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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
filed with the Securities and Exchange Commission on December 22,
2008</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registration
No. 333-</font></div>
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STATES</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
AND EXCHANGE COMMISSION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
DC 20549</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">________________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">FORM
S-1</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registration
Statement Under The Securities Act of 1933</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">________________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Cover-All
Technologies Inc.</font></div>
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name of Registrant as specified in its charter)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">________________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
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          <tr>
            <td valign="top" width="33%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Delaware</font></div>
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      or other jurisdiction of</font></div>
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      or organization)</font></div>
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      Standard Industrial</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Classification
      Code number)</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13-2698053</font></div>
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      Employer</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Identification
      No.)</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">55
Lane Road, Suite 300</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fairfield,
New Jersey 07004</font></div>
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461-5200</font></div>
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including zip code, and telephone number, including area code, of Registrant&#8217;s
principal executive offices)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">________________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">John
W. Roblin</font></div>
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Executive Officer</font></div>
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Technologies Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">55
Lane Road</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fairfield,
New Jersey 07004</font></div>
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461-5200</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">(Name,
address, including zip code, and telephone number, including area code, of agent
for service)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">________________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Copies
to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">David
E. Weiss, Esq.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DLA
Piper LLP (US)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1251
Avenue of the Americas</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">New
York, NY 10020</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(212)
335-4500</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">________________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Approximate
date of commencement of proposed sale to the public:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">From time
to time after the Registration Statement becomes effective.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
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        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt">If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act, check the following box. <font style="DISPLAY: inline;" face="Wingdings">x</font></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) 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.&#160;&#160;<a name="Check2" /></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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 number for the
same offering.&#160;&#160;<a name="Check3" /></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.&#160;&#160;<a name="Check4" /></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="50%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Large
      accelerated filer <font style="DISPLAY: inline; FONT-FAMILY: wingdings">o</font></font></div>
            </td>
            <td align="left" valign="top" width="50%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Accelerated
      filer <font style="DISPLAY: inline; FONT-FAMILY: wingdings">o</font></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="50%">
              <div style="DISPLAY: block; MARGIN-LEFT: 126pt; TEXT-INDENT: -126pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Non-accelerated
      filer <font style="DISPLAY: inline; FONT-FAMILY: wingdings">o</font></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 126pt; TEXT-INDENT: -126pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Do
      not check if a smaller reporting company)</font></div>
            </td>
            <td align="left" valign="top" width="50%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Smaller
      reporting company <font style="DISPLAY: inline; FONT-FAMILY: wingdings">x</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CALCULATION
OF REGISTRATION FEE</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td colspan="2" valign="bottom" width="29%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Title
      of Each Class of</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Securities
      to be Registered</font></div>
            </td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="14%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount
      to be</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Registered
      (1)</font></div>
            </td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="22%" style="BORDER-BOTTOM: black 2px solid">
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      Maximum </font><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Aggregate</font></div>
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      </font><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Price
      (2)</font></div>
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            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="bottom" width="21%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount
      of</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Registration
      Fee</font></div>
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          <tr bgcolor="#eeeeee">
            <td align="left" colspan="2" valign="top" width="29%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
      Stock, par value $0.01 per share</font></div>
            </td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="14%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,876,584</font></div>
            </td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="22%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$9,135,840</font></div>
            </td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="bottom" width="21%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$359</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
            </td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="14%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,876,584</font></div>
            </td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="22%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$9,135,840</font></div>
            </td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="bottom" width="21%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$359</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr bgcolor="white">
            <td align="left" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(1)</font></div>
            </td>
            <td valign="top" width="93%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Pursuant
      to Rule 416 under the Securities Act of 1933, as amended, the number of
      shares of common stock registered hereby includes such indeterminate
      number of additional shares of common stock as may become issuable as a
      result of stock splits, stock dividends or similar
      transactions.</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2)</font></div>
            </td>
            <td valign="top" width="93%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Estimated
      solely for the purposes of calculating the registration fee pursuant to
      Rule&#160;457(o) under the Securities Act of 1933, as amended, based upon
      the average bid and asked price of the common stock on December 17, 2008,
      as reported on the OTC Bulletin
Board.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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 the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">__________________________________</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
information in this preliminary prospectus is not complete and may be
changed.&#160;&#160;We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective.&#160;&#160;This prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Subject
to Completion, dated<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;, 2008</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-ii-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%" style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline">PAGE</font></td>
          </tr>
          <tr>
            <td width="95%">&#160;</td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">PROSPECTUS
      SUMMARY</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">RISK
    FACTORS</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">INFORMATION
      REGARDING FORWARD-LOOKING STATEMENTS</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">USE OF
      PROCEEDS</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">MARKET PRICE OF AND
      DIVIDENDS ON COMMON STOCK AND RELATED STOCKHOLDER MATTERS</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">MANAGEMENT&#8217;S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">BUSINESS</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">24</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">MANAGEMENT</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">30</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">EXECUTIVE
      COMPENSATION</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">32</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SECURITY OWNERSHIP
      OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">40</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">42</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SELLING
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            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">44</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DESCRIPTION OF
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            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">46</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">PLAN OF
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            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">47</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">LEGAL
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            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">49</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">EXPERTS</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">49</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">WHERE YOU CAN FIND
      MORE INFORMATION</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">49</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">INCORPORATION OF
      CERTAIN INFORMATION BY REFERENCE</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">50</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%">&#160;</td>
          </tr>
          <tr>
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      STATEMENTS</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">51</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">INFORMATION NOT
      REQUIRED IN PROSPECTUS</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">53</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SIGNATURES</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">57</font></div>
            </td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="5%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="95%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">EXHIBIT
    INDEX</font></td>
            <td width="5%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">58</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-iii-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PROSPECTUS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9,876,584
Shares of Common Stock</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cover-All
Technologies Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div>
        <hr style="COLOR: black" align="center" noshade size="1" width="100%">
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
prospectus relates to the resale by selling stockholders identified in the
section entitled &#8220;Selling Stockholders&#8221; on page 44 of up to an aggregate of
9,876,584 shares of common stock of Cover-All Technologies Inc., which consists
of:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9,776,584
      shares of common stock; and</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">100,000
      shares of common stock issuable upon the exercise of outstanding
      warrants.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
selling stockholders may offer and sell any of the shares of common stock from
time to time at fixed prices, at market prices or at negotiated prices, and may
engage a broker, dealer or underwriter to sell the shares.&#160;&#160;For
additional information on the possible methods of sale that may be used by the
selling stockholders, you should refer to the section entitled &#8220;Plan of
Distribution&#8221; on page 47 of this prospectus.&#160;&#160;We will not receive any
proceeds from the sale of the shares of common stock by the selling
stockholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
common stock is currently quoted on the Over-the-Counter Bulletin Board under
the symbol &#8220;COVR.OB&#8221;.&#160;&#160;On December 15, 2008, the last reported sale
price of our shares on the Over-the-Counter Bulletin Board was $0.81 per
share.&#160;&#160;You should rely only on the information contained in this
prospectus.&#160;&#160;We have not authorized any other person to provide you
with different information.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
should consider carefully the risks that we have described in &#8220;Risk Factors&#8221;
beginning on page 4 before deciding whether to invest in our common
stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is
truthful and complete.&#160;&#160;Any representation to the contrary is a
criminal offense.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
prospectus is dated<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;, 2008.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
should rely only on the information contained in this prospectus or contained in
any free writing prospectus filed with the Securities and Exchange Commission,
or SEC.&#160;&#160;We have not authorized anyone to provide you with information
different from that contained in this prospectus.&#160;&#160;The selling
stockholders are offering to sell, and seeking offers to buy, shares of our
common stock only in jurisdictions where offers and sales are
permitted.&#160;&#160;The information in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PROSPECTUS
SUMMARY</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">This
summary highlights selected information more fully described elsewhere in this
prospectus.&#160;&#160;You should read the following summary together with the
entire prospectus, including the more detailed information regarding us and the
common stock being sold in this offering and our financial statements and the
related notes appearing elsewhere in this prospectus.&#160;&#160;You should
carefully consider, among other things, the matters discussed in the section
entitled &#8220;Risk Factors&#8221; beginning on page 4 before deciding to invest in our
common stock.&#160;&#160;Unless otherwise stated or the context requires
otherwise, references in this prospectus to &#8220;we,&#8221; &#8220;our&#8221; or &#8220;us&#8221; refer to
Cover-All Technologies Inc. and its subsidiaries.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Overview</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
provide state-of-the-art software products, services and solutions to the
property and casualty insurance industry.&#160;&#160;Our customers include
insurance companies, agents, brokers and managing general agents
(MGAs).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
software products and services focus on the functions required to market,
underwrite, rate, issue, print, bill and support the entire life cycle of
insurance policies.&#160;&#160;Our products and services combine an in-depth
knowledge of property and casualty insurance with innovative solution designs
using state-of-the-art technology.&#160;&#160;Our products are either available
&#8220;off-the-shelf&#8221; or customized to specific customer needs.&#160;&#160;Our
software can be licensed for customer use on their own platforms or can be
provided through our application services provider, referred to as ASP, using
third party technology platforms and support.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We also
provide a wide range of professional services that support product
customization, conversion from existing systems and data integration with other
software or reporting agencies.&#160;&#160;We also offer on-going support
services including incorporating recent insurance rate and rule changes in our
solutions.&#160;&#160;These support services also include analyzing the changes,
developments, quality assurance, documentation and distribution of insurance
rate and rule changes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We earn
revenue from software contract licenses, service fees from ASPs, continuing
maintenance fees for servicing the product and professional
services.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Corporate
Information</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We were
incorporated in Delaware in April 1985 as Warner Computer Systems, Inc. and
changed our name to Warner Insurance Services, Inc. in March 1992.&#160;&#160;In
June 1996, we changed our name to Cover-All Technologies Inc. Our products and
services are offered through our wholly-owned subsidiary, Cover-All Systems,
Inc., also a Delaware corporation.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
principal executive offices are located at 55 Lane Road, Suite 300, Fairfield,
New Jersey 07004, and our telephone number is (973) 461-5200.&#160;&#160;Our
website address is www.cover-all.com.&#160;&#160;The information on, or that can
be accessed through, our website is not part of this prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Offering</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="50%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
      stock offered by the selling stockholders</font></div>
            </td>
            <td align="left" colspan="2" valign="top" width="50%">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Up
      to 9,876,584 shares of our common stock, which consists
  of:</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" colspan="2" valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="50%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, serif">&#183;</font></div>
            </td>
            <td align="left" valign="top" width="47%">
              <div style="TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,776,584
      shares of common stock; and</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, serif">&#160;</font></td>
            <td align="left" valign="top" width="47%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="50%">
              <div>&#160;</div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, serif">&#183;</font></div>
            </td>
            <td align="left" valign="top" width="47%">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">100,000
      shares of common stock issuable upon the exercise of outstanding
      warrants.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, serif">&#160;</font></td>
            <td align="left" valign="top" width="47%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="50%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Use
      of Proceeds</font></div>
            </td>
            <td align="left" colspan="2" valign="top" width="50%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Proceeds
      from the sale of common stock covered by this prospectus will be received
      by the selling stockholders.&#160;&#160;We will not receive any proceeds
      from the sale of the shares of common stock covered by this
      prospectus.&#160;&#160;We may receive proceeds from the exercise of the
      warrants whose underling shares of common stock are covered by this
      prospectus.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" colspan="2" valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="50%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">OTC
      Bulletin Board symbol for our Common Stock</font></div>
            </td>
            <td align="left" colspan="2" valign="top" width="50%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8220;COVR.OB&#8221;</font></div>
            </td>
          </tr>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 15, 2008, we had 24,134,683 shares of common stock outstanding,
1,972,463 options to purchase an aggregate of 1,972,463 shares of common stock
outstanding, 121,429 warrants to purchase an aggregate of 121,429 shares of
common stock outstanding and an aggregate of 232,500 shares of common stock
issuable upon the settlement of 232,500 time-based restricted stock units
outstanding.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
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      </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RISK
FACTORS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">You
should carefully consider the risks described below before making a decision to
buy our common stock.&#160;&#160;If any of the following risks actually occurs,
our business, financial condition and results of operations could be
harmed.&#160;&#160;In that case, the trading price of our common stock could
decline and you might lose all or part of your investment in our common
stock.&#160;&#160;You should also refer to the other information set forth in
this prospectus, including our financial statements and the related
notes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Risks
Related to Our Business</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">While
we were profitable in 2007, we incurred losses in 2006 and 2005.&#160;&#160;Our
earnings are volatile, and we may not be profitable in the future.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
incurred a loss of $1,000,000 in 2006 and $1,434,000 in
2005.&#160;&#160;Although we generated net income of $1,231,000 in 2007,
$767,000 in 2004 and $392,000 in 2003, there is no assurance that we will be
able to maintain profitability in the future.&#160;&#160;Our ability to invest
in sales and marketing programs, to expand and upgrade our technology
infrastructure and to fund our research and development efforts will depend on
existing cash balances and our ability to generate cash in the
future.&#160;&#160;This, to a certain extent, is subject to general economic,
financial, competitive, regulatory and other factors that are beyond our
control.&#160;&#160;If we are unable to achieve or maintain profitability in the
future, we may be unable to fund our liquidity needs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
may need additional financing in order to continue to develop our
business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We may
need additional financing to continue to fund the research and development of
our software products and to expand and grow our business
generally.&#160;&#160;To the extent that we will be required to fund operating
losses, our financial position would deteriorate.&#160;&#160;We may not be able
to find significant additional financing on terms favorable to us or at
all.&#160;&#160;If equity securities are issued in connection with a financing,
dilution to our stockholders may result, and if additional funds are raised
through the incurrence of debt, we may be subject to further restrictions on our
operations and finances.&#160;&#160;Furthermore, if we do incur additional debt,
we may be limiting our ability to repurchase capital stock, engage in mergers,
consolidations, acquisitions and asset sales, or alter our lines of business,
even though these actions might otherwise benefit our business.&#160;&#160;As of
December 31, 2007, we had a net stockholders&#8217; equity of approximately $2,285,000
and a net working capital of approximately $545,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
depend on product development in order to remain competitive in our
industry.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are
currently investing resources in product development and expect to continue to
do so in the future.&#160;&#160;Our future success will depend on our ability to
continue to enhance our current product line and to continue to develop and
introduce new products that keep pace with competitive product introductions and
technological developments, satisfy diverse and evolving insurance industry
requirements and otherwise achieve market acceptance.&#160;&#160;We may not be
successful in continuing to develop and market on a timely and cost-effective
basis product enhancements or new products that respond to technological
advances by others, or that these products will achieve market
acceptance.&#160;&#160;In addition, we have in the past experienced delays in
the development, introduction and marketing of new and enhanced products, and we
may experience similar delays in the future.&#160;&#160;Any failure by us to
anticipate or respond adequately to changes in technology and insurance industry
preferences, or any significant delays in product development or introduction,
would significantly and adversely affect our business, operating results and
financial condition.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
      <div id="HDR">
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        </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
products may not achieve market acceptance, which may make it difficult for us
to compete.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
future success will depend upon our ability to increase the number of insurance
companies that license our software products.&#160;&#160;As a result of the
intense competition in our industry and the rapid technological changes which
characterize it, our products may not achieve significant market
acceptance.&#160;&#160;Further, insurance companies are typically characterized
by slow decision-making and numerous bureaucratic and institutional obstacles
which will make our efforts to significantly expand our customer base
difficult.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
depend on key personnel.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
success depends to a significant extent upon a limited number of members of
senior management and other key employees, including John W. Roblin, our Chief
Executive Officer, Manish D. Shah, our President and Chief Technology Officer,
and Maryanne Gallagher, our Executive Vice President and Chief Operating
Officer.&#160;&#160;We maintain key man life insurance on Mr. Roblin, Mr. Shah
and Ms. Gallagher in the amount of $1,000,000 per individual.&#160;&#160;The
loss of the service of one or more key managers or other key employees could
have a significant and adverse effect upon our business, operating results or
financial condition.&#160;&#160;In addition, we believe that our future success
will depend in large part upon our ability to attract and retain additional
highly skilled technical, management, sales and marketing
personnel.&#160;&#160;Competition for such personnel in the computer software
industry is intense.&#160;&#160;We may not be successful in attracting and
retaining such personnel, and the failure to do so could have a material adverse
effect on our business, operating results or financial condition.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
products are affected by rapid technological change and we may not be able to
keep up with these changes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
demand for our products is impacted by rapid technological advances, evolving
industry standards in computer hardware and software technology, changing
insurance industry requirements and frequent new product introductions and
enhancements that address the evolving needs of the insurance
industry.&#160;&#160;The process of developing software products such as those
we offer is extremely complex and is expected to become increasingly complex and
expensive in the future with the introduction of new platforms and
technologies.&#160;&#160;The introduction of products embodying new technologies
and the emergence of new industry standards and practices can render existing
products obsolete and unmarketable.&#160;&#160;Our future success depends upon
our ability to anticipate or respond to technological advances, emerging
industry standards and practices in a timely and cost-effective
manner.&#160;&#160;We may not be successful in developing and marketing new
products or enhancements to existing products that respond to technological
changes or evolving industry standards.&#160;&#160;The failure to respond
successfully to these changes and evolving standards on a timely basis, or at
all, could have a detrimental effect on our business, operating results and
financial condition.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
market is highly competitive.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Both the
computer software and the insurance software systems industries are highly
competitive.&#160;&#160;There are a number of larger companies, including
computer manufacturers, computer service and software companies and insurance
companies, that have greater financial resources than we have.&#160;&#160;These
companies currently offer and have the technological ability to develop software
products similar to those offered by us.&#160;&#160;These companies present a
significant competitive challenge to our business.&#160;&#160;Because we do not
have the same financial resources as these competitors, we may have a difficult
time in the future in competing with these companies.&#160;&#160;In addition,
very large insurers internally develop systems similar to our systems and as a
result, they may not become customers of our software.&#160;&#160;We compete on
the basis of our insurance knowledge, products, service, price, system
functionality and performance and technological advances.&#160;&#160;Although we
believe we can continue to compete on the basis of these factors, some of our
current competitors have longer operating histories, larger customer bases,
greater brand recognition and significantly greater financial, marketing and
other resources than we do.&#160;&#160;Our current competitors may be able
to:</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">undertake
      more extensive marketing campaigns for their brands and
      services;</font></div>
            </td>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 108pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">devote
      more resources to product
development;</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 108pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">adopt
      more aggressive pricing policies;
and</font></div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 108pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
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            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">make
      more attractive offers to potential employees and third-party service
      providers.</font></div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
depend upon proprietary technology and we are subject to the risk of third party
claims of infringement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
success and ability to compete depends in part upon our proprietary software
technology.&#160;&#160;We also rely on certain software that we license from
others.&#160;&#160;We rely on a combination of trade secret, copyright and
trademark laws, nondisclosure and other contractual agreements and technical
measures to protect our proprietary rights.&#160;&#160;We currently have no
patents or patent applications pending.&#160;&#160;Despite our efforts to
protect our proprietary rights, unauthorized parties may attempt to copy aspects
of our products or to obtain and use information that we regard as
proprietary.&#160;&#160;The steps we take to protect our proprietary technology
may not prevent misappropriation of our technology, and this protection may not
stop competitors from developing products which function or have features
similar to our products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">While we
believe that our products and trademarks do not infringe upon the proprietary
rights of third parties, third parties may claim that our products infringe, or
may infringe, upon their proprietary rights.&#160;&#160;Any infringement claims,
with or without merit, could be time-consuming, result in costly litigation and
diversion of technical and management personnel, cause product shipment delays
or require us to develop non-infringing technology or enter into royalty or
licensing agreements.&#160;&#160;Royalty or licensing agreements, if required,
may not be available on terms acceptable to us or at all.&#160;&#160;If a claim
of product infringement against us is successful and we fail or are unable to
develop non-infringing technology or license the infringed or similar
technology, our business, operating results and financial condition could be
significantly and adversely affected.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
depend on existing major customers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In 2007
and 2006, our software products operations depended primarily on certain
existing major customers.&#160;&#160;One of these major customers accounted for
approximately 19% and 27% of our total revenues in 2007 and 2006,
respectively.&#160;&#160;One new other major customer accounted for
approximately 25% of our total revenue in 2007.&#160;&#160;We anticipate that
our operations will continue to depend upon the continuing business of our
existing customers, particularly the major customers, and the ability to attract
new customers.&#160;&#160;As a result, the loss of one or more of our existing
major customers or our inability to continue to attract new customers could
significantly and adversely affect our business, operating results and financial
condition.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">A
decline in computer software spending may result in a decrease in our revenues
or lower our growth rate.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A decline
in the demand for computer software among our current and prospective customers
may result in decreased revenues or a lower growth rate for us because our sales
depend, in part, on our customers&#8217; level of funding for new or additional
computer software systems and services.&#160;&#160;Moreover, demand for our
solutions may be reduced by a decline in overall demand for computer software
and services.&#160;&#160;The current decline in overall technology spending may
cause our customers to reduce or eliminate software and services spending and
cause price erosion for our solutions, which would substantially affect our
sales of new software licenses and the average sales price for these
licenses.&#160;&#160;Because of these market and economic conditions, we believe
there will continue to be uncertainty in the level of demand for our products
and services. Accordingly, we cannot assure you that we will be able to increase
or maintain our revenues.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
may not get the full benefit of our tax credits.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under the
United States Internal Revenue Code, companies that have not been operating
profitably are allowed to apply certain of their past losses to offset future
taxable income liabilities they may incur once they reach
profitability.&#160;&#160;These amounts are known as net operating loss
carryforwards.&#160;&#160;At December 31, 2007, we had approximately $25,700,000
of federal net operating tax loss carryforwards expiring at various dates
through 2026.&#160;&#160;Because of certain provisions of the Tax Reform Act of
1986 related to change of control, however, we may not get the full benefit of
these loss carryforwards.&#160;&#160;If we are limited from using net operating
loss carryforwards to offset any of our income, this would increase our taxes
owed and reduce our cash for operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RISKS
RELATED TO OUR COMMON STOCK AND THIS OFFERING</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Holders
of our common stock may have difficulty in selling those shares.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
common stock is not traded on any securities exchange or an inter-dealer
quotation system.&#160;&#160;Prices for our common stock are quoted on the
Over-the-Counter (OTC) Bulletin Board.&#160;&#160;Securities whose prices are
quoted on the OTC Bulletin Board do not enjoy the same liquidity as securities
that trade on a securities exchange or an inter-dealer quotation
system.&#160;&#160;As a result, you may have difficulty in selling shares of our
common stock.&#160;&#160;In addition, our common stock is a &#8220;penny stock&#8221; as
that term is defined in the Securities Exchange Act of 1934.&#160;&#160;Brokers
effecting transactions in a &#8220;penny stock&#8221; are subject to additional customer
disclosure and record keeping obligations, including disclosure of the risks
associated with low price stocks, stock quote information, and broker
compensation.&#160;&#160;In addition, brokers effecting transactions in a &#8220;penny
stock&#8221; are also subject to additional sales practice requirements under Rule
15g-9 of the Exchange Act including making inquiries into the suitability of
&#8220;penny stock&#8221; investments for each customer or obtaining a prior written
agreement for the specific &#8220;penny stock&#8221; purchase.&#160;&#160;Because of these
additional obligations, some brokers will not effect transactions in &#8220;penny
stocks.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
stock price has been volatile.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Quarterly
operating results have fluctuated and are likely to continue to fluctuate
significantly.&#160;&#160;The market price of our common stock has been and may
continue to be highly volatile.&#160;&#160;Factors that are difficult to
predict, such as quarterly revenues and operating results, limited trading
volumes and overall market performance, will have a significant effect on the
price for shares of our common stock.&#160;&#160;Revenues and operating results
have varied considerably in the past from period to period and are likely to
vary considerably in the future.&#160;&#160;We plan product development and
other expenses based on anticipated future revenue. If revenue falls below
expectations, financial performance is likely to be adversely affected because
only small portions of expenses vary with revenue.&#160;&#160;As a result,
period-to-period comparisons of operating results are not necessarily meaningful
and should not be relied upon to predict future performance.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
shares are subject to dilution as a result of the exercise of our
warrants.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">An
aggregate of 121,429 warrants, expiring in 2011, to purchase such number of
shares of our common stock issued to the same<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>investors, were
outstanding as of December&#160;31, 2007 and exercisable at a current exercise
price of $0.35 per share.&#160;&#160;The current exercise prices of these
warrants are subject to adjustment if and whenever we issue or sell additional
shares of our common stock for less than 95% of the market price on the date of
issuance or sale, in which case the exercise price will be reduced to a new
exercise price in accordance with the terms of the warrant.&#160;&#160;Pursuant
to the terms of these warrants, the issuance or sale of additional shares of
common stock resulting from (1) the exercise of stock options to be granted in
the future to employees or directors pursuant to our existing stock option plans
or (2) the exercise of any convertible security, in either case outstanding on
the date of the warrant, will not trigger any adjustment to the exercise price
of the warrants.&#160;&#160;The issuance of any additional shares of our common
stock as a consequence of the exercise of any of the warrants may result in
significant dilution to our stockholders and may depress the market price of our
common stock.&#160;&#160;Further, if the exercise price of the warrants is
adjusted, the additional shares of our common stock that would be issued upon
exercise of the warrants as a result of such adjustment may also result in
significant dilution to our stockholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Provisions
of our certificate of incorporation, as amended, and by-laws and Delaware law
might discourage, delay or prevent a change of control of or changes in our
management and, as a result, depress the trading price of our common
stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
certificate of incorporation, as amended (the &#8220;Certificate of Incorporation&#8221;),
and by-laws contain provisions that could discourage, delay or prevent a change
in control or changes in our management that our stockholders may deem
advantageous.&#160;&#160;These provisions:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">require
      super-majority voting to amend some provisions in our Certificate of
      Incorporation and by-laws;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">establish
      a staggered board of directors;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">limit
      the ability of our stockholders to call special meetings of
      stockholders;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">prohibit
      stockholder action by written consent, which requires all stockholder
      actions to be taken at a meeting of our
  stockholders;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">provide
      that the board of directors is expressly authorized to make, alter or
      repeal our by-laws; and</font></div>
            </td>
          </tr>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">establish
      advance notice requirements for nominations for election to our board or
      for proposing matters that can be acted upon by stockholders at
      stockholder meetings.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition, we are subject to Section 203 of the Delaware General Corporation Law,
which, subject to some exceptions, prohibits &#8220;business combinations&#8221; between a
Delaware corporation and an &#8220;interested stockholder,&#8221; which is generally defined
as a stockholder who becomes a beneficial owner of 15% or more of a Delaware
corporation&#8217;s voting stock for a three-year period following the date that the
stockholder became an interested stockholder.&#160;&#160;Section 203 could have
the effect of delaying, deferring or preventing a change in control that our
stockholders might consider to be in their best interests.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
anti-takeover defenses could discourage, delay or prevent a transaction
involving a change in control.&#160;&#160;These provisions could also discourage
proxy contests and make it more difficult for you and other stockholders to
elect directors of your choosing and cause us to take corporate actions other
than those you desire.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
do not expect to pay any cash dividends for the foreseeable future.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We do not
anticipate that we will pay any cash dividends to holders of our common stock in
the foreseeable future.&#160;&#160;Accordingly, investors must rely on sales of
their common stock after price appreciation, which may never occur, as the only
way to realize any future gains on their investment.&#160;&#160;Investors
seeking cash dividends in the foreseeable future should not purchase our common
stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div>&#160;</div>
    <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">INFORMATION
REGARDING FORWARD-LOOKING STATEMENTS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
prospectus contains &#8220;forward-looking statements&#8221; that represent our beliefs,
projections and predictions about future events.&#160;&#160;These statements are
necessarily subjective and involve known and unknown risks, uncertainties and
other important factors that could cause our actual results, performance or
achievements, or industry results, to differ materially from any future results,
performance or achievement described or implied by such statements.
Forward-looking statements regarding our plans, objectives, expectations,
intentions, future financial performance, future financial condition and other
statements are not historical facts. Whenever you read a statement that is not
solely a statement of historical fact (such as when we use words such as
&#8220;believe&#8221;, &#8220;anticipate&#8221;, &#8220;hope&#8221;, &#8220;intend&#8221;, &#8220;expect&#8221;, &#8220;estimate&#8221;, &#8220;plan&#8221;, &#8220;will&#8221;,
&#8220;would&#8221;, &#8220;could&#8221;, &#8220;likely&#8221; and other similar words, phrases and statements), you
should understand that our expectations may not be correct. We do not guarantee
that the transactions and events described in this prospectus will happen as
described or that any positive trends noted in this prospectus will continue.
