016, the Company had 41,543,655 shares of its Common Stock issued and outstanding.
F-
51
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 6 – STOCKHOLDERS' DEFICIT (Continued)
The Company has reserved shares of Common Stock, on an as-if-converted
basis, as follows:
March 31, 2017
December 31, 2016
Exercise of options issued and outstanding to purchase common stock
3,400,000
4,000,000
Issuance of common shares available under the 2010 Equity Compensation Plan
25,596,980
24,996,980
Exercise of warrants issued and outstanding to purchase common stock
25,098,330
25,098,330
Conversion of series A convertible preferred stock issued and outstanding into common stock
25,535,000
25,535,000
Exercise of warrants to purchase series A convertible preferred stock issued and outstanding and converted into common stock
7,600,000
7,600,000
Conversion of series B convertible preferred stock issued and outstanding into common stock
106,144,240
106,144,240
Exercise of warrants to purchase series B convertible preferred stock issued and outstanding and converted into common stock
65,000,000
65,000,000
Total common stock reserved for issuance
258,374,550
258,374,550
The above table includes Common Stock reserved for non exercisable,
unvested stock options and Common Stock reserved for the issuance of stock options in the future under the Company's 2010
Equity Compensation Plan.
Series A Preferred Stock
As of March 31, 2017 and December 31, 2016, the Company's
board of directors has designated 3,437,500 shares of Series A Convertible Preferred Stock par value $0.001 per share ("Series
A Preferred Stock"). As of March 31, 2017 and December 31, 2016, the Company had 1,276,750 shares of its Series A Preferred
Stock issued and outstanding. As of March 31, 2017 and December 31, 2016, the Company has reserved 380,000 shares of Series A Preferred
Stock for the exercise of warrants issued and outstanding to purchase its Series A Preferred Stock.
The Series A Preferred Stock is entitled to vote as a single
class with the holders of the Company's Common Stock and preferred stock, with each share of Series A Preferred Stock having
the right to 20 votes.
Upon the liquidation, sale or merger of the Company, each share
of Series A Preferred Stock is entitled to receive an amount equal to the greater of (A) a liquidation preference equal to two
and a half (2.5) times the Series A Preferred Stock original issue price, or $12,767,500, subject to certain customary adjustments,
or (B) the amount such share of Series A Preferred Stock would receive if it participated
pari
passu
with the holders
of Common Stock on an as-converted basis. The liquidation preference is calculated by taking the product of the issued and outstanding
shares of Series A Preferred Stock times $10.00. Series A Preferred Stock is junior to Series B Convertible Preferred Stock par
value $0.001 per share ("Series B Preferred Stock") and the Series C Preferred Stock as it pertains to liquidation
preferances.
Each share of Series A Preferred Stock is convertible into 20
shares of Common Stock, subject to adjustment and at the option of the holder of the Series A Preferred Stock.
F-
52
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 6 – STOCKHOLDERS' DEFICIT (Continued)
For so long as any shares of Series A Preferred Stock are outstanding,
the vote or consent of the holders of at least two-thirds of the Series A Preferred Stock is required to approve any amendment
to the Company's certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special
rights of the Series A Preferred Stock or any amendment to the Company's certificate of incorporation to create any shares
of capital stock that rank senior to the Series A Preferred Stock. In addition to the voting rights described above, for so long
as 1,000,000 shares of Series A Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the
shares of Series A Preferred Stock is required to effect or validate any merger, sale of substantially all of the assets of the
Company or other fundamental transaction, unless such transaction, when consummated, will provide the holders of Series A Preferred
Stock with an amount per share equal to two and a half (2.5) times the Series A Preferred Stock original issue price, or $12,767,500,
in aggregate for all issued and outstanding Series A Preferred Stock.
Series B Preferred Stock
As of March 31, 2017 and December 31, 2016, the Company's
board of directors has designated 11,000,000 shares of Series B Preferred Stock. As of March 31, 2017 and December 31, 2016, the
Company had 5,307,212 of its Series B Preferred Stock issued and outstanding. As of March 31, 2017 and December 31, 2016, the Company
has reserved 3,250,000 shares of Series B Preferred Stock for the exercise of warrants issued and outstanding to purchase its Series
B Preferred Stock.
The Series B Preferred Stock is entitled to vote as a single
class with the holders of the Company's Common Stock and preferred stock, with each share of Series B Preferred Stock having
the right to 20 votes.
As of March 31, 2017 and December 31, 2016, upon the liquidation,
sale or merger of the Company, each share of Series B Preferred Stock is entitled to receive an amount equal to the greater of
(A) a liquidation preference equal to the Series B Preferred Stock original issue price, or $15,921,636, subject to certain customary
adjustments, or (B) the amount such share of Series B Preferred Stock would receive if it participated
pari
passu
with the holders of Common Stock and preferred stock on an as-converted basis. The liquidation preference is calculated by taking
the product of the issued and outstanding shares of Series B Preferred Stock times $3.00. Series B Preferred Stock is senior to
Series A Preferred Stock, and junior to the Series C Preferred Stock, as it pertains to liquidation preferances.
Each share of Series B Preferred Stock is convertible into 20
shares of Common Stock, subject to adjustment and at the option of the holder of the Series B Preferred Stock.
For so long as any shares of Series B Preferred Stock are outstanding,
the vote or consent of the holders of at least two-thirds of the Series B Preferred Stock is required to approve (Y) any amendment
to the Company's certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special
rights of the Series B Preferred Stock or (Z) any amendment to the Company's certificate of incorporation to create any shares
of capital stock that rank senior to the Series B Preferred Stock. In addition to the voting rights described above, for so long
as 1,000,000 shares of Series B Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the
shares of Series B Preferred Stock is required to effect or validate any merger, sale of substantially all of the assets of the
Company or other fundamental transaction, unless such transaction, when consummated, will provide the holders of Series B Preferred
Stock with an amount per share equal the Series B Preferred Stock original issue price, or $15,921,636, in aggregate for all issued
and outstanding Series B Preferred Stock.
F-
53
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 6 – STOCKHOLDERS' DEFICIT (Continued)
On February 2, 2016 the Company filed a registration statement
for a rights offering on Form S-1/A, which the Commission declared effective on February 5, 2016, to distribute to shareholders
excluding residents of Arizona and California at no charge, one non-transferable subscription right for each 16,615 shares of our
Common Stock, 831 shares of our Series A Preferred Stock and 830 shares of our Series B Preferred Stock owned as of January 31,
2016 (the "Record Date"), either as a holder of record or, in the case of shares held of record by brokers, dealers,
custodian banks, or other nominees on shareholders' behalf, as a beneficial owner of such shares. If the rights offering
was fully subscribed the gross proceeds from the rights offering would have been approximately $2.5 million. This rights offering
was designed to give all of the holders of the Company's capital stock the opportunity to participate in an equity investment
in the Company on the same economic terms as the private placement completed by the Company for an aggregate of 1,163,141 shares
of Series B Preferred Stock and warrants to purchase 11,631,410 shares of Common Stock with certain accredited investors, including
Co-Investment and Donald Caldwell, who is the CEO and chairman of the board of directors of the Company, Edmond Walters, who is
a director of the Company, and Azeez Enterprises, LP, which is affiliated with Michael Azeez, who is a director of the Company.