The forward-looking information contained in this prospectus is generally
located under the headings &#8220;Management&#8217;s Discussion and Analysis of Financial
Condition and Results of Operations,&#8221; &#8220;Business&#8221; and &#8220;Risk Factors&#8221;, but may be
found in other locations as well.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition, through our senior management, from time to time we make
forward-looking statements concerning our expected future operations and
performance and other developments.&#160;&#160;Such forward-looking statements
are necessarily estimates reflecting our best judgment based upon current
information and involve a number of risks and uncertainties.&#160;&#160;Other
factors may affect the accuracy of these forward-looking statements and our
actual results may differ materially from the results anticipated in these
forward-looking statements.&#160;&#160;While it is impossible to identify all
such factors, factors that could cause actual results to differ materially from
those estimated by us include, but are not limited to, those factors or
conditions described under &#8220;Risk Factors&#8221; and &#8220;Management&#8217;s Discussion and
Analysis of Financial Condition and Results of Operations&#8221; and general
conditions in the economy and capital markets.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
forward-looking statements included herein attributable to Cover-All or any
person acting on Cover-All&#8217;s behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in this
section.&#160;&#160;Except to the extent required by applicable laws and
regulations, we undertake no obligations to update these forward-looking
statements to reflect events or circumstances after the date of this document or
to reflect the occurrence of unanticipated events.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
should review carefully the section entitled &#8220;Risk Factors&#8221; beginning on page 4
for a discussion of these and other risks that relate to our business and
investing in shares of our common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">USE
OF PROCEEDS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
selling stockholders will receive all of the net proceeds from the sale of the
shares of our common stock offered for resale by them under this
prospectus.&#160;&#160;We will not receive any proceeds from the resale of
shares of our common stock by the selling stockholders covered by this
prospectus; however, we will receive proceeds from cash payments made in
connection with the exercise of warrants held by selling stockholders that are
covered by this prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MARKET
PRICE OF AND DIVIDENDS ON COMMON STOCK AND RELATED STOCKHOLDER
MATTERS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
common stock trades in the over-the-counter market on the OTC Bulletin
Board.&#160;&#160;The quotations below reflect the high and low bid prices for
our common stock since January 1, 2006 as traded in the over-the-counter market
on the OTC Bulletin Board.&#160;&#160;The quotations below reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table cellpadding="0" cellspacing="0" width="75%">
          <tr>
            <td align="left" valign="bottom" width="60%" style="PADDING-BOTTOM: 2px">
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            <td colspan="2" valign="bottom" width="16%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">High</font></font></div>
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            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="16%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Low</font></font></div>
            </td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="bottom" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">rd</font>
      Quarter</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.20</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.72</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">nd</font>
      Quarter</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.22</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#eeeeee">
            <td align="left" valign="bottom" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">st</font>
      Quarter</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.38</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.95</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="60%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="60%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007:</font></div>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="16%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Low</font></font></div>
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            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="60%">
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      Quarter</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.12</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">rd</font>
      Quarter</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.50</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="60%">
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      Quarter</font></div>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.92</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">st</font>
      Quarter</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.30</font></td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
closing sales price for our common stock on December 15, 2008 was $0.81, as
reported by the OTC Bulletin Board.</font></div>
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December 15, 2008, there were 505 holders of record of our common
stock.&#160;&#160;This number does not include beneficial owners who may hold
their shares in street name.</font></div>
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not paid any dividends on our common stock and do not anticipate paying any
dividends in the foreseeable future.</font></div>
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Eligible for Future Sale</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
general, under Rule&#160;144 under the Securities Act of 1933, as amended (the
&#8220;Securities Act&#8221;), a person who acquires shares of our common stock in a
transaction not registered under the Securities Act and has beneficially owned
such shares for at least six months would be entitled to sell within any
three-month period those shares subject to certain restrictions, including
volume and manner of sale restrictions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
Rule 144(d) under the Securities Act, a person who is not deemed to have been
one of our affiliates at any time during the 90&#160;days preceding a sale, and
who has beneficially owned the shares proposed to be sold for at least six
months, is entitled to sell the shares without complying with the volume and
manner of sale restrictions of Rule&#160;144.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10</font></div>
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        <div id="GLHDR" style="WIDTH: 100%" align="right">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Of our
shares of common stock outstanding, at least 9,776,584 shares were eligible for
resale under Rule 144, subject to the volume and manner of sale restrictions
thereof.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 15, 2008, at least 14,358,099 shares of our common stock were either
freely tradable or eligible for resale under Rule&#160;144(d).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MANAGEMENT&#8217;S
DISCUSSION AND ANALYSIS OF</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FINANCIAL
CONDITION AND RESULTS OF OPERATIONS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
following discussion should be read in conjunction with the consolidated
financial statements and related notes which appear elsewhere in this
prospectus.&#160;&#160;This discussion contains forward-looking statements that
involve risks and uncertainties.&#160;&#160;Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of various factors, including those discussed below and elsewhere in this
prospectus, particularly under the heading &#8220;Risk Factors.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Overview</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are a
supplier of software products for the property and casualty insurance industry,
supplying a wide range of professional services that support product
customization, conversion from existing systems and data integration with other
software or reporting agencies.&#160;&#160;We also offer on-going support
services including incorporating recent insurance rate and rule changes in our
solutions.&#160;&#160;These support services also include analyzing the changes,
developments, quality assurance, documentation and distribution of insurance
rate and rule changes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We earn
revenue from software contract licenses, service fees from our Application
Service Provider (&#8220;ASP&#8221;), continuing maintenance fees for servicing the product
and professional services.&#160;&#160;Total revenue for the three and nine
months ended September 30, 2008 increased to $4,791,000 and $10,297,000 from
$1,889,000 and $5,759,000, respectively, for the three and nine months ended
September 30, 2007, mainly due to an increase in all revenue categories for the
three and nine months ended September 30, 2008.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following is an overview of the key components of our revenue and other
important financial data for the three and nine months ended September 30,
2008:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Software Licenses. </font><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>Our license revenue in
the three and nine months ended September 30, 2008 of $2,551,000 and $3,521,000,
respectively, was from one new large customer and existing customers who chose
to renew, add onto or extend their use of our software.&#160;&#160;For the three
and nine months ended September 30, 2007, we generated $269,000 and $764,000,
respectively, in license revenue.&#160;&#160;Our new software license revenue is
affected by the strength of general economic and business conditions and the
competitive position of our software products.&#160;&#160;New software license
sales are characterized by long sales cycles and intense
competition.&#160;&#160;Timing of new software license sales can substantially
affect our quarterly results.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Maintenance.&#160;&#160;</font>Maintenance
revenue was $1,089,000 and $3,036,000, respectively, in the three and nine
months ended September 30, 2008 compared to $775,000 and $2,419,000,
respectively, in the same periods in 2007.&#160;&#160;Maintenance revenue is
influenced primarily by the following factors: the renewal rate from our
existing customer base, the amount of new maintenance associated with new
license sales and annual price increases.</font></div>
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increase in professional services revenue, from $460,000 and $1,422,000,
respectively, in the three and nine months ended September 30, 2007, to $635,000
and $2,219,000, respectively, in the same periods of 2008, was a result of
increased demand for new software capabilities and customizations from our
current customer base and one new customer.</font></div>
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services revenue was $516,000 and $1,521,000, respectively, in the first three
and nine months of 2008 compared to $385,000 and $1,154,000, respectively, in
the same periods in 2007, due to an expanded and extended contractual
relationship with two large customers.</font></div>
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Taxes.&#160;&#160;</font>Income before provision for income taxes was $1,694,000
and $2,566,000, respectively, in the three and nine months ended September 30,
2008 compared to $2,000 and $144,000, respectively, in the same periods of 2007
primarily due to an increase in all revenue categories and our continuing and
ongoing effort to maintain our expenses in line with our revenues for the nine
months ended September 30, 2008.</font></div>
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income for the three and nine months ended September 30, 2008 increased<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>to $1,694,000 and
$2,566,000, respectively, from $2,000 and $144,000, respectively, in the same
periods of 2007 as a result of an increase<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>in all revenue
categories<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>and our
continuing and ongoing effort to maintain our expenses in line with our revenues
for the nine months ended September 30, 2008.</font></div>
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generated $5,345,000 in positive cash flow from operations in the first nine
months of 2008 and ended the period with $4,085,000 in cash and cash equivalents
and $2,115,000 in accounts receivable.</font></div>
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continue to face challenges to growth in 2008 mainly in the marketing and
selling of our products and services to new customers, caused by a number of
factors, including long sales cycles and general economic and business
conditions.&#160;&#160;In addition, there are risks related to customers&#8217;
acceptance and implementation delays, which could affect the timing and amount
of license revenue we are able to recognize.&#160;&#160;However, given the
positive response to our new software from existing customers, the significant
expansion of our relationship with a very large customer and the introduction of
additional software capabilities, we are expanding our sales and marketing
efforts to both new and existing customers.&#160;&#160;Consequently, we are
incurring additional sales and marketing expense in advance of generating the
corresponding revenue.</font></div>
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the Three and Nine Months Ended September 30, 2008 and 2007</font></font></div>
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following table sets forth, for the periods indicated, certain items from the
consolidated statements of operations expressed as a percentage of total
revenues:</font></div>
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            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
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            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
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            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
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            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
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            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="52%" style="PADDING-BOTTOM: 2px">
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="52%" style="PADDING-BOTTOM: 2px">
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="52%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cost
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#eeeeee">
            <td align="left" valign="bottom" width="52%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>License</font></div>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16.8</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15.8</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13.2</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14.5</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="52%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Maintenance</font></div>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14.5</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17.1</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">35.0</font></td>
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            <td align="left" valign="bottom" width="52%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Professional
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6.7</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14.0</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9.3</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13.9</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="52%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>ASP Services</font></div>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2.7</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8.2</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5.5</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7.7</font></td>
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            <td align="left" valign="bottom" width="52%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>General and
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8.9</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14.6</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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    <div>&#160;</div>
    <div align="left">
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          <tr bgcolor="#eeeeee">
            <td align="left" valign="bottom" width="52%">
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Interest (Expense) Income &#8211;
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(0.9</font></td>
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            <td align="left" valign="bottom" width="52%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Other Income</font></div>
            </td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.1</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="52%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Total Other (Expense)
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#eeeeee">
            <td align="left" valign="bottom" width="52%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Income Before Income
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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September 30, 2008 Compared to Three and Nine Months Ended September 30,
2007</font></font></div>
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revenues for the three months ended September 30, 2008 were $4,791,000 compared
to $1,889,000 for the same period in 2007.&#160;&#160;License fees were
$2,551,000 for the three months ended September 30, 2008 compared to $269,000 in
the same period in 2007, as a result of a new sale to a large customer in
2008.&#160;&#160;For the three months ended September 30, 2008, maintenance
revenues were $1,089,000 compared to $775,000 in the same period of the prior
year primarily due to annual renewals from existing customers and the new
customer contracts signed in 2008.&#160;&#160;For the three months ended
September 30, 2008, ASP revenues were $516,000 compared to $385,000 in the same
period for the prior year, due to an expanded and extended contractual
relationship with two customers<font style="DISPLAY: inline; FONT-STYLE: italic">. </font>Professional services
revenue contributed $635,000 in the three months ended September 30, 2008
compared to $460,000 in the third quarter of 2007, as a result of increased
demand for new software capabilities and customizations from our current
customer base.</font></div>
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nine months ended September 30, 2008, total revenues were $10,297,000 compared
to $5,759,000 in the same period of the prior year.</font></div>
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sales increased to $2,216,000 and $5,022,000, respectively, for the three and
nine months ended September 30, 2008 as compared to $1,348,000 and $3,986,000,
respectively, for the same periods in 2007, due to personnel-related costs and
commission and other costs related to the new license sale in the third quarter
of 2008.&#160;&#160;We are expanding our delivery bandwidth while maintaining
our costs in line with our revenues through improved productivity and new
technology in order to meet our increasing demand.&#160;&#160;Non-cash
capitalized software amortization was $236,000 and $682,000, respectively, for
the three and nine months ended September 30, 2008 as compared to $212,000 and
$664,000, respectively, for the same periods in 2007.&#160;&#160;We capitalized
$375,000 and $909,000, respectively, of software development costs in the three
and nine months ended September 30, 2008 as compared to $270,000 and $836,000,
respectively, in the same periods in 2007.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Research
and development expenses increased to $347,000 and $729,000, respectively, for
the three and nine months ended September 30, 2008 as compared to $107,000 and
$291,000, respectively, for the same periods in 2007, primarily as a result of
our efforts to develop new capabilities to better service our
customers.&#160;&#160;We are continuing our ongoing efforts to enhance the
functionality of our products and solutions and believe that investments in
research and development are critical to our remaining competitive in the
marketplace.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sales and
marketing expenses were $130,000 and $573,000, respectively, for the three and
nine months ended September 30, 2008 as compared to $154,000 and $445,000,
respectively, in the same periods of 2007.&#160;&#160;This decrease in the three
months ended September 30, 2008 was primarily due to a reduction in our sales
and marketing headcount, resulting in a decrease in personnel related
costs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">General
and administrative expenses increased to $422,000 and $1,443,000, respectively,
in the three and nine months ended September 30, 2008 as compared to $271,000
and $843,000, respectively, in the same periods in 2007.&#160;&#160;This
increase in 2008 was mainly due to stock-based compensation related to options
and warrants issued to one of our executives and stock-based compensation to our
non-employee directors and bonuses accrued based on estimated 2008
results.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Results of Operations for
the Years Ended December 31, 2007, 2006 and 2005</font></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table sets forth, for the years indicated, certain items from the
consolidated statements of operations expressed as a percentage of total
revenues:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Year
      Ended December 31,</font></div>
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          </tr>
          <tr>
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            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Revenues:</font></div>
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            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18.2</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%</font></td>
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          <tr bgcolor="#eeeeee">
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Maintenance</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">32.8</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">47.6</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">50.1</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Professional
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            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23.7</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16.1</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14.7</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Applications Service Provider
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            </td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16.1</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17.4</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17.0</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Total Revenues</font></div>
            </td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">100.0</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">100.0</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">100.0</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cost
      of Revenues:</font></div>
            </td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>License</font></div>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11.7</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17.6</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21.6</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Maintenance</font></div>
            </td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 2px">
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Direct Margin</font></div>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">41.8</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#eeeeee">
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Sales and
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8.2</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12.9</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16.9</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>General and
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">20.1</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">19.7</font></td>
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            <td align="left" valign="bottom" width="64%">
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 2px">
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 2px">
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Operating Income
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
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          <tr bgcolor="white">
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#eeeeee">
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Interest Expense</font></div>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.5</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2.3</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2.5</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#eeeeee">
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Interest Expense - Related
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            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.1</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.1</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.1</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Interest Income</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(0.1</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Other Expense</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Other Income</font></div>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8212;</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(0.5</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Total Other
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Year Ended December 31, 2007
Compared with Year Ended December 31, 2006</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Revenues</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total
revenues were $9,777,000 for the year ended December 31, 2007 compared to
$7,288,000 for the year ended December 31, 2006, an increase of
34%.&#160;&#160;License fees were $2,683,000 for the year ended December 31,
2007 compared to $1,376,000 in 2006, an increase of 95%, as a result of two new
customer license sales and sales to existing customers in 2007.&#160;&#160;For
the year ended December 31, 2007, maintenance revenues were $3,210,000 compared
to $3,471,000 of the prior year, due to the non-renewal of several existing
customers.&#160;&#160;We expect that the new license sales in 2007 will generate
significant additional maintenance revenue in 2008.&#160;&#160;Professional
services revenue contributed $2,316,000 for the year ended December 31, 2007
compared to $1,176,000 for the year ended December 31, 2006 as a result of
increased demand for new software capabilities and customizations from our two
new customers signed in 2007 and our current customer base.&#160;&#160;ASP
revenues were $1,568,000 for the year ended December 31, 2007 compared to
$1,265,000 for the year ended December 31, 2006 due primarily to an expanded and
extended contractual relationship with two large customers.</font></div>
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sales increased to $5,688,000 for the year ended December 31, 2007 as compared
to $5,244,000 for 2006, due to higher salaries and personnel-related expenses
associated with staffing changes.&#160;&#160;Non-cash capitalized software
amortization was $880,000 for the year ended December 31, 2007 as compared to
$1,114,000 in 2006.&#160;&#160;We capitalized software development costs of
$1,084,000 in 2007 compared to $888,000 in 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Expenses</font></font></div>
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Development</font>.&#160;&#160;Research and development expenses increased to
$510,000 for the year ended December 31, 2007 from $464,000 in 2006, primarily
due to the need for our research and development staff to work on various new
software capabilities for our new and prospective customers.&#160;&#160;We
intend to continue to maintain our ongoing effort to enhance the functionality
of our products and solutions to remain competitive.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">S</font><font style="DISPLAY: inline; FONT-STYLE: italic">ales and
Marketing</font>.&#160;&#160;Sales and marketing expenses decreased to $800,000
for the year ended December 31, 2007 from $943,000 in 2006, primarily due to a
reduction in our personnel-related expenses associated with a reduction in
staffing in 2007.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">G</font><font style="DISPLAY: inline; FONT-STYLE: italic">eneral and
Administrative</font>.&#160;&#160;General and administrative expenses were
$1,442,000 in 2007 as compared to $1,461,000 in 2006.&#160;&#160;The decrease in
the general and administrative expenses was mainly due to a reduction in our
legal fees in 2007 partially offset by an increase in stock-based
compensation.&#160;&#160;In 2006, the increase in legal fees was related to a
potential acquisition.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">O</font><font style="DISPLAY: inline; FONT-STYLE: italic">ther Expense</font>.&#160;&#160;We
had $0 other expense for the year ended December 31, 2006 compared to $(1,000)
for the year ended December 31, 2006.&#160;&#160;In 2006, other expense was
related to a settlement of late fees related to one customer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">O</font><font style="DISPLAY: inline; FONT-STYLE: italic">ther Income</font>.&#160;&#160;We
had $0 of other income for the year ended December 31, 2006 compared to $3,000
of other income for the year ended December 31, 2006.&#160;&#160;In 2006, other
income was related to late fees collected from customers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Provision for Doubtful
Accounts</font>.&#160;&#160;We had $51,000 provision for doubtful accounts in
2007 compared to $0 for 2006, due to the write-off of the account receivable
balances of two customers who decided not to purchase our software.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Year Ended December 31, 2006
Compare with Year Ended December 31, 2005</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Revenues</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total
revenues were $7,288,000 for the year ended December 31, 2006 compared to
$7,255,000 for the year ended December 31, 2005.&#160;&#160;License fees were
$1,376,000 for the year ended December 31, 2006 compared to $1,323,000 in the
same period in 2005 as a result of no new customer sales and sales to existing
customers in 2006 and one new customer license in 2005.&#160;&#160;For the year
ended December 31, 2006, maintenance revenues were $3,471,000 compared to
$3,637,000 in the same period of the prior year, due in part to the non-renewal
of several existing customers.&#160;&#160;Professional services revenue
contributed $1,177,000 for the year ended December 31, 2006 compared to
$1,064,000 for the year ended December 31, 2005 as a result of increased demand
for new software capabilities and customizations from our current customer
base.&#160;&#160;ASP revenues were $1,265,000 for the year ended December 31,
2006 compared to $1,231,000 for the year ended December 31, 2005 due primarily
to an expanded and extended contractual relationship with a large
customer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cost of
sales increased to $5,244,000 for the year ended December 31, 2006 as compared
to $5,087,000 for 2005, due to staff-related expenses.&#160;&#160;Non-cash
capitalized software amortization was $1,114,000 for the year ended December 31,
2006 as compared to $981,000 in 2005.&#160;&#160;We capitalized software
development costs of $888,000 in 2006 compared to $701,000 in 2005.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Expenses</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">R</font><font style="DISPLAY: inline; FONT-STYLE: italic">esearch and
Development</font>.&#160;&#160;Research and development expenses decreased to
$464,000 for the year ended December 31, 2006 from $809,000 in 2005, primarily
due to an increase concentration on capitalizable projects and the need for our
research and development staff to work on implementations of MIC.&#160;&#160;We
continue to maintain our ongoing effort to enhance the functionality of our
products and solutions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">S</font><font style="DISPLAY: inline; FONT-STYLE: italic">ales and
Marketing</font>.&#160;&#160;Sales and marketing expenses decreased to $943,000
for the year ended December 31, 2006 from $1,222,000 in 2005, primarily due to a
reduction in our marketing and sales staff in 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">G</font><font style="DISPLAY: inline; FONT-STYLE: italic">eneral and
Administrative</font>.&#160;&#160;General and administrative expenses were
$1,461,000 in 2006 as compared to $1,431,000 in 2005.&#160;&#160;The increase in
the general and administrative expenses was mainly due to directors fees paid
and an increase in legal fees related to a potential acquisition in
2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">O</font><font style="DISPLAY: inline; FONT-STYLE: italic">ther Expense</font>.&#160;&#160;We
had $1,000 of other expense for the year ended December 31, 2006 compared to $0
of other expense for the year ended December 31, 2005.&#160;&#160;In 2006, other
expense was related to a settlement of late fees related to one
customer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">O</font><font style="DISPLAY: inline; FONT-STYLE: italic">ther Income</font>.&#160;&#160;We
had $3,000 of other income for the year ended December 31, 2006 compared to
$39,000 of other income for the year ended December 31, 2005.&#160;&#160;In 2006
and 2005, other income was related to late fees collected from
customers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Provision for Doubtful
Accounts</font>.&#160;&#160;We had no provision for doubtful accounts in
2006<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>and
2005.</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Liquidity and Capital
Resources</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Sources of
Liquidity</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
funded our operations primarily from cash flow from operations and the proceeds
from our issuance in 2001 of $1,800,000 aggregate principal amount of 8%
convertible debentures due in 2008, which we refer to as the 2008 Debentures,
and our issuance in 2002 of $700,000 aggregate principal amount of 8%
convertible debentures due 2009, which we refer to as the 2009
Debentures.&#160;&#160;Cash from operations results primarily from net income
from the income statement less non-cash expenses (depreciation and amortization)
and changes in working capital from the balance sheet.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
largest source of operating cash flows is cash collections from our customers
following the purchase or renewal of software licenses, product support
agreements and other related services.&#160;&#160;Payments from customers for
software licenses are generally received at the beginning of the contract
term.&#160;&#160;Payments from customers for product support and ASP services
are generally received in advance on a quarterly basis.&#160;&#160;Payments for
professional services are generally received 30 days after the services are
performed.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
December&#160;31, 2007, we had cash and cash equivalents of $11,000 compared to
cash and cash equivalents of $132,000 at December&#160;31, 2006.&#160;&#160;The
decrease in cash and cash equivalents is primarily attributable to the decrease
in maintenance revenue and the timing of one of our large license sales in
2007.&#160;&#160;We had a significant increase in accounts receivable due to a
license sale in the fourth quarter of 2007 to a major insurance
company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
September 30, 2008, we had cash and cash equivalents of approximately $4,085,000
compared to cash and cash equivalents of approximately $150,000 at September 30,
2007.&#160;&#160;The increase in cash and cash equivalents is primarily
attributable to the increase in all revenue categories in the nine months ended
September 30, 2008.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Cash
Flows</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In 2001,
we issued $1,800,000 aggregate principal amount of 8% convertible debentures due
2008 (the &#8220;2008 Debentures&#8221;), and in 2002, we issued $700,000 aggregate
principal amount of 8% convertible debentures due 2009 (the &#8220;2009
Debentures&#8221;).&#160;&#160;The 2008 Debentures were issued to two funds managed by
RENN Capital Group, Inc. (each of whom or their successor are selling
shareholders hereunder), for an aggregate of $1,400,000, and the remainder of
the 2008 Debentures were issued to John W. Roblin, our Chairman of the Board and
Chief Executive Officer (and who at the time was also our President), who
purchased $100,000 in principal amount of debentures, and certain other
investors, who purchased an aggregate of $300,000 in principal amount of the
2008 Debentures.&#160;&#160;All of the 2009 Debentures were issued to the RENN
funds.&#160;&#160;Mr. Russell Cleveland is the President, Chief Executive
Officer, sole director and majority shareholder of RENN Capital
Group.&#160;&#160;Mr. Cleveland was named one of our directors in 2001 after the
consummation of the sale of the 2008 Debentures.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In March
2007, the RENN funds elected to convert all of their remaining unpaid principal
amount due on their 2008 Debentures and 2009 Debentures, totaling $1,631,601,
into shares of our common stock at the conversion price of $0.30 per share in
lieu of receiving such payments in cash.&#160;&#160;In June 2007, the remaining
holders of the 2008 Debentures elected to convert their monthly principal
installments due in 2007 totaling $33,617 into shares of our common stock at the
conversion rate of $.30 per share in lieu of receiving such payments in
cash.&#160;&#160;In connection with these conversions, we issued to the holders
an aggregate of 5,550,725 shares of our common stock.&#160;&#160;Of the shares
of common stock issued in connection with these conversions, an aggregate of
5,438,670 shares were issued to the RENN funds.&#160;&#160;After giving effect
to these conversions, as of December 31, 2007, our only outstanding debentures
were an aggregate principal amount of $262,265 that remained outstanding on the
2008 Debentures.&#160;&#160;Of such outstanding amount, Mr. Roblin held
$65,566.&#160;&#160;In June 2008, Mr. Roblin and certain other investors elected
to convert all of the then-remaining unpaid principal amount due on their 2008
Debentures, totaling $262,265, into an aggregate of 874,217 shares of our common
stock at the conversion price of $0.30 per share.&#160;&#160;After giving effect
to this conversion, as of June 25, 2008, we had no outstanding
debentures.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
ability to generate cash has depended on a number of different factors,
primarily our ability to continue to secure and retain customers and generate
new license sales and related product support agreements.&#160;&#160;In order to
attract new customers and maintain or grow existing revenue streams, we utilize
our existing sources of capital to invest in sales and marketing, technology
infrastructure and research and development.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
ability to continue to control expenses, maintain existing revenue streams and
anticipate new revenue will impact the amounts and certainty of cash
flows.&#160;&#160;We intend to maintain our expenses in line with existing
revenue streams from maintenance support, ASP services and professional
services.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Balance
sheet items that should be considered in assessing our liquidity include cash
and cash equivalents, accounts receivable, prepaid expenses, accounts payable
and accrued liabilities.&#160;&#160;Income statement items that should be
considered in assessing our liquidity include revenue, cost of revenue (net of
depreciation and amortization), operating expenses (net of depreciation and
amortization) and other expenses.&#160;&#160;Statement of cash flows items that
should be considered in assessing our liquidity include net cash flows from
operating activities, net cash flows from investing activities and net cash
flows from financing activities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
December 31, 2007, we had working capital of $545,000 compared to working
capital deficit of $898,000 at December 31, 2006.&#160;&#160;This increase in
our working capital resulted primarily from a increase in our license,
professional services and ASP revenues.&#160;&#160;Net cash provided from
operating activities totaled approximately $907,000 in 2007 compared to
approximately $738,000 in 2006.&#160;&#160;In 2007, cash flow from operating
activities represented the Company&#8217;s principal source of cash and results
primarily from net income (loss), less non-cash expense and changes in working
capital.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
September 30, 2008, we had working capital of approximately $3,423,000 compared
to a working capital (deficit) of approximately $(520,000) at September 30,
2007.&#160;&#160;This increase in our working capital resulted primarily from an
increase in all revenue categories and our continuing and ongoing effort to
maintain our costs in line with our revenues.&#160;&#160;For the nine months
ended September 30, 2008, net cash provided from operating activities totaled
approximately $5,345,000 compared to approximately $828,000 for the nine months
ended September 30, 2007.&#160;&#160;In 2008, cash flow from operating
activities represented the Company&#8217;s principal source of cash and results
primarily from net income, less non-cash expense and changes in working
capital.&#160;&#160;The Company had a significant increase in its accounts
receivable in 2008 due to the license sale to one large customer offset by
non-cash expenses and payment of liabilities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In 2007,
net cash used for investing activities was approximately $1,101,000 compared to
approximately $907,000 in 2006.&#160;&#160;We expect capital expenditures and
capital software expenditures to continue to be funded by cash generated from
operations.&#160;&#160;We use cash to invest in capital and other assets to
support our growth.&#160;&#160;In 2007, net cash provided from financing
activities was approximately $73,000 compared to approximately $4,000 in
2006.&#160;&#160;The cash provided from financing activities in 2007 and 2006
consisted of proceeds from the exercise of stock options and
warrants.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the
nine months ended September 30, 2008, net cash used for investing activities was
approximately $1,133,000 compared to approximately $853,000 for the nine months
ended September 30, 2007.&#160;&#160;The Company expects capital expenditures
and capital software expenditures to continue to be funded by cash generated
from operations.&#160;&#160;For the nine months ended September 30, 2008, net
cash provided from (used for) financing activities was approximately $(138,000)
compared to approximately $43,000 for the nine months ended September 30,
2007.&#160;&#160;The cash provided from financing activities in 2008 consisted
of proceeds from the exercise of stock options and the purchase of treasury
stock related to the Company&#8217;s share buyback plan.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Funding
Requirements</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
primary uses of cash are for personnel-related expenditures, facilities and
technology costs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We do not
anticipate any large capital expenditures that will require us to seek new
sources of capital.&#160;&#160;We lease computer equipment for terms of three
years in order to have the latest available technology to serve our customers
and develop new products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The 2008
Debentures were issued with an aggregate principal amount of $1,800,000, and the
2009 Debentures were issued with an aggregate principal amount of
$700,000.&#160;&#160;Interest on the unpaid principal amount of the debentures
was payable at the rate of 8% per annum.&#160;&#160;We had been required to pay,
since July 1, 2004 and July 1, 2005, respectively, monthly principal
installments in the amount of ten dollars ($10) per thousand dollars ($1,000) of
the then-remaining principal amount of the 2008 Debentures and 2009
Debentures.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
January 2007, the holders of the 2008 Debentures and 2009 Debentures elected to
convert the remaining portion of their monthly principal installments due in
2006, totaling $119,807, into shares of our common stock at the conversion price
of $0.30 per share in lieu of receiving such installment payments in
cash.&#160;&#160;On March 23, 2007, we issued an aggregate of 5,438,670 shares
of our common stock to the RENN funds in connection with their election to
convert an aggregate of $1,631,601 principal amount of their 2008 Debentures and
2009 Debentures, representing all of their remaining unpaid principal amount due
on the debentures, at a conversion price of $0.30 per share.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On June
25, 2008, we issued an aggregate of 874,217 shares of our common stock to John
Roblin, our Chairman and Chief Executive Officer and certain other investors in
connection with their election to convert an aggregate of $262,265 principal
amount of their 2008 Debentures, representing all of their remaining unpaid
principal amount due on the debentures, at a conversion price of $0.30 per
share.&#160;&#160;As of September 30, 2008, we do not have any amounts
outstanding on the 2008 Debentures or 2009 Debentures.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On June
18, 2008, the Company announced that the Board of Directors authorized a share
buyback plan of up to 1,000,000 shares of the Company&#8217;s common stock, in
accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as
amended.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the
three and nine months ended September 30, 2008, the Company purchased an
aggregate of 201,870 shares of the Company&#8217;s common stock on the open market at
an average purchase price of $0.82 per share for a total purchase price of
approximately $164,894.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
prepare monthly cash flow projections on a rolling twelve-month basis based on a
detailed review of anticipated receipts and revenue from licenses, maintenance,
ASP and professional services.&#160;&#160;We also perform a detailed review of
our disbursements, including fixed costs, variable costs, legal costs, payroll
costs and other specific payments, on a rolling twelve-month
basis.&#160;&#160;Comparing estimated cash receipts to estimated payments, we
evaluate our ending cash balance monthly and determine whether our anticipated
cash flows from operations will be sufficient to meet our normal operating needs
for at least the next twelve months.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
believe that our current cash balances and anticipated cash flows from
operations will be sufficient to meet our normal operating needs for at least
the next twelve months.&#160;&#160;We do not anticipate any material changes in
our sources of and needs for capital.&#160;&#160;Our ability to fund our working
capital needs and address planned capital expenditures will depend on our
ability to generate cash in the future.&#160;&#160;We anticipate generating
future working capital through sales to new customers and continued sales and
services to our existing customers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
future liquidity and capital resource requirements will depend on many factors,
including but not limited to the following trends and uncertainties we
face:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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            <td align="right" style="WIDTH: 54pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      ability to generate cash is subject to general economic, financial,
      competitive and other factors beyond its
  control.</font></div>
            </td>
          </tr>
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    <div>
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              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      need to invest resources in product development in order to continue to
      enhance our current product, develop new products, attract and retain
      customers and keep pace with competitive product introductions and
      technological developments.</font></div>
            </td>
          </tr>
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    </div>
    <div>
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            </td>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      experience intense competition in our industry and continuing
      technological changes.</font></div>
            </td>
          </tr>
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    </div>
    <div>
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            <td align="right" style="WIDTH: 54pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Insurance
      companies typically are slow in making decisions and have numerous
      bureaucratic and institutional obstacles, which can make our efforts to
      attain new customers difficult.</font></div>
            </td>
          </tr>
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    </div>
    <div>
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      compete with a number of larger companies who have greater resources than
      those of ours.&#160;&#160;We compete on the basis of insurance knowledge,
      products, services, price, technological advances and system functionality
      and performance.</font></div>
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      operations continue to depend upon the continuing business of our existing
      customers and our ability to attract new
  customers.</font></div>
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    </div>
    <div>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      decline in software spending in the insurance industry could result in a
      decrease in our revenue.</font></div>
            </td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Material
risks to cash flow from operations include delayed or reduced cash payments
accompanying sales of new licenses or a decline in our services
business.&#160;&#160;There can be no assurance that changes in our plans or
other events affecting our operations will not result in materially accelerated
or unexpected expenditures.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We do not
expect for there to be a change in the mix or relative cost of our sources of
capital.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Net Operating Tax Loss
Carryforwards</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
December 31, 2007, we had approximately $25,700,000 of federal net operating tax
loss carryforwards expiring at various dates through 2026.&#160;&#160;The Tax
Reform Act of 1986 enacted a complex set of rules which limits a company&#8217;s
ability to utilize net operating tax loss carryforwards and tax credit
carryforwards in periods following an ownership change.&#160;&#160;These rules
define ownership change as a greater than 50 percent point change in stock
ownership within a defined testing period which is generally a three-year
period.&#160;&#160;As a result of stock which may be issued by us from time to
time or the result of other changes in ownership of our outstanding stock, we
may experience an ownership change and consequently our utilization of net
operating tax loss carryforwards could be significantly limited.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A 100%
valuation allowance has been established due to the uncertainty about the
realization of the deferred tax asset.&#160;&#160;A deferred tax asset may be
used to reduce any subsequent period&#8217;s income tax expense.&#160;&#160;A deferred
tax asset would arise as a result of net operating tax loss carryforwards, which
would only be recorded as assets if it is deemed more likely than not that the
asset will be used in future fiscal periods.&#160;&#160;It must be determined
that there is more than a 50% probablility that the Company will have positive
accounting income in the next fiscal period before the deferred tax asset can be
applied.&#160;&#160;Based on the Company&#8217;s recent profitability, management is
in the process of evaluating reinstating a portion of its deferred tax
asset.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Off-Balance Sheet
Transactions</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We do not
maintain any off-balance sheet transactions, arrangements, obligations or other
relationships with unconsolidated entities or others that are reasonably likely
to have a material current or future effect on our condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources.</font></div>
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        </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">21</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Critical Accounting Policies
and Estimates</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The SEC
has issued cautionary advice to elicit more precise disclosure in this Item 2,
MD&amp;A, about accounting policies management believes are most critical in
portraying our financial results and in requiring management&#8217;s most difficult
subjective or complex judgments.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
preparation of financial documents in conformity with accounting principles
generally accepted in the United States of America requires management to make
judgments and estimates.&#160;&#160;On an on-going basis, we evaluate our
estimates, the most significant of which include establishing allowances for
doubtful accounts, a valuation allowance for our deferred tax assets and
determining the recoverability of our long-lived assets.&#160;&#160;The basis
for our estimates are historical experience and various assumptions that are
believed to be reasonable under the circumstances, given the available
information at the time of the estimate, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily available from other sources.&#160;&#160;Actual results may differ
from the amounts estimated and recorded in our financial
statements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
believe the following critical accounting policies affect our more significant
judgments and estimates used in the preparation of our consolidated financial
statements:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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            <td align="right" style="WIDTH: 54pt">
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      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Revenue
      Recognition</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
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          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;
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      of Capitalized Software</font></div>
            </td>
          </tr>
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      of Allowance for Doubtful Accounts
Receivable</font></div>
            </td>
          </tr>
      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Revenue
Recognition</font></div>
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recognition rules are very complex, and certain judgments affect the application
of our revenue policy.&#160;&#160;The amount and timing of our revenue is
difficult to predict, and any shortfall in revenue or delay in recognizing
revenue could cause our operating results to vary significantly from quarter to
quarter.&#160;&#160;In addition to determining our results of operations for a
given period, our revenue recognition determines the timing of certain expenses,
such as commissions, royalties and other variable expenses.</font></div>
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revenues are recognized in accordance with SOP 97-2, &#8220;Software Revenue
Recognition,&#8221; as amended by SOP 98-4, &#8220;Deferral of the Effective Date of SOP
97-2, Software Revenue Recognition&#8221; and SOP 98-9, &#8220;Modification of SOP 97-2 with
Respect to Certain Transactions.&#8221;&#160;&#160;Revenue from the sale of software
licenses is predominately from standardized software and is recognized when
standard software modules are delivered and accepted by the customer, the
license term has begun, the fee is fixed or determinable and collectibility is
probable.&#160;&#160;Revenue from software maintenance contracts and ASP
services is recognized ratably over the life of the contract.&#160;&#160;Revenue
from professional consulting services is recognized when the service is
provided.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
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invoiced to our customers in excess of recognized revenues are recorded as
deferred revenues.&#160;&#160;The timing and amounts invoiced to customers can
vary significantly depending on specific contract terms and can therefore have a
significant impact on deferred revenues in any given period.</font></div>
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revenue is derived from the licensing of our software products, professional
services, maintenance and support and ASP services.&#160;&#160;We recognize
revenue when persuasive evidence of an arrangement exists, we have delivered the
product or performed the service, the fee is fixed or determinable and
collection is probable.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">License
Revenue.</font>&#160;&#160;We recognize our license revenue upon delivery,
provided collection is determined to be probable and no significant obligations
remain.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">22</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Services and Support
Revenue</font>.&#160;&#160;Our services and support revenue is composed of
professional services (such as consulting services and training) and maintenance
and support and ASP services.&#160;&#160;Our professional services revenue is
recognized when the services are performed.&#160;&#160;Our maintenance and
support and ASP offerings are recognized ratably over the term of the
arrangement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Multiple Element
Arrangement</font>.&#160;&#160;We enter into revenue arrangements in which a
customer may purchase a combination of software, maintenance and support, and
professional services (multiple-element arrangements).&#160;&#160;When
vendor-specific objective evidence (&#8220;VSOE&#8221;) of fair value exists for all
elements, we allocate revenue to each element based on the relative fair value
of each of the elements.&#160;&#160;VSOE of fair value is established by the
price charged when that element is sold separately.&#160;&#160;For maintenance
and support, VSOE of fair value is established by renewal rates when they are
sold separately.&#160;&#160;For arrangements where VSOE of fair value exists
only for the undelivered elements, we defer the full fair value of the
undelivered elements and recognize the difference between the total arrangement
fee and the amount deferred for the undelivered items as revenue, assuming all
other criteria for revenue recognition have been met.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Valuation
of Capitalized Software</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Costs for
the conceptual formulation and design of new software products are expensed as
incurred until technological feasibility has been established.&#160;&#160;Once
technological feasibility has been established, we capitalize costs to produce
the finished software products.&#160;&#160;Capitalization ceases when the
product is available for general release to customers.&#160;&#160;Costs
associated with product enhancements that extend the original product&#8217;s life or
significantly improve the original product&#8217;s marketability are also capitalized
once technological feasibility has been established.&#160;&#160;Amortization is
calculated on a product-by-product basis as the greater of the amount computed
using (a) the ratio that current gross revenues for a product bear to the total
of current and anticipated future gross revenues for that product or (b) the
straight-line method over the remaining economic life of the
product.&#160;&#160;At each balance sheet date, the unamortized capitalized
costs of each computer software product is compared to the net realizable value
of that product.&#160;&#160;If an amount of unamortized capitalized costs of a
computer software product is found to exceed the net realizable value of that
asset, such amount will be written off.&#160;&#160;The net realizable value is
the estimated future gross revenues from that product reduced by the estimated
future costs of completing and deploying of that product, including the costs of
performing maintenance and customer support required to satisfy our
responsibility set forth at the time of sale.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Valuation
of Allowance for Doubtful Accounts Receivable</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management&#8217;s
estimate of the allowance for doubtful accounts is based on historical
information, historical loss levels, and an analysis of the collectibility of
individual accounts.&#160;&#160;We routinely assess the financial strength of
our customers and based upon factors concerning credit risk, establish an
allowance for uncollectible accounts.&#160;&#160;Management believes that
accounts receivable credit risk exposure beyond such allowance is
limited.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
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        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">BUSINESS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">General</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
provide state-of-the-art software products, services and solutions to the
property and casualty insurance industry.&#160;&#160;Our customers include
insurance companies, agents, brokers and managing general agents
(MGAs).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
software products and services focus on the functions required to market,
underwrite, rate, issue, print, bill and support the entire life cycle of
insurance policies.&#160;&#160;Our products and services combine an in-depth
knowledge of property and casualty insurance with innovative solution designs
using state-of-the-art technology.&#160;&#160;Our products are either available
&#8220;off-the-shelf&#8221; or customized to specific customer needs.&#160;&#160;Our
software can be licensed for customer use on their own platforms or can be
provided through our application services provider, referred to as &#8220;ASP,&#8221; using
third party technology platforms and support.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We also
provide a wide range of professional services that support product
customization, conversion from existing systems and data integration with other
software or reporting agencies.&#160;&#160;We also offer on-going support
services including incorporating recent insurance rate and rule changes in our
solutions.&#160;&#160;These support services also include analyzing the changes,
developments, quality assurance, documentation and distribution of insurance
rate and rule changes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We earn
revenue from software contract licenses, service fees from ASPs, continuing
maintenance fees for servicing the product and professional
services.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We were
incorporated in Delaware in April 1985 as Warner Computer Systems, Inc. and
changed our name to Warner Insurance Services, Inc. in March 1992.&#160;&#160;In
June 1996, we changed our name to Cover-All Technologies Inc. Our products and
services are offered through our wholly-owned subsidiary, Cover-All Systems,
Inc., also a Delaware corporation.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Products</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">My
Insurance Center</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In 2001,
we announced the creation of My Insurance Center, referred to as &#8220;MIC,&#8221; a
customizable and configurable Internet-enabled software platform and suite of
product components that was developed to provide insurance agents, brokers and
carriers with integrated workflows and access to real-time information. We
continue to expand MIC with new capabilities in response to customer
needs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MIC is
designed to be the platform for the entire insurance process from the insured
through agents, brokers, insurance companies and reinsurers.&#160;&#160;MIC is
designed to serve both large and small organizations and to serve the &#8220;extended
enterprise&#8221; by using advanced security to extend capabilities beyond the
client&#8217;s walls to partners, suppliers and customers.&#160;&#160;It is designed
to be a low cost and variable cost platform that meets or exceeds security/audit
standards required by sophisticated data centers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MIC was
designed to segregate functionality and access to data to the individual
user.&#160;&#160;These capabilities are configured and managed by the client and
can be &#8220;changed&#8221; in real time by authorized users.&#160;&#160;Additionally, all
changes are tracked by user, date and time to provide audit trails and
controls.&#160;&#160;These capabilities enable our clients to manage and monitor
their business as it happens, in real time as well as help them address the
increasing demands of regulatory compliance.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">24</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
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        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">New
capabilities have been created in the last twelve months that extend the
functionality of MIC to the submission of business and include underwriting
rules, support for insurance binders, new billing functionality including
commission management and installment support,&#160;&#160;electronic
underwriting files, milestone-driven workflows, which are customizable based
upon definable conditions like completed applications and underwriting
information, policy dashboards that include premium and loss information, an
innovative structure that supports policy level profitability and various other
functionality.&#160;&#160;The architecture of MIC enables Cover-All to introduce
and customize capabilities in short cycle times that allow our customers to be
responsive and nimble.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MIC is
designed to fully support STP (Straight Through Processing). MIC enables our
customers to utilize our rating, policy issuance, billing and other software
components into a fully-integrated platform that, among other things, eliminates
redundant data entry.&#160;&#160;Information is stored in a client-centric
database and becomes immediately available to other users or
functions.&#160;&#160;MIC may be customized to generate user alerts when a
user-specified condition occurs.&#160;&#160;Additionally, MIC has been designed
to allow the customer to configure features according to their own look and feel
preferences and workflow processes.&#160;&#160;For instance, the browser-based
user interface allows employees, agents and other end-users to personalize their
desktops so they see only the information they need or desire.&#160;&#160;MIC
allows our customers to reduce costs, leverage the latest technologies, better
manage risk and provide better service to their customers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MIC is
built upon our Customer Insurance Database, referred to as &#8220;CI,&#8221; that brings
together policy, billing and information from other business functions into an
integrated &#8220;customer view&#8221; that enables better customer service and
coordination.&#160;&#160;A key component of CI is the Insurance Policy Database,
referred to as &#8220;IPD.&#8221;&#160;&#160;IPD is a relational database that holds
detailed policy and policy history data for more than forty lines of commercial
property and casualty insurance and has been designed to bring powerful data
access and reporting capabilities to the desktop.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MIC is
being made available to users either for in-house implementation or through our
ASP.&#160;&#160;Combined with our client-centric database, MIC has an integrated
and flexible architecture designed to enable our customers to make rapid
business and technological changes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MIC
offers the following features and benefits:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
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      Integration</font> &#8211; IPD is an integrated data repository that provides
      information to MIC quickly and inexpensively.&#160;&#160;Multiple software
      components share data to help integrate business functions, manage
      workflow and avoid duplicate data
problems.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Application
      Integration; Single Sign-On</font> &#8211; MIC allows the end user to switch
      back and forth among applications without having to log in to individual
      applications, increasing a user&#8217;s productivity.&#160;&#160;MIC provides a
      consolidated view of data from different software components and provides
      &#8220;hotlinks&#8221; enabling a customer to connect quickly to the specific module
      of the specific system.&#160;&#160;MIC offers the user fast access,
      pro-active alerts and real-time
responsiveness.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
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      Accessibility</font> &#8211; MIC is an Internet application, which utilizes a
      sophisticated portal capability.</font></div>
            </td>
          </tr>
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    </div>
    <div align="left">
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          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
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            <td>
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      Representation</font> &#8211; MIC provides a consolidated view of information
      from disparate systems.</font></div>
            </td>
          </tr>
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Personalization and
      Customization</font> &#8211; MIC allows each user to personalize his or her view
      similar to other Internet portals, to meet the needs and the stylistic
      preferences of each individual user.&#160;&#160;MIC personalization allows
      the user to hide or show content, filter the content and also change color
      and page styles.&#160;&#160;Customization in MIC allows the host to
      control the accessibility to content for each user and also facilitates
      changes to content in MIC as business needs change, without additional
      programming.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">25</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div>&#160;</div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Scalability</font> &#8211;
      MIC can grow with our customer&#8217;s needs, measured in terms of the numbers
      of concurrent users, response times and other
  variables.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
    </div>
    <div>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
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      can be configured to achieve appropriate levels of security on data
      transfer over the Internet.&#160;&#160;MIC is also designed to adapt to
      almost any organizational hierarchy and data level security needs with
      minimal set-up effort by the
customer.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Compliance</font> &#8211;
      MIC is designed to enable our customers to respond quickly and efficiently
      to the growing number of&#160;&#160;federal, state and insurance
      regulations to help them meet their compliance
  obligations.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MIC
utilizes technology based on Oracle&#174; 10G Application Server, Oracle 10G
Database, J2EE and XML.&#160;&#160;MIC seamlessly integrates MIC Rating and
Issuance and other business components and our Customer Insurance
Database.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MIC
enables us to market the business components in &#8220;custom groupings,&#8221; or as a
service in an ASP environment, depending on customer needs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">MIC
Rating &amp; Insurance &#8211; The Policy Rating and Issuance Component of
MIC</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In 1989,
we purchased the assets related to the exclusive proprietary rights to a
PC-based software application for policy rating and issuance for property and
casualty insurance companies.&#160;&#160;This software uses a unique design that
separates the &#8220;insurance product definition&#8221; from the actual technology
&#8220;engines.&#8221;&#160;&#160;The sophistication of this design has enabled us to stay
current with technology innovations while preserving our &#8220;insurance knowledge&#8221;
investment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The MIC
Rating &amp; Issuance component supports the following policy
functions:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Data
      capture and editing</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Rating</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Policy
      issuance including multiple recipient
print</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      policy transactions including quotes, new lines, endorsements, renewals,
      audits and cancellations</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Policy
      database.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MIC
Rating &amp; Issuance is designed to accommodate all lines of property and
casualty insurance.&#160;&#160;It is especially effective in coping with the
complexity and variability of commercial lines of insurance.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
flexibility of MIC Rating &amp; Issuance is a competitive advantage, and today
we offer off-the-shelf support for more than 40 lines of commercial business in
virtually all states and Puerto Rico.&#160;&#160;Our extensive experience in
creating custom products combined with our proprietary tool set enables us to
deliver support for new insurance products in short time frames.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
the latter part of 2002, we developed a new &#8220;presentation layer&#8221; incorporating
the latest technologies, such as Java and XML, to provide a very flexible and
robust user interface over the Internet.&#160;&#160;This capability also
included significant enhancements to our security and administration functions
as well as a number of &#8220;usability&#8221; enhancements.&#160;&#160;These capabilities
significantly expand and enhance the &#8220;core&#8221; rating and issuance
capabilities.&#160;&#160;The new product has now been fully integrated with MIC
and is being sold and marketed as MIC Rating &amp; Issuance. The MIC Rating
&amp; Issuance has been and continues to be enhanced and updated with new
technology.&#160;&#160;The sophisticated design of the product isolates
insurance product knowledge from the application itself in data files, referred
to as &#8220;Metadata.&#8221;&#160;&#160;We have built an extensive knowledge base,
estimated at more than 100 person-years of effort, in this Metadata that defines
the details of virtually hundreds of insurance policy types and coverages for
the MIC Rating &amp; Issuance product.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">26</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
design of MIC Rating &amp; Issuance also allows us to stay current with changes
in technology while re-using the intellectual capital invested in the insurance
rules.&#160;&#160;Our upgrading the Classic product line to run on an
intranet/Internet has enabled multiple users to contribute to the common data
store.&#160;&#160;We have also integrated this product to IPD and
MIC.&#160;&#160;We have streamlined the support process with the goal to improve
quality to our customers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The MIC
Rating &amp; Issuance product is in use in over 35 companies.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
2007, Cover-All developed a number of new MIC Rating &amp; Issuance capabilities
that are designed to fundamentally improve the ability to customize and
introduce insurance products in very short time frames based upon the latest
technological advances and innovative architecture.&#160;&#160;These
capabilities include a new print engine, document packaging, a sophisticated set
of data capture/screen creation tools, and a number of other
components.&#160;&#160;These capabilities were deployed in two customers in 2007
and early 2008.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">My
Insurance Center &#8211; Functional Capabilities </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have,
through MIC, a deep inventory of insurance software components combined with a
sophisticated implementation platform.&#160;&#160;MIC includes the following
critical components:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">My
      Insurance Center Portal</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Enterprise,
      Customer-centric Oracle database</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Underwriting
      Tools</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">End
      User access to information in real time &#8211; Straight Through
      Processing</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Rating
      and Issuance</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Full
      policy lifecycle support</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Clear
      and comprehensive data collection with extensive real time
      edits</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Policy
      history &#8211; easy policy changes and useful for activities such as coverage
      inquiries</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On-line
      system, screen and field level
look-ups</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On-line
      Commercial Lines Manual Tables and
Footnotes</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Easy
      and direct system navigation</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Standard
      ISO (Insurance Service Office)/NCCI coverages and rates
      support</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Company
      customized coverages and rates
support</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fully
      automated recipient-driven issuance of insurance policies, worksheets, ID
      cards, etc., including print
preview</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Policy
      database</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Multiple
      company/program/state/coverage
support.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Templates
      to reduce data entry time</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Advanced
      Billing Capabilities &#8211; integrating with
NetSuite</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Claims
      Repository</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Customer
      Relationship Management</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Agency
      and Program Management</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Advanced
      Administration Tools</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Access
      to Web Services and Information
Providers</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Policy
      Dashboard &#8211; premium &amp; loss
information</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Advanced
      Workflows, Diaries</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Electronic
      Underwriting files</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">27</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div>&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Compliance
      Assist, Help Desk</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Interfaces
      to &#8220;back end&#8221; accounting and reporting
systems</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Policy-level
      Premium and Loss Information for profitability tracking /
      accounting</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 90pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Quote,
      Binder, Policy Lifecycle support</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We expect
to utilize and expand these capabilities to expand and leverage our ability to
respond to broadening marketplace and new customer opportunities with solutions
that address the special needs of carriers, managing general agents, agents,
brokers and third party providers with both off-the-shelf and custom
solutions.&#160;&#160;Our user interface capabilities of the MIC product have
been enhanced with more functionality through various strategic alliances and
partnerships that offer business process partnering (outsourcing), accounting,
claims administration capabilities and actuarial and statistical reporting
services.&#160;&#160;We also intend to continue to enhance our functional
components based upon market demand, existing customer needs, new capabilities
offered by Web Services as well as changes in technology (for example, support
for personal digital assistants, or PDAs), especially Internet technologies. We
have also developed integration and inter-connection capabilities for MIC to
exchange data with third party systems which should bring significant benefit to
our customers by reducing data entry and reducing the exposure to errors &amp;
omissions liability.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are
also increasing and enhancing our services portfolio.&#160;&#160;We have
expanded our professional services with conversion and interface
offerings.&#160;&#160;We developed new rule-based capabilities to enable us to
implement data exchange services that will save our customers time and effort
converting to our products or linking our products to existing
systems.&#160;&#160;We also have developed a &#8220;custom&#8221; service offering for
customers who desire specially-tailored services, service level agreements and
other services that enable them to achieve their business
objectives.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
February 2007, we announced that we were extending MIC capabilities by acquiring
and integrating the application processing functionality of the brokerage
application processing platform of InsureHiTech, a specialty wholesale insurance
brokerage for hedge funds, private equity, technology and life science
companies.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Competition</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
computer software and services industry is highly competitive and rapidly
changing, as current competitors expand their product offerings and new
companies enter the marketplace.&#160;&#160;Because of our extensive
knowledge-base in the insurance industry, however, we believe that our products
offer customers certain advantages not available from our
competitors.&#160;&#160;Our customers have access to our extensive experience
and software inventory in the area of rating and policy issuance of commercial
lines policies, among the most complex of insurance transactions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There are
a number of larger companies, including computer software, services and
outsourcing companies, consulting firms, computer manufacturers and insurance
companies that have greater financial resources than we have and possess the
technological ability to develop software products similar to those we
offer.&#160;&#160;These companies represent a significant competitive challenge
to our business.&#160;&#160;Very large insurers that internally develop systems
similar to ours may or may not become our major customers for software or
services.&#160;&#160;We compete on the basis of our insurance knowledge,
products, service, price, system functionality and performance and technological
advances.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Marketing</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
maintain an in-house sales and marketing staff. We also utilize distributors,
outside consultants and other complimentary service providers to market our
products.&#160;&#160;We are continuing to redesign our Internet site and
establish linkages to portals and other web sites.&#160;&#160;This is an
on-going effort that will continue to expand in 2008 as we focus on the Internet
as a valuable source of information for current and potential customers
interested in our products and services.&#160;&#160;We also participate in and
display and demonstrate our software products at industry trade
shows.&#160;&#160;Our consulting staff, business partners and other third
parties also generate sales leads.&#160;&#160;We also communicate with our
existing customers in a variety of ways including an annual Customer
Conference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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        </div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">28</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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        </div>
      </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Research
And Development</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
business is characterized by rapid business and technological
change.&#160;&#160;We believe our success will depend, in part, on our ability
to meet the new needs of our customers and the marketplace as well as continuing
to enhance our products based on new technologies.&#160;&#160;Accordingly, we
must maintain ongoing research and development programs to continually add value
to our suite of products, as well as any possible expansion of our product
lines.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our goal
with all of our products and services is to enhance the ease of implementation,
functionality, long-term flexibility and the ability to provide improved
customer service.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Research
and development expenses were $510,000, $464,000 and $809,000 for the years
ended December 31, 2007, 2006 and 2005, respectively.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Backlog</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We had no
license, maintenance, professional services or ASP backlog of unbilled work as
of December&#160;31, 2007.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Major
Customers</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
product line is in use in over 35 companies.&#160;&#160;For the years ended
December 31, 2007, 2006 and 2005, we had two, three and one customer(s) who
contributed revenues in excess of 10% of our total revenues for the respective
years.&#160;&#160;AIGT generated 19%, 27% and 23% of our revenues for the years
ended December 31, 2007, 2006 and 2005, respectively.&#160;&#160;One other
customer generated 25% of our revenue for the year ended December 31,
2007.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We had no
export sales in 2007, 2006 and 2005.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employees</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We had 44
employees as of December 31, 2007.&#160;&#160;None of our employees are
represented by a labor union, and we have not experienced any work
stoppages.&#160;&#160;We believe that relations with our employees are
good.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Legal
Proceedings</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are
not involved in any legal proceedings, nor are we aware of any proceedings that
are pending or threatened which may have a significant effect on our business,
financial position, results of operations or liquidity.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Facilities</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
headquarters is located in Fairfield, New Jersey, where we occupy approximately
20,000 square feet under a lease that expires at October 31,
2012.&#160;&#160;Currently, we fully utilize this facility.&#160;&#160;We
believe that our headquarters is well maintained and adequate to meet our needs
in the foreseeable future.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">29</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
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        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MANAGEMENT</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Executive
Officers and Directors</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
current directors and executive officers are as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 36pt" align="left">
      <table cellpadding="0" cellspacing="0" width="90%">
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">John
      W. Roblin</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">63</font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Chairman
      of the Board of Directors and Chief Executive Officer</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Russell
      Cleveland</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">70</font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Director</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Earl
      Gallegos</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">50</font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Director</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Mark
      D. Johnston</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">51</font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Director</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Manish
      D. Shah</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">37</font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Director,
      President and Chief Technology Officer</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Maryanne
      Z. Gallagher</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">47</font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Executive
      Vice President and Chief Operating Officer</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Ann
      F. Massey</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">50</font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Chief
      Financial Officer</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">John W. Roblin</font> has served as
our Chief Executive Officer since December 1999 and as a director since March
2000.&#160;&#160;He was named Chairman of the Board of Directors in February
2001.&#160;&#160;He served as our President from December 1999 to November
2008.&#160;&#160;Prior to joining us, Mr. Roblin was Chief Information Officer
and Senior Vice President for CIGNA Property and Casualty, positions he held
since 1998.&#160;&#160;From 1994 until 1998, he was Chief Information Officer
and Senior Vice President for Advanta Corporation.&#160;&#160;Prior to 1994, he
was the Chief Information Officer at Chubb &amp; Son, USF&amp;G and Traveler&#8217;s
Personal Lines Division.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">G. Russell Cleveland</font> has
served as a member of our Board since July 2001.&#160;&#160;Mr. Cleveland is the
President, Chief Executive Officer, sole director and the majority shareholder
of RENN Capital Group, Inc.&#160;&#160;He is also the President, Chief Executive
Officer and director of Renaissance Capital Growth &amp; Income Fund III,
Inc.&#160;&#160;RENN Capital Group, Inc. is the investment manager of
Renaissance Capital Growth &amp; Income Fund III, Inc., Renaissance US Growth
Investment Trust PLC and Global Special Opportunities Trust PLC, investment
trusts listed on the London Stock Exchange.&#160;&#160;Mr. Cleveland is a
Chartered Financial Analyst with more than 40 years of experience as a
specialist in investments in smaller capitalization companies.&#160;&#160;A
graduate of the Wharton School of Business, Mr. Cleveland has served as
President of the Dallas Association of Investment Analysts.&#160;&#160;Mr.