The basic subscription right entitled the holder to purchase
one unit ("Subscription Unit") at a subscription price of $240. A Subscription Unit consisted of 80 shares of Series
B Preferred Stock and a warrant to purchase 800 shares of Common Stock that expires on November 20, 2017 at an exercise price of
$0.15 per share. In the event that a holder of a Subscription Unit purchased all of the basic Subscription Units available to the
holder then pursuant to their basic subscription right, the holder had the option to choose to subscribe for a portion of any Subscription
Units that were not purchased by all other holders of Subscription Units through the exercise of their basic subscription rights.
Effective with the expiration of the subscription rights, which
occurred on March 14, 2016, holders of subscription rights exercised in aggregate 17 basic subscription rights and 0 over subscription
rights for a total 17 Subscription Units. The Company received $4,080 in gross proceeds as a result of the exercise of Subscription
Units. As a result of the exercise of 17 Subscription Units the Company issued effective on March 14, 2016 in aggregate 1,360 shares
of Series B Preferred Stock and of warrants to purchase in aggregate 13,600 shares of Common Stock that expires on November 20,
2017 at an exercise price of $0.15 per share (the "2016 Warrants"). Effective with the expiration of the subscription
rights all unexercised subscription rights expired.
The Company allocated $451 of the $4,080 proceeds received as
a result of the rights offering, which represent the fair value of the 2016 Warrants, to additional paid in capital using a Black-Scholes
option pricing model with the following assumptions: expected volatility of 259%, a risk-free interest rate of 0.51%, an expected
remaining term of 1.7 years and 0% dividend yield. The remaining $3,629 of the proceeds received was allocated to the Series B
Preferred Stock.
Series C Preferred Stock
See Note 10 – Subsequent Events.
Stock Options
During the three months ended March 31, 2017, options for 600,000
common shares, which were previously granted to a former executive of the Company, expired in accordance with the terms of such
stock options.
F-
54
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 6 – STOCKHOLDERS' DEFICIT (Continued)
As of March 31, 2017, there were 30,000,000 shares of our Common
Stock authorized to be issued under the Company's 2010 Equity Compensation Plan, of which 25,596,980 shares of our Common
Stock remain available for future stock option grants.
The Company recorded compensation expense pertaining to employee
stock options and warrants in the amount of $85,090 for the three months ended March 31, 2017.
The value of equity compensation expense not yet expensed pertaining
to unvested equity compensation for both options to purchase common stock and Series A Preferred Stock was $53,603 as of March
31, 2017, which will be recognized over a weighted average 2.8 years in the future.
A summary of the Company's outstanding stock options are as
follows:
Number
Weighted
Weighted
Of Shares
Average
Weighted
Average
Aggregate
Underlying
Exercise
Average
Remaining
Intrinsic
Options
Price
Fair Value
Contractual Life
Value (1)
(in years)
Outstanding at December 31, 2016
4,000,000
$
0.10
$
0.06
3.44
$
-
For the period ended March 31, 2017
Granted
-
-
-
Exercised
-
-
-
Expired
(600,000
)
0.10
0.04
Outstanding at March 31, 2017
3,400,000
$
0.10
$
0.07
-
$
-
Outstanding and exercisable at March 31, 2017
1,516,666
$
0.10
$
0.10
3.34
$
-
(1) The aggregate intrinsic value is based on the $0.0625 closing
price as of March 31, 2017, for the Company's Common Stock.
Common Stock Warrants
Outstanding warrants at March 31, 2017, have an average weighted
average remaining contractual life of 0.6 years.
A summary of the status of the Company's outstanding common
stock warrants are as follows:
Weighted
Common
Average
Stock
Exercise
Warrants
Price
Outstanding and exercisable at December 31, 2016
25,098,330
$
0.15
For the period ended March 31, 2017
Issued
-
-
Exercised
-
-
Expired
-
-
Outstanding and exercisable at March 31, 2017
25,098,330
$
0.15
F-
55
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 6 – STOCKHOLDERS' DEFICIT (Continued)
Series A Preferred Stock Warrants
Outstanding warrants to purchase the Company's Series
A Preferred Stock at March 31, 2017, have a remaining contractual life of 0.5 year. A summary of the status of the Company's outstanding
Series A Preferred Stock warrants are as follows:
Weighted
Preferred
Average
Stock
Exercise
Warrants
Price
Outstanding and exercisable at December 31, 2016
380,000
$
4.00
For the period ended March 31, 2017
Granted
-
-
Exercised
-
-
Expired
-
-
Outstanding and exercisable at March 31, 2017
380,000
$
4.00
Series B Preferred Stock Warrants
Outstanding preferred stock warrants to purchase the Company's
Series B Preferred Stock at March 31, 2017 have a remaining contractual life of 2.1 years. A summary of the status of the Company's
outstanding Series B Preferred Stock warrants are as follows:
Weighted
Preferred
Average
Stock
Exercise
Warrants
Price
Outstanding and exercisable at December 31, 2016
3,250,000
$
3.00
For the period ended March 31, 2017
Granted
-
-
Exercised
-
-
Expired
-
-
Outstanding and exercisable at March 31, 2017
3,250,000
$
3.00
Registration and Participation Rights
As of March 31, 2017, the Company has not received a demand
notice in connection with any of the Company's various registration rights agreements.
F-
56
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 7 – CAPITAL LEASE OBLIGATIONS
The Company's subsidiary, InsPro LLC, has entered into
several capital lease obligations to purchase equipment used for operations. The Company has the option to purchase the equipment
at the end of each lease agreement for one dollar. The underlying assets and related depreciation were included in the appropriate
fixed asset category, and related depreciation account.
Property and equipment includes the following amounts for leases
that have been capitalized:
March 31, 2017
December 31, 2016
Useful Life (Years)
Computer equipment and software
3
$
1,576,226
$
1,576,226
Leasehold improvements
3
15,011
15,011
1,591,237
1,591,237
Less accumulated depreciation
(1,334,741
)
(1,260,944
)
$
256,496
$
330,293
Future minimum payments required under capital leases at March
31, 2017, are as follows:
2017
$
122,149
2018
130,693
2019
30,307
Total future payments
283,149
Less amount representing interest
18,232
Present value of future minimum payments
264,917
Less current portion
145,371
Long-term portion
$
119,546
NOTE 8 – DEFINED CONTRIBUTION 401(k) PLAN
The Company implemented a 401(k) plan on January 1, 2007. Eligible
employees contribute to the 401(k) plan. Employees become eligible after attaining age 19 and after 6 months of employment with
the Company. An employee may become a participant of the 401(k) plan on the first day of the month following the completion of
the eligibility requirements. Effective January 1, 2007 the Company implemented an elective contribution to the plan of 25% of
the employee's contribution up to 4% of the employee's compensation. The contributions are subject to a vesting schedule
and become fully vested after one year of service, retirement, death or disability, whichever occurs first. The Company made contributions
of $21,215 and $23,688 for the three months ended March 31, 2017 and 2016, respectively.
F-
57
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 9 – COMMITMENTS AND CONTINGENCIES
On July 7, 2006, the Company entered into a lease agreement
with Radnor Properties-SDC, L.P. (the "Landlord") for the lease of 7,414 square feet of office space located in Radnor
Financial Center, Building B, 150 Radnor-Chester Road, Radnor, Pennsylvania. The term of the lease commenced on November 1, 2006,
which was the date the Company, with the Landlord's prior consent, assumed possession of the premises and the date the Landlord
tendered possession of the premises to the Company following the substantial completion of the improvements required to be made
by the Landlord under the lease agreement, and will expire on the last day of the 125
th
month following the commencement
of the lease term. The lease expired on March 31, 2017, in accordance with the terms of the lease.
On September 14, 2007, InsPro LLC entered into a lease agreement
(the "Lease Agreement") with BPG Officer VI Baldwin Tower L.P. ("BPG"). On April 28, 2015, InsPro LLC and
BPG entered into a fifth amendment to the Lease Agreement whereby InsPro LLC and BPG agreed to amend the Lease Agreement to increase
the leased office space by 6,801 rentable square feet effective April 1, 2015, through March 31, 2016, at an incremental monthly
rent of $10,000. On June 9, 2016, InsPro LLC and BPG entered into a sixth amendment to the Lease Agreement whereby InsPro LLC and
BPG agreed to amend the Lease Agreement to extend the term through January 31, 2018 for 17,567 of rentable square feet at a monthly
cost of $28,546 for the period February 1, 2017 through January 31, 2018.
Future minimum payments required under operating leases and
service agreements at March 31, 2017, are as follows:
2017
$
517,618
2018
266,591
2019
225,108
2020
15,932
thereafter
-
Total
$
1,025,249
The Company leases certain real and personal property under
non-cancelable operating leases. Rent expense was $118,484 and $187,657 for the three months ended March 31, 2017 and 2016, respectively.
NOTE 10 – SUBSEQUENT EVENTS
Private Placement
On April 20, 2017, the Company completed a private placement
(the "Private Placement") with Co-Investment, which hold more than 5% of our common stock. Donald Caldwell, who is
the CEO and chairman of the board of directors of the Company, is the CEO for Cross Atlantic Capital Partners, Inc., which is the
managing partner of Co-Investment. The Company issued and Co-Investment purchased 1,000,000 shares of our Series C Convertible
Preferred Stock at a per share price of $2.00 for an aggregate total investment of $2,000,000 pursuant to the terms of a securities
purchase agreement (the "Purchase Agreement"). The Company intends to use the net proceeds of the Private Placement
for working capital purposes. See Note 5 – Transactions With Related Parties for a description of the Series C Preferred
Stock.
F-
58
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 10 – SUBSEQUENT EVENTS (continued)
The Company agreed, pursuant to the terms of the Purchase Agreement,
that for a period of 90 days after the effective date (the "Initial Standstill") of the Purchase Agreement, the Company
shall not, subject to certain exceptions, offer, sell, grant any option to purchase, or otherwise dispose of any equity securities
or equity equivalent securities, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument
that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, capital stock and
other securities of the Company. In addition, pursuant to the Purchase Agreement, the Company was permitted to sell up to an additional
500,000 shares of Series C Preferred Stock Units to other existing stockholders within 90 days following the Closing on substantially
the same terms and conditions described above and as set forth in the Purchase Agreement.
The Purchase Agreement also provides for a customary participation
right for Co-Investment, subject to certain exceptions and limitations, which grants Co-Investment the right to participate in
any future capital raising financings of the Company occurring from the effective date of the Purchase Agreement until 24 months
after the effective date of the Purchase Agreement. Co-Investment may participate in such financings at a level based on Co-Investment's
ownership percentage of the Company on a fully-diluted basis prior to such financing.
In connection with the Private Placement, the board of directors
of the Company approved a Certificate of Designation of Series C Convertible Preferred Stock of the Company (the "Certificate
of Designation") setting forth the rights, preferences and limitations of the Series C Preferred Stock. The Company's
board of directors has designated 4,000,000 shares of Series C Preferred stock. On April 19, 2017, the Company filed the Certificate
of Designation with the Secretary of State of the State of Delaware.
The Certificate of Designation provides, among other things,
that upon the liquidation, sale or merger of the Company, the holders of shares of Series C Preferred Stock are entitled to receive
an amount equal to the greater of (A) a liquidation preference equal to two and a half (2.5) times the Series C Preferred Stock
original issue price, subject to certain customary adjustments, or (B) the amount such Series C Preferred Share would receive if
it participated
pari
passu
with the holders of shares of Common Stock on an as-converted basis.
Each Series C Preferred Share is convertible into 20 shares
of Common Stock.
For so long as any Series C Preferred Shares are outstanding,
the vote or consent of the holders of at least two-thirds of the Series C Preferred Shares is required to approve (Y) any amendment
to the Company's certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special
rights of the Series C Preferred Stock or (Z) any amendment to the Company's certificate of incorporation to create any shares
of capital stock that rank senior to the Series C Preferred Stock. In addition to the voting rights described above, for so long
as 1,000,000 Series C Preferred Shares are outstanding, the vote or consent of the holders of at least two-thirds of the Series
C Preferred Shares is required to effect or validate any merger, sale of substantially all of the assets of the Company or other
fundamental transaction, unless such transaction, when consummated, will provide the holders of Series C Preferred Stock with an
amount per share equal to two and a half (2.5) times the Series C Preferred Stock original issue price plus any declared but unpaid
dividends.
F-
59
INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2017
NOTE 10 – SUBSEQUENT EVENTS (continued)
On May 11, 2017, the Company completed
a private placement (the "Second Private Placement") with Azeez Enterprises, L.P., which hold more than 5% of our Series
C Preferred Stock. Michael Azeez is a member of the board of directors of the Company and is the managing partner of Azeez Enterprises,
L.P. The Company issued and Azeez Enterprises, L.P. purchased 75,000 shares of our Series C Convertible Preferred Stock at a per
share price of $2.00 for an aggregate total investment of $150,000 pursuant to the terms of a securities purchase agreement at
essentially the same terms as those contained in the Purchase Agreement (the "Second Purchase Agreement"). Also as
part of the Second Private Placement and Second Purchase Agreement with John Scarpa, which hold more than 5% of our Series B Preferred
Stock. The Company issued and John Scarpa purchased 75,000 shares of our Series C Convertible Preferred Stock at a per share price
of $2.00 for an aggregate total investment of $150,000 pursuant to the terms of the Second Purchase Agreement. The Company intends
to use the net proceeds of the Second Private Placement for working capital purposes.
F-
60
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The expenses payable
by us in connection with this registration statement are estimated as follows:
Commission Registration Fee
$
116
Accounting Fees and Expenses
$
2,500
Legal Fees and Expenses
$
75,000
Printing Fees and Expenses
$
10,000
Blue Sky Fees and Expenses (including legal fees)
$
10,000
Miscellaneous
$
5,000
Total
$
107,616
Item 14. Indemnification of Directors and Officers.
Section 145 of the
Delaware General Corporation Law provides, in general, that a corporation incorporated under the laws of the State of Delaware,
such as us, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding
if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses
(including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter
as to which such person will have been adjudged to be liable to the corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably
entitled to indemnity for such expenses.