Cleveland serves on the boards of directors of Renaissance US Growth Investment
Trust PLC, Renaissance Capital Growth &amp; Income Fund III, Inc., CaminoSoft
Corp., Integrated Security Systems, Inc., BPO Management Services and Access
Health USA, Inc.&#160;&#160;See &#8220;Certain Relationships and Related
Transactions.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Earl Gallegos</font> has served as a
member of our Board since March 1997.&#160;&#160;Mr. Gallegos is the principal
of Earl Gallegos Management Corporation, a management consulting firm founded by
him in July 1994 specializing in the insurance and software
industries.&#160;&#160;Mr. Gallegos is a founder of Peak Performance Solutions
Inc., a privately held insurance technology firm, and he served as a director of
Zytalis Inc., a privately held information technology professional services
firm, from October 1999 to December 2006.&#160;&#160;Mr. Gallegos was appointed
as an outside director of Fidelity National Real Estate Solutions (FNRES) as of
March 1, 2007. Mr. Gallegos has also served as a director of Bridium, Inc., a
privately held technology firm, from July 1998 to August 2003, Fidelity National
Information Solutions, Inc., a publicly held company listed on Nasdaq, from
September 1997 to September 2003, eGovNet, Inc., a privately held government
technology services firm, from September 2002 to September 2003, and
PracticeOne, Inc., a privately held medical practice management software
company, from November 2002 to January 2005. In addition, Mr. Gallegos is
currently a director of (FNRES) Fidelity National Real Estate Solutions a
private company specializing in Internet Real Estate technology.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
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        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">30</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
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        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Mark D. Johnston</font> has served
as a member of our Board since April 1996.&#160;&#160;Mr. Johnston served as our
Chairman of our Board from November 1999 until February 2001 and served as our
Interim Chief Financial Officer from March 2000 to February 2001.&#160;&#160;Mr.
Johnston was named to our Board pursuant to the terms of a Stock Purchase
Agreement, dated as of March 31, 1996, among our company, SIL and Care
Corporation Limited.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Manish D. Shah </font>has served as
a member of our Board and as our President since November 2008 and has served as
our Chief Technology Officer since May 2004.&#160;&#160;Prior to his promotion
to the position of our President, he served as our Executive Vice President
since May 2008.&#160;&#160;Mr. Shah served as our Director of Technology from
December 2002 through May 2004 and served as our technology consultant from
September 2000 through December 2001.&#160;&#160;He graduated with Honors from
the Columbia University Executive MBA Program in May of 2008.&#160;&#160;Prior
to joining us, Mr. Shah held several technology management positions at various
companies such as Andersen Consulting, P&amp;O Nedlloyd and Tata Consultancy
Services in different industries for over 10 years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Maryanne Z. Gallagher</font> has
served as our Executive Vice President and Chief Operating Officer since May
2008 and February 2001, respectively.&#160;&#160;Prior to holding the position
of Chief Operating Officer, she served as our Senior Vice President since
January 2000.&#160;&#160;From November 1998 until December 1999, Ms. Gallagher
served as our Vice President - Customer Service.&#160;&#160;Ms. Gallagher joined
us in 1990 and has held various development and support positions in our Classic
division through 1998.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Ann F. Massey</font> has served as
our Chief Financial Officer since February 2001, as our Secretary since April
1997 and as our Controller since March 1997.&#160;&#160;From March 1996 to March
1997, Ms. Massey served as our Assistant Treasurer.&#160;&#160;From 1994 until
February 1996, Ms. Massey served as Assistant Controller for our insurance
services division.&#160;&#160;Prior to 1994, Ms. Massey had served as our
Accounting Manager.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director
Independence</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Board
of Directors has determined that Messrs. Gallegos and Johnston are independent
within the meaning of regulations of the Securities and Exchange Commission and
the rules of the Nasdaq Stock Market.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">31</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EXECUTIVE
COMPENSATION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">COMPENSATION
DISCUSSION AND ANALYSIS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Role of the Compensation
Committee</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
executive compensation program is overseen and administered by the Compensation
Committee of the Board of Directors.&#160;&#160;The members of the Compensation
Committee are John Roblin and Mark Johnston.&#160;&#160;The Compensation
Committee sets the principles and strategies that serve to guide the design of
the Company&#8217;s employee compensation and benefit programs.&#160;&#160;The
Compensation Committee annually evaluates the performance of the Chief Executive
Officer and other executive officers.&#160;&#160;Taking the performance
evaluations into consideration, the Committee establishes and approves the
compensation levels for the executive officers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
principal functions of the Compensation Committee are:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      establish and periodically review the Company&#8217;s compensation philosophy
      and the adequacy of compensation plans and programs for directors,
      executive officers and other
employees;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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            <td align="right" style="WIDTH: 54pt">
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            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      establish compensation arrangements and incentive goals for executive
      officers and to assist the Board of Directors in the administration of
      compensation plans;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
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      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      review the performance of the executive officers and award incentive
      compensation and adjust compensation arrangements as appropriate based
      upon performance;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      periodically report on the Compensation Committee&#8217;s activities to the full
      Board of Directors; and</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      prepare an annual report on executive compensation for inclusion in the
      Company&#8217;s annual proxy statement.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
Roblin does not participate in the Compensation Committee&#8217;s decisions regarding
his compensation.&#160;&#160;His compensation is separately evaluated by Mr.
Johnston and the remaining members of the Board, who take into consideration
overall Company performance in attaining established targets for income before
taxes and developing and achieving short term and long term goals for the
Company.&#160;&#160;Such targets are set forth in Mr. Roblin&#8217;s employment
agreement.&#160;&#160;As a result of this review, the Compensation Committee
concluded that Mr. Roblin&#8217;s compensation was reasonable and not excessive based
on his leadership, decision-making skills, experience, knowledge, communication
with the Board of Directors and strategic recommendations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Compensation Objectives and
Principles</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
overall objective is to attract, retain, motivate and reward high caliber
executives who deliver superior short and long-term performance that builds
shareholder value.&#160;&#160;To achieve our objective, the Compensation
Committee has set the following guiding principles in the design and
administration of the Company&#8217;s compensation programs:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Attract,
      motivate and retain executive officers who can make significant
      contributions to the Company&#8217;s long-term
  success;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Align
      the interests of executive officers with those of shareholders;
      and</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
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            </td>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Tie
      individual compensation awards to business and individual performance with
      a portion of executive compensation designed to create incentives for
      superior performance and consequences for below target
      performance.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">32</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
compensation policy is designed to compensate our executive officers based on a
number of factors, including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
      individual&#8217;s position and responsibilities within the
    Company;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
      overall importance of the individual&#8217;s responsibilities in helping the
      Company achieve success;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">specific
      tasks that the individual may be required to perform during a particular
      time period;</font></div>
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      individual&#8217;s skill set, experience and
  education;</font></div>
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              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">market
      conditions, as measured by, among other things, the Company&#8217;s knowledge of
      peer company compensation policies and geographical considerations,
      including the cost of living;</font></div>
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      <table cellpadding="0" cellspacing="0" id="list" width="100%">
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            <td>
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      Company&#8217;s performance in areas for which the individual has
      responsibility; and</font></div>
            </td>
          </tr>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
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      Company&#8217;s overall performance.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Principal Elements of
Compensation</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
provide the following principal elements of compensation to our executive
officers:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
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            </td>
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      salary</font> &#8211; We provide a fixed base salary to our executive officers
      to compensate them for services provided to the Company during the fiscal
      year;</font></div>
            </td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
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      bonuses</font> &#8211; We provide cash bonus awards to our executive officers
      which vary in amount depending upon the executive&#8217;s individual performance
      and the achievement of certain predetermined goals and objectives for the
      fiscal year; and</font></div>
            </td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 54pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Equity
      incentive awards</font> &#8211; We provide equity incentive awards to our
      executive officers&#160;comprised of stock options and shares of
      restricted stock which are intended to reward them for prior and future
      performance, as well as to motivate them to stay with the Company and
      build stockholder value.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Compensation Committee developed a compensation evaluation program that requires
management to set goals at the beginning of each fiscal year for increasing
income before taxes from the previous year in order to evaluate management&#8217;s
performance.&#160;&#160;Salary increases for each fiscal year have been based
upon the Company attaining the earnings performance targets for the preceding
fiscal year, unusual achievements and cost of living.&#160;&#160;Bonuses, if
any, are divided among the executive group after evaluation of each individual&#8217;s
performance, in consultation with senior management.&#160;&#160;Option grants
are </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">similarly
based.&#160;&#160;In 2007, we paid bonuses to our three named executive officers
totaling $379,000.&#160;&#160;All of our bonus payments in 2007 were approved by
our Board.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition to these elements of executive compensation, we provide our executive
officers with other benefits generally available to all eligible employees, such
as participation in our health and retirement plans.&#160;&#160;We also provide
or reimburse costs associated with certain limited perquisites and personal
benefits and provide certain of our executive officers with certain
change-in-control benefits.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Equity Incentive
Plans</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Compensation Committee believes that stock options provide a valuable tool for
aligning the interests of management with stockholders and focusing management&#8217;s
attention on the long-term growth of the Company.&#160;&#160;In addition, the
Committee believes that the awarding of stock options is essential to attract
and retain the talented professionals and managers needed to ensure the
continued success of the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">33</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
2007, the Company had two stock option plans which were in
effect.&#160;&#160;Under the 1994 Stock Option Plan for Independent Directors,
which was amended in June 2000, options for the purchase of up to 750,000 shares
of our common stock may be granted to directors who are not
employees.&#160;&#160;This plan will expire on December 31, 2009.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under the
Amended and Restated 2005 Stock Incentive Plan (the &#8220;2005 Plan&#8221;), a maximum of
5,000,000 shares of the Company&#8217;s common stock are available for grants of all
equity awards under this plan.&#160;&#160;On March 25, 2008, the 2005 Plan was
further amended and restated in order to make the Company&#8217;s directors who are
not employees of the Company eligible participants under the 2005
Plan.&#160;&#160;This plan will expire on June 6, 2015.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Employment Agreements and
Severance Arrangements/Change of Control Agreements</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
not entered into employment arrangements with any of our executive officers,
except for Mr. Roblin, with whom we have entered into an Employment Agreement,
and Mr. Shah, with whom we have entered into a Tuition Reimbursement
Agreement.&#160;&#160;Each of these agreements contains provisions which would
entitle these executives to certain payments or benefits if their employment is
terminated under certain circumstances, including after a &#8220;change of control&#8221; of
the Company occurs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
material terms of each of these executive&#8217;s employment agreements, and the
payments or benefits which the executive officers would receive under different
terminating circumstances, are set forth below in &#8220;&#8722;Employment Agreements or
Arrangements of Executive Officers&#8221; and &#8220;&#8722;Potential Payments upon Termination or
Change of Control&#8221;, respectively.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">34</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">COMPENSATION
OF NAMED EXECUTIVE OFFICERS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Summary
Compensation Table</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table summarizes the total compensation earned during 2007 and 2006 by
our chief executive officer and our two next most highly compensated executive
officers whose total compensation exceeded $100,000 in 2007:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="bottom" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Name
      and</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Principal
      Position</font></font></div>
            </td>
            <td valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Year</font></font></div>
            </td>
            <td valign="bottom" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Salary</font></font></div>
            </td>
            <td valign="bottom" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Bonus</font></font></div>
            </td>
            <td valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="TEXT-DECORATION: underline">Option <font style="DISPLAY: inline; TEXT-DECORATION: underline">Awards
      (1)</font></font></font></div>
            </td>
            <td valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="TEXT-DECORATION: underline">All Other<font style="DISPLAY: inline; TEXT-DECORATION: underline">
      Compensation</font></font></font></div>
            </td>
            <td valign="bottom" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Total</font></font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">John
      W. Roblin</font></div>
            </td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$300,000</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$162,000</font></div>
            </td>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$128,484</font></div>
            </td>
            <td align="left" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$23,867
      (3)</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$614,351</font></div>
            </td>
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            <td align="left" valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Chairman
      of the Board of Directors and Chief Executive Officer(2)</font></div>
            </td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2006</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$300,000</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8211;&#8211;&#8211;</font></div>
            </td>
            <td align="left" valign="top" width="9%">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      $36,643</font></div>
            </td>
            <td align="left" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$19,395
      (4)</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$356,038</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Maryanne
      Z. Gallagher</font></div>
            </td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$187,000</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$101,000</font></div>
            </td>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      $12,443</font></div>
            </td>
            <td align="left" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      $4,675 (6)</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$305,118</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Executive
      Vice President and Chief Operating Officer(5)</font></div>
            </td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2006</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$194,192</font></div>&#160;</td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8211;&#8211;&#8211;</font></div>&#160;</td>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      $13,917</font></div>&#160;</td>
            <td align="left" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8211;&#8211;&#8211;</font></div>&#160;</td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$208,109</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Manish
      D. Shah</font></div>
            </td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$168,000</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$116,000</font></div>
            </td>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      $27,976</font></div>
            </td>
            <td align="left" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$50,875
      (8)</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$362,851</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">President
      and </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Chief
      Technology Officer(7)</font></div>
            </td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2006</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$168,000</font></div>&#160;</td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;
      $2,500</font></div>&#160;</td>
            <td align="left" valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      $10,583</font></div>&#160;</td>
            <td align="left" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$19,246
      (9)</font></div>&#160;</td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$200,329</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div align="center">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">__________________________________________</div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(1)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Reflects
      the dollar amount recognized for financial statement reporting purposes
      for the fiscal year, in accordance with Statement of Financial Accounting
      Standards No. 123(R).</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Mr.
      Roblin was also our President until November
  2008.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(3)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consists
      of $16,502 of automobile allowance and $7,365 of matching contributions to
      the Cover-All Technologies Inc. 401(k) Plan made by
  us.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(4)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consists
      of $12,183 of automobile allowance and $7,212 of matching contributions to
      the Cover-All Technologies Inc. 401(k) Plan made by
  us.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(5)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Ms.
      Gallagher was appointed as our Executive Vice President in May
      2008.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(6)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Represents
      matching contributions to the Cover-All Technologies Inc. 401(k) Plan made
      by us.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(7)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Mr.
      Shah was appointed as our President in November
  2008.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(8)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consists
      of $46,675 of tuition reimbursement and $4,200 of matching contributions
      to the Cover-All Technologies Inc. 401(k) Plan made by
  us.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(9)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consists
      of $15,046 of tuition reimbursement and $4,200 of matching contributions
      to the Cover-All Technologies Inc. 401(k) Plan made by
  us.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On August
21, 2006, Ms. Gallagher and Mr. Shah received options to purchase 75,000 and
100,000 shares, respectively, of our common stock at an exercise price of $0.41
per share.&#160;&#160;These options vest one-third on each of August 21, 2007,
2008 and 2009.&#160;&#160;These options shall expire five years from the date of
grant.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
January 1, 2007, Mr. Roblin received options to purchase 500,000 shares of our
common stock at an exercise price of $0.79 per share.&#160;&#160;These options
vest as to all 500,000 shares three years following the date of grant; provided,
that options as to 250,000 shares shall immediately vest and become exercisable
on the first date the Company enters into a Qualifying Agreement (as defined
below), and options as to 250,000 shares shall immediately vest and become
exercisable on the date the Company enters into a second Qualifying
Agreement.&#160;&#160;A &#8220;Qualifying Agreement&#8221; means any fully executed customer
agreement pursuant to which the Company is entitled to receive at least
$1,000,000 in license revenue or maintenance (for the first year of such
agreement) revenue.&#160;&#160;These options shall expire five years from the
date of grant.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">35</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
September 12, 2007, Ms. Gallagher and Mr. Shah received options to purchase
75,000 and 250,000 shares, respectively, of our common stock at an exercise
price of $1.40 per share.&#160;&#160;These&#160;&#160;options vest one-third on
each of September 13, 2009, 2010 and 2011.&#160;&#160;These options shall expire
five years from the date of grant.</font></div>
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    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Outstanding
Equity Awards at December 31, 2007</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table provides information concerning outstanding equity awards as of
December&#160;31, 2007, by each of our named executive officers:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="bottom" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="4" valign="bottom" width="50%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Option
      Awards</font></div>
              </div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Name</font></font></div>
            </td>
            <td valign="bottom" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Number
      of Securities</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Underlying
      Unexercised</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Options
      (# )</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Exercisable</font></font></div>
            </td>
            <td valign="bottom" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Number
      of Securities</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Underlying
      Unexercised</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Options
      (#)</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Unexercisable</font></font></div>
            </td>
            <td valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Option</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Exercise</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Price
      ($)</font></font></div>
            </td>
            <td valign="bottom" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Option</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Expiration
      Date</font></font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td valign="top" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">John
      W. Roblin</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">300,000</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8211;&#8211;&#8211;</font></div>
            </td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.53</font></div>
            </td>
            <td valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12/22/08</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">250,000</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">250,000
      (1)</font></div>
            </td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.79</font></div>
            </td>
            <td valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12/31/11</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">125,000</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8211;&#8211;&#8211;</font></div>
            </td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.13</font></div>
              </div>
            </td>
            <td valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;2/16/08</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td valign="top" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Maryanne
      Z. Gallagher</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;24,998</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;50,002
      (2)</font></div>
            </td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.41</font></div>
            </td>
            <td valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;8/21/11</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">100,000</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8211;&#8211;&#8211;</font></div>
            </td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.53</font></div>
            </td>
            <td valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12/22/08</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;75,000</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8211;&#8211;&#8211;</font></div>
            </td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.60</font></div>
            </td>
            <td valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;3/23/08</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8211;&#8211;&#8211;</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;75,000
      (3)</font></div>
            </td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.40</font></div>
            </td>
            <td valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;9/12/12</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Manish
      D. Shah</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;33,330</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;66,670
      (2)</font></div>
            </td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.41</font></div>
            </td>
            <td valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;8/21/11</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;65,000</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8211;&#8211;&#8211;</font></div>
            </td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.53</font></div>
            </td>
            <td valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12/22/08</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#8211;&#8211;&#8211;</font></div>
            </td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">250,000
      (3)</font></div>
            </td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.40</font></div>
            </td>
            <td valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;9/12/12</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">___________________</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 50px">
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            </td>
            <td width="931">
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
      options vest on January 1, 2010; provided, that these options shall vest
      immediately and become exercisable when the Company enters into a
      Qualifying Agreement.&#160;&#160;A &#8220;Qualifying Agreement&#8221; means any fully
      executed customer agreement pursuant to which the Company is entitled to
      receive at least $1,000,000 in license revenue or maintenance (for the
      first year of such agreement)
revenue.</font></div>
            </td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          <tr valign="top" style="LINE-HEIGHT: 1.25;">
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)</font></div>
            </td>
            <td width="932">
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
      options vest one-third on each of August 21, 2007, 2008 and
      2009.</font></div>
            </td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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          <tr valign="top" style="LINE-HEIGHT: 1.25;">
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3)</font></div>
            </td>
            <td width="932">
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
      options vest one-third on each of September 13, 2009, 2010 and
      2012.</font></div>
            </td>
          </tr>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
Agreements or Arrangement of Executive Officers</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">John W. Roblin, Chairman and
Chief Executive Officer</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">John W.
Roblin has served as our Chief Executive Officer since December 1999, as our
President from December 1999 to November 2008, and as a director since March
2000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 26, 2006, the Company entered into an employment agreement with Mr.
Roblin, effective as of January 1, 2007 (the &#8220;2007 Agreement&#8221;). The Compensation
Committee determined Mr. Roblin&#8217;s salary based upon the factors discussed above
relating to executive compensation in general and reflected the terms of that
determination in Mr. Roblin&#8217;s employment agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to the 2007 Agreement, in 2007, Mr. Roblin was paid a base salary of $300,000,
which is his annual salary rate that has been in effect since December
2003.&#160;&#160;In addition, Mr. Roblin was entitled to a bonus based on the
financial performance of the Company, which bonus shall be paid in the form of
cash or shares of our common stock under our Amended and Restated 2005 Stock
Incentive Plan.&#160;&#160;In no event were cash payments to be made to Mr.
Roblin pursuant to his performance bonus to exceed seventy percent (70%) of his
base salary, and any bonus which may have been payable to Mr. Roblin in excess
of seventy percent (70%) of his base salary shall have been payable in shares of
our common stock.<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>In 2007, the Company
paid Mr. Roblin a bonus of $162,000.&#160;&#160;Additionally, Mr. Roblin was
entitled to annual paid vacation, participation in benefit plans applicable to
our officers and executive employees and the use of a Company automobile for
business purposes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">36</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition, under the 2007 Agreement, Mr. Roblin received options to purchase
500,000 shares of our common stock.&#160;&#160;The options, which were granted
pursuant to the Amended and Restated 2005 Stock Incentive Plan at an exercise
price per share equal to $0.79, the fair market value of such shares on the date
of the grant, shall vest as to all 500,000 shares three years following the
effective date of the employment agreement; provided, that options as to 250,000
shares shall immediately vest and become exercisable on the first date the
Company enters into a Qualifying Agreement, and options as to 250,000 shares
shall immediately vest and become exercisable on the date the Company enters
into a second Qualifying Agreement.&#160;&#160;On October 23, 2007, the Company
entered into a Qualifying Agreement, and as a result 250,000 shares vested on
such date.&#160;&#160;As of December 31, 2007, options to purchase 250,000
shares of our common stock had not yet vested.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In 2007,
the Company made total matching contributions of $7,365 to Mr. Roblin&#8217;s 401(k)
Plan.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 26, 2007, the Company entered into a new employment agreement with Mr.
Roblin, effective as of January 1, 2008 (the &#8220;2008 Agreement&#8221;).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to the 2008 Agreement, Mr. Roblin will receive an annual base salary of $325,000
plus benefits and the use of a Company car.&#160;&#160;In addition, Mr. Roblin
is entitled to a bonus based on the financial performance of the
Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under the
2008 Agreement, Mr. Roblin received options to purchase 72,463 shares of our
common stock.&#160;&#160;The options, which were granted pursuant to the Amended
and Restated 2005 Stock Incentive Plan at an exercise price per share equal to
$1.38, the fair market value of such shares on the date of the grant, will vest
as to all 72,463 shares on January 1, 2009, subject to the terms and conditions
set forth in the Amended and Restated 2005 Stock Incentive Plan and a stock
option agreement entered into by and between the Company and Mr.
Roblin.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition, under the 2008 Agreement, Mr. Roblin received 150,000 shares of the
Company&#8217;s common stock (the &#8220;Restricted Shares&#8221;), which vested as to 75,000
shares on January 1, 2008 and will vest as to 75,000 shares on January 1, 2009,
in accordance with and subject to the terms and conditions set forth in the
Company&#8217;s Amended and Restated 2005 Stock Incentive Plan and a restricted stock
grant agreement entered into by and between the Company and Mr.
Roblin.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
Roblin&#8217;s 2008 Agreement is for a term of two years, provided, that each of Mr.
Roblin and the Company may terminate the agreement at any time, with or without
reason or cause, upon written notice to the other party.&#160;&#160;If the
employment of Mr. Roblin is terminated for any reason, including upon the
expiration of the employment agreement, Mr. Roblin will be entitled to receive
(i) any accrued and unpaid base salary and accrued and unused vacation days
through the date of termination, (ii) the pro rata portion of his performance
bonus based on the number of days he was employed during the fiscal year for
which such bonus is computed and (iii) any unreimbursed business
expenses.&#160;&#160;In addition, Mr. Roblin will be entitled to receive, as
severance, for a period of six months following such termination, his base
salary, benefits and the continued use of the Company car.&#160;&#160;Upon such
termination, the Company and Mr. Roblin have agreed to mutually release each
other for all claims arising in connection with Mr. Roblin&#8217;s employment with the
Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The 2008
Agreement also contains a confidentiality provision, a non-solicitation covenant
and a mutual non-disparagement clause.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">37</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Manish D. Shah, President
and Chief Technology Officer</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
September 1, 2006, we entered into a Tuition Reimbursement Agreement with Manish
D. Shah, then our Chief Technology Officer.&#160;&#160;Under this agreement,
which expires 30 months after the date of the agreement, we will reimburse Mr.
Shah for academic costs, up to a maximum of $75,000, in connection with Mr.
Shah&#8217;s enrollment in the Executive MBA program at Columbia Business
School.&#160;&#160;If Mr. Shah voluntarily resigns for any reason, he would be
required to reimburse us for a portion of the academic costs.&#160;&#160;If Mr.
Shah&#8217;s resignation follows a change of control (as defined in the agreement),
Mr. Shah would only be required to reimburse us for 30 percent of the funds he
would have otherwise been required to reimburse us for had no change of control
occurred.&#160;&#160;If he is terminated for cause (as defined in the
agreement), Mr. Shah would be required to return all of the academic costs
associated with the program.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">None of
our other executive officers have employment agreements, severance payment
arrangements or payment arrangements that would be triggered by a change of
control.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Potential
Payments upon Termination or Change of Control</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to Mr. Roblin&#8217;s 2008 Agreement, if the employment of Mr. Roblin is terminated
for any reason, including upon the expiration of the employment agreement, Mr.
Roblin will be entitled to receive (i) any accrued and unpaid base salary and
accrued and unused vacation days through the date of termination, (ii) the pro
rata portion of his performance bonus based on the number of days he was
employed during the fiscal year for which such bonus is computed and (iii) any
unreimbursed business expenses.&#160;&#160;In addition, Mr. Roblin will be
entitled to receive, as severance, for a period of six months following such
termination, his base salary, benefits and continued use of the Company
car.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table shows the potential payments to Mr. Roblin if his employment
were terminated following a change of control as of December 31, 2007, assuming
his 2008 Agreement were in effect:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="bottom" width="12%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Name</font></div>
              </div>
            </td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="12%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cash
      Severance (1)</font></div>
              </div>
            </td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="19%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Health/Welfare
      Benefits (2)</font></div>
              </div>
            </td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Company
      Car (3)</font></div>
              </div>
            </td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="12%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Acceleration
      of</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Options
      (4)</font></div>
              </div>
            </td>
            <td valign="top" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
              </div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">John
      W. Roblin</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$162,500</font></div>
            </td>
            <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$10,893</font></div>
            </td>
            <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$8,251</font></div>
            </td>
            <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$147,500</font></div>
            </td>
            <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$329,144</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">____________________</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)</font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash
      severance equal to the sum of Mr. Roblin&#8217;s base salary for the six months
      following the termination date.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)</font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
      medical, dental, life and contributions under our 401(k)
      plan.&#160;&#160;This value was calculated based on the approximate cost
      of these benefits for the six-month
period.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3)</font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      value was calculated based on the current cost of the Company car for the
      six-month period.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(4)</font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Represents
      the difference between the total market value (based on the closing price
      of $1.38 on December 31, 2007) of shares underlying options that become
      vested and exercisable on termination and the total exercise price of
      these options.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">38</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table shows the potential payments to the other named executive
officers if their employment were terminated following a change of control as of
December 31, 2007:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="top" width="26%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Name</font></div>
              </div>
            </td>
            <td valign="top" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="26%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Acceleration
      of Options (1)</font></div>
              </div>
            </td>
            <td valign="top" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="26%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
              </div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Maryanne
      Z. Gallagher</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$48,502</font></div>
            </td>
            <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$48,502</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Manish
      D. Shah</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$64,670</font></div>
            </td>
            <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$64,670</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">___________________</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)</font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Represents
      the difference between the total market value (based on the closing price
      of $1.38 on December 31, 2007) of shares underlying options that become
      vested and exercisable on termination and the total exercise price of
      these options.&#160;&#160;These options accelerate pursuant to the Amended
      and Restated 2005 Stock Incentive
Plan.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to Mr. Shah&#8217;s Tuition Reimbursement Agreement, if Mr. Shah&#8217;s resignation follows
a change of control (as defined in Mr. Shah&#8217;s employment agreement), Mr. Shah
would be required to reimburse us for 30 percent of the tuition funds paid by
the Company that he would have otherwise been required to reimburse us for had
no change of control occurred.&#160;&#160;Assuming that Mr. Shah had voluntarily
resigned following a change of control on December 31, 2007, Mr. Shah would be
required to reimburse us for $12,961 instead of $43,205 had he voluntarily
resigned and no change of control had occurred.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">COMPENSATION
OF DIRECTORS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following director compensation table shows the compensation we paid in 2007 to
our non-employee directors:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Director Compensation
Table</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table cellpadding="0" cellspacing="0" width="70%">
          <tr>
            <td valign="middle" width="17%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Name</font></font></div>
            </td>
            <td valign="middle" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="middle" width="22%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Fees Earned or Paid in Cash</font></font></div>
            </td>
            <td valign="middle" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="middle" width="12%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Total</font></font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">G.
      Russell Cleveland</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$11,000</font></div>
            </td>
            <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$11,000</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Earl
      Gallegos</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$13,000</font></div>
            </td>
            <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$13,000</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Mark
      D. Johnston</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$11,000</font></div>
            </td>
            <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$11,000</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For 2007,
each of our non-employee directors received:&#160;&#160;(i) an annual stipend of
$6,000; (ii) $1,500 per each meeting attended, with an annual ceiling of $3,000;
and (iii) $500 per each quarterly conference call attended, with an annual
ceiling of $2,000.&#160;&#160;Non-employee directors serving on our Audit
Committee received an additional $500 per quarter.&#160;&#160;We make all such
payments to our non-employee directors quarterly and in arrears.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">39</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div>&#160;</div>
    <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table contains information as of December 15, 2008 as to the number of
shares of our common stock beneficially owned by (i) each person we know to own
beneficially more than 5% of our common stock, (ii) each person who is a
director or who is a nominee to be a director, (iii) the executive officers for
whom information is included in the Summary Compensation Table and (iv) all
persons as a group who are directors and executive officers and as to the
percentage of outstanding shares held by these persons on that
date.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="top" width="35%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Name
      and Address</font></div>
              </div>
            </td>
            <td valign="top" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="top" width="25%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount
      Beneficially Owned (1)</font></div>
              </div>
            </td>
            <td valign="top" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="16%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Percent
      of Class (2)</font></div>
              </div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="35%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Global
      Special Opportunities Trust PLC</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">c/o
      RENN Capital Group, Inc.</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8080
      N. Central Expressway</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Suite
      210, LB-59</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dallas,
      Texas 75206</font></div>
            </td>
            <td align="left" valign="top" width="1%" style="PADDING-LEFT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,526,871</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;(3)</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6.3%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="35%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Renaissance
      US Growth Investment Trust PLC</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">c/o
      RENN Capital Group, Inc.</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8080
      N. Central Expressway</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Suite
      210, LB-59</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dallas,
      Texas 75206</font></div>
            </td>
            <td align="left" valign="top" width="1%" style="PADDING-LEFT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,107,529</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;(4)</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">25.3%</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="35%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Atlantic
      Employers Insurance Company</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1601
      Chestnut Street, TL44D</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Philadelphia,
      PA 19101</font></div>
            </td>
            <td align="left" valign="top" width="1%" style="PADDING-LEFT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,238,273</font></div>
            </td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5.1%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">John
      W. Roblin</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,589,633</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;(5)</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6.3%</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">G.