Our certificate of
incorporation and bylaws provide that we will indemnify our directors, officers, employees and agents to the extent and in the
manner permitted by the provisions of the Delaware General Corporation Law, as amended from time to time, subject to any permissible
expansion or limitation of such indemnification, as may be set forth in any stockholders' or directors' resolution
or by contract. We also have director and officer indemnification agreements with each of our executive officers and directors
which provide, among other things, for the indemnification to the fullest extent permitted or required by Delaware law, provided
that such indemnitee shall not be entitled to indemnification in connection with any "claim" (as such term is defined
in the agreement) initiated by the indemnitee against us or our directors or officers unless we join or consent to the initiation
of such claim, or the purchase and sale of securities by the indemnitee in violation of Section 16(b) of the Exchange Act.
Item 15. Recent Sales of Unregistered Securities
During the last three
years, we have issued the following securities that were not registered under the Securities Act:
On April 20, 2017,
the Company completed a private placement with The Co-Investment Fund II, L.P., a holder of more than 5% of our common stock on
an as converted basis (the "
Investor
"), for an aggregate of 1,000,000 shares of Series C Convertible Preferred
Stock. In the April Private Placement the Company sold to the Investor 1,000,000 shares of Series C Convertible Preferred Stock
at a per share price equal to $2.00. The sale was made pursuant to a Securities Purchase Agreement on April 20, 2017.
II-
1
On May 11, 2017, the
Company entered into and completed a private placement with Azeez Enterprises, L.P., which is affiliated with Michael Azeez, who
is a director of the Company, and John Scarpa, who is a holder of more than 5% of our common stock on an as converted basis, for
an aggregate of 150,000 shares of Series C Convertible Preferred Stock. In the May Private Placement the Company issued 75,000
shares of Series C Convertible Preferred Stock to each of Azeez Enterprises, L.P. and John Scarpa. The sale was made pursuant to
a Securities Purchase Agreement on May 11, 2017.
No underwriters were
involved in the above sales of securities. The securities described above in this Item 15 were issued to investors in the United
States in reliance on the exemption from the registration requirements of the Securities Act, as set forth in Section 4(2) under
the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act relative to sales by an issuer not involving
any public offering.
During the last three
fiscal years, we also have issued the following securities that were not registered under the Securities Act:
As of May 22, 2014,
we granted in aggregate warrants to purchase 1,140,000 shares of our Series B Convertible Preferred Stock
at an exercise price of $3.00 per share, which expire on May 22, 2019. As of May 22, 2014, we granted warrants to purchase
150,000 shares of our Series A Convertible Preferred Stock at an exercise price of $4.00 per share, which expire on September 14,
2017. As of August 14, 2014, we granted warrants to purchase 30,000 shares of our Series B Convertible Preferred Stock at an exercise
price of $3.00 per share, which expire on May 22, 2019. As of November 13, 2015, we granted warrants to purchase 80,000 shares
of our Series B Convertible Preferred Stock at an exercise price of $3.00 per share, which expire on November 13, 2010. As of May
4, 2016, we granted warrants to purchase 2,000,000 shares of our Series B Convertible Preferred Stock at an exercise price of $3.00
per share, which expire on May 4, 2019.
Item 16. Exhibits and Financial Statement Schedules.
The following is a
list of exhibits filed as part of this registration statement. Where so indicated by footnote, exhibits that were previously filed
are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated.
Exhibit Number
Description
2.1
Agreement and Plan of Merger, dated November 23, 2005, among Darwin Resources Corp., Health Benefits Direct Corporation, and HBDC II, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed with the Commission on November 30, 2005).
2.2
Agreement and Plan of Merger, dated as of September 21, 2007, by and among the Company, HBDC Acquisition, LLC, System Consulting Associates, Inc. and the shareholders of System Consulting Associates, Inc. party thereto (incorporated by reference from Exhibit 2.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on September 26, 2007).
3.1
Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on November 22, 2005).
3.2
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed with the Commission on December 3, 2007).
II-
2
Exhibit Number
Description
3.3
Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.3 to the Registrant's Current Report on Form 8-K filed with the Commission on November 30, 2005).
3.4
Certificate of Merger of HBDC II, Inc. with and into Health Benefits Direct Corporation (incorporated by reference to Exhibit 3.4 to the Registrant's Current Report on Form 8-K filed with the Commission on November 30, 2005).
3.5
Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.5 to the Registrant's Registration Statement on Form SB-2, filed with the Commission on February 1, 2008).
3.6
Certificate of Designation with respect to shares of Series A Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on January 21, 2009).
3.7
Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.7 to the Registrant's Annual Report on Form 10-K filed with the Commission on March 31, 2009).
3.8
Certificate of Designation with respect to shares of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on October 1, 2010).
3.9
Certificate of Amendment to Certificate of Designation with respect to shares of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on December 23, 2010).
3.10
Certificate of Amendment to Certificate of Incorporation filed November 18, 2010 (incorporated by reference to Exhibit 3.10 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).
3.11
Certificate of Amendment to Certificate of Incorporation filed on November 24, 2010 (incorporated by reference to Exhibit 3.11 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).
3.12
Certificate of Amendment to Certificate of Incorporation filed on August 20, 2014 (incorporated by reference to Exhibit 3.12 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed with the Commission on March 31, 2015).
3.13
Certificate of Amendment to Certificate of Incorporation filed on August 19, 2015 (incorporated by reference to Exhibit 3.13 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Commission on March 30, 2017).
3.14
Certificate of Amendment to Certificate of Designation of Series B Convertible Preferred Stock with respect to the Series B Stock (incorporated by reference to Exhibit 3.14 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the commission on March 30, 2017).
II-
3
Exhibit Number
Description
3.15
Certificate of Designation with respect to shares of Series C Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on April 21, 2017).
4.1
Form of Common Stock Purchase Warrant Certificate (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the Commission on November 30, 2005).
4.2
Warrant to Purchase Common Stock issued to Alvin H. Clemens (incorporated by reference to Exhibit 4.2 to the Registrant's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005, filed with the Commission on March 31, 2006).
4.3
Securities Purchase Agreement, dated March 30, 2007, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 30, 2007).
4.4
Registration Rights Agreement, dated March 30, 2007, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 30, 2007).
4.5
Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 30, 2007).
4.6
Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.4 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 30, 2007).
4.7
Registration Rights Agreement, dated October 1, 2007, by and between Health Benefits Direct Corporation and Computer Command and Control Company (incorporated by reference from Exhibit 4.1 to the Company's Current Report on Form 8-K, filed with the Commission on October 4, 2007).
4.8
Registration Rights Agreement, dated October 1, 2007, by and among Health Benefits Direct Corporation and Robert J. Oakes, Jeff Brocco, Tim Savery and Lisa Roetz (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 4, 2007).
4.9
Securities Purchase Agreement, dated March 31, 2008, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 31, 2008).
4.10
Securities Purchase Agreement, dated March 31, 2008, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 31, 2008).
4.11
Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 31, 2008).
II-
4
Exhibit Number
Description
4.12
Form of Registration Rights Agreement, dated March 31, 2008, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.4 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 31, 2008).
4.13
Form of Registration Rights Agreement, dated March 31, 2008, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 31, 2008).
4.14
Board Representation Agreement, dated March 31, 2008, between Health Benefits Direct Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.5 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 31, 2008).
4.15
Securities Purchase Agreement, dated January 14, 2009, by and between Health Benefits Direct Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on January 21, 2009).
4.16
Registration Rights Agreement, dated January 14, 2009, by and between Health Benefits Direct Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on January 21, 2009).
4.17
Preferred Warrant (incorporated by reference from Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on January 21, 2009).
4.18
Form of Subscription Rights Certificate (incorporated by reference from Exhibit 4.18 to the Registrant's Registration Statement on Form S-1, filed with the Commission on December 31, 2009).
4.19
Form of Warrant (incorporated by reference from Exhibit 4.19 to the Registrant's Registration Statement on Form S-1, filed with the Commission on December 31, 2009).
4.20
Securities Purchase Agreement, dated September 30, 2010, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 1, 2010).
4.21
Registration Rights Agreement, dated September 30, 2010, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 1, 2010).
4.22
Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 1, 2010).
4.23
Board Representation Agreement, dated September 30, 2010, by and between Health Benefits Direct Corporation and Independence Blue Cross (incorporated by reference from Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 1, 2010).
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Exhibit Number
Description
4.24
Form of Addendum and Certificate of Adjustment to Warrant (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 1, 2010).
4.25
Form of Addendum and Certificate of Adjustment to Warrant (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 1, 2010).
4.26
Note Conversion Agreement, dated December 22, 2010, by and between InsPro Technologies Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on December 23, 2010).
4.27
Registration Rights Agreement, dated December 22, 2010, by and between InsPro Technologies Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on December 23, 2010).
4.28
Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on December 23, 2010).
4.29
Securities Purchase Agreement, dated November 20, 2012, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on November 26, 2012).
4.30
Registration Rights Agreement, dated November 20, 2012, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on November 26, 2012).
4.31
Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on November 26, 2012).
4.32
Securities Purchase Agreement, dated September 12, 2013, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on September 12, 2013).
4.33
Registration Rights Agreement, dated September 12, 2014, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on September 12, 2013).
4.34
Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on September 12, 2013).
4.35
Amended and Restated Loan and Security Agreement, dated as of December 2, 2014, by and among InsPro Technologies Corporation, InsPro Technologies, LLC, Atiam Technologies L.P. and Silicon Valley Bank (incorporated by reference from Exhibit 99.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on December 8, 2014).
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Exhibit Number
Description
4.36
Securities Purchase Agreement, dated September 18, 2015, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on September 24, 2015).
4.37
Registration Rights Agreement, dated September 18, 2015, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on September 24, 2015).
4.38
Form of Warrant (incorporated by reference from Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on September 24, 2015).
4.39
Securities Purchase Agreement, dated October 6, 2015, by and between InsPro Technologies Corporation and the Investor signatory thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 7, 2015).
4.40
Registration Rights Agreement, dated October 6, 2015, by and between InsPro Technologies Corporation and the Investor signatory thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 7, 2015).
4.41
Warrant, dated October 6, 2015 (incorporated by reference from Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 7, 2015).
4.42
Securities Purchase Agreement, dated April 20, 2017, by and among InsPro Technologies Corporation and the investor signatory thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on April 21, 2017).
4.43
Registration Rights Agreement, dated April 20, 2017, by and among InsPro Technologies Corporation and the investor signatory thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on April 21, 2017).
4.44
Securities Purchase Agreement, dated May 11, 2017, by and among InsPro Technologies Corporation and the investors signatory thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on May 15, 2017).
4.45
Registration Rights Agreement, dated May 11, 2017, by and among InsPro Technologies Corporation and the investors signatory thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on May 15, 2017).
4.46**
Form of Subscription Rights Certificate
5.1**
Opinion of Morgan, Lewis & Bockius LLP
8.1**
Opinion of Morgan, Lewis & Bockius LLP regarding certain tax matters
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Exhibit Number
Description
10.1
Health Benefits Direct Corporation Compensation Plan for Directors (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on March 20, 2006).
10.2
Lease Agreement, dated February 9, 2004, between Case Holding Co. and Platinum Partners, LLC (incorporated by reference to Exhibit 10.7 to the Registrant's Current Report on Form 8-K filed with the Commission on November 30, 2005).
10.3
Lease between Health Benefits Direct Corporation and FG2200, LLC, effective March 15, 2006 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on March 6, 2006).
10.4
Employment Agreement, dated November 18, 2005, between Health Benefits Direct Corporation and Charles A. Eissa (incorporated by reference to Exhibit 10.14 to the Registrant's Current Report on Form 8-K filed with the Commission on November 30, 2005).
10.5
Amendment 2008-1 to Employment Agreement, dated March 31, 2008, between Health Benefits Direct Corporation and Charles A. Eissa (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed with the Commission on March 31, 2008).
10.6
Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on January 17, 2006).
10.7
Securities Contribution Agreement, dated September 9, 2005, among Health Benefits Direct Corporation, Marlin Capital Partners I, LLC, Scott Frohman, Charles A. Eissa, Platinum Partners II LLC and Dana Boskoff (incorporated by reference to Exhibit 10.22 to the Registrant's Current Report on Form 8-K filed with the Commission on November 30, 2005).
10.8
Employment Agreement, dated April 3, 2006, between HBDC II, Inc. and Ivan M. Spinner (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on April 6, 2006).
10.9
Health Benefits Direct Corporation 2008 Equity Compensation Plan (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on March 31, 2008).
10.10
Health Benefits Direct Corporation 2008 Equity Compensation Plan Form of Nonqualified Stock Option Grant (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on March 28, 2008).
10.11
Sublease, dated March 7, 2006, between Health Benefits Direct Corporation and World Travel Partners I, LLC Form of Nonqualified Stock Option Grant (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on May 19, 2006).
10.12
First Amendment to Sublease, dated April 18, 2006, between Health Benefits Direct Corporation ad World Travel Partners I, LLC (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on May 19, 2006).
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Exhibit Number
Description
10.13
Letter Agreement, dated April 18, 2006, among World Travel Partners I, LLC, Health Benefits Direct Corporation, and 1120 Avenue of the Americas, LLC (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on May 19, 2006).
10.14
Software and Services Agreement, dated May 31, 2006, among Health Benefits Direct Corporation, Insurint Corporation, and Realtime Solutions Group, L.L.C. (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on June 2, 2006).
10.15
Lease, dated July 7, 2006, between Health Benefits Direct Corporation and Radnor Properties-SDC, L.P. (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on July 10, 2006).
10.16
Separation Agreement, dated December 7, 2006, between Health Benefits Direct Corporation and Scott Frohman (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on December 11, 2006).
10.17
Amendment No. 1 to Option, dated as of February 15, 2007, delivered by Health Benefits Direct Corporation to Daniel Brauser (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on February 16, 2007).
10.18
Consent and Lock-Up Agreement, dated April 5, 2007, between Health Benefits Direct Corporation and Scott Frohman (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on April 6, 2007).
10.19
Agreement to Transfer Partnership Interests, dated October 1, 2007, by and among HBDC Acquisition, LLC and the former partners of BileniaTech, L.P. (incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Commission on October 4, 2007).