      Russell Cleveland</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">87,723</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;(6)</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">*</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Earl
      Gallegos</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">105,723</font></div>
            </td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">*</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Mark
      D. Johnston</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,416,687</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;(7)</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.0%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Maryanne
      Z. Gallagher</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">286,060</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;(8)</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.2%</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Manish
      D. Shah</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">166,666</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;(9)</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.0%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">All
      current directors and executive officers as a </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">group
      (7 persons)</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,695,825</font></div>
            </td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;(10)</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">19.3%</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">______________________________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">* Less
than one percent.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Except
      as otherwise noted, all persons have sole voting and investment power with
      respect to their shares.&#160;&#160;All amounts shown in this column
      include shares obtainable upon exercise of options or warrants within
      sixty (60) days of the date of this
table.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Based
      upon 24,134,683 total outstanding shares of common stock on December 15,
      2008, plus shares of common stock that may be acquired by the person
      indicated pursuant to any options or warrants exercisable within sixty
      (60) days.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Represents
      1,476,871 shares of common stock and 50,000 shares of common stock
      issuable upon the exercise of outstanding warrants.&#160;&#160;Mr.
      Cleveland is President and Chief Executive Officer of RENN Capital Group,
      Inc., the investment manager of Global Special Opportunities Trust PLC
      (formerly known as US Special Opportunities Trust PLC and BFS US Speical
      Opportunities Trust PLC).&#160;&#160;Mr. Cleveland disclaims beneficial
      ownership as to the shares beneficially owned by Global Special
      Opportunities Trust.&#160;&#160;See &#8220;Certain Relationships and Related
      Transactions.&#8221;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">40</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(4)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Represents
      6,057,529 shares of common stock and 50,000 shares of common stock
      issuable upon the exercise of outstanding warrants.&#160;&#160;Mr.
      Cleveland is President and Chief Executive Officer of RENN Capital Group,
      Inc., the investment manager of Renaissance US Growth Investment Trust PLC
      (formerly known as Renaissance US Growth &amp; Income Trust
      PLC).&#160;&#160;Mr. Cleveland disclaims beneficial ownership as to the
      shares beneficially owned by Renaissance US Growth Investment
      Trust.&#160;&#160;See &#8220;Certain Relationships and Related
      Transactions.&#8221;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(5)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Represents
      717,170 shares of common stock and 872,463 shares of common stock that may
      be acquired pursuant to the exercise of outstanding stock
      options.&#160;&#160;See &#8220;Certain Relationships and Related
      Transactions.&#8221;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(6)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Represents
      62,723 shares of common stock and 25,000 shares of common stock that may
      be acquired pursuant to the exercise of outstanding stock
      options.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(7)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Represents
      2,391,687 shares of common stock and 25,000 shares of common stock that
      may be acquired pursuant to the exercise of outstanding stock
      options.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(8)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Represents
      136,060 shares of common stock and 150,000 shares of common stock that may
      be acquired pursuant to the exercise of outstanding stock
      options.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(9)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Represents
      35,000 shares of common stock and 131,666 shares of common stock that may
      be acquired pursuant to the exercise of outstanding stock
      options.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(10)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
      1,237,462 shares of common stock that may be acquired pursuant to the
      exercise of outstanding stock options and
  warrants.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">41</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
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        </div>
      </div>
    </div>
    <div>&#160;</div>
    <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In 2001,
we issued $1,800,000 aggregate principal amount of 8% convertible debentures due
2008 (the &#8220;2008 Debentures&#8221;), and in 2002, we issued $700,000 aggregate
principal amount of 8% convertible debentures due 2009 (the &#8220;2009
Debentures&#8221;).&#160;&#160;Of the total principal amount of the 2008 Debentures,
two funds managed by RENN Capital Group, Inc. (each of whom or their successor
is a selling stockholder hereunder) purchased an aggregate of $1,400,000 in
principal amount and John W. Roblin, our Chairman of the Board and Chief
Executive Officer (and who at the time was also our President), purchased
$100,000 in principal amount.&#160;&#160;All of the 2009 Debentures were
purchased by the RENN funds.&#160;&#160;Mr. Russell Cleveland is the President,
Chief Executive Officer, sole director and majority shareholder of RENN Capital
Group.&#160;&#160;Mr. Cleveland was named one of our directors in 2001 after the
consummation of the sale of the 2008 Debentures.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In 2005,
the holders of the 2008 Debentures elected to convert all of their monthly
principal installments due in 2005, totaling $220,121, under such debentures
into shares of our common stock at the conversion price of $0.30 per share in
lieu of receiving such installment payments in cash.&#160;&#160;In connection
with this conversion, we issued to the holders of the 2008 Debentures an
aggregate of 733,739 shares of our common stock. Of such shares, an aggregate of
591,118 shares were issued to the RENN funds upon the conversion of $177,336 of
principal of such debentures, and an aggregate of 35,655 shares were issued to
Mr. Roblin upon the conversion of $10,697 of principal of such debentures. In
2005, we made an aggregate of $184,000 of interest payments on the 2008
Debentures and 2009 Debentures.&#160;&#160;Of such interest payments, the RENN
funds received an aggregate of $155,807 in interest payments on the debentures,
and Mr. Roblin received an aggregate of $7,169 in interest payments on the
debentures.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In 2006,
the holders of the 2008 Debentures and 2009 Debentures elected to convert a
portion of their monthly principal installments due in 2006, totaling $127,254,
under such debentures into shares of our common stock at the conversion price of
$0.30 per share in lieu of receiving such installment payments in
cash.&#160;&#160;In connection with this conversion, we issued to the holders of
such debentures an aggregate of 424,181 shares of our common
stock.&#160;&#160;Of the shares of common stock issued in connection with these
conversions, an aggregate of 359,066 shares were issued to RENN funds upon
conversion of $107,720 of principal amount of such debentures, and 16,279 shares
were issued to Mr. Roblin upon conversion of $4,884 of principal amount of such
debentures.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
January 2007, the holders of the 2008 Debentures and 2009 Debentures elected to
convert the remaining portion of their monthly principal installments due in
2006, totaling $119,807, under such debentures into shares of our common stock
at the conversion price of $0.30 per share in lieu of receiving such installment
payments in cash.&#160;&#160;In connection with this conversion, we issued to
the holders an aggregate of 399,358 shares of our common stock.&#160;&#160;Of
the shares of common stock issued in connection with these conversions, an
aggregate of 697,120 shares were issued to the RENN funds upon conversion of
$209,136 of principal of such debentures, and 31,605 shares were issued to Mr.
Roblin upon conversion of $9,482 of principal of such debentures.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In March
2007, the RENN funds elected to convert all of their remaining unpaid principal
amount due on their 2008 Debentures and 2009 Debentures, totaling $1,631,601,
into shares of our common stock at the conversion price of $0.30 per share in
lieu of receiving such payments in cash.&#160;&#160;In June 2007, the remaining
holders of the 2008 Debentures elected to convert their monthly principal
installments due in 2007 totaling $33,617 into shares of our common stock at the
conversion rate of $0.30 per share in lieu of receiving such payments in
cash.&#160;&#160;In connection with these conversions, we issued to the holders
an aggregate of 5,550,725 shares of our common stock.&#160;&#160;Of the shares
of common stock issued in connection with these conversions, an aggregate of
5,438,670 shares were issued to the RENN funds upon conversion of $1,631,601 of
principal of such debentures, and 28,014 shares were issued to Mr. Roblin upon
conversion of $8,404 of principal of such debentures.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In June
2008, Mr. Roblin elected to convert all of the then-remaining unpaid principal
amount due on his 2008 Debentures, totaling $65,566, into 218,553 shares of our
common stock at the conversion price of $0.30 per share.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">42</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In 2002,
we issued the holders of our 2008 Debentures and 2009 Debentures an aggregate of
128,572 warrants to purchase such number of shares of our common stock at an
exercise price of $0.22 per share (the &#8220;2002 Warrants&#8221;), as consideration for
the receipt of waivers from them with respect to our non-compliance with certain
financial covenants contained in the convertible loan agreements related to the
2008 Debentures and 2009 Debentures.&#160;&#160;Of the 2002 Warrants, an
aggregate of 100,000 warrants were issued to the RENN funds and 7,143 warrants
were issued to Mr. Roblin.&#160;&#160;In March 2007, the holders of our 2002
Warrants exercised all of the then outstanding 2002 Warrants at an exercise
price of $0.22 per share.&#160;&#160;In connection with these exercises, we
issued an aggregate of 128,572 shares of our common stock to the holders of our
2002 Warrants.&#160;&#160;Of the shares of common stock issued in connection
with these exercises, an aggregate of 100,000 shares were issued to the RENN
funds, and 7,143 shares were issued to Mr. Roblin.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In 2006,
we issued the holders of our 2008 Debentures and 2009 Debentures an aggregate of
128,572 warrants to purchase such number of shares of our common stock at an
exercise price of $0.35 per share (the &#8220;2006 Warrants&#8221;), as consideration for
the receipt of the waivers from them with respect to our non-compliance with
certain financial covenants contained in the convertible loan agreements related
to the 2008 Debentures and 2009 Debentures.&#160;&#160;These warrants expire in
2011.&#160;&#160;Of the 2006 Warrants, an aggregate of 100,000 warrants were
issued to the RENN funds and 7,143 warrants were issued to Mr.
Roblin.&#160;&#160;In December 2007, Mr. Roblin exercised all of his outstanding
2006 Warrants at an exercise price of $0.35 per share.&#160;&#160;In connection
with such exercise, we issued 7,143 shares of our common stock to Mr.
Roblin.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">43</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
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        </div>
      </div>
    </div>
    <div>&#160;</div>
    <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SELLING
STOCKHOLDERS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">An
aggregate of 9,876,584 shares of common stock, which consists of 9,776,584
shares of common stock and 100,000 shares of common stock issuable upon the
exercise of our outstanding warrants, may be offered for sale and sold from time
to time pursuant to this prospectus by the selling stockholders. The term
&#8220;selling stockholder&#8221; includes the stockholders listed below and their
transferees, pledgees, donees, assignees or other successors. We have agreed to
register all of the shares offered hereby for resale by the selling stockholders
under the Securities Act and to pay all of the expenses in connection with such
registration and the sale of the shares, other than selling commissions and the
fees and expenses of counsel and other advisors to the selling stockholders.
Information concerning the selling stockholders may change from time to time,
and any changed information will be set forth if and when required in prospectus
supplements or other appropriate forms permitted to be used by the
SEC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table sets forth, for each the selling stockholers to the extent known
by us, the number of shares of our common stock beneficially owned, the number
of shares of our common stock offered hereby and the number of shares and
percentage of outstanding common stock to be owned after completion of this
Offering, assuming all shares offered hereby are sold.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unless
otherwise indicated, the selling stockholders have sole voting and investment
power with respect to their shares of common stock. All of the information
contained in the table below is based upon information provided to us by the
selling stockholders, and we have not independently verified this information.
The selling stockholders may have sold, transferred or otherwise disposed of, or
may sell, transfer or otherwise dispose of, at any time or from time to time
since the date on which it provided the information regarding the shares
beneficially owned, all or a portion of the shares<a name="page10"> beneficially
owned in transactions exempt from the registration requirements of the
Securities Act.</a></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
number of shares outstanding and the percentages of beneficial ownership are
based on 24,134,683 shares of our common stock issued and outstanding on a fully
diluted basis as of December 15, 2008.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
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purposes of the following table, the number of shares of our common stock
beneficially owned has been determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, and such information is not necessarily
indicative of beneficial ownership for any other purpose.&#160;&#160;Under Rule
13d-3, beneficial ownership includes any shares as to which a selling
stockholder has sole or shared voting power or investment power and also any
shares which that selling stockholder has the right to acquire within 60 days of
the date of this prospectus through the exercise of any stock option, restricted
stock unit, warrant or other rights.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">44</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
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      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Name
      of Selling Stockholder</font></div>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Number
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Beneficially</font></div>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Number
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Shares
      Offered</font></div>
              </div>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="16%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Number
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Beneficially
      Owned</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">After
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%
      of Common</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Stock</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Beneficially</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Owned
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">the
      Offering</font></div>
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            </td>
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          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="26%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Global
      Special Opportunities Trust PLC</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">c/o
      RENN Capital Group, Inc.</font></div>
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      N. Central Expressway</font></div>
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            <td align="left" valign="top" width="1%" style="PADDING-LEFT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,526,871(1)</font></div>
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            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;
      1,309,671(2)</font></div>
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            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;
      217,200</font></div>
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            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">*</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="26%" style="PADDING-LEFT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="1%" style="PADDING-LEFT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="top" width="26%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Renaissance
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            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,107,529(3)</font></div>
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            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;
      5,890,329(2)</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;
      217,200</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">*</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="26%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Mark
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            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,416,687(4)</font></div>
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            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,328,964</font></div>
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            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="16%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;
      87,723</font></div>
            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">*</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="26%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="26%">
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            </td>
            <td align="left" valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="15%">
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            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;
      347,620</font></div>
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            <td align="left" valign="top" width="16%">
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            <td align="left" valign="top" width="13%">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">* Less
than one percent.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="left">
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          <tr>
            <td align="left" valign="top" width="5%">
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            </td>
            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Includes
      50,000 shares of common stock issuable upon the exercise of outstanding
      warrants.&#160;&#160;Mr. Cleveland is President and Chief Executive
      Officer of RENN Capital Group, Inc., the investment manager of Global
      Special Opportunities Trust PLC (formerly known as US Special
      Opportunities Trust PLC and BFS US Special Opportunities Trust
      PLC).&#160;&#160;Mr. Cleveland has been a director of the Company since
      2001.</font></div>
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          <tr>
            <td align="left" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2)</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Includes
      50,000 shares of common stock issuable upon the exercise of outstanding
      warrants.</font></div>
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          <tr>
            <td align="left" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(3)</font></div>
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            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Includes
      50,000 shares of common stock issuable upon the exercise of outstanding
      warrants.&#160;&#160;Mr. Cleveland is President and Chief Executive
      Officer of RENN Capital Group, Inc., the investment manager of Renaissance
      US Growth Investment Trust PLC (formerly known as Renaissance US Growth
      &amp; Income Trust PLC).&#160;&#160;Mr. Cleveland has been a director of
      the Company since 2001.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr>
            <td align="left" valign="top" width="5%">
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            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Includes
      25,000 shares of common stock that may be acquired pursuant to the
      exercise of outstanding stock options.&#160;&#160;Mr. Johnston has been a
      director of the Company since 1996.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(5)</font></div>
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      872,463 shares of common stock that may be acquired pursuant to the
      exercise of outstanding stock options.&#160;&#160;Mr. Roblin has served as
      our Chief Executive Officer and a director since 1999.&#160;&#160;He also
      has served as our Chairman of the Board since 2001 and our President from
      1999 until November 2008.</font></div>
            </td>
          </tr>
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      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">45</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DESCRIPTION
OF SECURITIES</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
authorized capital stock consists of 75,000,000 shares of common stock, par
value $0.01 per share.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Common
Stock</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 15, 2008, we had 24,134,683 shares of common stock
outstanding.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
holders of shares of common stock are entitled to one vote per share on all
matters to be voted on by stockholders.&#160;&#160;The holders of shares of
common stock may not cumulate their votes in elections for directors, which
means that holders of more than half of the outstanding shares of common stock
can elect all our directors standing for election.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
holders of shares of common stock are entitled to receive such dividends as may
be declared from time to time by the Board of Directors in its discretion from
any assets legally available therefore.&#160;&#160;If we dissolve, whether
voluntary or involuntary, the holders of common stock are entitled to share
ratably in our assets legally available for distribution to our
stockholders.&#160;&#160;The holders of common stock have no preemptive,
subscription, conversion or redemption rights and are not subject to further
calls or assessments or rights of redemption by the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Warrants</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 15, 2008, an aggregate of 121,429 warrants, expiring in 2011, to
purchase 121,429 shares of our common stock were outstanding and exercisable at
a current exercise price of $0.35 per share.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
current exercise prices of these warrants are subject to adjustment if and
whenever we issue or sell additional shares of our common stock for less than
95% of the market price on the date of issuance or sale, in which case the
exercise price will be reduced to a new exercise price in accordance with the
terms of the warrant.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to the terms of these warrants, the issuance or sale of additional shares of
common stock resulting from (1) the exercise of stock options to be granted in
the future to employees or directors pursuant to our existing stock option plans
or (2) the exercise of any convertible security, in either case outstanding on
the date of the warrant, will not trigger any adjustment to the exercise price
of the warrants.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Classifications
of The Board of Directors</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
Certificate of Incorporation provides that we have three classes of directors,
with the term of each class to run for three years and expire at successive
annual meetings of the stockholders.&#160;&#160;Thus, it would take a minimum of
two annual meetings of the stockholders to change the majority of the Board of
Directors.&#160;&#160;Only the Board of Directors may fill vacancies on the
Board of Directors that may occur between annual meetings.&#160;&#160;In
addition, any director elected to fill a vacancy on the Board will serve for the
balance of the term of the replaced director.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certain
Provisions in Our Certificate of Incorporation</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
Certificate of Incorporation contains certain provisions that would have an
effect of delaying, deferring or preventing a change of control of the Company
in connection with certain business combinations.&#160;&#160;Article Seventh
provides that the affirmative vote of at least 80% of the outstanding shares of
voting stock is required to approve (1)&#160;the sale (or similar transfer) of
all or substantially all of the assets of the Company to a &#8220;related
corporation,&#8221; (2)&#160;the consolidation of the Company with, or its merger
into, a &#8220;related corporation,&#8221; (3)&#160;the merger into the Company of a
&#8220;related corporation,&#8221; (4)&#160;any agreement relating to the transactions
referred to in (1) through (3), and (5)&#160;any amendment to said</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">46</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Article
Seventh.&#160;&#160;A &#8220;related corporation&#8221; is any corporation which, together
with its affiliated and associated persons (as such terms are defined), owns of
record or beneficially more than 5% of the Company&#8217;s outstanding voting stock
entitled to vote on the subject transaction.&#160;&#160;These provisions,
however, do not apply if a majority of the Company&#8217;s disinterested directors
approve the subject transaction, in which event approval of such transaction
shall require only such affirmative vote as is otherwise required by
law.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition, Article Fifth of the Certificate of Incorporation requires the
approval of 80% of the voting stock to remove a director without cause, to
alter, repeal or modify those provisions of the Company&#8217;s by-laws relating to
the number, election and terms of directors, newly created directorships and
vacancies and removal of directors, and to amend said Article Fifth (relating
generally to the Company&#8217;s Board of Directors).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Transfer
Agent</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">American
Stock Transfer &amp; Trust Company is the Transfer Agent and Registrar for the
Company&#8217;s common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PLAN
OF DISTRIBUTION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
shares covered by this prospectus may be offered and sold from time to time by
the selling stockholders.&#160;&#160;The term &#8220;selling stockholder&#8221; includes
transferees, pledgees, donees, assignees or other successors in interest selling
shares received after the date of this prospectus from each selling
stockholder.&#160;&#160;The number of shares beneficially owned by a selling
stockholder will decrease as and when it effects any such
transfers.&#160;&#160;The plan of distribution for the selling stockholders&#8217;
shares sold hereunder will otherwise remain unchanged, except that the
transferees, pledgees, donees assignees or other successors will be selling
stockholders hereunder.&#160;&#160;To the extent required, we may amend and
supplement this prospectus from time to time to describe a specific plan of
distribution.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
selling stockholders may, from time to time, sell any and all of their shares of
common stock on the Over-the-Counter Bulletin Board (or any other market,
exchange or trading facility on which the shares are then listed) or in private
transactions.&#160;&#160;The selling stockholders may make these sales at prices
and under terms then prevailing or at prices related to the then current market
price.&#160;&#160;The selling stockholders may also make sales in negotiated
transactions.&#160;&#160;The selling stockholders may offer their shares from
time to time pursuant to one or more of the following methods:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits purchasers;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">one
      or more block trades in which the broker-dealer will attempt to sell the
      shares as agent but may position and resell a portion of the block as
      principal to facilitate the
transaction;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">an
      exchange distribution in accordance with the rules of the applicable
      exchange;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">public
      or privately negotiated
transactions;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">through
      underwriters, brokers or dealers (who may act as agents or principals) or
      directly to one or more purchasers;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
      combination of any such methods of sale;
and</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any
      other method permitted pursuant to applicable
  law.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">47</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
selling stockholders may enter into derivative transactions with third parties,
or sell securities not covered by this prospectus to third parties in privately
negotiated transactions.&#160;&#160;If the applicable prospectus supplement
indicates, in connection with those derivatives, the third parties may sell
securities covered by this prospectus and the applicable prospectus supplement,
including in short sale transactions.&#160;&#160;If so, the third party may use
securities pledged by the selling stockholders or borrowed from the selling
stockholders or others to settle those sales or to close out any related open
borrowings of stock, and may use securities received from the selling
stockholders in settlement of those derivatives to close out any related open
borrowings of stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
connection with distributions of the shares or otherwise, the selling
stockholders may:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">enter
      into hedging transactions with broker-dealers or other financial
      institutions, which may in turn engage in short sales of the shares in the
      course of hedging the positions they
assume;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">sell
      the shares short and redeliver the shares to close out such short
      positions;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">enter
      into option or other transactions with broker-dealers or other financial
      institutions which require the delivery to them of shares offered by this
      prospectus, which they may in turn resell;
and</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">pledge
      shares to a broker-dealer or other financial institution, which, upon a
      default, they may in turn resell.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition to the foregoing methods, the selling stockholders may offer their
shares from time to time in transactions involving principals or brokers not
otherwise contemplated above, in a combination of such methods or described
above or any other lawful methods.&#160;&#160;The selling stockholders may also
transfer, donate or assign their shares to lenders, family members and others
and each of such persons will be deemed to be a selling stockholder for purposes
of this prospectus.&#160;&#160;The selling stockholders may from time to time
pledge or grant a security interest in some or all of the shares of common
stock, and if the selling stockholders default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the
shares of common stock from time to time under this prospectus; provided,
however, in the event of a pledge or then default on a secured obligation by the
selling stockholder, in order for the shares to be sold under this registration
statement, unless permitted by law, we must distribute a prospectus supplement
and/or amendment to this registration statement amending the list of selling
stockholders to include the pledge, secured party or other successors in
interest of the selling stockholder under this prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
selling stockholders may also sell their shares pursuant to Rule 144 under the
Securities Act, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sales
through brokers may be made by any method of trading authorized by any stock
exchange or market on which the shares may be listed or quoted, including block
trading in negotiated transactions.&#160;&#160;Without limiting the foregoing,
such brokers may act as dealers by purchasing any or all of the shares covered
by this prospectus, either as agents for others or as principals for their own
accounts, and reselling such shares pursuant to this prospectus.&#160;&#160;The
selling stockholders may effect such transactions directly, or indirectly
through underwriters, broker-dealers or agents acting on their
behalf.&#160;&#160;In effecting sales, broker-dealers or agents engaged by the
selling stockholders may arrange for other broker-dealers to
participate.&#160;&#160;Broker-dealers or agents may receive commissions,
discounts or concessions from the selling stockholders, in amounts to be
negotiated immediately prior to the sale (which compensation as to a particular
broker-dealer might be in excess of customary commissions for routine market
transactions).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">48</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
offering the shares covered by this prospectus, the selling stockholders, and
any broker-dealers and any other participating broker-dealers who execute sales
for the selling stockholders, may be deemed to be &#8220;underwriters&#8221; within the
meaning of the Securities Act in connection with these sales.&#160;&#160;Any
profits realized by the selling stockholders and the compensation of such
broker-dealers may be deemed to be underwriting discounts and
commissions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
agreed to pay all fees and expenses incident to the registration of the
shares.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
agreed to indemnify the selling stockholders against certain losses, claims,
damages and liabilities, including liabilities under the Securities
Act.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">LEGAL
MATTERS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
validity of the common stock offered in this prospectus will be passed upon for
us by DLA Piper LLP (US).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EXPERTS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
consolidated financial statements of Cover-All Technologies and its subsidiary
as of December 31, 2007, 2006 and for each of the three fiscal years in the
three-year period ended December 31, 2007, incorporated by reference herein,
have been audited by Moore Stephens, P.C., an independent registered public
accounting firm, as stated in their report dated March 28, 2008, which
is&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">incorporated
by reference</font>&#160;herein, and such consolidated financial statements have
been so incorporated by reference in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHERE
YOU CAN FIND MORE INFORMATION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are a
public company and file annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange
Commission.&#160;&#160;You may read and copy any document we file at the SEC&#8217;s
Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C.
20549.&#160;&#160;You can request copies of these documents by writing to the
SEC and paying a fee for the copying cost.&#160;&#160;Please call the SEC at
1-800-SEC-0330 for more information about the operation of the public reference
room.&#160;&#160;Our SEC filings are also available to the public at the SEC&#8217;s
web site at &#8220;http://www.sec.gov.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
prospectus is only part of a Registration Statement on Form S-1 that we have
filed with the SEC under the Securities Act and therefore omits certain
information contained in the Registration Statement.&#160;&#160;We have also
filed exhibits and schedules with the Registration Statement that are excluded
from this prospectus, and you should refer to the applicable exhibit or schedule
for a complete description of any statement referring to any contract or other
document.&#160;&#160;You may:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">inspect
      a copy of the Registration Statement, including the exhibits and
      schedules, without charge at the public reference
  room,</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">obtain
      a copy from the SEC upon payment of the fees prescribed by the SEC,
      or</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">obtain
      a copy from the SEC website.</font></div>
            </td>
          </tr>
      </table>
    </div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">49</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
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    <div>&#160;</div>
    <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Securities and Exchange Commission, or the SEC, allows us to "incorporate by
reference" the information that we file with it, meaning we can disclose
important information to you by referring you to those documents already on file
with the SEC. The information incorporated by reference is considered to be part
of this prospectus except for any information that is superseded by other
information that is included in this prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
filing incorporates by reference the following documents, which we have
previously filed with the SEC:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, serif">&#183;</font></div>
            </td>
            <td valign="top" width="69%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Our
      Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as
      filed on March 28, 2008;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, serif">&#183;</font></div>
            </td>
            <td valign="top" width="69%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Our
      Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2008,
      as filed on May 9, 2008;</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, serif">&#183;</font></div>
            </td>
            <td valign="top" width="69%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Our
      Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2008,
      as filed on August 11, 2008;</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, serif">&#183;</font></div>
            </td>
            <td valign="top" width="69%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Our
      Quarterly Report on Form 10-Q for the Registrant&#8217;s fiscal quarter ended
      September 30, 2008, as filed on November 10, 2008;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, serif">&#183;</font></div>
            </td>
            <td valign="top" width="69%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Our
      definitive Proxy Statement used in connection with the Annual Meeting of
      Stockholders held on June 6, 2008, as filed on April 29, 2008;
      and</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, serif">&#183;</font></div>
            </td>
            <td valign="top" width="69%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Our
      Current Reports on Form 8-K, as filed on June 3, 2008, June 18, 2008,
      November 7, 2008 and November 24,
2008.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
should rely only on the information contained in this prospectus or that
information to which this prospectus has referred you by reference. We have not
authorized anyone to provide you with any additional information.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
documents may also be accessed through our website at www.cover-all.com or as
described under "Where You Can Find More Information." The information and other
content contained on or linked from our website are not part of this prospectus.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We will
provide, without charge, to each person, including any beneficial owner, to whom
this prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the reports or documents incorporated by reference in this
prospectus but not delivered with this prospectus. Any request may be made by
writing or calling us at the following address or telephone
number:&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ms. Ann
F. Massey</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">55 Lane
Road, Suite 300</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fairfield,
New Jersey&#160;07004</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(973)
461-5190</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">50</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div>&#160;</div>
    <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FINANCIAL
STATEMENTS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">With
respect to our unaudited interim financial statements, the Registrant hereby
incorporates by reference the following:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consolidated
      Balance Sheets as of September 30, 2008
  (unaudited);</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consolidated
      Statements of Operations for the Three and Nine Months Ended September 30,
      2008 and 2007 (unaudited);</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consolidated
      Statements of Cash Flows for the Nine Months Ended September 30, 2008 and
      2007 (unaudited); and</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Notes
      to Consolidated Financial Statements
  (unaudited),</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">contained
in our quarterly report on Form 10-Q for the quarter ended September 30, 2008,
filed with the SEC on November 10, 2008.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">With
respect to our audited annual consolidated financial statements, the Registrant
hereby incorporates by reference the following:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Report
      of Moore Stephens, P.C., Independent Registered Public Accounting
      Firm;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consolidated
      Balance Sheets as of December 31, 2007 and
2006;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consolidated
      Statements of Operations for the Years Ended December 31, 2007,&#160;
      <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006
      and 2005;</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div align="center">
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consolidated
      Statements of Changes in Stockholders&#8217; Equity (Deficit) for the <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Years
      Ended December 31, 2007, 2006 and
2005;</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div align="center">
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2007,&#160;
      <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006
      and 2005; and</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div align="center">
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;&#160;
      &#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Notes
      to Consolidated Financial
Statements,</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">contained
in our annual report on Form 10-K for the year ended December 31, 2007, filed
with the SEC on March 28, 2008.</font></div>
    <div>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">51</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9,876,584
Shares of Common Stock</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">COVER-ALL
TECHOLOGIES INC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prospectus</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
2008</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No
dealer, salesperson or any person is authorized to give any information or make
any representations in connection with this offering other than those contained
in this prospectus and, if given or made, the information or representations
must not be relied upon as having been authorized by us.&#160;&#160;This
prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any security other than the securities offered by the prospectus, or an
offer to sell or a solicitation of an offer to buy any securities by anyone in
any jurisdiction in which the offer or solicitation is not authorized or is
unlawful.&#160;&#160;Until
[&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;],
2009, all dealers that effect transactions in this securities, whether or not
participating in this offering may be required to deliver a
prospectus.&#160;&#160;This is an addition to the dealers obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">52</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PART
II</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">INFORMATION
NOT REQUIRED IN PROSPECTUS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
13.&#160;&#160;Other Expenses of Issuance and Distribution</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table sets forth the Company&#8217;s estimates of the expenses in connection
with the sale and distribution of the securities being registered, all of which
will be paid by the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" colspan="2" valign="top" width="42%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item</font></div>
            </td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="3" valign="top" width="28%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount</font></div>
            </td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SEC
      registration fee</font></div>
            </td>
            <td valign="top" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="right" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$359&#160;&#160;
      </font></div>
            </td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Legal
      fees and expenses</font></div>
            </td>
            <td valign="top" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="right" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$50,000*</font></div>
            </td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Accounting
      fees and expenses</font></div>
            </td>
            <td valign="top" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="right" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$7,500*</font></div>
            </td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Printing
      fees and expenses</font></div>
            </td>
            <td valign="top" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="right" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$1,000*</font></div>
            </td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#eeeeee">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Miscellaneous
      fees and expenses</font></div>
            </td>
            <td valign="top" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="right" valign="top" width="10%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$1,141*</font></div>
            </td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
            </td>
            <td valign="top" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="right" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 3.6pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$60,000*</font></div>
            </td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">______________</font></td>
            <td valign="top" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">*Estimated</font></div>
            </td>
            <td valign="top" width="16%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
14.&#160;&#160;Indemnification of Directors and Officers</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Section
102 of the Delaware General Corporation Law (&#8220;DGCL&#8221;), as amended, allows a
corporation to eliminate the personal liability of directors of a corporation to
the corporation or its stockholders for monetary damages for a breach of
fiduciary duty as a director, except where the director breached his duty of
loyalty, failed to act in good faith, engaged in intentional misconduct or
knowingly violated a law, authorized the payment of a dividend or approved a
stock repurchase in violation of Delaware corporate law or obtained an improper
personal benefit.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Section
145 of the DGCL provides, among other things, that the company 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 an
action by or in the right of the company) by reason of the fact that the person
is or was a director, officer, agent or employee of the company or is or was
serving at the company&#8217;s request as a director, officer, agent or employee of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys&#8217; fees, judgment, fines and amounts paid in
settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding.&#160;&#160;The power to indemnify applies (a)
if such person is successful on the merits or otherwise in defense of any
action, suit or proceeding, or (b) if such person acted in good faith and in a
manner he reasonably believed to be in the best interest, or not opposed to the
best interest, of the company, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful.&#160;&#160;The power to indemnify applies to actions brought by or in
the right of the company as well but only to the extent of defense expenses
(including attorneys&#8217; fees but excluding amounts paid in settlement) actually
and reasonably incurred and not to any satisfaction of judgment or settlement of
the claim itself, and with the further limitation that in such actions no
indemnification shall be made in the event of any adjudication of negligence or
misconduct in the performance of his duties to the company, unless the court
believes that in light of all the circumstances indemnification should
apply.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Section
174 of the DGCL provides, among other things, that a director, who willfully or
negligently approves of an unlawful payment of dividends or an unlawful stock
purchase or redemption, may be held liable for such actions.&#160;&#160;A
director who was either absent when the unlawful actions were approved or
dissented at the time, may avoid liability by causing his or her dissent to such
actions be entered in the books containing the minutes of the meetings of the
board of directors at the time such action occurred or immediately after such
absent director receives notice of the unlawful acts.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">53</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Article X
of the Company&#8217;s By-Laws provides that a director or officer of the Company
shall by indemnified by the Company against judgment, fines, amounts paid in
settlement and reasonable expenses, including attorney&#8217;s fees, actually and
necessarily incurred by such person in connection with the defense of or any
appeal therein, to the full extent permitted under the laws of the State of
Delaware from time to time in effect.&#160;&#160;The Company shall have the
power to purchase and maintain insurance for the indemnification of such
directors, officers to the full extent permitted under the laws of the State of
Delaware from time to time in effect.&#160;&#160;Such right of indemnification
shall not be deemed exclusive of any other rights of indemnification to which
such director or officer may be entitled.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
15.&#160;&#160;Recent Sales of Unregistered Securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
sold or issued the following securities that were not registered under the
Securities Act during the three year period ending on the date of filing of this
registration statement:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In August
2006, the holders of our 2008 Debentures and 2009 Debentures elected to convert
an aggregate of $127,254 principal amount of such debentures for share of our
common stock at the conversion price of $0.30 per share.&#160;&#160;In
connection with this conversion, we issued to the holders of the debentures an
aggregate of 424,181 shares of our common stock.&#160;&#160;No cash proceeds
were received by us in connection with each conversion of the
debentures.&#160;&#160;The shares of our common stock issued upon each
conversion of the debentures were issued exempt from registration in reliance on
Section 3(a)(9) of the Securities Act as an exchange of securities by an issuer
with its existing security holders where no commission or other remuneration was
paid or given directly or indirectly for soliciting such exchange.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
January 2007, the holders of our 2008 Debentures and 2009 Debentures elected to
convert an aggregate of $119,807 principal amount of such Debentures for shares
of our common stock at the conversion price of $0.30 per share.&#160;&#160;In
connection with this conversion, we issued to the holders of the debentures an
aggregate of 399,358 shares of our common stock.&#160;&#160;No cash proceeds
were received by us in connection with each conversion of the
debentures.&#160;&#160;The shares of our common stock issued upon each
conversion of the debentures were issued exempt from registration in reliance on
Section 3(a)(9) of the Securities Act as an exchange of securities by an issuer
with its existing security holders where no commission or other remuneration was
paid or given directly or indirectly for soliciting such exchange.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In March
2007, we issued an aggregate of 5,438,670 shares of our common stock to the RENN
funds in connection with their election to convert an aggregate of $1,631,601
principal amount of the 2008 Debentures and 2009 Debentures at a conversion
price of $0.30 per share.&#160;&#160;No cash proceeds were received by us in
connection with each conversion of the debentures.&#160;&#160;The shares of our
common stock issued upon each conversion of the debentures were issued exempt
from registration in reliance on Section 3(a)(9) of the Securities Act as an
exchange of securities by an issuer with its existing security holders where no
commission or other remuneration was paid or given directly or indirectly for
soliciting such exchange.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In March
2007, we issued an aggregate of 128,572 shares of our common stock to US Special
Opportunities Trust PLC (the predecessor of Global Special Opportunities Trust
PLC), Renaissance US Growth Investment Trust PLC, Mr. Roblin and certain other
investors upon their exercise of an aggregate of 128,572 warrants to purchase
128,572 shares of our common stock at an exercise price of $0.22 per
share.&#160;&#160;The issuance of such shares was exempt from registration in
reliance on Section 4(2) of the Securities Act.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In June
2007, the holders of the 2008 Debentures converted an aggregate of $33,617 in
principal of such debentures into a total of 112,055 shares of our common stock
at the conversion price of $0.30 per share.&#160;&#160;No cash proceeds were
received by us in connection with this partial conversion of the 2008
Debentures.&#160;&#160;The shares of our common stock issued upon the conversion
of the debentures were issued exempt from registration in reliance on Section
3(a)(9) of the Securities Act as an exchange of securities by an issuer with its
existing security holders where no commission or other remuneration was paid or
given directly or indirectly for soliciting such exchange.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">54</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
December 2007, we issued an aggregate of 7,143 shares of our common stock to Mr.
Roblin, upon his exercise of an aggregate of 7,143 warrants to purchase 7,143
shares of our common stock at an exercise price of $0.35 per
share.&#160;&#160;The issuance of such shares was exempt from registration in
reliance on Section 4(2) of the Securities Act.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In June
2008, Mr. Roblin and certain other investors converted an aggregate of $262,265
in principal of our 2008 Debentures into a total of 874,217 shares of our common
stock.&#160;&#160;No cash proceeds were received by us in connection with this
partial conversion of the 2008 Debentures.&#160;&#160;The shares of our common
stock issued upon the conversion of the debentures were issued exempt from
registration in reliance on Section 3(a)(9) of the Securities Act as an exchange
of securities by an issuer with its existing security holders where no
commission or other remuneration was paid or given directly or indirectly for
soliciting such exchange.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
16.&#160;&#160;Exhibits</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Exhibits listed on the Exhibit Index of this Registration Statement are filed
herewith or are incorporated herein by reference to other filings.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
17.&#160;&#160;Undertakings</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
undersigned Registrant hereby undertakes:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top" style="LINE-HEIGHT: 1.25;">
              <td style="WIDTH: 49px">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
              </td>
              <td style="WIDTH: 35px">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.</font></div>
              </td>
              <td width="897">
                <div style="TEXT-ALIGN: justify" align="left">
                  <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      file, during any period in which offers or sales are being made, a
      post-effective amendment to this registration
    statement:</font></div>
                </div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">i.</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      include any prospectus required by Section 10(a)(3) of the Securities
      Act;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ii.</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.&#160;&#160;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 &#8220;Calculation of Registration Fee&#8221; table in
      the effective registration statement<font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">;
      and</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">iii.</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 48px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 36px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</font></div>
            </td>
            <td width="897">
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">That,
      for the purpose of determining any liability under the Securities Act,
      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.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 47px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 37px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.</font></div>
            </td>
            <td width="897">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 47px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 37px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.</font></div>
            </td>
            <td width="897">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">That,
      for the purpose of determining liability under the Securities Act to any
      purchaser:</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">55</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 63pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
      prospectus filed pursuant to Rule 424(b) as part of a registration
      statement relating to an offering, other than registration statements
      relying on Rule 430B or other than prospectuses filed in reliance on Rule
      430A, shall be deemed to be part of and included in the registration
      statement as of the date it is first used after
      effectiveness.&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Provided, however</font>, that
      no statement made in a registration statement or prospectus that is part
      of the registration statement or made in a document incorporated or deemed
      incorporated by reference into the registration statement or prospectus
      that is part of the registration statement will, as to a purchaser with a
      time of contract of sale prior to such first use, supersede or modify any
      statement that was made in the registration statement or prospectus that
      was part of the registration statement or made in any such document
      immediately prior to such date of first
use.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 63pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Insofar
      as indemnification for liabilities arising under the Securities Act may be
      permitted to directors, officers and controlling persons of the
      Registrant, 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.&#160;&#160;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.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 63pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      undersigned Registrant hereby undertakes
that:</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 47px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 37px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.</font></div>
            </td>
            <td width="897">
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      purposes of determining any liability under the Securities Act, 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.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      post-effective amendment that contains a form of prospectus shall be
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  thereof.</font></div>
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to the requirements of the Securities Act, the Registrant certifies that it has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Fairfield, New Jersey on December 22,
2008.</font></div>
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OF ATTORNEY</font></div>
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undersigned officers and directors of Cover-All Technologies, Inc., hereby
severally constitute and appoint John W. Roblin and Ann F. Massey (with full
power to act alone), our true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution in each of them for him and in his
name, place and stead, and in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
(or any other Registration Statement for the same offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act), and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as full to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.</font></div>
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to the requirements of the Securities Act, this Registration Statement has been
signed by the following persons in the capacities and on the dates
indicated.</font></div>
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      John W. Roblin</font></div>
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      22, 2008</font></div>
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            <td width="30%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="34%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td width="3%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      22, 2008</font></div>
              </div>
            </td>
          </tr>
          <tr>
            <td width="30%">
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            <td width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="34%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="30%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="30%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="34%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="30%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td width="30%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/
      Mark Johnston</font></div>
            </td>
            <td width="3%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="34%" style="PADDING-BOTTOM: 2px">
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            </td>
            <td width="3%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="30%" style="PADDING-BOTTOM: 2px">
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      22, 2008</font></div>
              </div>
            </td>
          </tr>
          <tr>
            <td width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Mark
      Johnston</font></div>
            </td>
            <td width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="34%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="30%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">57</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EXHIBIT
INDEX</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Exhibit No.</font></font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Description</font></font></td>
          </tr>
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Certificate
      of Merger of the Company Computer Systems, Inc. (a New York corporation)
      into the Registrant, filed on June 11, 1985 [incorporated by reference to
      Exhibit 2 to the Registrant&#8217;s Annual Report on Form 10-K (Commission File
      No. 0-13124) filed on January 29,
1986].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3(a)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
      of Incorporation of the Registrant filed on April 22, 1985 [incorporated
      by reference to Exhibit 3(a) to the Registrant&#8217;s Annual Report on Form
      10-K (Commission File No. 0-13124) filed on January 29,
    1986].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3(b)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
      of Amendment of Certificate of Incorporation of the Registrant filed on
      May&#160;6, 1987 [incorporated by reference to Exhibit 3.2 to the
      Registrant&#8217;s Registration Statement on Form S-1 (Commission File No.
      33-17533) filed on September 29,
1987].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3(c)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
      of Amendment of Certificate of Incorporation of the Registrant filed on
      March 26, 1990 [incorporated by reference to Exhibit 3(d) to the
      Registrant&#8217;s Quarterly Report on Form 10-Q (Commission File No. 0-13124)
      filed on June 14, 1990].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3(d)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
      of Amendment of Certificate of Incorporation of the Registrant filed on
      March 18, 1992 [incorporated by reference to Exhibit 1 to the Registrant&#8217;s
      Current Report on Form 8-K (Commission File No. 0-13124) filed on March
      30, 1992].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3(e)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
      of Amendment of Certificate of Incorporation of the Registrant
      [incorporated by reference to Exhibit 3(e) to the Registrant&#8217;s Amendment
      No. 1 to Registration Statement on Form S-3 (Commission File No. 0-13124)
      filed on July 10, 1996].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3(f)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
      of Amendment of Certificate of Incorporation of the Registrant filed on
      July 12, 2000 [incorporated by reference to Exhibit 3(g) to the
      Registrant&#8217;s Quarterly Report on Form 10-Q (Commission File No. 0-13124)
      filed on August 11, 2000].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3(g)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By-laws
      of the Registrant, as amended [incorporated by reference to Exhibit 3(g)
      to the Registrant&#8217;s Amendment No. 1 to Registration Statement on Form S-3
      (Commission file No. 0-13124) filed on July 10,
  1996].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
      of Common Stock Certificate of the Registrant [incorporated by reference
      to Exhibit 4(a) to the Registrant&#8217;s Annual Report on Form 10-K (Commission
      File No. 0-13124) filed on January 29,
1986].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5*</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Opinion
      of DLA Piper LLP (US).</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(a)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Warner
      Insurance Services, Inc. Tax Saver 401(k) Salary Reduction Plan adopted
      May&#160;31, 1985 and restated as of August 11, 1992 [incorporated by
      reference to Exhibit&#160;10(k) to the Registrant&#8217;s Annual Report on Form
      10-K (Commission File No. 0-13124) filed on January 28,
    1993].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(b)(1)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1994
      Stock Option Plan for Independent Directors adopted by the Board of
      Directors of the Registrant on November 10, 1994 [incorporated by
      reference to Exhibit 10(n)(1) to the Registrant&#8217;s Annual Report on Form
      10-K (Commission File No. 0-13124) filed on April 17,
    1995].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(c)(8)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amendment
      to Non-Qualified Stock Option Agreement, dated as of December 20, 2004,
      between the Registrant and Mark D. Johnston [incorporated by reference to
      Exhibit 10(c)(8) to the Registrant&#8217;s Quarterly Report on Form 10-Q
      (Commission File No. 0-13124) filed on August 15,
  2005].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">58</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(c)(9)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amendment
      to Non-Qualified Stock Option Agreement, dated as of December 20, 2004,
      between the Registrant and Earl Gallegos [incorporated by reference to
      Exhibit 10(c)(9) to the Registrant&#8217;s Quarterly Report on Form 10-Q
      (Commission File No. 0-13124) filed on August 15,
  2005].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(c)(10)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amendment
      to Incentive Stock Option Agreement, dated as of December 20, 2004,
      between the Registrant and John Roblin [incorporated by reference to
      Exhibit 10(c)(10) to the Registrant&#8217;s Quarterly Report on Form 10-Q
      (Commission File No. 0-13124) filed on August 15,
  2005].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(c)(11)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amendment
      to Incentive Stock Option Agreement, dated as of December 20, 2004,
      between the Registrant and John Roblin [incorporated by reference to
      Exhibit 10(c)(11) to the Registrant&#8217;s Quarterly Report on Form 10-Q
      (Commission File No. 0-13124) filed on August 15,
  2005].</font></div>
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      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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          <tr valign="top" style="LINE-HEIGHT: 1.25;">
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            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
      of Non-Qualified Stock Option Agreement [incorporated by reference to
      Exhibit 10(c)(14) the Registrant&#8217;s Quarterly Report on Form 10-Q
      (Commission File No. 0-13124) filed on May 15,
  2006].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(c)(15)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
      of Incentive Stock Option Agreement [incorporated by reference to Exhibit
      10(c)(15) the Registrant&#8217;s Quarterly Report on Form 10-Q (Commission File
      No. 0-13124) filed on May 15,
2006].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(c)(16)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
      of Restricted Stock Grant Agreement [incorporated by reference to Exhibit
      10(c)(16) the Registrant&#8217;s Quarterly Report on Form 10-Q (Commission File
      No. 0-13124) filed on May 15,
2006].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(c)(17)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
      of Non-Qualified Stock Option Agreement (for Consultants) [incorporated by
      reference to Exhibit 10(c)(13) the Registrant&#8217;s Quarterly Report on Form
      10-Q (Commission File No. 0-13124) filed on May 15,
  2006].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(c)(18)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cover-All
      Technologies Inc. Amended and Restated 2005 Stock Incentive Plan
      [incorporated by reference to Exhibit 10(c)(18) to the Registrant&#8217;s Form
      8-K (Commission File No. 0-13124) filed on March 27,
  2008].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(c)(19)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Summary
      of 2008 Non-Employee Director Compensation dated March 25, 2008
      [incorporated by reference to Exhibit 99.1 the Registrant&#8217;s Form 8-K
      (Commission File No. 0-13124) filed on March 27,
  2008].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(d)(1)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lease
      Agreement, dated March 3, 2005, by and between the Registrant and
      Fairfield 80 Venture, LLC [incorporated by reference to Exhibit 10(d)(4)
      to the Registrant&#8217;s Annual Report on Form 10-K (Commission File No.
      0-13124) filed on March 25, 2005].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(e)(3)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Tuition
      Reimbursement Agreement, dated September 1, 2006, between the Registrant
      and Manish D. Shah [incorporated by reference to Exhibit 10(p) to the
      Registrant&#8217;s Form 8-K (Commission File No. 0-13124) filed on September 1,
      2006].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(e)(5)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
      Agreement, dated December 26, 2006, by and between the Registrant and John
      Roblin [incorporated by reference to Exhibit 10(e)(5) to the Registrant&#8217;s
      Form 8-K (Commission File No. 0-13124) filed on December 27,
      2006].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(e)(6)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amendment
      No. 1 to the Employment Agreement, dated April 26, 2007, between the
      Registrant and John Roblin [incorporated by reference to Exhibit 10(e)(6)
      to the Registrant&#8217;s Form 8-K (Commission File No. 0-13124) filed on April
      30, 2007].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(e)(7)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
      Agreement, dated December 26, 2007, by and between the Registrant and John
      Roblin [incorporated by reference to Exhibit 10(e)(7) to the Registrant&#8217;s
      Form 8-K (Commission File No. 0-13124) filed on December 27,
      2007].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">59</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(i)(17)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">Limited Waiver to
      the Convertible Loan Agreement, dated as of March 31, 2007, by John Roblin
      and Stuart Sternberg</font> [incorporated by reference to Exhibit
      10(i)(17) to the Registrant&#8217;s Quarterly Report on Form 10-Q (Commission
      File No. 0-13124) filed on May 11,
2007].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(i)(18)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">Limited Waiver to
      Convertible Loan Agreement, dated as of June 30, 2007, by John Roblin and
      Stuart Sternberg</font> [incorporated by reference to Exhibit 10(i)(18) to
      the Registrant&#8217;s Quarterly Report on Form 10-Q (Commission File No.
      0-13124) filed on August 10, 2007].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(i)(19)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Limited
      Waiver to Convertible Loan Agreement, dated as of September 30, 2007, by
      John Roblin and Stuart Sternberg [incorporated by reference to Exhibit
      10(i)(19) to the Registrant&#8217;s Quarterly Report on Form 10-Q (Commission
      File No. 0-13124) filed on November 13,
2007].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(j)(i)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Asset
      Purchase Agreement, dated January 22, 2007, between the Registrant and
      Maloy Risk Services, Inc. [incorporated by reference to Exhibit 10(j)(i)
      to the Registrant&#8217;s Form 8-K (Commission File No. 0-13124) filed on
      January 26, 2007].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10(j)(ii)</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Commission
      Agreement, dated January 22, 2007, between the Registrant and Maloy Risk
      Services, Inc. [incorporated by reference to Exhibit 10(j)(ii) to the
      Registrant&#8217;s Form 8-K (Commission File No. 0-13124) filed on January 26,
      2007].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">21</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Subsidiaries
      of the Registrant [incorporated by reference to Exhibit 21 to the
      Registrant&#8217;s Annual Report on Form 10-K (Commission File No. 0-13124)
      filed on April 11, 1996].</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 72pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23.1*</font></div>
            </td>
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              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consent
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            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
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            <td style="WIDTH: 72pt">
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            </td>
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              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consent
      of DLA Piper LLP (US) [included in Exhibit
5].</font></div>
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      </table>
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            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Power
      of Attorney [included on the signature
page].</font></div>
            </td>
          </tr>
      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">_____________</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*&#160;&#160;&#160;&#160;&#160;&#160;Filed
herewith.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">60</font></div>
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coverall_s1-121808.htm
As
filed with the Securities and Exchange Commission on December 22,
2008
Registration
No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
________________
FORM
S-1
Registration
Statement Under The Securities Act of 1933
________________
Cover-All
Technologies Inc.
(Exact
name of Registrant as specified in its charter)
________________
Delaware
(State
      or other jurisdiction of
incorporation
      or organization)
7371
(Primary
      Standard Industrial
Classification
      Code number)
13-2698053
(I.R.S.
      Employer
Identification
      No.)
________________
55
Lane Road, Suite 300
Fairfield,
New Jersey 07004
(973)
461-5200
(Address,
including zip code, and telephone number, including area code, of Registrant's
principal executive offices)
________________
John
W. Roblin
Chief
Executive Officer
Cover-All
Technologies Inc.
55
Lane Road
Fairfield,
New Jersey 07004
(973)
461-5200
(Name,
address, including zip code, and telephone number, including area code, of agent
for service)
________________
Copies
to:
David
E. Weiss, Esq.
DLA
Piper LLP (US)
1251
Avenue of the Americas
New
York, NY 10020
(212)
335-4500
________________
Approximate
date of commencement of proposed sale to the public:
From time
to time after the Registration Statement becomes effective.
If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act, check the following box.
x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) 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(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement number 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, or a smaller reporting
company.
Large
      accelerated filer
o
Accelerated
      filer
o
Non-accelerated
      filer
o
(Do
      not check if a smaller reporting company)
Smaller
      reporting company
x
CALCULATION
OF REGISTRATION FEE
Title
      of Each Class of
Securities
      to be Registered
Amount
      to be
Registered
      (1)
Proposed
      Maximum
Aggregate
Offering
Price
      (2)
Amount
      of
Registration
      Fee
Common
      Stock, par value $0.01 per share
9,876,584
$9,135,840
$359
Total
9,876,584
$9,135,840
$359
(1)
Pursuant
      to Rule 416 under the Securities Act of 1933, as amended, the number of
      shares of common stock registered hereby includes such indeterminate
      number of additional shares of common stock as may become issuable as a
      result of stock splits, stock dividends or similar
      transactions.
(2)
Estimated
      solely for the purposes of calculating the registration fee pursuant to
      Rule 457(o) under the Securities Act of 1933, as amended, based upon
      the average bid and asked price of the common stock on December 17, 2008,
      as reported on the OTC Bulletin
Board.
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 the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
__________________________________
The
information in this preliminary 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 prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
Subject
to Completion, dated
, 2008
-ii-
PAGE
PROSPECTUS
      SUMMARY
2
RISK
    FACTORS
4
INFORMATION
      REGARDING FORWARD-LOOKING STATEMENTS
9
USE OF
      PROCEEDS
9
MARKET PRICE OF AND
      DIVIDENDS ON COMMON STOCK AND RELATED STOCKHOLDER MATTERS
10
MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
12
BUSINESS
24
MANAGEMENT
30
EXECUTIVE
      COMPENSATION
32
SECURITY OWNERSHIP
      OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
40
CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS
42
SELLING
      STOCKHOLDERS
44
DESCRIPTION OF
      SECURITIES
46
PLAN OF
      DISTRIBUTION
47
LEGAL
    MATTERS
49
EXPERTS
49
WHERE YOU CAN FIND
      MORE INFORMATION
49
INCORPORATION OF
      CERTAIN INFORMATION BY REFERENCE
50
FINANCIAL
      STATEMENTS
51
INFORMATION NOT
      REQUIRED IN PROSPECTUS
53
SIGNATURES
57
EXHIBIT
    INDEX
58
-iii-
PROSPECTUS
9,876,584
Shares of Common Stock
Cover-All
Technologies Inc.
This
prospectus relates to the resale by selling stockholders identified in the
section entitled "Selling Stockholders" on page 44 of up to an aggregate of
9,876,584 shares of common stock of Cover-All Technologies Inc., which consists
of:
·
9,776,584
      shares of common stock; and
·
100,000
      shares of common stock issuable upon the exercise of outstanding
      warrants.
The
selling stockholders may offer and sell any of the shares of common stock from
time to time at fixed prices, at market prices or at negotiated prices, and may
engage a broker, dealer or underwriter to sell the shares.  For
additional information on the possible methods of sale that may be used by the
selling stockholders, you should refer to the section entitled "Plan of
Distribution" on page 47 of this prospectus.  We will not receive any
proceeds from the sale of the shares of common stock by the selling
stockholders.
Our
common stock is currently quoted on the Over-the-Counter Bulletin Board under
the symbol "COVR.OB".  On December 15, 2008, the last reported sale
price of our shares on the Over-the-Counter Bulletin Board was $0.81 per
share.  You should rely only on the information contained in this
prospectus.  We have not authorized any other person to provide you
with different information.
You
should consider carefully the risks that we have described in "Risk Factors"
beginning on page 4 before deciding whether to invest in our common
stock.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is
truthful and complete.  Any representation to the contrary is a
criminal offense.
This
prospectus is dated
, 2008.
You
should rely only on the information contained in this prospectus or contained in
any free writing prospectus filed with the Securities and Exchange Commission,
or SEC.  We have not authorized anyone to provide you with information
different from that contained in this prospectus.  The selling
stockholders are offering to sell, and seeking offers to buy, shares of our
common stock only in jurisdictions where offers and sales are
permitted.  The information in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our common stock.
PROSPECTUS
SUMMARY
This
summary highlights selected information more fully described elsewhere in this
prospectus.  You should read the following summary together with the
entire prospectus, including the more detailed information regarding us and the
common stock being sold in this offering and our financial statements and the
related notes appearing elsewhere in this prospectus.  You should
carefully consider, among other things, the matters discussed in the section
entitled "Risk Factors" beginning on page 4 before deciding to invest in our
common stock.  Unless otherwise stated or the context requires
otherwise, references in this prospectus to "we," "our" or "us" refer to
Cover-All Technologies Inc. and its subsidiaries.
Overview
We
provide state-of-the-art software products, services and solutions to the
property and casualty insurance industry.  Our customers include
insurance companies, agents, brokers and managing general agents
(MGAs).
Our
software products and services focus on the functions required to market,
underwrite, rate, issue, print, bill and support the entire life cycle of
insurance policies.  Our products and services combine an in-depth
knowledge of property and casualty insurance with innovative solution designs
using state-of-the-art technology.  Our products are either available
"off-the-shelf" or customized to specific customer needs.  Our
software can be licensed for customer use on their own platforms or can be
provided through our application services provider, referred to as ASP, using
third party technology platforms and support.
We also
provide a wide range of professional services that support product
customization, conversion from existing systems and data integration with other
software or reporting agencies.  We also offer on-going support
services including incorporating recent insurance rate and rule changes in our
solutions.  These support services also include analyzing the changes,
developments, quality assurance, documentation and distribution of insurance
rate and rule changes.
We earn
revenue from software contract licenses, service fees from ASPs, continuing
maintenance fees for servicing the product and professional
services.
Corporate
Information
We were
incorporated in Delaware in April 1985 as Warner Computer Systems, Inc. and
changed our name to Warner Insurance Services, Inc. in March 1992.  In
June 1996, we changed our name to Cover-All Technologies Inc. Our products and
services are offered through our wholly-owned subsidiary, Cover-All Systems,
Inc., also a Delaware corporation.
Our
principal executive offices are located at 55 Lane Road, Suite 300, Fairfield,
New Jersey 07004, and our telephone number is (973) 461-5200.  Our
website address is www.cover-all.com.  The information on, or that can
be accessed through, our website is not part of this prospectus.
2
The
Offering
Common
      stock offered by the selling stockholders
Up
      to 9,876,584 shares of our common stock, which consists
  of:
·
9,776,584
      shares of common stock; and
·
100,000
      shares of common stock issuable upon the exercise of outstanding
      warrants.
Use
      of Proceeds
Proceeds
      from the sale of common stock covered by this prospectus will be received
      by the selling stockholders.  We will not receive any proceeds
      from the sale of the shares of common stock covered by this
      prospectus.  We may receive proceeds from the exercise of the
      warrants whose underling shares of common stock are covered by this
      prospectus.
OTC
      Bulletin Board symbol for our Common Stock
"COVR.OB"
As of
December 15, 2008, we had 24,134,683 shares of common stock outstanding,
1,972,463 options to purchase an aggregate of 1,972,463 shares of common stock
outstanding, 121,429 warrants to purchase an aggregate of 121,429 shares of
common stock outstanding and an aggregate of 232,500 shares of common stock
issuable upon the settlement of 232,500 time-based restricted stock units
outstanding.
3
RISK
FACTORS
You
should carefully consider the risks described below before making a decision to
buy our common stock.  If any of the following risks actually occurs,
our business, financial condition and results of operations could be
harmed.  In that case, the trading price of our common stock could
decline and you might lose all or part of your investment in our common
stock.  You should also refer to the other information set forth in
this prospectus, including our financial statements and the related
notes.
Risks
Related to Our Business
While
we were profitable in 2007, we incurred losses in 2006 and 2005.  Our
earnings are volatile, and we may not be profitable in the future.
We
incurred a loss of $1,000,000 in 2006 and $1,434,000 in
2005.  Although we generated net income of $1,231,000 in 2007,
$767,000 in 2004 and $392,000 in 2003, there is no assurance that we will be
able to maintain profitability in the future.  Our ability to invest
in sales and marketing programs, to expand and upgrade our technology
infrastructure and to fund our research and development efforts will depend on
existing cash balances and our ability to generate cash in the
future.  This, to a certain extent, is subject to general economic,
financial, competitive, regulatory and other factors that are beyond our
control.  If we are unable to achieve or maintain profitability in the
future, we may be unable to fund our liquidity needs.
We
may need additional financing in order to continue to develop our
business.
We may
need additional financing to continue to fund the research and development of
our software products and to expand and grow our business
generally.  To the extent that we will be required to fund operating
losses, our financial position would deteriorate.  We may not be able
to find significant additional financing on terms favorable to us or at
all.  If equity securities are issued in connection with a financing,
dilution to our stockholders may result, and if additional funds are raised
through the incurrence of debt, we may be subject to further restrictions on our
operations and finances.  Furthermore, if we do incur additional debt,
we may be limiting our ability to repurchase capital stock, engage in mergers,
consolidations, acquisitions and asset sales, or alter our lines of business,
even though these actions might otherwise benefit our business.  As of
December 31, 2007, we had a net stockholders' equity of approximately $2,285,000
and a net working capital of approximately $545,000.
We
depend on product development in order to remain competitive in our
industry.
We are
currently investing resources in product development and expect to continue to
do so in the future.  Our future success will depend on our ability to
continue to enhance our current product line and to continue to develop and
introduce new products that keep pace with competitive product introductions and
technological developments, satisfy diverse and evolving insurance industry
requirements and otherwise achieve market acceptance.  We may not be
successful in continuing to develop and market on a timely and cost-effective
basis product enhancements or new products that respond to technological
advances by others, or that these products will achieve market
acceptance.  In addition, we have in the past experienced delays in
the development, introduction and marketing of new and enhanced products, and we
may experience similar delays in the future.  Any failure by us to
anticipate or respond adequately to changes in technology and insurance industry
preferences, or any significant delays in product development or introduction,
would significantly and adversely affect our business, operating results and
financial condition.
4
Our
products may not achieve market acceptance, which may make it difficult for us
to compete.
Our
future success will depend upon our ability to increase the number of insurance
companies that license our software products.  As a result of the
intense competition in our industry and the rapid technological changes which
characterize it, our products may not achieve significant market
acceptance.  Further, insurance companies are typically characterized
by slow decision-making and numerous bureaucratic and institutional obstacles
which will make our efforts to significantly expand our customer base
difficult.
We
depend on key personnel.
Our
success depends to a significant extent upon a limited number of members of
senior management and other key employees, including John W. Roblin, our Chief
Executive Officer, Manish D. Shah, our President and Chief Technology Officer,
and Maryanne Gallagher, our Executive Vice President and Chief Operating
Officer.  We maintain key man life insurance on Mr. Roblin, Mr. Shah
and Ms. Gallagher in the amount of $1,000,000 per individual.  The
loss of the service of one or more key managers or other key employees could
have a significant and adverse effect upon our business, operating results or
financial condition.  In addition, we believe that our future success
will depend in large part upon our ability to attract and retain additional
highly skilled technical, management, sales and marketing
personnel.  Competition for such personnel in the computer software
industry is intense.  We may not be successful in attracting and
retaining such personnel, and the failure to do so could have a material adverse
effect on our business, operating results or financial condition.
Our
products are affected by rapid technological change and we may not be able to
keep up with these changes.
The
demand for our products is impacted by rapid technological advances, evolving
industry standards in computer hardware and software technology, changing
insurance industry requirements and frequent new product introductions and
enhancements that address the evolving needs of the insurance
industry.  The process of developing software products such as those
we offer is extremely complex and is expected to become increasingly complex and
expensive in the future with the introduction of new platforms and
technologies.  The introduction of products embodying new technologies
and the emergence of new industry standards and practices can render existing
products obsolete and unmarketable.  Our future success depends upon
our ability to anticipate or respond to technological advances, emerging
industry standards and practices in a timely and cost-effective
manner.  We may not be successful in developing and marketing new
products or enhancements to existing products that respond to technological
changes or evolving industry standards.  The failure to respond
successfully to these changes and evolving standards on a timely basis, or at
all, could have a detrimental effect on our business, operating results and
financial condition.
Our
market is highly competitive.
Both the
computer software and the insurance software systems industries are highly
competitive.  There are a number of larger companies, including
computer manufacturers, computer service and software companies and insurance
companies, that have greater financial resources than we have.  These
companies currently offer and have the technological ability to develop software
products similar to those offered by us.  These companies present a
significant competitive challenge to our business.  Because we do not
have the same financial resources as these competitors, we may have a difficult
time in the future in competing with these companies.  In addition,
very large insurers internally develop systems similar to our systems and as a
result, they may not become customers of our software.  We compete on
the basis of our insurance knowledge, products, service, price, system
functionality and performance and technological advances.  Although we
believe we can continue to compete on the basis of these factors, some of our
current competitors have longer operating histories, larger customer bases,
greater brand recognition and significantly greater financial, marketing and
other resources than we do.  Our current competitors may be able
to:
5
·
undertake
      more extensive marketing campaigns for their brands and
      services;
·
devote
      more resources to product
development;
·
adopt
      more aggressive pricing policies;
and
·
make
      more attractive offers to potential employees and third-party service
      providers.
We
depend upon proprietary technology and we are subject to the risk of third party
claims of infringement.
Our
success and ability to compete depends in part upon our proprietary software
technology.  We also rely on certain software that we license from
others.  We rely on a combination of trade secret, copyright and
trademark laws, nondisclosure and other contractual agreements and technical
measures to protect our proprietary rights.  We currently have no
patents or patent applications pending.  Despite our efforts to
protect our proprietary rights, unauthorized parties may attempt to copy aspects
of our products or to obtain and use information that we regard as
proprietary.  The steps we take to protect our proprietary technology
may not prevent misappropriation of our technology, and this protection may not
stop competitors from developing products which function or have features
similar to our products.
While we
believe that our products and trademarks do not infringe upon the proprietary
rights of third parties, third parties may claim that our products infringe, or
may infringe, upon their proprietary rights.  Any infringement claims,
with or without merit, could be time-consuming, result in costly litigation and
diversion of technical and management personnel, cause product shipment delays
or require us to develop non-infringing technology or enter into royalty or
licensing agreements.  Royalty or licensing agreements, if required,
may not be available on terms acceptable to us or at all.  If a claim
of product infringement against us is successful and we fail or are unable to
develop non-infringing technology or license the infringed or similar
technology, our business, operating results and financial condition could be
significantly and adversely affected.
We
depend on existing major customers.
In 2007
and 2006, our software products operations depended primarily on certain
existing major customers.  One of these major customers accounted for
approximately 19% and 27% of our total revenues in 2007 and 2006,
respectively.  One new other major customer accounted for
approximately 25% of our total revenue in 2007.  We anticipate that
our operations will continue to depend upon the continuing business of our
existing customers, particularly the major customers, and the ability to attract
new customers.  As a result, the loss of one or more of our existing
major customers or our inability to continue to attract new customers could
significantly and adversely affect our business, operating results and financial
condition.
A
decline in computer software spending may result in a decrease in our revenues
or lower our growth rate.
A decline
in the demand for computer software among our current and prospective customers
may result in decreased revenues or a lower growth rate for us because our sales
depend, in part, on our customers' level of funding for new or additional
computer software systems and services.  Moreover, demand for our
solutions may be reduced by a decline in overall demand for computer software
and services.  The current decline in overall technology spending may
cause our customers to reduce or eliminate software and services spending and
cause price erosion for our solutions, which would substantially affect our
sales of new software licenses and the average sales price for these
licenses.  Because of these market and economic conditions, we believe
there will continue to be uncertainty in the level of demand for our products
and services. Accordingly, we cannot assure you that we will be able to increase
or maintain our revenues.
6
We
may not get the full benefit of our tax credits.
Under the
United States Internal Revenue Code, companies that have not been operating
profitably are allowed to apply certain of their past losses to offset future
taxable income liabilities they may incur once they reach
profitability.  These amounts are known as net operating loss
carryforwards.  At December 31, 2007, we had approximately $25,700,000
of federal net operating tax loss carryforwards expiring at various dates
through 2026.  Because of certain provisions of the Tax Reform Act of
1986 related to change of control, however, we may not get the full benefit of
these loss carryforwards.  If we are limited from using net operating
loss carryforwards to offset any of our income, this would increase our taxes
owed and reduce our cash for operations.
RISKS
RELATED TO OUR COMMON STOCK AND THIS OFFERING
Holders
of our common stock may have difficulty in selling those shares.
Our
common stock is not traded on any securities exchange or an inter-dealer
quotation system.  Prices for our common stock are quoted on the
Over-the-Counter (OTC) Bulletin Board.  Securities whose prices are
quoted on the OTC Bulletin Board do not enjoy the same liquidity as securities
that trade on a securities exchange or an inter-dealer quotation
system.  As a result, you may have difficulty in selling shares of our
common stock.  In addition, our common stock is a "penny stock" as
that term is defined in the Securities Exchange Act of 1934.  Brokers
effecting transactions in a "penny stock" are subject to additional customer
disclosure and record keeping obligations, including disclosure of the risks
associated with low price stocks, stock quote information, and broker
compensation.  In addition, brokers effecting transactions in a "penny
stock" are also subject to additional sales practice requirements under Rule
15g-9 of the Exchange Act including making inquiries into the suitability of
"penny stock" investments for each customer or obtaining a prior written
agreement for the specific "penny stock" purchase.  Because of these
additional obligations, some brokers will not effect transactions in "penny
stocks."
Our
stock price has been volatile.
Quarterly
operating results have fluctuated and are likely to continue to fluctuate
significantly.  The market price of our common stock has been and may
continue to be highly volatile.  Factors that are difficult to
predict, such as quarterly revenues and operating results, limited trading
volumes and overall market performance, will have a significant effect on the
price for shares of our common stock.  Revenues and operating results
have varied considerably in the past from period to period and are likely to
vary considerably in the future.  We plan product development and
other expenses based on anticipated future revenue. If revenue falls below
expectations, financial performance is likely to be adversely affected because
only small portions of expenses vary with revenue.  As a result,
period-to-period comparisons of operating results are not necessarily meaningful
and should not be relied upon to predict future performance.
Our
shares are subject to dilution as a result of the exercise of our
warrants.
An
aggregate of 121,429 warrants, expiring in 2011, to purchase such number of
shares of our common stock issued to the same
investors, were
outstanding as of December 31, 2007 and exercisable at a current exercise
price of $0.35 per share.  The current exercise prices of these
warrants are subject to adjustment if and whenever we issue or sell additional
shares of our common stock for less than 95% of the market price on the date of
issuance or sale, in which case the exercise price will be reduced to a new
exercise price in accordance with the terms of the warrant.  Pursuant
to the terms of these warrants, the issuance or sale of additional shares of
common stock resulting from (1) the exercise of stock options to be granted in
the future to employees or directors pursuant to our existing stock option plans
or (2) the exercise of any convertible security, in either case outstanding on
the date of the warrant, will not trigger any adjustment to the exercise price
of the warrants.  The issuance of any additional shares of our common
stock as a consequence of the exercise of any of the warrants may result in
significant dilution to our stockholders and may depress the market price of our
common stock.  Further, if the exercise price of the warrants is
adjusted, the additional shares of our common stock that would be issued upon
exercise of the warrants as a result of such adjustment may also result in
significant dilution to our stockholders.
7
Provisions
of our certificate of incorporation, as amended, and by-laws and Delaware law
might discourage, delay or prevent a change of control of or changes in our
management and, as a result, depress the trading price of our common
stock.
Our
certificate of incorporation, as amended (the "Certificate of Incorporation"),
and by-laws contain provisions that could discourage, delay or prevent a change
in control or changes in our management that our stockholders may deem
advantageous.  These provisions:
·
require
      super-majority voting to amend some provisions in our Certificate of
      Incorporation and by-laws;
·
establish
      a staggered board of directors;
·
limit
      the ability of our stockholders to call special meetings of
      stockholders;
·
prohibit
      stockholder action by written consent, which requires all stockholder
      actions to be taken at a meeting of our
  stockholders;
·
provide
      that the board of directors is expressly authorized to make, alter or
      repeal our by-laws; and
·
establish
      advance notice requirements for nominations for election to our board or
      for proposing matters that can be acted upon by stockholders at
      stockholder meetings.
In
addition, we are subject to Section 203 of the Delaware General Corporation Law,
which, subject to some exceptions, prohibits "business combinations" between a
Delaware corporation and an "interested stockholder," which is generally defined
as a stockholder who becomes a beneficial owner of 15% or more of a Delaware
corporation's voting stock for a three-year period following the date that the
stockholder became an interested stockholder.  Section 203 could have
the effect of delaying, deferring or preventing a change in control that our
stockholders might consider to be in their best interests.
These
anti-takeover defenses could discourage, delay or prevent a transaction
involving a change in control.  These provisions could also discourage
proxy contests and make it more difficult for you and other stockholders to
elect directors of your choosing and cause us to take corporate actions other
than those you desire.
We
do not expect to pay any cash dividends for the foreseeable future.
We do not
anticipate that we will pay any cash dividends to holders of our common stock in
the foreseeable future.  Accordingly, investors must rely on sales of
their common stock after price appreciation, which may never occur, as the only
way to realize any future gains on their investment.  Investors
seeking cash dividends in the foreseeable future should not purchase our common
stock.
8
INFORMATION
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains "forward-looking statements" that represent our beliefs,
projections and predictions about future events.  These statements are
necessarily subjective and involve known and unknown risks, uncertainties and
other important factors that could cause our actual results, performance or
achievements, or industry results, to differ materially from any future results,
performance or achievement described or implied by such statements.
Forward-looking statements regarding our plans, objectives, expectations,
intentions, future financial performance, future financial condition and other
statements are not historical facts. Whenever you read a statement that is not
solely a statement of historical fact (such as when we use words such as
"believe", "anticipate", "hope", "intend", "expect", "estimate", "plan", "will",
"would", "could", "likely" and other similar words, phrases and statements), you
should understand that our expectations may not be correct. We do not guarantee
that the transactions and events described in this prospectus will happen as
described or that any positive trends noted in this prospectus will continue.
The forward-looking information contained in this prospectus is generally
located under the headings "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business" and "Risk Factors", but may be
found in other locations as well.
In
addition, through our senior management, from time to time we make
forward-looking statements concerning our expected future operations and
performance and other developments.  Such forward-looking statements
are necessarily estimates reflecting our best judgment based upon current
information and involve a number of risks and uncertainties.  Other
factors may affect the accuracy of these forward-looking statements and our
actual results may differ materially from the results anticipated in these
forward-looking statements.  While it is impossible to identify all
such factors, factors that could cause actual results to differ materially from
those estimated by us include, but are not limited to, those factors or
conditions described under "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and general
conditions in the economy and capital markets.
All
forward-looking statements included herein attributable to Cover-All or any
person acting on Cover-All's behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in this
section.  Except to the extent required by applicable laws and
regulations, we undertake no obligations to update these forward-looking
statements to reflect events or circumstances after the date of this document or
to reflect the occurrence of unanticipated events.
You
should review carefully the section entitled "Risk Factors" beginning on page 4
for a discussion of these and other risks that relate to our business and
investing in shares of our common stock.
USE
OF PROCEEDS
The
selling stockholders will receive all of the net proceeds from the sale of the
shares of our common stock offered for resale by them under this
prospectus.  We will not receive any proceeds from the resale of
shares of our common stock by the selling stockholders covered by this
prospectus; however, we will receive proceeds from cash payments made in
connection with the exercise of warrants held by selling stockholders that are
covered by this prospectus.
9
MARKET
PRICE OF AND DIVIDENDS ON COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Our
common stock trades in the over-the-counter market on the OTC Bulletin
Board.  The quotations below reflect the high and low bid prices for
our common stock since January 1, 2006 as traded in the over-the-counter market
on the OTC Bulletin Board.  The quotations below reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.
2008:
High
Low
3
rd
Quarter
$
1.20
$
0.72
2
nd
Quarter
1.22
0.76
1
st
Quarter
1.38
0.95
2007:
High
Low
4
th
Quarter
$
1.53
$
1.12
3
rd
Quarter
1.50
1.24
2
nd
Quarter
1.25
0.92
1
st
Quarter
1.30
0.66
2006:
High
Low
4
th
Quarter
$
0.79
$
0.42
3
rd
Quarter
0.51
0.31
2
nd
Quarter
0.43
0.31
1
st
Quarter
0.58
0.35
The
closing sales price for our common stock on December 15, 2008 was $0.81, as
reported by the OTC Bulletin Board.
As of
December 15, 2008, there were 505 holders of record of our common
stock.  This number does not include beneficial owners who may hold
their shares in street name.
Dividends
We have
not paid any dividends on our common stock and do not anticipate paying any
dividends in the foreseeable future.
Shares
Eligible for Future Sale
In
general, under Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"), a person who acquires shares of our common stock in a
transaction not registered under the Securities Act and has beneficially owned
such shares for at least six months would be entitled to sell within any
three-month period those shares subject to certain restrictions, including
volume and manner of sale restrictions.
Under
Rule 144(d) under the Securities Act, a person who is not deemed to have been
one of our affiliates at any time during the 90 days preceding a sale, and
who has beneficially owned the shares proposed to be sold for at least six
months, is entitled to sell the shares without complying with the volume and
manner of sale restrictions of Rule 144.
10
Of our
shares of common stock outstanding, at least 9,776,584 shares were eligible for
resale under Rule 144, subject to the volume and manner of sale restrictions
thereof.
As of
December 15, 2008, at least 14,358,099 shares of our common stock were either
freely tradable or eligible for resale under Rule 144(d).