10.20
Amended and Restated Employment Agreement, dated November 27, 2007, between Health Benefits Direct Corporation and Alvin H. Clemens (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on December 3, 2007).
10.21
Amended and Restated Employment Agreement, dated November 27, 2007, between Health Benefits Direct Corporation and Anthony R. Verdi (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the Commission on December 3, 2007).
10.22
Amendment 2008-1 to Amended and Restated Employment Agreement, dated March 31, 2008, between Health Benefits Direct Corporation and Anthony R. Verdi (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed with the Commission on March 31, 2008).
10.23
Client Transition Agreement, between Health Benefits Direct Corporation, HBDC II, Inc. and eHealthInsurance Services, Inc. (incorporated by reference to Exhibit 10.31 to the Registrant's Annual Report on Form 10-K filed with the Commission on March 31, 2009).
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Exhibit Number
Description
10.24
Loan Agreement, dated December 22, 2009, by and among Health Benefits Direct Corporation, Insurance Specialist Group, Inc., HBDC II, Inc., Insurint Corporation, Platinum Partners, LLC, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on December 29, 2009).
10.25
Secured Promissory Note, dated December 22, 2009, by and among Health Benefits Direct Corporation, Insurance Specialist Group, Inc., HBDC II, Inc., Insurint Corporation, Platinum Partners, LLC, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the Commission on December 29, 2009).
10.26
First Amendment to Loan Documents, dated June 15, 2010, by and among Health Benefits Direct Corporation, Insurance Specialist Group, Inc., HBDC II, Inc., Insurint Corporation, Platinum Partners, LLC, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on June 17, 2010).
10.27
Health Benefits Direct Corporation 2010 Equity Compensation Plan (incorporated by reference to Exhibit 10.27 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).
10.28
InsPro Technologies Corporation Amended and Restated Compensation Policy for Non-Employee Directors (incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on December 16, 2011).
10.29
Loan and Security Agreement, dated as of October 3, 2012, by and among InsPro Technologies Corporation, InsPro Technologies, LLC, Atiam Technologies L.P. and Silicon Valley Bank (incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 10, 2012).
10.30
Secured Convertible Promissory Note Purchase Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of January 30, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on February 3, 2015).
10.31
Form of Secured Convertible Promissory Note due June 30, 2016 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on February 3, 2015).
10.32
Security Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of January 30, 2015 (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on February 3, 2015).
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Exhibit Number
Description
10.33
Subordination Agreement by and among The Co-Investment Fund II, L.P., Silicon Valley Bank, InsPro Technologies Corporation and InsPro Technologies, LLC dated as of January 30, 2015 (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K, filed with the Commission on February 3, 2015).
10.34
Secured Convertible Promissory Note Purchase Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of March 27, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 30, 2015).
10.35
Form of Secured Convertible Promissory Note due June 30, 2016 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 30, 2015).
10.36
Amended and Restated Security Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of March 27, 2015 (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 30, 2015).
14
Amended and Restated Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to the Registrant's Current Report on Form 8-K filed with the Commission on February 4, 2008).
21*
Subsidiaries of InsPro Technologies Corporation
23.1*
Consent of Assurance Dimensions, Inc.
23.2**
Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.1 Opinion and Exhibit 8.1 Opinion)
99.1**
Form of Instructions for Use of InsPro Technologies Corporation Subscription Rights Certificate
99.2**
Form of Notice of Guaranteed Delivery
99.3**
Form of Letter to Security Dealers, Commercial Banks, Trust Companies and Other Nominees
99.4**
Form of Letter to Clients
99.5**
Form of Notice to Stockholders of Subscription Rights
99.6**
Form of Beneficial Owner Election Form
99.7**
Form of Nominee Holder Certification
*
Filed herewith.
**
To be filed by amendment.
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Item 17. Undertakings.
The undersigned Registrant
hereby undertakes:
(1)	        To file, during
any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)         	To include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii)        	To reflect in
the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective registration statement;
(iii)        To include
any material information with respect to the plan of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2)        	That, for the
purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3)        	To remove from
registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering.
(4)        	That, for purposes
of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to
section 13(a)	or section 15(d)	of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d)of the Securities Exchange Act of 1934)	that is incorporated by
reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(5)        	To supplement
the prospectus, after the expiration of the subscription period, to set forth the results of the subscription offer, the transactions
by the underwriters during the subscription period, the amount of unsubscribed securities to be purchased by the underwriters,
and the terms of any subsequent reoffering thereof. If any public offering by the underwriters is to be made on terms differing
from those set forth on the cover page of the prospectus, a post-effective amendment will be filed to set forth the terms of such
offering.
(6)        	Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
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(7)        	For the purpose
of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant
to rule 424(b)(1), or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the
time it was declared effective.
(8)        	For the purpose
of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-1 and authorizes this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Borough of Eddystone, Commonwealth of Pennsylvania, on this 15  day of June, 2017.
INSPRO TECHNOLOGIES CORPORATION
By:
/s/ Anthony R. Verdi
Anthony R. Verdi
Chief Financial Officer
(Principal Financial and Accounting Officer)
We, the undersigned
officers and directors of InsPro Technologies Corporation, hereby severally constitute and appoint Anthony R. Verdi our true and
lawful attorney with full power to him to sign for us and in our names in the capacities indicated below, the Registration Statement
on Form S-1 filed herewith and any and all subsequent amendments to said Registration Statement, and generally to do all such things
in our names and on our behalf in our capacities as officers and directors to enable InsPro Technologies Corporation to comply
with the provisions of the Securities Act of 1933, as amended, and all requirements of the Securities and Exchange Commission,
hereby ratifying and confirming our signatures as they may be signed by our said attorney, or any of them, to said Registration
Statement and any and all amendments thereto.
Pursuant to the requirements
of the Securities Act of 1933, this report has been signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
/s/ Donald R. Caldwell
Donald R. Caldwell
Chief Executive Officer (Principal Executive Officer) and Chairman
/s/ Anthony R. Verdi
Anthony R. Verdi
Chief Financial Officer (Principal Financial and Accounting Officer) and Director
Frederick C. Tecce
Director
/s/ Michael Azeez
Michael Azeez
Director
/s/ John Harrison
John Harrison
Director
/s/ Kenneth Harvey
Kenneth Harvey
Director
Alan Krigstein
Director
/s/ Robert J. Oakes
Robert J. Oakes
Director
Sanford Rich
Director
L. J. Rowell
Director
/s/ Paul Soltoff
Paul Soltoff
Director
/s/ Edmond Walters
Edmond Walters
Director
EXHIBIT INDEX
Exhibit Number
Description
2.1
Agreement and Plan of Merger, dated November 23, 2005, among Darwin Resources Corp., Health Benefits Direct Corporation, and HBDC II, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed with the Commission on November 30, 2005).
2.2
Agreement and Plan of Merger, dated as of September 21, 2007, by and among the Company, HBDC Acquisition, LLC, System Consulting Associates, Inc. and the shareholders of System Consulting Associates, Inc. party thereto (incorporated by reference from Exhibit 2.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on September 26, 2007).
3.1
Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on November 22, 2005).
3.2
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed with the Commission on December 3, 2007).
3.3
Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.3 to the Registrant's Current Report on Form 8-K filed with the Commission on November 30, 2005).
3.4
Certificate of Merger of HBDC II, Inc. with and into Health Benefits Direct Corporation (incorporated by reference to Exhibit 3.4 to the Registrant's Current Report on Form 8-K filed with the Commission on November 30, 2005).
3.5
Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.5 to the Registrant's Registration Statement on Form SB-2, filed with the Commission on February 1, 2008).
3.6
Certificate of Designation with respect to shares of Series A Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on January 21, 2009).
3.7
Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.7 to the Registrant's Annual Report on Form 10-K filed with the Commission on March 31, 2009).
3.8
Certificate of Designation with respect to shares of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on October 1, 2010).
3.9
Certificate of Amendment to Certificate of Designation with respect to shares of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on December 23, 2010).
3.10
Certificate of Amendment to Certificate of Incorporation filed November 18, 2010 (incorporated by reference to Exhibit 3.10 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).
Exhibit Number
Description
3.11
Certificate of Amendment to Certificate of Incorporation filed on November 24, 2010 (incorporated by reference to Exhibit 3.11 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).
3.12
Certificate of Amendment to Certificate of Incorporation filed on August 20, 2014 (incorporated by reference to Exhibit 3.12 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed with the Commission on March 31, 2015).
3.13
Certificate of Amendment to Certificate of Incorporation filed on August 19, 2015 (incorporated by reference to Exhibit 3.13 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Commission on March 30, 2017).
3.14
Certificate of Amendment to Certificate of Designation of Series B Convertible Preferred Stock with respect to the Series B Stock (incorporated by reference to Exhibit 3.14 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the commission on March 30, 2017).
3.13
Certificate of Amendment to Certificate of Designation of Series B Convertible Preferred Stock with respect to the Series B Stock (incorporated by reference to Exhibit 3.13 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the commission on March 30, 2017).
3.14
Certificate of Amendment to Certificate of Incorporation filed on August 19, 2015 (incorporated by reference to Exhibit 3.13 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Commission on March 30, 2017).
3.15
Certificate of Designation with respect to shares of Series C Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on April 21, 2017).
4.1
Form of Common Stock Purchase Warrant Certificate (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the Commission on November 30, 2005).
4.2
Warrant to Purchase Common Stock issued to Alvin H. Clemens (incorporated by reference to Exhibit 4.2 to the Registrant's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005, filed with the Commission on March 31, 2006).
4.3
Securities Purchase Agreement, dated March 30, 2007, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 30, 2007).
4.4
Registration Rights Agreement, dated March 30, 2007, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 30, 2007).
Exhibit Number
Description
4.5
Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 30, 2007).
4.6
Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.4 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 30, 2007).
4.7
Registration Rights Agreement, dated October 1, 2007, by and between Health Benefits Direct Corporation and Computer Command and Control Company (incorporated by reference from Exhibit 4.1 to the Company's Current Report on Form 8-K, filed with the Commission on October 4, 2007).
4.8
Registration Rights Agreement, dated October 1, 2007, by and among Health Benefits Direct Corporation and Robert J. Oakes, Jeff Brocco, Tim Savery and Lisa Roetz (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 4, 2007).
4.9
Securities Purchase Agreement, dated March 31, 2008, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 31, 2008).
4.10
Securities Purchase Agreement, dated March 31, 2008, by and between Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 31, 2008).
4.11
Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 31, 2008).
4.12
Form of Registration Rights Agreement, dated March 31, 2008, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.4 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 31, 2008).
4.13
Form of Registration Rights Agreement, dated March 31, 2008, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 31, 2008).
4.14
Board Representation Agreement, dated March 31, 2008, between Health Benefits Direct Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.5 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 31, 2008).
4.15
Securities Purchase Agreement, dated January 14, 2009, by and between Health Benefits Direct Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on January 21, 2009).
4.16
Registration Rights Agreement, dated January 14, 2009, by and between Health Benefits Direct Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on January 21, 2009).
Exhibit Number
Description
4.17
Preferred Warrant (incorporated by reference from Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on January 21, 2009).
4.18
Form of Subscription Rights Certificate (incorporated by reference from Exhibit 4.18 to the Registrant's Registration Statement on Form S-1, filed with the Commission on December 31, 2009).
4.19
Form of Warrant (incorporated by reference from Exhibit 4.19 to the Registrant's Registration Statement on Form S-1, filed with the Commission on December 31, 2009).
4.20
Securities Purchase Agreement, dated September 30, 2010, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 1, 2010).
4.21
Registration Rights Agreement, dated September 30, 2010, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 1, 2010).
4.22
Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 1, 2010).
4.23
Board Representation Agreement, dated September 30, 2010, by and between Health Benefits Direct Corporation and Independence Blue Cross (incorporated by reference from Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 1, 2010).
4.24
Form of Addendum and Certificate of Adjustment to Warrant (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 1, 2010).
4.25
Form of Addendum and Certificate of Adjustment to Warrant (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 1, 2010).
4.26
Note Conversion Agreement, dated December 22, 2010, by and between InsPro Technologies Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on December 23, 2010).
4.27
Registration Rights Agreement, dated December 22, 2010, by and between InsPro Technologies Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on December 23, 2010).
4.28
Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on December 23, 2010).
Exhibit Number
Description
4.29
Securities Purchase Agreement, dated November 20, 2012, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on November 26, 2012).
4.30
Registration Rights Agreement, dated November 20, 2012, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on November 26, 2012).
4.31
Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on November 26, 2012).
4.32
Securities Purchase Agreement, dated September 12, 2013, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on September 12, 2013).
4.33
Registration Rights Agreement, dated September 12, 2014, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on September 12, 2013).
4.34
Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on September 12, 2013).
4.35
Amended and Restated Loan and Security Agreement, dated as of December 2, 2014, by and among InsPro Technologies Corporation, InsPro Technologies, LLC, Atiam Technologies L.P. and Silicon Valley Bank (incorporated by reference from Exhibit 99.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on December 8, 2014).
4.36
Securities Purchase Agreement, dated September 18, 2015, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on September 24, 2015).
4.37
Registration Rights Agreement, dated September 18, 2015, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on September 24, 2015).
4.38
Form of Warrant (incorporated by reference from Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on September 24, 2015).
4.39
Securities Purchase Agreement, dated October 6, 2015, by and between InsPro Technologies Corporation and the Investor signatory thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 7, 2015).
4.40
Registration Rights Agreement, dated October 6, 2015, by and between InsPro Technologies Corporation and the Investor signatory thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 7, 2015).
Exhibit Number
Description
4.41
Warrant, dated October 6, 2015 (incorporated by reference from Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 7, 2015).
4.42
Securities Purchase Agreement, dated April 20, 2017, by and among InsPro Technologies Corporation and the investor signatory thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on April 21, 2017).
4.43
Registration Rights Agreement, dated April 20, 2017, by and among InsPro Technologies Corporation and the investor signatory thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on April 21, 2017).
4.44
Securities Purchase Agreement, dated May 11, 2017, by and among InsPro Technologies Corporation and the investors signatory thereto (incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on May 15, 2017).
4.45
Registration Rights Agreement, dated May 11, 2017, by and among InsPro Technologies Corporation and the investors signatory thereto (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on May 15, 2017).