11
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The
following discussion should be read in conjunction with the consolidated
financial statements and related notes which appear elsewhere in this
prospectus.  This discussion contains forward-looking statements that
involve risks and uncertainties.  Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of various factors, including those discussed below and elsewhere in this
prospectus, particularly under the heading "Risk Factors."
Overview
We are a
supplier of software products for the property and casualty insurance industry,
supplying a wide range of professional services that support product
customization, conversion from existing systems and data integration with other
software or reporting agencies.  We also offer on-going support
services including incorporating recent insurance rate and rule changes in our
solutions.  These support services also include analyzing the changes,
developments, quality assurance, documentation and distribution of insurance
rate and rule changes.
We earn
revenue from software contract licenses, service fees from our Application
Service Provider ("ASP"), continuing maintenance fees for servicing the product
and professional services.  Total revenue for the three and nine
months ended September 30, 2008 increased to $4,791,000 and $10,297,000 from
$1,889,000 and $5,759,000, respectively, for the three and nine months ended
September 30, 2007, mainly due to an increase in all revenue categories for the
three and nine months ended September 30, 2008.
The
following is an overview of the key components of our revenue and other
important financial data for the three and nine months ended September 30,
2008:
Software Licenses.
Our license revenue in
the three and nine months ended September 30, 2008 of $2,551,000 and $3,521,000,
respectively, was from one new large customer and existing customers who chose
to renew, add onto or extend their use of our software.  For the three
and nine months ended September 30, 2007, we generated $269,000 and $764,000,
respectively, in license revenue.  Our new software license revenue is
affected by the strength of general economic and business conditions and the
competitive position of our software products.  New software license
sales are characterized by long sales cycles and intense
competition.  Timing of new software license sales can substantially
affect our quarterly results.
Maintenance.
Maintenance
revenue was $1,089,000 and $3,036,000, respectively, in the three and nine
months ended September 30, 2008 compared to $775,000 and $2,419,000,
respectively, in the same periods in 2007.  Maintenance revenue is
influenced primarily by the following factors: the renewal rate from our
existing customer base, the amount of new maintenance associated with new
license sales and annual price increases.
Professional Services.
The
increase in professional services revenue, from $460,000 and $1,422,000,
respectively, in the three and nine months ended September 30, 2007, to $635,000
and $2,219,000, respectively, in the same periods of 2008, was a result of
increased demand for new software capabilities and customizations from our
current customer base and one new customer.
ASP Services.
ASP
services revenue was $516,000 and $1,521,000, respectively, in the first three
and nine months of 2008 compared to $385,000 and $1,154,000, respectively, in
the same periods in 2007, due to an expanded and extended contractual
relationship with two large customers.
12
Income before Provision for Income
Taxes.
Income before provision for income taxes was $1,694,000
and $2,566,000, respectively, in the three and nine months ended September 30,
2008 compared to $2,000 and $144,000, respectively, in the same periods of 2007
primarily due to an increase in all revenue categories and our continuing and
ongoing effort to maintain our expenses in line with our revenues for the nine
months ended September 30, 2008.
Net Income.
Net
income for the three and nine months ended September 30, 2008 increased
to $1,694,000 and
$2,566,000, respectively, from $2,000 and $144,000, respectively, in the same
periods of 2007 as a result of an increase
in all revenue
categories
and our
continuing and ongoing effort to maintain our expenses in line with our revenues
for the nine months ended September 30, 2008.
Cash Flow.
We
generated $5,345,000 in positive cash flow from operations in the first nine
months of 2008 and ended the period with $4,085,000 in cash and cash equivalents
and $2,115,000 in accounts receivable.
We
continue to face challenges to growth in 2008 mainly in the marketing and
selling of our products and services to new customers, caused by a number of
factors, including long sales cycles and general economic and business
conditions.  In addition, there are risks related to customers'
acceptance and implementation delays, which could affect the timing and amount
of license revenue we are able to recognize.  However, given the
positive response to our new software from existing customers, the significant
expansion of our relationship with a very large customer and the introduction of
additional software capabilities, we are expanding our sales and marketing
efforts to both new and existing customers.  Consequently, we are
incurring additional sales and marketing expense in advance of generating the
corresponding revenue.
Results of Operations for
the Three and Nine Months Ended September 30, 2008 and 2007
The
following table sets forth, for the periods indicated, certain items from the
consolidated statements of operations expressed as a percentage of total
revenues:
Three
      Months
Ended
      September 30,
Nine
      Months
Ended
      September 30,
2008
2007
2008
2007
Revenues:
License
53.2
%
14.3
%
34.2
%
13.3
%
Maintenance
22.7
41.0
29.5
42.0
Professional
    Services
13.3
24.4
21.5
24.7
Applications Service Provider
      ("ASP")
Services
10.8
20.3
14.8
20.0
Total Revenues
100.0
100.0
100.0
100.0
Cost
      of Revenues:
License
16.8
15.8
13.2
14.5
Maintenance
14.5
34.9
17.1
35.0
Professional
    Services
6.7
14.0
9.3
13.9
ASP Services
8.2
6.7
9.2
5.8
Total Cost of
      Revenues
46.2
71.4
48.8
69.2
Direct Margin
53.8
28.6
51.2
30.8
Operating
      Expenses:
Sales and
    Marketing
2.7
8.2
5.5
7.7
General and
      Administrative
8.9
14.4
14.0
14.6
Research and
      Development
7.2
5.6
7.1
5.1
Total Operating
      Expenses
18.8
28.2
26.6
27.4
Operating Income
35.0
0.4
24.6
3.4
13
Other
      (Expense) Income:
Interest (Expense) Income –
      Net
0.3
(0.3
)
—
(0.9
)
Other Income
0.1
—
0.3
—
Total Other (Expense)
      Income
0.4
(0.3
)
0.3
(0.9
)
Income Before Income
      Taxes
35.4
0.1
24.9
2.5
Income
      Taxes (Benefit)
—
—
—
—
Net
      Income
35.4
%
0.1
%
24.9
%
2.5
%
Three and Nine Months Ended
September 30, 2008 Compared to Three and Nine Months Ended September 30,
2007
Total
revenues for the three months ended September 30, 2008 were $4,791,000 compared
to $1,889,000 for the same period in 2007.  License fees were
$2,551,000 for the three months ended September 30, 2008 compared to $269,000 in
the same period in 2007, as a result of a new sale to a large customer in
2008.  For the three months ended September 30, 2008, maintenance
revenues were $1,089,000 compared to $775,000 in the same period of the prior
year primarily due to annual renewals from existing customers and the new
customer contracts signed in 2008.  For the three months ended
September 30, 2008, ASP revenues were $516,000 compared to $385,000 in the same
period for the prior year, due to an expanded and extended contractual
relationship with two customers
.
Professional services
revenue contributed $635,000 in the three months ended September 30, 2008
compared to $460,000 in the third quarter of 2007, as a result of increased
demand for new software capabilities and customizations from our current
customer base.
For the
nine months ended September 30, 2008, total revenues were $10,297,000 compared
to $5,759,000 in the same period of the prior year.
Cost of
sales increased to $2,216,000 and $5,022,000, respectively, for the three and
nine months ended September 30, 2008 as compared to $1,348,000 and $3,986,000,
respectively, for the same periods in 2007, due to personnel-related costs and
commission and other costs related to the new license sale in the third quarter
of 2008.  We are expanding our delivery bandwidth while maintaining
our costs in line with our revenues through improved productivity and new
technology in order to meet our increasing demand.  Non-cash
capitalized software amortization was $236,000 and $682,000, respectively, for
the three and nine months ended September 30, 2008 as compared to $212,000 and
$664,000, respectively, for the same periods in 2007.  We capitalized
$375,000 and $909,000, respectively, of software development costs in the three
and nine months ended September 30, 2008 as compared to $270,000 and $836,000,
respectively, in the same periods in 2007.
Research
and development expenses increased to $347,000 and $729,000, respectively, for
the three and nine months ended September 30, 2008 as compared to $107,000 and
$291,000, respectively, for the same periods in 2007, primarily as a result of
our efforts to develop new capabilities to better service our
customers.  We are continuing our ongoing efforts to enhance the
functionality of our products and solutions and believe that investments in
research and development are critical to our remaining competitive in the
marketplace.
Sales and
marketing expenses were $130,000 and $573,000, respectively, for the three and
nine months ended September 30, 2008 as compared to $154,000 and $445,000,
respectively, in the same periods of 2007.  This decrease in the three
months ended September 30, 2008 was primarily due to a reduction in our sales
and marketing headcount, resulting in a decrease in personnel related
costs.
14
General
and administrative expenses increased to $422,000 and $1,443,000, respectively,
in the three and nine months ended September 30, 2008 as compared to $271,000
and $843,000, respectively, in the same periods in 2007.  This
increase in 2008 was mainly due to stock-based compensation related to options
and warrants issued to one of our executives and stock-based compensation to our
non-employee directors and bonuses accrued based on estimated 2008
results.
Results of Operations for
the Years Ended December 31, 2007, 2006 and 2005
The
following table sets forth, for the years indicated, certain items from the
consolidated statements of operations expressed as a percentage of total
revenues:
Year
      Ended December 31,
2007
2006
2005
Revenues:
License
27.4
%
18.9
%
18.2
%
Maintenance
32.8
47.6
50.1
Professional
    Services
23.7
16.1
14.7
Applications Service Provider
      ("ASP") Services
16.1
17.4
17.0
Total Revenues
100.0
100.0
100.0
Cost
      of Revenues:
License
11.7
17.6
21.6
Maintenance
28.6
41.3
39.0
Professional
    Services
13.1
7.8
6.9
ASP Services
4.8
5.2
2.6
Total Cost of
      Revenues
58.2
71.9
70.1
Direct Margin
41.8
28.1
29.9
Operating
      Expenses:
Sales and
    Marketing
8.2
12.9
16.9
General and
      Administrative
14.7
20.1
19.7
Research and
      Development
5.2
6.4
11.1
Provision for Doubtful
      Accounts
0.5
—
—
Total Operating
      Expenses
28.6
39.4
47.7
Operating Income
      (Loss)
13.2
(11.3
)
(17.8
)
Other
      Expense (Income):
Interest Expense
0.5
2.3
2.5
Interest Expense - Related
      Party
0.1
0.1
0.1
Interest Income
—
—
(0.1
)
Other Expense
—
—
—
Other Income
—
—
(0.5
)
Total Other
    Expense
0.6
2.4
2.0
(Loss) Income Before Income Taxes
      Expense
12.6
(13.7
)
(19.8
)
Income
      Taxes (Expense)
—
—
—
Net
      (Loss) Income
12.6
%
(13.7
)%
(19.8
)%
15
Year Ended December 31, 2007
Compared with Year Ended December 31, 2006
Revenues
Total
revenues were $9,777,000 for the year ended December 31, 2007 compared to
$7,288,000 for the year ended December 31, 2006, an increase of
34%.  License fees were $2,683,000 for the year ended December 31,
2007 compared to $1,376,000 in 2006, an increase of 95%, as a result of two new
customer license sales and sales to existing customers in 2007.  For
the year ended December 31, 2007, maintenance revenues were $3,210,000 compared
to $3,471,000 of the prior year, due to the non-renewal of several existing
customers.  We expect that the new license sales in 2007 will generate
significant additional maintenance revenue in 2008.  Professional
services revenue contributed $2,316,000 for the year ended December 31, 2007
compared to $1,176,000 for the year ended December 31, 2006 as a result of
increased demand for new software capabilities and customizations from our two
new customers signed in 2007 and our current customer base.  ASP
revenues were $1,568,000 for the year ended December 31, 2007 compared to
$1,265,000 for the year ended December 31, 2006 due primarily to an expanded and
extended contractual relationship with two large customers.
Cost of
sales increased to $5,688,000 for the year ended December 31, 2007 as compared
to $5,244,000 for 2006, due to higher salaries and personnel-related expenses
associated with staffing changes.  Non-cash capitalized software
amortization was $880,000 for the year ended December 31, 2007 as compared to
$1,114,000 in 2006.  We capitalized software development costs of
$1,084,000 in 2007 compared to $888,000 in 2006.
Expenses
R
esearch and
Development
.  Research and development expenses increased to
$510,000 for the year ended December 31, 2007 from $464,000 in 2006, primarily
due to the need for our research and development staff to work on various new
software capabilities for our new and prospective customers.  We
intend to continue to maintain our ongoing effort to enhance the functionality
of our products and solutions to remain competitive.
S
ales and
Marketing
.  Sales and marketing expenses decreased to $800,000
for the year ended December 31, 2007 from $943,000 in 2006, primarily due to a
reduction in our personnel-related expenses associated with a reduction in
staffing in 2007.
G
eneral and
Administrative
.  General and administrative expenses were
$1,442,000 in 2007 as compared to $1,461,000 in 2006.  The decrease in
the general and administrative expenses was mainly due to a reduction in our
legal fees in 2007 partially offset by an increase in stock-based
compensation.  In 2006, the increase in legal fees was related to a
potential acquisition.
O
ther Expense
.  We
had $0 other expense for the year ended December 31, 2006 compared to $(1,000)
for the year ended December 31, 2006.  In 2006, other expense was
related to a settlement of late fees related to one customer.
O
ther Income
.  We
had $0 of other income for the year ended December 31, 2006 compared to $3,000
of other income for the year ended December 31, 2006.  In 2006, other
income was related to late fees collected from customers.
Provision for Doubtful
Accounts
.  We had $51,000 provision for doubtful accounts in
2007 compared to $0 for 2006, due to the write-off of the account receivable
balances of two customers who decided not to purchase our software.
16
Year Ended December 31, 2006
Compare with Year Ended December 31, 2005
Revenues
Total
revenues were $7,288,000 for the year ended December 31, 2006 compared to
$7,255,000 for the year ended December 31, 2005.  License fees were
$1,376,000 for the year ended December 31, 2006 compared to $1,323,000 in the
same period in 2005 as a result of no new customer sales and sales to existing
customers in 2006 and one new customer license in 2005.  For the year
ended December 31, 2006, maintenance revenues were $3,471,000 compared to
$3,637,000 in the same period of the prior year, due in part to the non-renewal
of several existing customers.  Professional services revenue
contributed $1,177,000 for the year ended December 31, 2006 compared to
$1,064,000 for the year ended December 31, 2005 as a result of increased demand
for new software capabilities and customizations from our current customer
base.  ASP revenues were $1,265,000 for the year ended December 31,
2006 compared to $1,231,000 for the year ended December 31, 2005 due primarily
to an expanded and extended contractual relationship with a large
customer.
Cost of
sales increased to $5,244,000 for the year ended December 31, 2006 as compared
to $5,087,000 for 2005, due to staff-related expenses.  Non-cash
capitalized software amortization was $1,114,000 for the year ended December 31,
2006 as compared to $981,000 in 2005.  We capitalized software
development costs of $888,000 in 2006 compared to $701,000 in 2005.
Expenses
R
esearch and
Development
.  Research and development expenses decreased to
$464,000 for the year ended December 31, 2006 from $809,000 in 2005, primarily
due to an increase concentration on capitalizable projects and the need for our
research and development staff to work on implementations of MIC.  We
continue to maintain our ongoing effort to enhance the functionality of our
products and solutions.
S
ales and
Marketing
.  Sales and marketing expenses decreased to $943,000
for the year ended December 31, 2006 from $1,222,000 in 2005, primarily due to a
reduction in our marketing and sales staff in 2006.
G
eneral and
Administrative
.  General and administrative expenses were
$1,461,000 in 2006 as compared to $1,431,000 in 2005.  The increase in
the general and administrative expenses was mainly due to directors fees paid
and an increase in legal fees related to a potential acquisition in
2006.
O
ther Expense
.  We
had $1,000 of other expense for the year ended December 31, 2006 compared to $0
of other expense for the year ended December 31, 2005.  In 2006, other
expense was related to a settlement of late fees related to one
customer.
O
ther Income
.  We
had $3,000 of other income for the year ended December 31, 2006 compared to
$39,000 of other income for the year ended December 31, 2005.  In 2006
and 2005, other income was related to late fees collected from
customers.
Provision for Doubtful
Accounts
.  We had no provision for doubtful accounts in
2006
and
2005.
17
Liquidity and Capital
Resources
Sources of
Liquidity
We have
funded our operations primarily from cash flow from operations and the proceeds
from our issuance in 2001 of $1,800,000 aggregate principal amount of 8%
convertible debentures due in 2008, which we refer to as the 2008 Debentures,
and our issuance in 2002 of $700,000 aggregate principal amount of 8%
convertible debentures due 2009, which we refer to as the 2009
Debentures.  Cash from operations results primarily from net income
from the income statement less non-cash expenses (depreciation and amortization)
and changes in working capital from the balance sheet.
Our
largest source of operating cash flows is cash collections from our customers
following the purchase or renewal of software licenses, product support
agreements and other related services.  Payments from customers for
software licenses are generally received at the beginning of the contract
term.  Payments from customers for product support and ASP services
are generally received in advance on a quarterly basis.  Payments for
professional services are generally received 30 days after the services are
performed.
At
December 31, 2007, we had cash and cash equivalents of $11,000 compared to
cash and cash equivalents of $132,000 at December 31, 2006.  The
decrease in cash and cash equivalents is primarily attributable to the decrease
in maintenance revenue and the timing of one of our large license sales in
2007.  We had a significant increase in accounts receivable due to a
license sale in the fourth quarter of 2007 to a major insurance
company.
At
September 30, 2008, we had cash and cash equivalents of approximately $4,085,000
compared to cash and cash equivalents of approximately $150,000 at September 30,
2007.  The increase in cash and cash equivalents is primarily
attributable to the increase in all revenue categories in the nine months ended
September 30, 2008.
Cash
Flows
In 2001,
we issued $1,800,000 aggregate principal amount of 8% convertible debentures due
2008 (the "2008 Debentures"), and in 2002, we issued $700,000 aggregate
principal amount of 8% convertible debentures due 2009 (the "2009
Debentures").  The 2008 Debentures were issued to two funds managed by
RENN Capital Group, Inc. (each of whom or their successor are selling
shareholders hereunder), for an aggregate of $1,400,000, and the remainder of
the 2008 Debentures were issued to John W. Roblin, our Chairman of the Board and
Chief Executive Officer (and who at the time was also our President), who
purchased $100,000 in principal amount of debentures, and certain other
investors, who purchased an aggregate of $300,000 in principal amount of the
2008 Debentures.  All of the 2009 Debentures were issued to the RENN
funds.  Mr. Russell Cleveland is the President, Chief Executive
Officer, sole director and majority shareholder of RENN Capital
Group.  Mr. Cleveland was named one of our directors in 2001 after the
consummation of the sale of the 2008 Debentures.
In March
2007, the RENN funds elected to convert all of their remaining unpaid principal
amount due on their 2008 Debentures and 2009 Debentures, totaling $1,631,601,
into shares of our common stock at the conversion price of $0.30 per share in
lieu of receiving such payments in cash.  In June 2007, the remaining
holders of the 2008 Debentures elected to convert their monthly principal
installments due in 2007 totaling $33,617 into shares of our common stock at the
conversion rate of $.30 per share in lieu of receiving such payments in
cash.  In connection with these conversions, we issued to the holders
an aggregate of 5,550,725 shares of our common stock.  Of the shares
of common stock issued in connection with these conversions, an aggregate of
5,438,670 shares were issued to the RENN funds.  After giving effect
to these conversions, as of December 31, 2007, our only outstanding debentures
were an aggregate principal amount of $262,265 that remained outstanding on the
2008 Debentures.  Of such outstanding amount, Mr. Roblin held
$65,566.  In June 2008, Mr. Roblin and certain other investors elected
to convert all of the then-remaining unpaid principal amount due on their 2008
Debentures, totaling $262,265, into an aggregate of 874,217 shares of our common
stock at the conversion price of $0.30 per share.  After giving effect
to this conversion, as of June 25, 2008, we had no outstanding
debentures.
18
Our
ability to generate cash has depended on a number of different factors,
primarily our ability to continue to secure and retain customers and generate
new license sales and related product support agreements.  In order to
attract new customers and maintain or grow existing revenue streams, we utilize
our existing sources of capital to invest in sales and marketing, technology
infrastructure and research and development.
Our
ability to continue to control expenses, maintain existing revenue streams and
anticipate new revenue will impact the amounts and certainty of cash
flows.  We intend to maintain our expenses in line with existing
revenue streams from maintenance support, ASP services and professional
services.
Balance
sheet items that should be considered in assessing our liquidity include cash
and cash equivalents, accounts receivable, prepaid expenses, accounts payable
and accrued liabilities.  Income statement items that should be
considered in assessing our liquidity include revenue, cost of revenue (net of
depreciation and amortization), operating expenses (net of depreciation and
amortization) and other expenses.  Statement of cash flows items that
should be considered in assessing our liquidity include net cash flows from
operating activities, net cash flows from investing activities and net cash
flows from financing activities.
In
December 31, 2007, we had working capital of $545,000 compared to working
capital deficit of $898,000 at December 31, 2006.  This increase in
our working capital resulted primarily from a increase in our license,
professional services and ASP revenues.  Net cash provided from
operating activities totaled approximately $907,000 in 2007 compared to
approximately $738,000 in 2006.  In 2007, cash flow from operating
activities represented the Company's principal source of cash and results
primarily from net income (loss), less non-cash expense and changes in working
capital.
At
September 30, 2008, we had working capital of approximately $3,423,000 compared
to a working capital (deficit) of approximately $(520,000) at September 30,
2007.  This increase in our working capital resulted primarily from an
increase in all revenue categories and our continuing and ongoing effort to
maintain our costs in line with our revenues.  For the nine months
ended September 30, 2008, net cash provided from operating activities totaled
approximately $5,345,000 compared to approximately $828,000 for the nine months
ended September 30, 2007.  In 2008, cash flow from operating
activities represented the Company's principal source of cash and results
primarily from net income, less non-cash expense and changes in working
capital.  The Company had a significant increase in its accounts
receivable in 2008 due to the license sale to one large customer offset by
non-cash expenses and payment of liabilities.
In 2007,
net cash used for investing activities was approximately $1,101,000 compared to
approximately $907,000 in 2006.  We expect capital expenditures and
capital software expenditures to continue to be funded by cash generated from
operations.  We use cash to invest in capital and other assets to
support our growth.  In 2007, net cash provided from financing
activities was approximately $73,000 compared to approximately $4,000 in
2006.  The cash provided from financing activities in 2007 and 2006
consisted of proceeds from the exercise of stock options and
warrants.
For the
nine months ended September 30, 2008, net cash used for investing activities was
approximately $1,133,000 compared to approximately $853,000 for the nine months
ended September 30, 2007.  The Company expects capital expenditures
and capital software expenditures to continue to be funded by cash generated
from operations.  For the nine months ended September 30, 2008, net
cash provided from (used for) financing activities was approximately $(138,000)
compared to approximately $43,000 for the nine months ended September 30,
2007.  The cash provided from financing activities in 2008 consisted
of proceeds from the exercise of stock options and the purchase of treasury
stock related to the Company's share buyback plan.
19
Funding
Requirements
Our
primary uses of cash are for personnel-related expenditures, facilities and
technology costs.
We do not
anticipate any large capital expenditures that will require us to seek new
sources of capital.  We lease computer equipment for terms of three
years in order to have the latest available technology to serve our customers
and develop new products.
The 2008
Debentures were issued with an aggregate principal amount of $1,800,000, and the
2009 Debentures were issued with an aggregate principal amount of
$700,000.  Interest on the unpaid principal amount of the debentures
was payable at the rate of 8% per annum.  We had been required to pay,
since July 1, 2004 and July 1, 2005, respectively, monthly principal
installments in the amount of ten dollars ($10) per thousand dollars ($1,000) of
the then-remaining principal amount of the 2008 Debentures and 2009
Debentures.
In
January 2007, the holders of the 2008 Debentures and 2009 Debentures elected to
convert the remaining portion of their monthly principal installments due in
2006, totaling $119,807, into shares of our common stock at the conversion price
of $0.30 per share in lieu of receiving such installment payments in
cash.  On March 23, 2007, we issued an aggregate of 5,438,670 shares
of our common stock to the RENN funds in connection with their election to
convert an aggregate of $1,631,601 principal amount of their 2008 Debentures and
2009 Debentures, representing all of their remaining unpaid principal amount due
on the debentures, at a conversion price of $0.30 per share.
On June
25, 2008, we issued an aggregate of 874,217 shares of our common stock to John
Roblin, our Chairman and Chief Executive Officer and certain other investors in
connection with their election to convert an aggregate of $262,265 principal
amount of their 2008 Debentures, representing all of their remaining unpaid
principal amount due on the debentures, at a conversion price of $0.30 per
share.  As of September 30, 2008, we do not have any amounts
outstanding on the 2008 Debentures or 2009 Debentures.
On June
18, 2008, the Company announced that the Board of Directors authorized a share
buyback plan of up to 1,000,000 shares of the Company's common stock, in
accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as
amended.
For the
three and nine months ended September 30, 2008, the Company purchased an
aggregate of 201,870 shares of the Company's common stock on the open market at
an average purchase price of $0.82 per share for a total purchase price of
approximately $164,894.
We
prepare monthly cash flow projections on a rolling twelve-month basis based on a
detailed review of anticipated receipts and revenue from licenses, maintenance,
ASP and professional services.  We also perform a detailed review of
our disbursements, including fixed costs, variable costs, legal costs, payroll
costs and other specific payments, on a rolling twelve-month
basis.  Comparing estimated cash receipts to estimated payments, we
evaluate our ending cash balance monthly and determine whether our anticipated
cash flows from operations will be sufficient to meet our normal operating needs
for at least the next twelve months.
We
believe that our current cash balances and anticipated cash flows from
operations will be sufficient to meet our normal operating needs for at least
the next twelve months.  We do not anticipate any material changes in
our sources of and needs for capital.  Our ability to fund our working
capital needs and address planned capital expenditures will depend on our
ability to generate cash in the future.  We anticipate generating
future working capital through sales to new customers and continued sales and
services to our existing customers.
20
Our
future liquidity and capital resource requirements will depend on many factors,
including but not limited to the following trends and uncertainties we
face:
·
Our
      ability to generate cash is subject to general economic, financial,
      competitive and other factors beyond its
  control.
·
Our
      need to invest resources in product development in order to continue to
      enhance our current product, develop new products, attract and retain
      customers and keep pace with competitive product introductions and
      technological developments.
·
We
      experience intense competition in our industry and continuing
      technological changes.
·
Insurance
      companies typically are slow in making decisions and have numerous
      bureaucratic and institutional obstacles, which can make our efforts to
      attain new customers difficult.
·
We
      compete with a number of larger companies who have greater resources than
      those of ours.  We compete on the basis of insurance knowledge,
      products, services, price, technological advances and system functionality
      and performance.
·
Our
      operations continue to depend upon the continuing business of our existing
      customers and our ability to attract new
  customers.
·
A
      decline in software spending in the insurance industry could result in a
      decrease in our revenue.
Material
risks to cash flow from operations include delayed or reduced cash payments
accompanying sales of new licenses or a decline in our services
business.  There can be no assurance that changes in our plans or
other events affecting our operations will not result in materially accelerated
or unexpected expenditures.
We do not
expect for there to be a change in the mix or relative cost of our sources of
capital.
Net Operating Tax Loss
Carryforwards
At
December 31, 2007, we had approximately $25,700,000 of federal net operating tax
loss carryforwards expiring at various dates through 2026.  The Tax
Reform Act of 1986 enacted a complex set of rules which limits a company's
ability to utilize net operating tax loss carryforwards and tax credit
carryforwards in periods following an ownership change.  These rules
define ownership change as a greater than 50 percent point change in stock
ownership within a defined testing period which is generally a three-year
period.  As a result of stock which may be issued by us from time to
time or the result of other changes in ownership of our outstanding stock, we
may experience an ownership change and consequently our utilization of net
operating tax loss carryforwards could be significantly limited.
A 100%
valuation allowance has been established due to the uncertainty about the
realization of the deferred tax asset.  A deferred tax asset may be
used to reduce any subsequent period's income tax expense.  A deferred
tax asset would arise as a result of net operating tax loss carryforwards, which
would only be recorded as assets if it is deemed more likely than not that the
asset will be used in future fiscal periods.  It must be determined
that there is more than a 50% probablility that the Company will have positive
accounting income in the next fiscal period before the deferred tax asset can be
applied.  Based on the Company's recent profitability, management is
in the process of evaluating reinstating a portion of its deferred tax
asset.
Off-Balance Sheet
Transactions
We do not
maintain any off-balance sheet transactions, arrangements, obligations or other
relationships with unconsolidated entities or others that are reasonably likely
to have a material current or future effect on our condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources.
21
Critical Accounting Policies
and Estimates
The SEC
has issued cautionary advice to elicit more precise disclosure in this Item 2,
MD&A, about accounting policies management believes are most critical in
portraying our financial results and in requiring management's most difficult
subjective or complex judgments.
The
preparation of financial documents in conformity with accounting principles
generally accepted in the United States of America requires management to make
judgments and estimates.  On an on-going basis, we evaluate our
estimates, the most significant of which include establishing allowances for
doubtful accounts, a valuation allowance for our deferred tax assets and
determining the recoverability of our long-lived assets.  The basis
for our estimates are historical experience and various assumptions that are
believed to be reasonable under the circumstances, given the available
information at the time of the estimate, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily available from other sources.  Actual results may differ
from the amounts estimated and recorded in our financial
statements.
We
believe the following critical accounting policies affect our more significant
judgments and estimates used in the preparation of our consolidated financial
statements:
·
Revenue
      Recognition
·
Valuation
      of Capitalized Software
·
Valuation
      of Allowance for Doubtful Accounts
Receivable
Revenue
Recognition
Revenue
recognition rules are very complex, and certain judgments affect the application
of our revenue policy.  The amount and timing of our revenue is
difficult to predict, and any shortfall in revenue or delay in recognizing
revenue could cause our operating results to vary significantly from quarter to
quarter.  In addition to determining our results of operations for a
given period, our revenue recognition determines the timing of certain expenses,
such as commissions, royalties and other variable expenses.
Our
revenues are recognized in accordance with SOP 97-2, "Software Revenue
Recognition," as amended by SOP 98-4, "Deferral of the Effective Date of SOP
97-2, Software Revenue Recognition" and SOP 98-9, "Modification of SOP 97-2 with
Respect to Certain Transactions."  Revenue from the sale of software
licenses is predominately from standardized software and is recognized when
standard software modules are delivered and accepted by the customer, the
license term has begun, the fee is fixed or determinable and collectibility is
probable.  Revenue from software maintenance contracts and ASP
services is recognized ratably over the life of the contract.  Revenue
from professional consulting services is recognized when the service is
provided.
Amounts
invoiced to our customers in excess of recognized revenues are recorded as
deferred revenues.  The timing and amounts invoiced to customers can
vary significantly depending on specific contract terms and can therefore have a
significant impact on deferred revenues in any given period.
Our
revenue is derived from the licensing of our software products, professional
services, maintenance and support and ASP services.  We recognize
revenue when persuasive evidence of an arrangement exists, we have delivered the
product or performed the service, the fee is fixed or determinable and
collection is probable.
License
Revenue.
We recognize our license revenue upon delivery,
provided collection is determined to be probable and no significant obligations
remain.
22
Services and Support
Revenue
.  Our services and support revenue is composed of
professional services (such as consulting services and training) and maintenance
and support and ASP services.  Our professional services revenue is
recognized when the services are performed.  Our maintenance and
support and ASP offerings are recognized ratably over the term of the
arrangement.
Multiple Element
Arrangement
.  We enter into revenue arrangements in which a
customer may purchase a combination of software, maintenance and support, and
professional services (multiple-element arrangements).  When
vendor-specific objective evidence ("VSOE") of fair value exists for all
elements, we allocate revenue to each element based on the relative fair value
of each of the elements.  VSOE of fair value is established by the
price charged when that element is sold separately.  For maintenance
and support, VSOE of fair value is established by renewal rates when they are
sold separately.  For arrangements where VSOE of fair value exists
only for the undelivered elements, we defer the full fair value of the
undelivered elements and recognize the difference between the total arrangement
fee and the amount deferred for the undelivered items as revenue, assuming all
other criteria for revenue recognition have been met.
Valuation
of Capitalized Software
Costs for
the conceptual formulation and design of new software products are expensed as
incurred until technological feasibility has been established.  Once
technological feasibility has been established, we capitalize costs to produce
the finished software products.  Capitalization ceases when the
product is available for general release to customers.  Costs
associated with product enhancements that extend the original product's life or
significantly improve the original product's marketability are also capitalized
once technological feasibility has been established.  Amortization is
calculated on a product-by-product basis as the greater of the amount computed
using (a) the ratio that current gross revenues for a product bear to the total
of current and anticipated future gross revenues for that product or (b) the
straight-line method over the remaining economic life of the
product.  At each balance sheet date, the unamortized capitalized
costs of each computer software product is compared to the net realizable value
of that product.  If an amount of unamortized capitalized costs of a
computer software product is found to exceed the net realizable value of that
asset, such amount will be written off.  The net realizable value is
the estimated future gross revenues from that product reduced by the estimated
future costs of completing and deploying of that product, including the costs of
performing maintenance and customer support required to satisfy our
responsibility set forth at the time of sale.
Valuation
of Allowance for Doubtful Accounts Receivable
Management's
estimate of the allowance for doubtful accounts is based on historical
information, historical loss levels, and an analysis of the collectibility of
individual accounts.  We routinely assess the financial strength of
our customers and based upon factors concerning credit risk, establish an
allowance for uncollectible accounts.  Management believes that
accounts receivable credit risk exposure beyond such allowance is
limited.
23
BUSINESS
General
We
provide state-of-the-art software products, services and solutions to the
property and casualty insurance industry.  Our customers include
insurance companies, agents, brokers and managing general agents
(MGAs).
Our
software products and services focus on the functions required to market,
underwrite, rate, issue, print, bill and support the entire life cycle of
insurance policies.  Our products and services combine an in-depth
knowledge of property and casualty insurance with innovative solution designs
using state-of-the-art technology.  Our products are either available
"off-the-shelf" or customized to specific customer needs.  Our
software can be licensed for customer use on their own platforms or can be
provided through our application services provider, referred to as "ASP," using
third party technology platforms and support.
We also
provide a wide range of professional services that support product
customization, conversion from existing systems and data integration with other
software or reporting agencies.  We also offer on-going support
services including incorporating recent insurance rate and rule changes in our
solutions.  These support services also include analyzing the changes,
developments, quality assurance, documentation and distribution of insurance
rate and rule changes.
We earn
revenue from software contract licenses, service fees from ASPs, continuing
maintenance fees for servicing the product and professional
services.
We were
incorporated in Delaware in April 1985 as Warner Computer Systems, Inc. and
changed our name to Warner Insurance Services, Inc. in March 1992.  In
June 1996, we changed our name to Cover-All Technologies Inc. Our products and
services are offered through our wholly-owned subsidiary, Cover-All Systems,
Inc., also a Delaware corporation.
Products
My
Insurance Center
In 2001,
we announced the creation of My Insurance Center, referred to as "MIC," a
customizable and configurable Internet-enabled software platform and suite of
product components that was developed to provide insurance agents, brokers and
carriers with integrated workflows and access to real-time information. We
continue to expand MIC with new capabilities in response to customer
needs.
MIC is
designed to be the platform for the entire insurance process from the insured
through agents, brokers, insurance companies and reinsurers.  MIC is
designed to serve both large and small organizations and to serve the "extended
enterprise" by using advanced security to extend capabilities beyond the
client's walls to partners, suppliers and customers.  It is designed
to be a low cost and variable cost platform that meets or exceeds security/audit
standards required by sophisticated data centers.
MIC was
designed to segregate functionality and access to data to the individual
user.  These capabilities are configured and managed by the client and
can be "changed" in real time by authorized users.  Additionally, all
changes are tracked by user, date and time to provide audit trails and
controls.  These capabilities enable our clients to manage and monitor
their business as it happens, in real time as well as help them address the
increasing demands of regulatory compliance.
24
New
capabilities have been created in the last twelve months that extend the
functionality of MIC to the submission of business and include underwriting
rules, support for insurance binders, new billing functionality including
commission management and installment support,  electronic
underwriting files, milestone-driven workflows, which are customizable based
upon definable conditions like completed applications and underwriting
information, policy dashboards that include premium and loss information, an
innovative structure that supports policy level profitability and various other
functionality.  The architecture of MIC enables Cover-All to introduce
and customize capabilities in short cycle times that allow our customers to be
responsive and nimble.
MIC is
designed to fully support STP (Straight Through Processing). MIC enables our
customers to utilize our rating, policy issuance, billing and other software
components into a fully-integrated platform that, among other things, eliminates
redundant data entry.  Information is stored in a client-centric
database and becomes immediately available to other users or
functions.  MIC may be customized to generate user alerts when a
user-specified condition occurs.  Additionally, MIC has been designed
to allow the customer to configure features according to their own look and feel
preferences and workflow processes.  For instance, the browser-based
user interface allows employees, agents and other end-users to personalize their
desktops so they see only the information they need or desire.  MIC
allows our customers to reduce costs, leverage the latest technologies, better
manage risk and provide better service to their customers.
MIC is
built upon our Customer Insurance Database, referred to as "CI," that brings
together policy, billing and information from other business functions into an
integrated "customer view" that enables better customer service and
coordination.  A key component of CI is the Insurance Policy Database,
referred to as "IPD."  IPD is a relational database that holds
detailed policy and policy history data for more than forty lines of commercial
property and casualty insurance and has been designed to bring powerful data
access and reporting capabilities to the desktop.
MIC is
being made available to users either for in-house implementation or through our
ASP.  Combined with our client-centric database, MIC has an integrated
and flexible architecture designed to enable our customers to make rapid
business and technological changes.
MIC
offers the following features and benefits:
·
Data
      Integration
– IPD is an integrated data repository that provides
      information to MIC quickly and inexpensively.  Multiple software
      components share data to help integrate business functions, manage
      workflow and avoid duplicate data
problems.
·
Application
      Integration; Single Sign-On
– MIC allows the end user to switch
      back and forth among applications without having to log in to individual
      applications, increasing a user's productivity.  MIC provides a
      consolidated view of data from different software components and provides
      "hotlinks" enabling a customer to connect quickly to the specific module
      of the specific system.  MIC offers the user fast access,
      pro-active alerts and real-time
responsiveness.
·
Broad
      Accessibility
– MIC is an Internet application, which utilizes a
      sophisticated portal capability.
·
Integrated Data
      Representation
– MIC provides a consolidated view of information
      from disparate systems.
·
Personalization and
      Customization
– MIC allows each user to personalize his or her view
      similar to other Internet portals, to meet the needs and the stylistic
      preferences of each individual user.  MIC personalization allows
      the user to hide or show content, filter the content and also change color
      and page styles.  Customization in MIC allows the host to
      control the accessibility to content for each user and also facilitates
      changes to content in MIC as business needs change, without additional
      programming.
25
·
Scalability
–
      MIC can grow with our customer's needs, measured in terms of the numbers
      of concurrent users, response times and other
  variables.
·
Security
– MIC
      can be configured to achieve appropriate levels of security on data
      transfer over the Internet.  MIC is also designed to adapt to
      almost any organizational hierarchy and data level security needs with
      minimal set-up effort by the
customer.
·
Compliance
–
      MIC is designed to enable our customers to respond quickly and efficiently
      to the growing number of  federal, state and insurance
      regulations to help them meet their compliance
  obligations.
MIC
utilizes technology based on Oracle® 10G Application Server, Oracle 10G
Database, J2EE and XML.  MIC seamlessly integrates MIC Rating and
Issuance and other business components and our Customer Insurance
Database.
MIC
enables us to market the business components in "custom groupings," or as a
service in an ASP environment, depending on customer needs.
MIC
Rating & Insurance – The Policy Rating and Issuance Component of
MIC
In 1989,
we purchased the assets related to the exclusive proprietary rights to a
PC-based software application for policy rating and issuance for property and
casualty insurance companies.  This software uses a unique design that
separates the "insurance product definition" from the actual technology
"engines."  The sophistication of this design has enabled us to stay
current with technology innovations while preserving our "insurance knowledge"
investment.
The MIC
Rating & Issuance component supports the following policy
functions:
·
Data
      capture and editing
·
Rating
·
Policy
      issuance including multiple recipient
print
·
All
      policy transactions including quotes, new lines, endorsements, renewals,
      audits and cancellations
·
Policy
      database.
MIC
Rating & Issuance is designed to accommodate all lines of property and
casualty insurance.  It is especially effective in coping with the
complexity and variability of commercial lines of insurance.
This
flexibility of MIC Rating & Issuance is a competitive advantage, and today
we offer off-the-shelf support for more than 40 lines of commercial business in
virtually all states and Puerto Rico.  Our extensive experience in
creating custom products combined with our proprietary tool set enables us to
deliver support for new insurance products in short time frames.
During
the latter part of 2002, we developed a new "presentation layer" incorporating
the latest technologies, such as Java and XML, to provide a very flexible and
robust user interface over the Internet.  This capability also
included significant enhancements to our security and administration functions
as well as a number of "usability" enhancements.  These capabilities
significantly expand and enhance the "core" rating and issuance
capabilities.  The new product has now been fully integrated with MIC
and is being sold and marketed as MIC Rating & Issuance. The MIC Rating
& Issuance has been and continues to be enhanced and updated with new
technology.  The sophisticated design of the product isolates
insurance product knowledge from the application itself in data files, referred
to as "Metadata."  We have built an extensive knowledge base,
estimated at more than 100 person-years of effort, in this Metadata that defines
the details of virtually hundreds of insurance policy types and coverages for
the MIC Rating & Issuance product.
26
The
design of MIC Rating & Issuance also allows us to stay current with changes
in technology while re-using the intellectual capital invested in the insurance
rules.  Our upgrading the Classic product line to run on an
intranet/Internet has enabled multiple users to contribute to the common data
store.  We have also integrated this product to IPD and
MIC.  We have streamlined the support process with the goal to improve
quality to our customers.
The MIC
Rating & Issuance product is in use in over 35 companies.
During
2007, Cover-All developed a number of new MIC Rating & Issuance capabilities
that are designed to fundamentally improve the ability to customize and
introduce insurance products in very short time frames based upon the latest
technological advances and innovative architecture.  These
capabilities include a new print engine, document packaging, a sophisticated set
of data capture/screen creation tools, and a number of other
components.  These capabilities were deployed in two customers in 2007
and early 2008.
My
Insurance Center – Functional Capabilities
We have,
through MIC, a deep inventory of insurance software components combined with a
sophisticated implementation platform.  MIC includes the following
critical components:
·
My
      Insurance Center Portal
·
Enterprise,
      Customer-centric Oracle database
·
Underwriting
      Tools
·
End
      User access to information in real time – Straight Through
      Processing
·
Rating
      and Issuance
·
Full
      policy lifecycle support
·
Clear
      and comprehensive data collection with extensive real time
      edits
·
Policy
      history – easy policy changes and useful for activities such as coverage
      inquiries
·
On-line
      system, screen and field level
look-ups
·
On-line
      Commercial Lines Manual Tables and
Footnotes
·
Easy
      and direct system navigation
·
Standard
      ISO (Insurance Service Office)/NCCI coverages and rates
      support
·
Company
      customized coverages and rates
support
·
Fully
      automated recipient-driven issuance of insurance policies, worksheets, ID
      cards, etc., including print
preview
·
Policy
      database
·
Multiple
      company/program/state/coverage
support.
·
Templates
      to reduce data entry time
·
Advanced
      Billing Capabilities – integrating with
NetSuite
·
Claims
      Repository
·
Customer
      Relationship Management
·
Agency
      and Program Management
·
Advanced
      Administration Tools
·
Access
      to Web Services and Information
Providers
·
Policy
      Dashboard – premium & loss
information
·
Advanced
      Workflows, Diaries
·
Electronic
      Underwriting files
27
·
Compliance
      Assist, Help Desk
·
Interfaces
      to "back end" accounting and reporting
systems
·
Policy-level
      Premium and Loss Information for profitability tracking /
      accounting
·
Quote,
      Binder, Policy Lifecycle support
We expect
to utilize and expand these capabilities to expand and leverage our ability to
respond to broadening marketplace and new customer opportunities with solutions
that address the special needs of carriers, managing general agents, agents,
brokers and third party providers with both off-the-shelf and custom
solutions.  Our user interface capabilities of the MIC product have
been enhanced with more functionality through various strategic alliances and
partnerships that offer business process partnering (outsourcing), accounting,
claims administration capabilities and actuarial and statistical reporting
services.  We also intend to continue to enhance our functional
components based upon market demand, existing customer needs, new capabilities
offered by Web Services as well as changes in technology (for example, support
for personal digital assistants, or PDAs), especially Internet technologies. We
have also developed integration and inter-connection capabilities for MIC to
exchange data with third party systems which should bring significant benefit to
our customers by reducing data entry and reducing the exposure to errors &
omissions liability.
We are
also increasing and enhancing our services portfolio.  We have
expanded our professional services with conversion and interface
offerings.  We developed new rule-based capabilities to enable us to
implement data exchange services that will save our customers time and effort
converting to our products or linking our products to existing
systems.  We also have developed a "custom" service offering for
customers who desire specially-tailored services, service level agreements and
other services that enable them to achieve their business
objectives.
In
February 2007, we announced that we were extending MIC capabilities by acquiring
and integrating the application processing functionality of the brokerage
application processing platform of InsureHiTech, a specialty wholesale insurance
brokerage for hedge funds, private equity, technology and life science
companies.
Competition
The
computer software and services industry is highly competitive and rapidly
changing, as current competitors expand their product offerings and new
companies enter the marketplace.  Because of our extensive
knowledge-base in the insurance industry, however, we believe that our products
offer customers certain advantages not available from our
competitors.  Our customers have access to our extensive experience
and software inventory in the area of rating and policy issuance of commercial
lines policies, among the most complex of insurance transactions.
There are
a number of larger companies, including computer software, services and
outsourcing companies, consulting firms, computer manufacturers and insurance
companies that have greater financial resources than we have and possess the
technological ability to develop software products similar to those we
offer.  These companies represent a significant competitive challenge
to our business.  Very large insurers that internally develop systems
similar to ours may or may not become our major customers for software or
services.  We compete on the basis of our insurance knowledge,
products, service, price, system functionality and performance and technological
advances.
Marketing
We
maintain an in-house sales and marketing staff. We also utilize distributors,
outside consultants and other complimentary service providers to market our
products.  We are continuing to redesign our Internet site and
establish linkages to portals and other web sites.  This is an
on-going effort that will continue to expand in 2008 as we focus on the Internet
as a valuable source of information for current and potential customers
interested in our products and services.  We also participate in and
display and demonstrate our software products at industry trade
shows.  Our consulting staff, business partners and other third
parties also generate sales leads.  We also communicate with our
existing customers in a variety of ways including an annual Customer
Conference.
28
Research
And Development
Our
business is characterized by rapid business and technological
change.  We believe our success will depend, in part, on our ability
to meet the new needs of our customers and the marketplace as well as continuing
to enhance our products based on new technologies.  Accordingly, we
must maintain ongoing research and development programs to continually add value
to our suite of products, as well as any possible expansion of our product
lines.
Our goal
with all of our products and services is to enhance the ease of implementation,
functionality, long-term flexibility and the ability to provide improved
customer service.
Research
and development expenses were $510,000, $464,000 and $809,000 for the years
ended December 31, 2007, 2006 and 2005, respectively.
Backlog
We had no
license, maintenance, professional services or ASP backlog of unbilled work as
of December 31, 2007.
Major
Customers
Our
product line is in use in over 35 companies.  For the years ended
December 31, 2007, 2006 and 2005, we had two, three and one customer(s) who
contributed revenues in excess of 10% of our total revenues for the respective
years.  AIGT generated 19%, 27% and 23% of our revenues for the years
ended December 31, 2007, 2006 and 2005, respectively.  One other
customer generated 25% of our revenue for the year ended December 31,
2007.
We had no
export sales in 2007, 2006 and 2005.
Employees
We had 44
employees as of December 31, 2007.  None of our employees are
represented by a labor union, and we have not experienced any work
stoppages.  We believe that relations with our employees are
good.
Legal
Proceedings
We are
not involved in any legal proceedings, nor are we aware of any proceedings that
are pending or threatened which may have a significant effect on our business,
financial position, results of operations or liquidity.
Facilities
Our
headquarters is located in Fairfield, New Jersey, where we occupy approximately
20,000 square feet under a lease that expires at October 31,
2012.  Currently, we fully utilize this facility.  We
believe that our headquarters is well maintained and adequate to meet our needs
in the foreseeable future.
29
MANAGEMENT
Executive
Officers and Directors
Our
current directors and executive officers are as follows:
John
      W. Roblin
63
Chairman
      of the Board of Directors and Chief Executive Officer
Russell
      Cleveland
70
Director
Earl
      Gallegos
50
Director
Mark
      D. Johnston
51
Director
Manish
      D. Shah
37
Director,
      President and Chief Technology Officer
Maryanne
      Z. Gallagher
47
Executive
      Vice President and Chief Operating Officer
Ann
      F. Massey
50
Chief
      Financial Officer
John W. Roblin
has served as
our Chief Executive Officer since December 1999 and as a director since March
2000.  He was named Chairman of the Board of Directors in February
2001.  He served as our President from December 1999 to November
2008.  Prior to joining us, Mr. Roblin was Chief Information Officer
and Senior Vice President for CIGNA Property and Casualty, positions he held
since 1998.  From 1994 until 1998, he was Chief Information Officer
and Senior Vice President for Advanta Corporation.  Prior to 1994, he
was the Chief Information Officer at Chubb & Son, USF&G and Traveler's
Personal Lines Division.
G. Russell Cleveland
has
served as a member of our Board since July 2001.  Mr. Cleveland is the
President, Chief Executive Officer, sole director and the majority shareholder
of RENN Capital Group, Inc.  He is also the President, Chief Executive
Officer and director of Renaissance Capital Growth & Income Fund III,
Inc.  RENN Capital Group, Inc. is the investment manager of
Renaissance Capital Growth & Income Fund III, Inc., Renaissance US Growth
Investment Trust PLC and Global Special Opportunities Trust PLC, investment
trusts listed on the London Stock Exchange.  Mr. Cleveland is a
Chartered Financial Analyst with more than 40 years of experience as a
specialist in investments in smaller capitalization companies.  A
graduate of the Wharton School of Business, Mr. Cleveland has served as
President of the Dallas Association of Investment Analysts.  Mr.
Cleveland serves on the boards of directors of Renaissance US Growth Investment
Trust PLC, Renaissance Capital Growth & Income Fund III, Inc., CaminoSoft
Corp., Integrated Security Systems, Inc., BPO Management Services and Access
Health USA, Inc.  See "Certain Relationships and Related
Transactions."
Earl Gallegos
has served as a
member of our Board since March 1997.  Mr. Gallegos is the principal
of Earl Gallegos Management Corporation, a management consulting firm founded by
him in July 1994 specializing in the insurance and software
industries.  Mr. Gallegos is a founder of Peak Performance Solutions
Inc., a privately held insurance technology firm, and he served as a director of
Zytalis Inc., a privately held information technology professional services
firm, from October 1999 to December 2006.  Mr. Gallegos was appointed
as an outside director of Fidelity National Real Estate Solutions (FNRES) as of
March 1, 2007. Mr. Gallegos has also served as a director of Bridium, Inc., a
privately held technology firm, from July 1998 to August 2003, Fidelity National
Information Solutions, Inc., a publicly held company listed on Nasdaq, from
September 1997 to September 2003, eGovNet, Inc., a privately held government
technology services firm, from September 2002 to September 2003, and
PracticeOne, Inc., a privately held medical practice management software
company, from November 2002 to January 2005. In addition, Mr. Gallegos is
currently a director of (FNRES) Fidelity National Real Estate Solutions a
private company specializing in Internet Real Estate technology.
30
Mark D. Johnston
has served
as a member of our Board since April 1996.  Mr. Johnston served as our
Chairman of our Board from November 1999 until February 2001 and served as our
Interim Chief Financial Officer from March 2000 to February 2001.  Mr.
Johnston was named to our Board pursuant to the terms of a Stock Purchase
Agreement, dated as of March 31, 1996, among our company, SIL and Care
Corporation Limited.
Manish D. Shah
has served as
a member of our Board and as our President since November 2008 and has served as
our Chief Technology Officer since May 2004.  Prior to his promotion
to the position of our President, he served as our Executive Vice President
since May 2008.  Mr. Shah served as our Director of Technology from
December 2002 through May 2004 and served as our technology consultant from
September 2000 through December 2001.  He graduated with Honors from
the Columbia University Executive MBA Program in May of 2008.  Prior
to joining us, Mr. Shah held several technology management positions at various
companies such as Andersen Consulting, P&O Nedlloyd and Tata Consultancy
Services in different industries for over 10 years.
Maryanne Z. Gallagher
has
served as our Executive Vice President and Chief Operating Officer since May
2008 and February 2001, respectively.  Prior to holding the position
of Chief Operating Officer, she served as our Senior Vice President since
January 2000.  From November 1998 until December 1999, Ms. Gallagher
served as our Vice President - Customer Service.  Ms. Gallagher joined
us in 1990 and has held various development and support positions in our Classic
division through 1998.
Ann F. Massey
has served as
our Chief Financial Officer since February 2001, as our Secretary since April
1997 and as our Controller since March 1997.  From March 1996 to March
1997, Ms. Massey served as our Assistant Treasurer.  From 1994 until
February 1996, Ms. Massey served as Assistant Controller for our insurance
services division.  Prior to 1994, Ms. Massey had served as our
Accounting Manager.
Director
Independence
The Board
of Directors has determined that Messrs. Gallegos and Johnston are independent
within the meaning of regulations of the Securities and Exchange Commission and
the rules of the Nasdaq Stock Market.
31
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
Role of the Compensation
Committee
Our
executive compensation program is overseen and administered by the Compensation
Committee of the Board of Directors.  The members of the Compensation
Committee are John Roblin and Mark Johnston.  The Compensation
Committee sets the principles and strategies that serve to guide the design of
the Company's employee compensation and benefit programs.  The
Compensation Committee annually evaluates the performance of the Chief Executive
Officer and other executive officers.  Taking the performance
evaluations into consideration, the Committee establishes and approves the
compensation levels for the executive officers.
The
principal functions of the Compensation Committee are:
·
To
      establish and periodically review the Company's compensation philosophy
      and the adequacy of compensation plans and programs for directors,
      executive officers and other
employees;
·
To
      establish compensation arrangements and incentive goals for executive
      officers and to assist the Board of Directors in the administration of
      compensation plans;
·
To
      review the performance of the executive officers and award incentive
      compensation and adjust compensation arrangements as appropriate based
      upon performance;
·
To
      periodically report on the Compensation Committee's activities to the full
      Board of Directors; and
·
To
      prepare an annual report on executive compensation for inclusion in the
      Company's annual proxy statement.
Mr.
Roblin does not participate in the Compensation Committee's decisions regarding
his compensation.  His compensation is separately evaluated by Mr.
Johnston and the remaining members of the Board, who take into consideration
overall Company performance in attaining established targets for income before
taxes and developing and achieving short term and long term goals for the
Company.  Such targets are set forth in Mr. Roblin's employment
agreement.  As a result of this review, the Compensation Committee
concluded that Mr. Roblin's compensation was reasonable and not excessive based
on his leadership, decision-making skills, experience, knowledge, communication
with the Board of Directors and strategic recommendations.
Compensation Objectives and
Principles
Our
overall objective is to attract, retain, motivate and reward high caliber
executives who deliver superior short and long-term performance that builds
shareholder value.  To achieve our objective, the Compensation
Committee has set the following guiding principles in the design and
administration of the Company's compensation programs:
·
Attract,
      motivate and retain executive officers who can make significant
      contributions to the Company's long-term
  success;
·
Align
      the interests of executive officers with those of shareholders;
      and
·
Tie
      individual compensation awards to business and individual performance with
      a portion of executive compensation designed to create incentives for
      superior performance and consequences for below target
      performance.
32
Our
compensation policy is designed to compensate our executive officers based on a
number of factors, including:
·
the
      individual's position and responsibilities within the
    Company;
·
the
      overall importance of the individual's responsibilities in helping the
      Company achieve success;
·
specific
      tasks that the individual may be required to perform during a particular
      time period;
·
the
      individual's skill set, experience and
  education;
·
market
      conditions, as measured by, among other things, the Company's knowledge of
      peer company compensation policies and geographical considerations,
      including the cost of living;
·
the
      Company's performance in areas for which the individual has
      responsibility; and
·
the
      Company's overall performance.
Principal Elements of
Compensation
We
provide the following principal elements of compensation to our executive
officers:
·
Base
      salary
– We provide a fixed base salary to our executive officers
      to compensate them for services provided to the Company during the fiscal
      year;
·
Annual cash
      bonuses
– We provide cash bonus awards to our executive officers
      which vary in amount depending upon the executive's individual performance
      and the achievement of certain predetermined goals and objectives for the
      fiscal year; and
·
Equity
      incentive awards
– We provide equity incentive awards to our
      executive officers comprised of stock options and shares of
      restricted stock which are intended to reward them for prior and future
      performance, as well as to motivate them to stay with the Company and
      build stockholder value.
The
Compensation Committee developed a compensation evaluation program that requires
management to set goals at the beginning of each fiscal year for increasing
income before taxes from the previous year in order to evaluate management's
performance.  Salary increases for each fiscal year have been based
upon the Company attaining the earnings performance targets for the preceding
fiscal year, unusual achievements and cost of living.  Bonuses, if
any, are divided among the executive group after evaluation of each individual's
performance, in consultation with senior management.  Option grants
are
similarly
based.  In 2007, we paid bonuses to our three named executive officers
totaling $379,000.  All of our bonus payments in 2007 were approved by
our Board.
In
addition to these elements of executive compensation, we provide our executive
officers with other benefits generally available to all eligible employees, such
as participation in our health and retirement plans.  We also provide
or reimburse costs associated with certain limited perquisites and personal
benefits and provide certain of our executive officers with certain
change-in-control benefits.
Equity Incentive
Plans
The
Compensation Committee believes that stock options provide a valuable tool for
aligning the interests of management with stockholders and focusing management's
attention on the long-term growth of the Company.  In addition, the
Committee believes that the awarding of stock options is essential to attract
and retain the talented professionals and managers needed to ensure the
continued success of the Company.
33
During
2007, the Company had two stock option plans which were in
effect.  Under the 1994 Stock Option Plan for Independent Directors,
which was amended in June 2000, options for the purchase of up to 750,000 shares
of our common stock may be granted to directors who are not
employees.  This plan will expire on December 31, 2009.
Under the
Amended and Restated 2005 Stock Incentive Plan (the "2005 Plan"), a maximum of
5,000,000 shares of the Company's common stock are available for grants of all
equity awards under this plan.  On March 25, 2008, the 2005 Plan was
further amended and restated in order to make the Company's directors who are
not employees of the Company eligible participants under the 2005
Plan.  This plan will expire on June 6, 2015.
Employment Agreements and
Severance Arrangements/Change of Control Agreements
We have
not entered into employment arrangements with any of our executive officers,
except for Mr. Roblin, with whom we have entered into an Employment Agreement,
and Mr. Shah, with whom we have entered into a Tuition Reimbursement
Agreement.  Each of these agreements contains provisions which would
entitle these executives to certain payments or benefits if their employment is
terminated under certain circumstances, including after a "change of control" of
the Company occurs.
The
material terms of each of these executive's employment agreements, and the
payments or benefits which the executive officers would receive under different
terminating circumstances, are set forth below in "−Employment Agreements or
Arrangements of Executive Officers" and "−Potential Payments upon Termination or
Change of Control", respectively.
34
COMPENSATION
OF NAMED EXECUTIVE OFFICERS
Summary
Compensation Table
The
following table summarizes the total compensation earned during 2007 and 2006 by
our chief executive officer and our two next most highly compensated executive
officers whose total compensation exceeded $100,000 in 2007:
Name
      and
Principal
      Position
Year
Salary
Bonus
Option
Awards
      (1)
All Other
Compensation
Total
John
      W. Roblin
2007
$300,000
$162,000
$128,484
$23,867
      (3)
$614,351
Chairman
      of the Board of Directors and Chief Executive Officer(2)
2006
$300,000
–––
$36,643
$19,395
      (4)
$356,038
Maryanne
      Z. Gallagher
2007
$187,000
$101,000
$12,443
$4,675 (6)
$305,118
Executive
      Vice President and Chief Operating Officer(5)
2006
$194,192
–––
$13,917
–––
$208,109
Manish
      D. Shah
2007
$168,000
$116,000
$27,976
$50,875
      (8)
$362,851
President
      and
Chief
      Technology Officer(7)
2006
$168,000
$2,500
$10,583
$19,246
      (9)
$200,329
__________________________________________
(1)
Reflects
      the dollar amount recognized for financial statement reporting purposes
      for the fiscal year, in accordance with Statement of Financial Accounting
      Standards No. 123(R).
(2)
Mr.
      Roblin was also our President until November
  2008.
(3)
Consists
      of $16,502 of automobile allowance and $7,365 of matching contributions to
      the Cover-All Technologies Inc. 401(k) Plan made by
  us.
(4)
Consists
      of $12,183 of automobile allowance and $7,212 of matching contributions to
      the Cover-All Technologies Inc. 401(k) Plan made by
  us.
(5)
Ms.
      Gallagher was appointed as our Executive Vice President in May
      2008.
(6)
Represents
      matching contributions to the Cover-All Technologies Inc. 401(k) Plan made
      by us.
(7)
Mr.
      Shah was appointed as our President in November
  2008.
(8)
Consists
      of $46,675 of tuition reimbursement and $4,200 of matching contributions
      to the Cover-All Technologies Inc. 401(k) Plan made by
  us.
(9)
Consists
      of $15,046 of tuition reimbursement and $4,200 of matching contributions
      to the Cover-All Technologies Inc. 401(k) Plan made by
  us.
On August
21, 2006, Ms. Gallagher and Mr. Shah received options to purchase 75,000 and
100,000 shares, respectively, of our common stock at an exercise price of $0.41
per share.  These options vest one-third on each of August 21, 2007,
2008 and 2009.  These options shall expire five years from the date of
grant.
On
January 1, 2007, Mr. Roblin received options to purchase 500,000 shares of our
common stock at an exercise price of $0.79 per share.  These options
vest as to all 500,000 shares three years following the date of grant; provided,
that options as to 250,000 shares shall immediately vest and become exercisable
on the first date the Company enters into a Qualifying Agreement (as defined
below), and options as to 250,000 shares shall immediately vest and become
exercisable on the date the Company enters into a second Qualifying
Agreement.  A "Qualifying Agreement" means any fully executed customer
agreement pursuant to which the Company is entitled to receive at least
$1,000,000 in license revenue or maintenance (for the first year of such
agreement) revenue.  These options shall expire five years from the
date of grant.
35
On
September 12, 2007, Ms. Gallagher and Mr. Shah received options to purchase
75,000 and 250,000 shares, respectively, of our common stock at an exercise
price of $1.40 per share.  These  options vest one-third on
each of September 13, 2009, 2010 and 2011.  These options shall expire
five years from the date of grant.
Outstanding
Equity Awards at December 31, 2007
The
following table provides information concerning outstanding equity awards as of
December 31, 2007, by each of our named executive officers:
Option
      Awards
Name
Number
      of Securities
Underlying
      Unexercised
Options
      (# )
Exercisable
Number
      of Securities
Underlying
      Unexercised
Options
      (#)
Unexercisable
Option
Exercise
Price
      ($)
Option
Expiration
      Date
John
      W. Roblin
300,000
–––
0.53
12/22/08
250,000
250,000
      (1)
0.79
12/31/11
125,000
–––
1.13
2/16/08
Maryanne
      Z. Gallagher
24,998
50,002
      (2)
0.41
8/21/11
100,000
–––
0.53
12/22/08
75,000
–––
0.60
3/23/08
–––
75,000
      (3)
1.40
9/12/12
Manish
      D. Shah
33,330
66,670
      (2)
0.41
8/21/11
65,000
–––
0.53
12/22/08
–––
250,000
      (3)
1.40
9/12/12
___________________
(1)
These
      options vest on January 1, 2010; provided, that these options shall vest
      immediately and become exercisable when the Company enters into a
      Qualifying Agreement.  A "Qualifying Agreement" means any fully
      executed customer agreement pursuant to which the Company is entitled to
      receive at least $1,000,000 in license revenue or maintenance (for the
      first year of such agreement)
revenue.
(2)
These
      options vest one-third on each of August 21, 2007, 2008 and
      2009.
(3)
These
      options vest one-third on each of September 13, 2009, 2010 and
      2012.
Employment
Agreements or Arrangement of Executive Officers
John W. Roblin, Chairman and
Chief Executive Officer
John W.
Roblin has served as our Chief Executive Officer since December 1999, as our
President from December 1999 to November 2008, and as a director since March
2000.
On
December 26, 2006, the Company entered into an employment agreement with Mr.
Roblin, effective as of January 1, 2007 (the "2007 Agreement"). The Compensation
Committee determined Mr. Roblin's salary based upon the factors discussed above
relating to executive compensation in general and reflected the terms of that
determination in Mr. Roblin's employment agreement.
Pursuant
to the 2007 Agreement, in 2007, Mr. Roblin was paid a base salary of $300,000,
which is his annual salary rate that has been in effect since December
2003.  In addition, Mr. Roblin was entitled to a bonus based on the
financial performance of the Company, which bonus shall be paid in the form of
cash or shares of our common stock under our Amended and Restated 2005 Stock
Incentive Plan.  In no event were cash payments to be made to Mr.
Roblin pursuant to his performance bonus to exceed seventy percent (70%) of his
base salary, and any bonus which may have been payable to Mr. Roblin in excess
of seventy percent (70%) of his base salary shall have been payable in shares of
our common stock.
In 2007, the Company
paid Mr. Roblin a bonus of $162,000.  Additionally, Mr. Roblin was
entitled to annual paid vacation, participation in benefit plans applicable to
our officers and executive employees and the use of a Company automobile for
business purposes.
36
In
addition, under the 2007 Agreement, Mr. Roblin received options to purchase
500,000 shares of our common stock.  The options, which were granted
pursuant to the Amended and Restated 2005 Stock Incentive Plan at an exercise
price per share equal to $0.79, the fair market value of such shares on the date
of the grant, shall vest as to all 500,000 shares three years following the
effective date of the employment agreement; provided, that options as to 250,000
shares shall immediately vest and become exercisable on the first date the
Company enters into a Qualifying Agreement, and options as to 250,000 shares
shall immediately vest and become exercisable on the date the Company enters
into a second Qualifying Agreement.  On October 23, 2007, the Company
entered into a Qualifying Agreement, and as a result 250,000 shares vested on
such date.  As of December 31, 2007, options to purchase 250,000
shares of our common stock had not yet vested.
In 2007,
the Company made total matching contributions of $7,365 to Mr. Roblin's 401(k)
Plan.
On
December 26, 2007, the Company entered into a new employment agreement with Mr.
Roblin, effective as of January 1, 2008 (the "2008 Agreement").
Pursuant
to the 2008 Agreement, Mr. Roblin will receive an annual base salary of $325,000
plus benefits and the use of a Company car.  In addition, Mr. Roblin
is entitled to a bonus based on the financial performance of the
Company.
Under the
2008 Agreement, Mr. Roblin received options to purchase 72,463 shares of our
common stock.  The options, which were granted pursuant to the Amended
and Restated 2005 Stock Incentive Plan at an exercise price per share equal to
$1.38, the fair market value of such shares on the date of the grant, will vest
as to all 72,463 shares on January 1, 2009, subject to the terms and conditions
set forth in the Amended and Restated 2005 Stock Incentive Plan and a stock
option agreement entered into by and between the Company and Mr.
Roblin.
In
addition, under the 2008 Agreement, Mr. Roblin received 150,000 shares of the
Company's common stock (the "Restricted Shares"), which vested as to 75,000
shares on January 1, 2008 and will vest as to 75,000 shares on January 1, 2009,
in accordance with and subject to the terms and conditions set forth in the
Company's Amended and Restated 2005 Stock Incentive Plan and a restricted stock
grant agreement entered into by and between the Company and Mr.
Roblin.
Mr.
Roblin's 2008 Agreement is for a term of two years, provided, that each of Mr.
Roblin and the Company may terminate the agreement at any time, with or without
reason or cause, upon written notice to the other party.  If the
employment of Mr. Roblin is terminated for any reason, including upon the
expiration of the employment agreement, Mr. Roblin will be entitled to receive
(i) any accrued and unpaid base salary and accrued and unused vacation days
through the date of termination, (ii) the pro rata portion of his performance
bonus based on the number of days he was employed during the fiscal year for
which such bonus is computed and (iii) any unreimbursed business
expenses.  In addition, Mr. Roblin will be entitled to receive, as
severance, for a period of six months following such termination, his base
salary, benefits and the continued use of the Company car.  Upon such
termination, the Company and Mr. Roblin have agreed to mutually release each
other for all claims arising in connection with Mr. Roblin's employment with the
Company.
The 2008
Agreement also contains a confidentiality provision, a non-solicitation covenant
and a mutual non-disparagement clause.
37
Manish D. Shah, President
and Chief Technology Officer
On
September 1, 2006, we entered into a Tuition Reimbursement Agreement with Manish
D. Shah, then our Chief Technology Officer.  Under this agreement,
which expires 30 months after the date of the agreement, we will reimburse Mr.
Shah for academic costs, up to a maximum of $75,000, in connection with Mr.
Shah's enrollment in the Executive MBA program at Columbia Business
School.  If Mr. Shah voluntarily resigns for any reason, he would be
required to reimburse us for a portion of the academic costs.  If Mr.
Shah's resignation follows a change of control (as defined in the agreement),
Mr. Shah would only be required to reimburse us for 30 percent of the funds he
would have otherwise been required to reimburse us for had no change of control
occurred.  If he is terminated for cause (as defined in the
agreement), Mr. Shah would be required to return all of the academic costs
associated with the program.
None of
our other executive officers have employment agreements, severance payment
arrangements or payment arrangements that would be triggered by a change of
control.
Potential
Payments upon Termination or Change of Control
Pursuant
to Mr. Roblin's 2008 Agreement, if the employment of Mr. Roblin is terminated
for any reason, including upon the expiration of the employment agreement, Mr.
Roblin will be entitled to receive (i) any accrued and unpaid base salary and
accrued and unused vacation days through the date of termination, (ii) the pro
rata portion of his performance bonus based on the number of days he was
employed during the fiscal year for which such bonus is computed and (iii) any
unreimbursed business expenses.  In addition, Mr. Roblin will be
entitled to receive, as severance, for a period of six months following such
termination, his base salary, benefits and continued use of the Company
car.
The
following table shows the potential payments to Mr. Roblin if his employment
were terminated following a change of control as of December 31, 2007, assuming
his 2008 Agreement were in effect:
Name
Cash
      Severance (1)
Health/Welfare
      Benefits (2)
Company
      Car (3)
Acceleration
      of
Options
      (4)
Total
John
      W. Roblin
$162,500
$10,893
$8,251
$147,500
$329,144
____________________
(1)
Cash
      severance equal to the sum of Mr. Roblin's base salary for the six months
      following the termination date.
(2)
Includes
      medical, dental, life and contributions under our 401(k)
      plan.  This value was calculated based on the approximate cost
      of these benefits for the six-month
period.
(3)
This
      value was calculated based on the current cost of the Company car for the
      six-month period.
(4)
Represents
      the difference between the total market value (based on the closing price
      of $1.38 on December 31, 2007) of shares underlying options that become
      vested and exercisable on termination and the total exercise price of
      these options.
38
The
following table shows the potential payments to the other named executive
officers if their employment were terminated following a change of control as of
December 31, 2007:
Name
Acceleration
      of Options (1)
Total
Maryanne
      Z. Gallagher
$48,502
$48,502
Manish
      D. Shah
$64,670
$64,670
___________________
(1)
Represents
      the difference between the total market value (based on the closing price
      of $1.38 on December 31, 2007) of shares underlying options that become
      vested and exercisable on termination and the total exercise price of
      these options.  These options accelerate pursuant to the Amended
      and Restated 2005 Stock Incentive
Plan.
Pursuant
to Mr. Shah's Tuition Reimbursement Agreement, if Mr. Shah's resignation follows
a change of control (as defined in Mr. Shah's employment agreement), Mr. Shah
would be required to reimburse us for 30 percent of the tuition funds paid by
the Company that he would have otherwise been required to reimburse us for had
no change of control occurred.  Assuming that Mr. Shah had voluntarily
resigned following a change of control on December 31, 2007, Mr. Shah would be
required to reimburse us for $12,961 instead of $43,205 had he voluntarily
resigned and no change of control had occurred.
COMPENSATION
OF DIRECTORS
The
following director compensation table shows the compensation we paid in 2007 to
our non-employee directors:
Director Compensation
Table
Name
Fees Earned or Paid in Cash
Total
G.
      Russell Cleveland
$11,000
$11,000
Earl
      Gallegos
$13,000
$13,000
Mark
      D. Johnston
$11,000
$11,000
For 2007,
each of our non-employee directors received:  (i) an annual stipend of
$6,000; (ii) $1,500 per each meeting attended, with an annual ceiling of $3,000;
and (iii) $500 per each quarterly conference call attended, with an annual
ceiling of $2,000.  Non-employee directors serving on our Audit
Committee received an additional $500 per quarter.  We make all such
payments to our non-employee directors quarterly and in arrears.
39
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table contains information as of December 15, 2008 as to the number of
shares of our common stock beneficially owned by (i) each person we know to own
beneficially more than 5% of our common stock, (ii) each person who is a
director or who is a nominee to be a director, (iii) the executive officers for
whom information is included in the Summary Compensation Table and (iv) all
persons as a group who are directors and executive officers and as to the
percentage of outstanding shares held by these persons on that
date.
Name
      and Address
Amount
      Beneficially Owned (1)
Percent
      of Class (2)
Global
      Special Opportunities Trust PLC
c/o
      RENN Capital Group, Inc.
8080
      N. Central Expressway
Suite
      210, LB-59
Dallas,
      Texas 75206
1,526,871
(3)
6.3%
Renaissance
      US Growth Investment Trust PLC
c/o
      RENN Capital Group, Inc.
8080
      N. Central Expressway
Suite
      210, LB-59
Dallas,
      Texas 75206
6,107,529
(4)
25.3%
Atlantic
      Employers Insurance Company
1601
      Chestnut Street, TL44D
Philadelphia,
      PA 19101
1,238,273
5.1%
John
      W. Roblin
1,589,633
(5)
6.3%
G.
      Russell Cleveland
87,723
(6)
*
Earl
      Gallegos
105,723
*
Mark
      D. Johnston
2,416,687
(7)
10.0%
Maryanne
      Z. Gallagher
286,060
(8)
1.2%
Manish
      D. Shah
166,666
(9)
1.0%
All
      current directors and executive officers as a
group
      (7 persons)
4,695,825
(10)
19.3%
______________________________
* Less
than one percent.
(1)
Except
      as otherwise noted, all persons have sole voting and investment power with
      respect to their shares.  All amounts shown in this column
      include shares obtainable upon exercise of options or warrants within
      sixty (60) days of the date of this
table.
(2)
Based
      upon 24,134,683 total outstanding shares of common stock on December 15,
      2008, plus shares of common stock that may be acquired by the person
      indicated pursuant to any options or warrants exercisable within sixty
      (60) days.
(3)
Represents
      1,476,871 shares of common stock and 50,000 shares of common stock
      issuable upon the exercise of outstanding warrants.  Mr.
      Cleveland is President and Chief Executive Officer of RENN Capital Group,
      Inc., the investment manager of Global Special Opportunities Trust PLC
      (formerly known as US Special Opportunities Trust PLC and BFS US Speical
      Opportunities Trust PLC).  Mr. Cleveland disclaims beneficial
      ownership as to the shares beneficially owned by Global Special
      Opportunities Trust.  See "Certain Relationships and Related
      Transactions."
40
(4)
Represents
      6,057,529 shares of common stock and 50,000 shares of common stock
      issuable upon the exercise of outstanding warrants.  Mr.
      Cleveland is President and Chief Executive Officer of RENN Capital Group,
      Inc., the investment manager of Renaissance US Growth Investment Trust PLC
      (formerly known as Renaissance US Growth & Income Trust
      PLC).  Mr. Cleveland disclaims beneficial ownership as to the
      shares beneficially owned by Renaissance US Growth Investment
      Trust.  See "Certain Relationships and Related
      Transactions."
(5)
Represents
      717,170 shares of common stock and 872,463 shares of common stock that may
      be acquired pursuant to the exercise of outstanding stock
      options.  See "Certain Relationships and Related
      Transactions."
(6)
Represents
      62,723 shares of common stock and 25,000 shares of common stock that may
      be acquired pursuant to the exercise of outstanding stock
      options.
(7)
Represents
      2,391,687 shares of common stock and 25,000 shares of common stock that
      may be acquired pursuant to the exercise of outstanding stock
      options.
(8)
Represents
      136,060 shares of common stock and 150,000 shares of common stock that may
      be acquired pursuant to the exercise of outstanding stock
      options.
(9)
Represents
      35,000 shares of common stock and 131,666 shares of common stock that may
      be acquired pursuant to the exercise of outstanding stock
      options.
(10)
Includes
      1,237,462 shares of common stock that may be acquired pursuant to the
      exercise of outstanding stock options and
  warrants.
41
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
In 2001,
we issued $1,800,000 aggregate principal amount of 8% convertible debentures due
2008 (the "2008 Debentures"), and in 2002, we issued $700,000 aggregate
principal amount of 8% convertible debentures due 2009 (the "2009
Debentures").  Of the total principal amount of the 2008 Debentures,
two funds managed by RENN Capital Group, Inc. (each of whom or their successor
is a selling stockholder hereunder) purchased an aggregate of $1,400,000 in
principal amount and John W. Roblin, our Chairman of the Board and Chief
Executive Officer (and who at the time was also our President), purchased
$100,000 in principal amount.  All of the 2009 Debentures were
purchased by the RENN funds.  Mr. Russell Cleveland is the President,
Chief Executive Officer, sole director and majority shareholder of RENN Capital
Group.  Mr. Cleveland was named one of our directors in 2001 after the
consummation of the sale of the 2008 Debentures.
In 2005,
the holders of the 2008 Debentures elected to convert all of their monthly
principal installments due in 2005, totaling $220,121, under such debentures
into shares of our common stock at the conversion price of $0.30 per share in
lieu of receiving such installment payments in cash.  In connection
with this conversion, we issued to the holders of the 2008 Debentures an
aggregate of 733,739 shares of our common stock. Of such shares, an aggregate of
591,118 shares were issued to the RENN funds upon the conversion of $177,336 of
principal of such debentures, and an aggregate of 35,655 shares were issued to
Mr. Roblin upon the conversion of $10,697 of principal of such debentures. In
2005, we made an aggregate of $184,000 of interest payments on the 2008
Debentures and 2009 Debentures.  Of such interest payments, the RENN
funds received an aggregate of $155,807 in interest payments on the debentures,
and Mr. Roblin received an aggregate of $7,169 in interest payments on the
debentures.