4.46**
Form of Subscription Rights Certificate
5.1**
Opinion of Morgan, Lewis & Bockius LLP
8.1**
Opinion of Morgan, Lewis & Bockius LLP regarding certain tax matters
10.1
Health Benefits Direct Corporation Compensation Plan for Directors (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on March 20, 2006).
10.2
Lease Agreement, dated February 9, 2004, between Case Holding Co. and Platinum Partners, LLC (incorporated by reference to Exhibit 10.7 to the Registrant's Current Report on Form 8-K filed with the Commission on November 30, 2005).
10.3
Lease between Health Benefits Direct Corporation and FG2200, LLC, effective March 15, 2006 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on March 6, 2006).
10.4
Employment Agreement, dated November 18, 2005, between Health Benefits Direct Corporation and Charles A. Eissa (incorporated by reference to Exhibit 10.14 to the Registrant's Current Report on Form 8-K filed with the Commission on November 30, 2005).
10.5
Amendment 2008-1 to Employment Agreement, dated March 31, 2008, between Health Benefits Direct Corporation and Charles A. Eissa (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed with the Commission on March 31, 2008).
Exhibit Number
Description
10.6
Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on January 17, 2006).
10.7
Securities Contribution Agreement, dated September 9, 2005, among Health Benefits Direct Corporation, Marlin Capital Partners I, LLC, Scott Frohman, Charles A. Eissa, Platinum Partners II LLC and Dana Boskoff (incorporated by reference to Exhibit 10.22 to the Registrant's Current Report on Form 8-K filed with the Commission on November 30, 2005).
10.8
Employment Agreement, dated April 3, 2006, between HBDC II, Inc. and Ivan M. Spinner (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on April 6, 2006).
10.9
Health Benefits Direct Corporation 2008 Equity Compensation Plan (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on March 31, 2008).
10.10
Health Benefits Direct Corporation 2008 Equity Compensation Plan Form of Nonqualified Stock Option Grant (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on March 28, 2008).
10.11
Sublease, dated March 7, 2006, between Health Benefits Direct Corporation and World Travel Partners I, LLC Form of Nonqualified Stock Option Grant (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on May 19, 2006).
10.12
First Amendment to Sublease, dated April 18, 2006, between Health Benefits Direct Corporation ad World Travel Partners I, LLC (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on May 19, 2006).
10.13
Letter Agreement, dated April 18, 2006, among World Travel Partners I, LLC, Health Benefits Direct Corporation, and 1120 Avenue of the Americas, LLC (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on May 19, 2006).
10.14
Software and Services Agreement, dated May 31, 2006, among Health Benefits Direct Corporation, Insurint Corporation, and Realtime Solutions Group, L.L.C. (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on June 2, 2006).
10.15
Lease, dated July 7, 2006, between Health Benefits Direct Corporation and Radnor Properties-SDC, L.P. (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on July 10, 2006).
10.16
Separation Agreement, dated December 7, 2006, between Health Benefits Direct Corporation and Scott Frohman (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on December 11, 2006).
10.17
Amendment No. 1 to Option, dated as of February 15, 2007, delivered by Health Benefits Direct Corporation to Daniel Brauser (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on February 16, 2007).
Exhibit Number
Description
10.18
Consent and Lock-Up Agreement, dated April 5, 2007, between Health Benefits Direct Corporation and Scott Frohman (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Commission on April 6, 2007).
10.19
Agreement to Transfer Partnership Interests, dated October 1, 2007, by and among HBDC Acquisition, LLC and the former partners of BileniaTech, L.P. (incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Commission on October 4, 2007).
10.20
Amended and Restated Employment Agreement, dated November 27, 2007, between Health Benefits Direct Corporation and Alvin H. Clemens (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on December 3, 2007).
10.21
Amended and Restated Employment Agreement, dated November 27, 2007, between Health Benefits Direct Corporation and Anthony R. Verdi (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the Commission on December 3, 2007).
10.22
Amendment 2008-1 to Amended and Restated Employment Agreement, dated March 31, 2008, between Health Benefits Direct Corporation and Anthony R. Verdi (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed with the Commission on March 31, 2008).
10.23
Client Transition Agreement, between Health Benefits Direct Corporation, HBDC II, Inc. and eHealthInsurance Services, Inc. (incorporated by reference to Exhibit 10.31 to the Registrant's Annual Report on Form 10-K filed with the Commission on March 31, 2009).
10.24
Loan Agreement, dated December 22, 2009, by and among Health Benefits Direct Corporation, Insurance Specialist Group, Inc., HBDC II, Inc., Insurint Corporation, Platinum Partners, LLC, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on December 29, 2009).
10.25
Secured Promissory Note, dated December 22, 2009, by and among Health Benefits Direct Corporation, Insurance Specialist Group, Inc., HBDC II, Inc., Insurint Corporation, Platinum Partners, LLC, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the Commission on December 29, 2009).
10.26
First Amendment to Loan Documents, dated June 15, 2010, by and among Health Benefits Direct Corporation, Insurance Specialist Group, Inc., HBDC II, Inc., Insurint Corporation, Platinum Partners, LLC, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on June 17, 2010).
Exhibit Number
Description
10.27
Health Benefits Direct Corporation 2010 Equity Compensation Plan (incorporated by reference to Exhibit 10.27 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).
10.28
InsPro Technologies Corporation Amended and Restated Compensation Policy for Non-Employee Directors (incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on December 16, 2011).
10.29
Loan and Security Agreement, dated as of October 3, 2012, by and among InsPro Technologies Corporation, InsPro Technologies, LLC, Atiam Technologies L.P. and Silicon Valley Bank (incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on October 10, 2012).
10.30
Secured Convertible Promissory Note Purchase Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of January 30, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on February 3, 2015).
10.31
Form of Secured Convertible Promissory Note due June 30, 2016 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on February 3, 2015).
10.32
Security Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of January 30, 2015 (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on February 3, 2015).
10.33
Subordination Agreement by and among The Co-Investment Fund II, L.P., Silicon Valley Bank, InsPro Technologies Corporation and InsPro Technologies, LLC dated as of January 30, 2015 (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K, filed with the Commission on February 3, 2015).
10.34
Secured Convertible Promissory Note Purchase Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of March 27, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 30, 2015).
10.35
Form of Secured Convertible Promissory Note due June 30, 2016 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 30, 2015).
10.36
Amended and Restated Security Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of March 27, 2015 (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed with the Commission on March 30, 2015).
Exhibit Number
Description
14
Amended and Restated Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to the Registrant's Current Report on Form 8-K filed with the Commission on February 4, 2008).
21*
Subsidiaries of InsPro Technologies Corporation
23.1*
Consent of Assurance Dimensions, Inc.
23.2**
Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.1 Opinion and Exhibit 8.1 Opinion)
99.1**
Form of Instructions for Use of InsPro Technologies Corporation Subscription Rights Certificate
99.2**
Form of Notice of Guaranteed Delivery
99.3**
Form of Letter to Security Dealers, Commercial Banks, Trust Companies and Other Nominees
99.4**
Form of Letter to Clients
99.5**
Form of Notice to Stockholders of Subscription Rights
99.6**
Form of Beneficial Owner Election Form
99.7**
Form of Nominee Holder Certification
*
Filed herewith.
**
To be filed by amendment.