In 2006,
the holders of the 2008 Debentures and 2009 Debentures elected to convert a
portion of their monthly principal installments due in 2006, totaling $127,254,
under such debentures into shares of our common stock at the conversion price of
$0.30 per share in lieu of receiving such installment payments in
cash.  In connection with this conversion, we issued to the holders of
such debentures an aggregate of 424,181 shares of our common
stock.  Of the shares of common stock issued in connection with these
conversions, an aggregate of 359,066 shares were issued to RENN funds upon
conversion of $107,720 of principal amount of such debentures, and 16,279 shares
were issued to Mr. Roblin upon conversion of $4,884 of principal amount of such
debentures.
In
January 2007, the holders of the 2008 Debentures and 2009 Debentures elected to
convert the remaining portion of their monthly principal installments due in
2006, totaling $119,807, under such debentures into shares of our common stock
at the conversion price of $0.30 per share in lieu of receiving such installment
payments in cash.  In connection with this conversion, we issued to
the holders an aggregate of 399,358 shares of our common stock.  Of
the shares of common stock issued in connection with these conversions, an
aggregate of 697,120 shares were issued to the RENN funds upon conversion of
$209,136 of principal of such debentures, and 31,605 shares were issued to Mr.
Roblin upon conversion of $9,482 of principal of such debentures.
In March
2007, the RENN funds elected to convert all of their remaining unpaid principal
amount due on their 2008 Debentures and 2009 Debentures, totaling $1,631,601,
into shares of our common stock at the conversion price of $0.30 per share in
lieu of receiving such payments in cash.  In June 2007, the remaining
holders of the 2008 Debentures elected to convert their monthly principal
installments due in 2007 totaling $33,617 into shares of our common stock at the
conversion rate of $0.30 per share in lieu of receiving such payments in
cash.  In connection with these conversions, we issued to the holders
an aggregate of 5,550,725 shares of our common stock.  Of the shares
of common stock issued in connection with these conversions, an aggregate of
5,438,670 shares were issued to the RENN funds upon conversion of $1,631,601 of
principal of such debentures, and 28,014 shares were issued to Mr. Roblin upon
conversion of $8,404 of principal of such debentures.
In June
2008, Mr. Roblin elected to convert all of the then-remaining unpaid principal
amount due on his 2008 Debentures, totaling $65,566, into 218,553 shares of our
common stock at the conversion price of $0.30 per share.
42
In 2002,
we issued the holders of our 2008 Debentures and 2009 Debentures an aggregate of
128,572 warrants to purchase such number of shares of our common stock at an
exercise price of $0.22 per share (the "2002 Warrants"), as consideration for
the receipt of waivers from them with respect to our non-compliance with certain
financial covenants contained in the convertible loan agreements related to the
2008 Debentures and 2009 Debentures.  Of the 2002 Warrants, an
aggregate of 100,000 warrants were issued to the RENN funds and 7,143 warrants
were issued to Mr. Roblin.  In March 2007, the holders of our 2002
Warrants exercised all of the then outstanding 2002 Warrants at an exercise
price of $0.22 per share.  In connection with these exercises, we
issued an aggregate of 128,572 shares of our common stock to the holders of our
2002 Warrants.  Of the shares of common stock issued in connection
with these exercises, an aggregate of 100,000 shares were issued to the RENN
funds, and 7,143 shares were issued to Mr. Roblin.
In 2006,
we issued the holders of our 2008 Debentures and 2009 Debentures an aggregate of
128,572 warrants to purchase such number of shares of our common stock at an
exercise price of $0.35 per share (the "2006 Warrants"), as consideration for
the receipt of the waivers from them with respect to our non-compliance with
certain financial covenants contained in the convertible loan agreements related
to the 2008 Debentures and 2009 Debentures.  These warrants expire in
2011.  Of the 2006 Warrants, an aggregate of 100,000 warrants were
issued to the RENN funds and 7,143 warrants were issued to Mr.
Roblin.  In December 2007, Mr. Roblin exercised all of his outstanding
2006 Warrants at an exercise price of $0.35 per share.  In connection
with such exercise, we issued 7,143 shares of our common stock to Mr.
Roblin.
43
SELLING
STOCKHOLDERS
An
aggregate of 9,876,584 shares of common stock, which consists of 9,776,584
shares of common stock and 100,000 shares of common stock issuable upon the
exercise of our outstanding warrants, may be offered for sale and sold from time
to time pursuant to this prospectus by the selling stockholders. The term
"selling stockholder" includes the stockholders listed below and their
transferees, pledgees, donees, assignees or other successors. We have agreed to
register all of the shares offered hereby for resale by the selling stockholders
under the Securities Act and to pay all of the expenses in connection with such
registration and the sale of the shares, other than selling commissions and the
fees and expenses of counsel and other advisors to the selling stockholders.
Information concerning the selling stockholders may change from time to time,
and any changed information will be set forth if and when required in prospectus
supplements or other appropriate forms permitted to be used by the
SEC.
The
following table sets forth, for each the selling stockholers to the extent known
by us, the number of shares of our common stock beneficially owned, the number
of shares of our common stock offered hereby and the number of shares and
percentage of outstanding common stock to be owned after completion of this
Offering, assuming all shares offered hereby are sold.
Unless
otherwise indicated, the selling stockholders have sole voting and investment
power with respect to their shares of common stock. All of the information
contained in the table below is based upon information provided to us by the
selling stockholders, and we have not independently verified this information.
The selling stockholders may have sold, transferred or otherwise disposed of, or
may sell, transfer or otherwise dispose of, at any time or from time to time
since the date on which it provided the information regarding the shares
beneficially owned, all or a portion of the shares
beneficially
owned in transactions exempt from the registration requirements of the
Securities Act.
The
number of shares outstanding and the percentages of beneficial ownership are
based on 24,134,683 shares of our common stock issued and outstanding on a fully
diluted basis as of December 15, 2008.
For the
purposes of the following table, the number of shares of our common stock
beneficially owned has been determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, and such information is not necessarily
indicative of beneficial ownership for any other purpose.  Under Rule
13d-3, beneficial ownership includes any shares as to which a selling
stockholder has sole or shared voting power or investment power and also any
shares which that selling stockholder has the right to acquire within 60 days of
the date of this prospectus through the exercise of any stock option, restricted
stock unit, warrant or other rights.
44
Name
      of Selling Stockholder
Number
      of Shares
Beneficially
Owner
      Prior to
Offering
Number
      of
Shares
      Offered
Number
      of Shares
Beneficially
      Owned
After
      Offering
%
      of Common
Stock
Beneficially
Owned
      After
the
      Offering
Global
      Special Opportunities Trust PLC
c/o
      RENN Capital Group, Inc.
8080
      N. Central Expressway
Suite
      210, LB-59
Dallas,
      Texas 75206
1,526,871(1)
1,309,671(2)
217,200
*
Renaissance
      US Growth
Investment
      Trust PLC
c/o
      RENN Capital Group, Inc.
8080
      N. Central Expressway
Suite
      210, LB-59
Dallas,
      Texas 75206
6,107,529(3)
5,890,329(2)
217,200
*
Mark
      D. Johnston
2,416,687(4)
2,328,964
87,723
*
John
      Roblin
1,589,633(5)
347,620
1,242,013
5.0%
______________________________
* Less
than one percent.
(1)
Includes
      50,000 shares of common stock issuable upon the exercise of outstanding
      warrants.  Mr. Cleveland is President and Chief Executive
      Officer of RENN Capital Group, Inc., the investment manager of Global
      Special Opportunities Trust PLC (formerly known as US Special
      Opportunities Trust PLC and BFS US Special Opportunities Trust
      PLC).  Mr. Cleveland has been a director of the Company since
      2001.
(2)
Includes
      50,000 shares of common stock issuable upon the exercise of outstanding
      warrants.
(3)
Includes
      50,000 shares of common stock issuable upon the exercise of outstanding
      warrants.  Mr. Cleveland is President and Chief Executive
      Officer of RENN Capital Group, Inc., the investment manager of Renaissance
      US Growth Investment Trust PLC (formerly known as Renaissance US Growth
      & Income Trust PLC).  Mr. Cleveland has been a director of
      the Company since 2001.
(4)
Includes
      25,000 shares of common stock that may be acquired pursuant to the
      exercise of outstanding stock options.  Mr. Johnston has been a
      director of the Company since 1996.
(5)
Includes
      872,463 shares of common stock that may be acquired pursuant to the
      exercise of outstanding stock options.  Mr. Roblin has served as
      our Chief Executive Officer and a director since 1999.  He also
      has served as our Chairman of the Board since 2001 and our President from
      1999 until November 2008.
45
DESCRIPTION
OF SECURITIES
Our
authorized capital stock consists of 75,000,000 shares of common stock, par
value $0.01 per share.
Common
Stock
As of
December 15, 2008, we had 24,134,683 shares of common stock
outstanding.
The
holders of shares of common stock are entitled to one vote per share on all
matters to be voted on by stockholders.  The holders of shares of
common stock may not cumulate their votes in elections for directors, which
means that holders of more than half of the outstanding shares of common stock
can elect all our directors standing for election.
The
holders of shares of common stock are entitled to receive such dividends as may
be declared from time to time by the Board of Directors in its discretion from
any assets legally available therefore.  If we dissolve, whether
voluntary or involuntary, the holders of common stock are entitled to share
ratably in our assets legally available for distribution to our
stockholders.  The holders of common stock have no preemptive,
subscription, conversion or redemption rights and are not subject to further
calls or assessments or rights of redemption by the Company.
Warrants
As of
December 15, 2008, an aggregate of 121,429 warrants, expiring in 2011, to
purchase 121,429 shares of our common stock were outstanding and exercisable at
a current exercise price of $0.35 per share.
The
current exercise prices of these warrants are subject to adjustment if and
whenever we issue or sell additional shares of our common stock for less than
95% of the market price on the date of issuance or sale, in which case the
exercise price will be reduced to a new exercise price in accordance with the
terms of the warrant.
Pursuant
to the terms of these warrants, the issuance or sale of additional shares of
common stock resulting from (1) the exercise of stock options to be granted in
the future to employees or directors pursuant to our existing stock option plans
or (2) the exercise of any convertible security, in either case outstanding on
the date of the warrant, will not trigger any adjustment to the exercise price
of the warrants.
Classifications
of The Board of Directors
Our
Certificate of Incorporation provides that we have three classes of directors,
with the term of each class to run for three years and expire at successive
annual meetings of the stockholders.  Thus, it would take a minimum of
two annual meetings of the stockholders to change the majority of the Board of
Directors.  Only the Board of Directors may fill vacancies on the
Board of Directors that may occur between annual meetings.  In
addition, any director elected to fill a vacancy on the Board will serve for the
balance of the term of the replaced director.
Certain
Provisions in Our Certificate of Incorporation
Our
Certificate of Incorporation contains certain provisions that would have an
effect of delaying, deferring or preventing a change of control of the Company
in connection with certain business combinations.  Article Seventh
provides that the affirmative vote of at least 80% of the outstanding shares of
voting stock is required to approve (1) the sale (or similar transfer) of
all or substantially all of the assets of the Company to a "related
corporation," (2) the consolidation of the Company with, or its merger
into, a "related corporation," (3) the merger into the Company of a
"related corporation," (4) any agreement relating to the transactions
referred to in (1) through (3), and (5) any amendment to said
46
Article
Seventh.  A "related corporation" is any corporation which, together
with its affiliated and associated persons (as such terms are defined), owns of
record or beneficially more than 5% of the Company's outstanding voting stock
entitled to vote on the subject transaction.  These provisions,
however, do not apply if a majority of the Company's disinterested directors
approve the subject transaction, in which event approval of such transaction
shall require only such affirmative vote as is otherwise required by
law.
In
addition, Article Fifth of the Certificate of Incorporation requires the
approval of 80% of the voting stock to remove a director without cause, to
alter, repeal or modify those provisions of the Company's by-laws relating to
the number, election and terms of directors, newly created directorships and
vacancies and removal of directors, and to amend said Article Fifth (relating
generally to the Company's Board of Directors).
Transfer
Agent
American
Stock Transfer & Trust Company is the Transfer Agent and Registrar for the
Company's common stock.
PLAN
OF DISTRIBUTION
The
shares covered by this prospectus may be offered and sold from time to time by
the selling stockholders.  The term "selling stockholder" includes
transferees, pledgees, donees, assignees or other successors in interest selling
shares received after the date of this prospectus from each selling
stockholder.  The number of shares beneficially owned by a selling
stockholder will decrease as and when it effects any such
transfers.  The plan of distribution for the selling stockholders'
shares sold hereunder will otherwise remain unchanged, except that the
transferees, pledgees, donees assignees or other successors will be selling
stockholders hereunder.  To the extent required, we may amend and
supplement this prospectus from time to time to describe a specific plan of
distribution.
The
selling stockholders may, from time to time, sell any and all of their shares of
common stock on the Over-the-Counter Bulletin Board (or any other market,
exchange or trading facility on which the shares are then listed) or in private
transactions.  The selling stockholders may make these sales at prices
and under terms then prevailing or at prices related to the then current market
price.  The selling stockholders may also make sales in negotiated
transactions.  The selling stockholders may offer their shares from
time to time pursuant to one or more of the following methods:
·
ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits purchasers;
·
one
      or more block trades in which the broker-dealer will attempt to sell the
      shares as agent but may position and resell a portion of the block as
      principal to facilitate the
transaction;
·
purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;
·
an
      exchange distribution in accordance with the rules of the applicable
      exchange;
·
public
      or privately negotiated
transactions;
·
through
      underwriters, brokers or dealers (who may act as agents or principals) or
      directly to one or more purchasers;
·
a
      combination of any such methods of sale;
and
·
any
      other method permitted pursuant to applicable
  law.
47
The
selling stockholders may enter into derivative transactions with third parties,
or sell securities not covered by this prospectus to third parties in privately
negotiated transactions.  If the applicable prospectus supplement
indicates, in connection with those derivatives, the third parties may sell
securities covered by this prospectus and the applicable prospectus supplement,
including in short sale transactions.  If so, the third party may use
securities pledged by the selling stockholders or borrowed from the selling
stockholders or others to settle those sales or to close out any related open
borrowings of stock, and may use securities received from the selling
stockholders in settlement of those derivatives to close out any related open
borrowings of stock.
In
connection with distributions of the shares or otherwise, the selling
stockholders may:
·
enter
      into hedging transactions with broker-dealers or other financial
      institutions, which may in turn engage in short sales of the shares in the
      course of hedging the positions they
assume;
·
sell
      the shares short and redeliver the shares to close out such short
      positions;
·
enter
      into option or other transactions with broker-dealers or other financial
      institutions which require the delivery to them of shares offered by this
      prospectus, which they may in turn resell;
and
·
pledge
      shares to a broker-dealer or other financial institution, which, upon a
      default, they may in turn resell.
In
addition to the foregoing methods, the selling stockholders may offer their
shares from time to time in transactions involving principals or brokers not
otherwise contemplated above, in a combination of such methods or described
above or any other lawful methods.  The selling stockholders may also
transfer, donate or assign their shares to lenders, family members and others
and each of such persons will be deemed to be a selling stockholder for purposes
of this prospectus.  The selling stockholders may from time to time
pledge or grant a security interest in some or all of the shares of common
stock, and if the selling stockholders default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the
shares of common stock from time to time under this prospectus; provided,
however, in the event of a pledge or then default on a secured obligation by the
selling stockholder, in order for the shares to be sold under this registration
statement, unless permitted by law, we must distribute a prospectus supplement
and/or amendment to this registration statement amending the list of selling
stockholders to include the pledge, secured party or other successors in
interest of the selling stockholder under this prospectus.
The
selling stockholders may also sell their shares pursuant to Rule 144 under the
Securities Act, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions.
Sales
through brokers may be made by any method of trading authorized by any stock
exchange or market on which the shares may be listed or quoted, including block
trading in negotiated transactions.  Without limiting the foregoing,
such brokers may act as dealers by purchasing any or all of the shares covered
by this prospectus, either as agents for others or as principals for their own
accounts, and reselling such shares pursuant to this prospectus.  The
selling stockholders may effect such transactions directly, or indirectly
through underwriters, broker-dealers or agents acting on their
behalf.  In effecting sales, broker-dealers or agents engaged by the
selling stockholders may arrange for other broker-dealers to
participate.  Broker-dealers or agents may receive commissions,
discounts or concessions from the selling stockholders, in amounts to be
negotiated immediately prior to the sale (which compensation as to a particular
broker-dealer might be in excess of customary commissions for routine market
transactions).
48
In
offering the shares covered by this prospectus, the selling stockholders, and
any broker-dealers and any other participating broker-dealers who execute sales
for the selling stockholders, may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with these sales.  Any
profits realized by the selling stockholders and the compensation of such
broker-dealers may be deemed to be underwriting discounts and
commissions.
We have
agreed to pay all fees and expenses incident to the registration of the
shares.
We have
agreed to indemnify the selling stockholders against certain losses, claims,
damages and liabilities, including liabilities under the Securities
Act.
LEGAL
MATTERS
The
validity of the common stock offered in this prospectus will be passed upon for
us by DLA Piper LLP (US).
EXPERTS
The
consolidated financial statements of Cover-All Technologies and its subsidiary
as of December 31, 2007, 2006 and for each of the three fiscal years in the
three-year period ended December 31, 2007, incorporated by reference herein,
have been audited by Moore Stephens, P.C., an independent registered public
accounting firm, as stated in their report dated March 28, 2008, which
is
incorporated
by reference
herein, and such consolidated financial statements have
been so incorporated by reference in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We are a
public company and file annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange
Commission.  You may read and copy any document we file at the SEC's
Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C.
20549.  You can request copies of these documents by writing to the
SEC and paying a fee for the copying cost.  Please call the SEC at
1-800-SEC-0330 for more information about the operation of the public reference
room.  Our SEC filings are also available to the public at the SEC's
web site at "http://www.sec.gov."
This
prospectus is only part of a Registration Statement on Form S-1 that we have
filed with the SEC under the Securities Act and therefore omits certain
information contained in the Registration Statement.  We have also
filed exhibits and schedules with the Registration Statement that are excluded
from this prospectus, and you should refer to the applicable exhibit or schedule
for a complete description of any statement referring to any contract or other
document.  You may:
·
inspect
      a copy of the Registration Statement, including the exhibits and
      schedules, without charge at the public reference
  room,
·
obtain
      a copy from the SEC upon payment of the fees prescribed by the SEC,
      or
·
obtain
      a copy from the SEC website.
49
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
Securities and Exchange Commission, or the SEC, allows us to "incorporate by
reference" the information that we file with it, meaning we can disclose
important information to you by referring you to those documents already on file
with the SEC. The information incorporated by reference is considered to be part
of this prospectus except for any information that is superseded by other
information that is included in this prospectus.
This
filing incorporates by reference the following documents, which we have
previously filed with the SEC:
·
Our
      Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as
      filed on March 28, 2008;
·
Our
      Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2008,
      as filed on May 9, 2008;
·
Our
      Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2008,
      as filed on August 11, 2008;
·
Our
      Quarterly Report on Form 10-Q for the Registrant's fiscal quarter ended
      September 30, 2008, as filed on November 10, 2008;
·
Our
      definitive Proxy Statement used in connection with the Annual Meeting of
      Stockholders held on June 6, 2008, as filed on April 29, 2008;
      and
·
Our
      Current Reports on Form 8-K, as filed on June 3, 2008, June 18, 2008,
      November 7, 2008 and November 24,
2008.
You
should rely only on the information contained in this prospectus or that
information to which this prospectus has referred you by reference. We have not
authorized anyone to provide you with any additional information.
These
documents may also be accessed through our website at www.cover-all.com or as
described under "Where You Can Find More Information." The information and other
content contained on or linked from our website are not part of this prospectus.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus.
We will
provide, without charge, to each person, including any beneficial owner, to whom
this prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the reports or documents incorporated by reference in this
prospectus but not delivered with this prospectus. Any request may be made by
writing or calling us at the following address or telephone
number:
Ms. Ann
F. Massey
55 Lane
Road, Suite 300
Fairfield,
New Jersey 07004
(973)
461-5190
50
FINANCIAL
STATEMENTS
With
respect to our unaudited interim financial statements, the Registrant hereby
incorporates by reference the following:
·
Consolidated
      Balance Sheets as of September 30, 2008
  (unaudited);
·
Consolidated
      Statements of Operations for the Three and Nine Months Ended September 30,
      2008 and 2007 (unaudited);
·
Consolidated
      Statements of Cash Flows for the Nine Months Ended September 30, 2008 and
      2007 (unaudited); and
·
Notes
      to Consolidated Financial Statements
  (unaudited),
contained
in our quarterly report on Form 10-Q for the quarter ended September 30, 2008,
filed with the SEC on November 10, 2008.
With
respect to our audited annual consolidated financial statements, the Registrant
hereby incorporates by reference the following:
·
Report
      of Moore Stephens, P.C., Independent Registered Public Accounting
      Firm;
·
Consolidated
      Balance Sheets as of December 31, 2007 and
2006;
·
Consolidated
      Statements of Operations for the Years Ended December 31, 2007,
2006
      and 2005;
·
Consolidated
      Statements of Changes in Stockholders' Equity (Deficit) for the
Years
      Ended December 31, 2007, 2006 and
2005;
·
Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2007,
2006
      and 2005; and
·
Notes
      to Consolidated Financial
Statements,
contained
in our annual report on Form 10-K for the year ended December 31, 2007, filed
with the SEC on March 28, 2008.
51
9,876,584
Shares of Common Stock
COVER-ALL
TECHOLOGIES INC.
Prospectus
,
2008
No
dealer, salesperson or any person is authorized to give any information or make
any representations in connection with this offering other than those contained
in this prospectus and, if given or made, the information or representations
must not be relied upon as having been authorized by us.  This
prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any security other than the securities offered by the prospectus, or an
offer to sell or a solicitation of an offer to buy any securities by anyone in
any jurisdiction in which the offer or solicitation is not authorized or is
unlawful.  Until
[                    ],
2009, all dealers that effect transactions in this securities, whether or not
participating in this offering may be required to deliver a
prospectus.  This is an addition to the dealers obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
52
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13.  Other Expenses of Issuance and Distribution
The
following table sets forth the Company's estimates of the expenses in connection
with the sale and distribution of the securities being registered, all of which
will be paid by the Company.
Item
Amount
SEC
      registration fee
$359
Legal
      fees and expenses
$50,000*
Accounting
      fees and expenses
$7,500*
Printing
      fees and expenses
$1,000*
Miscellaneous
      fees and expenses
$1,141*
Total
$60,000*
______________
*Estimated
Item
14.  Indemnification of Directors and Officers
Section
102 of the Delaware General Corporation Law ("DGCL"), as amended, allows a
corporation to eliminate the personal liability of directors of a corporation to
the corporation or its stockholders for monetary damages for a breach of
fiduciary duty as a director, except where the director breached his duty of
loyalty, failed to act in good faith, engaged in intentional misconduct or
knowingly violated a law, authorized the payment of a dividend or approved a
stock repurchase in violation of Delaware corporate law or obtained an improper
personal benefit.
Section
145 of the DGCL provides, among other things, that the company 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 an
action by or in the right of the company) by reason of the fact that the person
is or was a director, officer, agent or employee of the company or is or was
serving at the company's request as a director, officer, agent or employee of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgment, fines and amounts paid in
settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding.  The power to indemnify applies (a)
if such person is successful on the merits or otherwise in defense of any
action, suit or proceeding, or (b) if such person acted in good faith and in a
manner he reasonably believed to be in the best interest, or not opposed to the
best interest, of the company, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful.  The power to indemnify applies to actions brought by or in
the right of the company as well but only to the extent of defense expenses
(including attorneys' fees but excluding amounts paid in settlement) actually
and reasonably incurred and not to any satisfaction of judgment or settlement of
the claim itself, and with the further limitation that in such actions no
indemnification shall be made in the event of any adjudication of negligence or
misconduct in the performance of his duties to the company, unless the court
believes that in light of all the circumstances indemnification should
apply.
Section
174 of the DGCL provides, among other things, that a director, who willfully or
negligently approves of an unlawful payment of dividends or an unlawful stock
purchase or redemption, may be held liable for such actions.  A
director who was either absent when the unlawful actions were approved or
dissented at the time, may avoid liability by causing his or her dissent to such
actions be entered in the books containing the minutes of the meetings of the
board of directors at the time such action occurred or immediately after such
absent director receives notice of the unlawful acts.
53
Article X
of the Company's By-Laws provides that a director or officer of the Company
shall by indemnified by the Company against judgment, fines, amounts paid in
settlement and reasonable expenses, including attorney's fees, actually and
necessarily incurred by such person in connection with the defense of or any
appeal therein, to the full extent permitted under the laws of the State of
Delaware from time to time in effect.  The Company shall have the
power to purchase and maintain insurance for the indemnification of such
directors, officers to the full extent permitted under the laws of the State of
Delaware from time to time in effect.  Such right of indemnification
shall not be deemed exclusive of any other rights of indemnification to which
such director or officer may be entitled.
Item
15.  Recent Sales of Unregistered Securities.
We have
sold or issued the following securities that were not registered under the
Securities Act during the three year period ending on the date of filing of this
registration statement:
In August
2006, the holders of our 2008 Debentures and 2009 Debentures elected to convert
an aggregate of $127,254 principal amount of such debentures for share of our
common stock at the conversion price of $0.30 per share.  In
connection with this conversion, we issued to the holders of the debentures an
aggregate of 424,181 shares of our common stock.  No cash proceeds
were received by us in connection with each conversion of the
debentures.  The shares of our common stock issued upon each
conversion of the debentures were issued exempt from registration in reliance on
Section 3(a)(9) of the Securities Act as an exchange of securities by an issuer
with its existing security holders where no commission or other remuneration was
paid or given directly or indirectly for soliciting such exchange.
In
January 2007, the holders of our 2008 Debentures and 2009 Debentures elected to
convert an aggregate of $119,807 principal amount of such Debentures for shares
of our common stock at the conversion price of $0.30 per share.  In
connection with this conversion, we issued to the holders of the debentures an
aggregate of 399,358 shares of our common stock.  No cash proceeds
were received by us in connection with each conversion of the
debentures.  The shares of our common stock issued upon each
conversion of the debentures were issued exempt from registration in reliance on
Section 3(a)(9) of the Securities Act as an exchange of securities by an issuer
with its existing security holders where no commission or other remuneration was
paid or given directly or indirectly for soliciting such exchange.
In March
2007, we issued an aggregate of 5,438,670 shares of our common stock to the RENN
funds in connection with their election to convert an aggregate of $1,631,601
principal amount of the 2008 Debentures and 2009 Debentures at a conversion
price of $0.30 per share.  No cash proceeds were received by us in
connection with each conversion of the debentures.  The shares of our
common stock issued upon each conversion of the debentures were issued exempt
from registration in reliance on Section 3(a)(9) of the Securities Act as an
exchange of securities by an issuer with its existing security holders where no
commission or other remuneration was paid or given directly or indirectly for
soliciting such exchange.
In March
2007, we issued an aggregate of 128,572 shares of our common stock to US Special
Opportunities Trust PLC (the predecessor of Global Special Opportunities Trust
PLC), Renaissance US Growth Investment Trust PLC, Mr. Roblin and certain other
investors upon their exercise of an aggregate of 128,572 warrants to purchase
128,572 shares of our common stock at an exercise price of $0.22 per
share.  The issuance of such shares was exempt from registration in
reliance on Section 4(2) of the Securities Act.
In June
2007, the holders of the 2008 Debentures converted an aggregate of $33,617 in
principal of such debentures into a total of 112,055 shares of our common stock
at the conversion price of $0.30 per share.  No cash proceeds were
received by us in connection with this partial conversion of the 2008
Debentures.  The shares of our common stock issued upon the conversion
of the debentures were issued exempt from registration in reliance on Section
3(a)(9) of the Securities Act as an exchange of securities by an issuer with its
existing security holders where no commission or other remuneration was paid or
given directly or indirectly for soliciting such exchange.
54
In
December 2007, we issued an aggregate of 7,143 shares of our common stock to Mr.
Roblin, upon his exercise of an aggregate of 7,143 warrants to purchase 7,143
shares of our common stock at an exercise price of $0.35 per
share.  The issuance of such shares was exempt from registration in
reliance on Section 4(2) of the Securities Act.
In June
2008, Mr. Roblin and certain other investors converted an aggregate of $262,265
in principal of our 2008 Debentures into a total of 874,217 shares of our common
stock.  No cash proceeds were received by us in connection with this
partial conversion of the 2008 Debentures.  The shares of our common
stock issued upon the conversion of the debentures were issued exempt from
registration in reliance on Section 3(a)(9) of the Securities Act as an exchange
of securities by an issuer with its existing security holders where no
commission or other remuneration was paid or given directly or indirectly for
soliciting such exchange.
Item
16.  Exhibits
The
Exhibits listed on the Exhibit Index of this Registration Statement are filed
herewith or are incorporated herein by reference to other filings.
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;
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
;
      and
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,
      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 the purpose of determining liability under the Securities Act to any
      purchaser:
55
Each
      prospectus filed pursuant to Rule 424(b) as part of a registration
      statement relating to an offering, other than registration statements
      relying on Rule 430B or other than prospectuses filed in reliance on Rule
      430A, shall be deemed to be part of and included in the registration
      statement as of the date it is first used after
      effectiveness.
Provided, however
, that
      no statement made in a registration statement or prospectus that is part
      of the registration statement or made in a document incorporated or deemed
      incorporated by reference into the registration statement or prospectus
      that is part of the registration statement will, as to a purchaser with a
      time of contract of sale prior to such first use, supersede or modify any
      statement that was made in the registration statement or prospectus that
      was part of the registration statement or made in any such document
      immediately prior to such date of first
use.
Insofar
      as indemnification for liabilities arising under the Securities Act may be
      permitted to directors, officers and controlling persons of the
      Registrant, 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.
The
      undersigned Registrant hereby undertakes
that:
1.
For
      purposes of determining any liability under the Securities Act, 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.
2.
For
      the purpose of determining any liability under the Securities Act, 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.
56
SIGNATURES
Pursuant
to the requirements of the Securities Act, the Registrant certifies that it has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Fairfield, New Jersey on December 22,
2008.
COVER-ALL
      TECHNOLOGIES INC.
By:
/s/
      John W. Roblin
John
      W. Roblin
Chairman
      of the Board of Directors and Chief Executive
  Officer
POWER
OF ATTORNEY
We the
undersigned officers and directors of Cover-All Technologies, Inc., hereby
severally constitute and appoint John W. Roblin and Ann F. Massey (with full
power to act alone), our true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution in each of them for him and in his
name, place and stead, and in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
(or any other Registration Statement for the same offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act), and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as full to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act, this Registration Statement has been
signed by the following persons in the capacities and on the dates
indicated.
Name
Title
Date
/s/
      John W. Roblin
Chairman
      of the Board of Directors and Chief
December
      22, 2008
John
      W. Roblin
Executive Officer
(Principal
      Executive Officer)
/s/
      Ann F. Massey
Chief
      Financial Officer, Controller and Secretary
December
      22, 2008
Ann
      F. Massey
(Principal Financial
      and Accounting Officer)
/s/
      Manish D. Shah
Director,
      President and Chief Technology Officer
December
      22, 2008
Manish
      D. Shah
/s/
      Russell Cleveland
Director
December
      22, 2008
Russell
      Cleveland
/s/
      Earl Gallegos
Director
December
      22, 2008
Earl
      Gallegos
/s/
      Mark Johnston
Director
December
      22, 2008
Mark
      Johnston
57
EXHIBIT
INDEX
Exhibit No.
Description
2
Certificate
      of Merger of the Company Computer Systems, Inc. (a New York corporation)
      into the Registrant, filed on June 11, 1985 [incorporated by reference to
      Exhibit 2 to the Registrant's Annual Report on Form 10-K (Commission File
      No. 0-13124) filed on January 29,
1986].
3(a)
Certificate
      of Incorporation of the Registrant filed on April 22, 1985 [incorporated
      by reference to Exhibit 3(a) to the Registrant's Annual Report on Form
      10-K (Commission File No. 0-13124) filed on January 29,
    1986].
3(b)
Certificate
      of Amendment of Certificate of Incorporation of the Registrant filed on
      May 6, 1987 [incorporated by reference to Exhibit 3.2 to the
      Registrant's Registration Statement on Form S-1 (Commission File No.
      33-17533) filed on September 29,
1987].
3(c)
Certificate
      of Amendment of Certificate of Incorporation of the Registrant filed on
      March 26, 1990 [incorporated by reference to Exhibit 3(d) to the
      Registrant's Quarterly Report on Form 10-Q (Commission File No. 0-13124)
      filed on June 14, 1990].
3(d)
Certificate
      of Amendment of Certificate of Incorporation of the Registrant filed on
      March 18, 1992 [incorporated by reference to Exhibit 1 to the Registrant's
      Current Report on Form 8-K (Commission File No. 0-13124) filed on March
      30, 1992].
3(e)
Certificate
      of Amendment of Certificate of Incorporation of the Registrant
      [incorporated by reference to Exhibit 3(e) to the Registrant's Amendment
      No. 1 to Registration Statement on Form S-3 (Commission File No. 0-13124)
      filed on July 10, 1996].
3(f)
Certificate
      of Amendment of Certificate of Incorporation of the Registrant filed on
      July 12, 2000 [incorporated by reference to Exhibit 3(g) to the
      Registrant's Quarterly Report on Form 10-Q (Commission File No. 0-13124)
      filed on August 11, 2000].
3(g)
By-laws
      of the Registrant, as amended [incorporated by reference to Exhibit 3(g)
      to the Registrant's Amendment No. 1 to Registration Statement on Form S-3
      (Commission file No. 0-13124) filed on July 10,
  1996].
4
Form
      of Common Stock Certificate of the Registrant [incorporated by reference
      to Exhibit 4(a) to the Registrant's Annual Report on Form 10-K (Commission
      File No. 0-13124) filed on January 29,
1986].
5*
Opinion
      of DLA Piper LLP (US).
10(a)
Warner
      Insurance Services, Inc. Tax Saver 401(k) Salary Reduction Plan adopted
      May 31, 1985 and restated as of August 11, 1992 [incorporated by
      reference to Exhibit 10(k) to the Registrant's Annual Report on Form
      10-K (Commission File No. 0-13124) filed on January 28,
    1993].
10(b)(1)
1994
      Stock Option Plan for Independent Directors adopted by the Board of
      Directors of the Registrant on November 10, 1994 [incorporated by
      reference to Exhibit 10(n)(1) to the Registrant's Annual Report on Form
      10-K (Commission File No. 0-13124) filed on April 17,
    1995].
10(c)(8)
Amendment
      to Non-Qualified Stock Option Agreement, dated as of December 20, 2004,
      between the Registrant and Mark D. Johnston [incorporated by reference to
      Exhibit 10(c)(8) to the Registrant's Quarterly Report on Form 10-Q
      (Commission File No. 0-13124) filed on August 15,
  2005].
58
10(c)(9)
Amendment
      to Non-Qualified Stock Option Agreement, dated as of December 20, 2004,
      between the Registrant and Earl Gallegos [incorporated by reference to
      Exhibit 10(c)(9) to the Registrant's Quarterly Report on Form 10-Q
      (Commission File No. 0-13124) filed on August 15,
  2005].
10(c)(10)
Amendment
      to Incentive Stock Option Agreement, dated as of December 20, 2004,
      between the Registrant and John Roblin [incorporated by reference to
      Exhibit 10(c)(10) to the Registrant's Quarterly Report on Form 10-Q
      (Commission File No. 0-13124) filed on August 15,
  2005].
10(c)(11)
Amendment
      to Incentive Stock Option Agreement, dated as of December 20, 2004,
      between the Registrant and John Roblin [incorporated by reference to
      Exhibit 10(c)(11) to the Registrant's Quarterly Report on Form 10-Q
      (Commission File No. 0-13124) filed on August 15,
  2005].
10(c)(14)
Form
      of Non-Qualified Stock Option Agreement [incorporated by reference to
      Exhibit 10(c)(14) the Registrant's Quarterly Report on Form 10-Q
      (Commission File No. 0-13124) filed on May 15,
  2006].
10(c)(15)
Form
      of Incentive Stock Option Agreement [incorporated by reference to Exhibit
      10(c)(15) the Registrant's Quarterly Report on Form 10-Q (Commission File
      No. 0-13124) filed on May 15,
2006].
10(c)(16)
Form
      of Restricted Stock Grant Agreement [incorporated by reference to Exhibit
      10(c)(16) the Registrant's Quarterly Report on Form 10-Q (Commission File
      No. 0-13124) filed on May 15,
2006].
10(c)(17)
Form
      of Non-Qualified Stock Option Agreement (for Consultants) [incorporated by
      reference to Exhibit 10(c)(13) the Registrant's Quarterly Report on Form
      10-Q (Commission File No. 0-13124) filed on May 15,
  2006].
10(c)(18)
Cover-All
      Technologies Inc. Amended and Restated 2005 Stock Incentive Plan
      [incorporated by reference to Exhibit 10(c)(18) to the Registrant's Form
      8-K (Commission File No. 0-13124) filed on March 27,
  2008].
10(c)(19)
Summary
      of 2008 Non-Employee Director Compensation dated March 25, 2008
      [incorporated by reference to Exhibit 99.1 the Registrant's Form 8-K
      (Commission File No. 0-13124) filed on March 27,
  2008].
10(d)(1)
Lease
      Agreement, dated March 3, 2005, by and between the Registrant and
      Fairfield 80 Venture, LLC [incorporated by reference to Exhibit 10(d)(4)
      to the Registrant's Annual Report on Form 10-K (Commission File No.
      0-13124) filed on March 25, 2005].
10(e)(3)
Tuition
      Reimbursement Agreement, dated September 1, 2006, between the Registrant
      and Manish D. Shah [incorporated by reference to Exhibit 10(p) to the
      Registrant's Form 8-K (Commission File No. 0-13124) filed on September 1,
      2006].
10(e)(5)
Employment
      Agreement, dated December 26, 2006, by and between the Registrant and John
      Roblin [incorporated by reference to Exhibit 10(e)(5) to the Registrant's
      Form 8-K (Commission File No. 0-13124) filed on December 27,
      2006].
10(e)(6)
Amendment
      No. 1 to the Employment Agreement, dated April 26, 2007, between the
      Registrant and John Roblin [incorporated by reference to Exhibit 10(e)(6)
      to the Registrant's Form 8-K (Commission File No. 0-13124) filed on April
      30, 2007].
10(e)(7)
Employment
      Agreement, dated December 26, 2007, by and between the Registrant and John
      Roblin [incorporated by reference to Exhibit 10(e)(7) to the Registrant's
      Form 8-K (Commission File No. 0-13124) filed on December 27,
      2007].
59
10(i)(17)
Limited Waiver to
      the Convertible Loan Agreement, dated as of March 31, 2007, by John Roblin
      and Stuart Sternberg
[incorporated by reference to Exhibit
      10(i)(17) to the Registrant's Quarterly Report on Form 10-Q (Commission
      File No. 0-13124) filed on May 11,
2007].
10(i)(18)
Limited Waiver to
      Convertible Loan Agreement, dated as of June 30, 2007, by John Roblin and
      Stuart Sternberg
[incorporated by reference to Exhibit 10(i)(18) to
      the Registrant's Quarterly Report on Form 10-Q (Commission File No.
      0-13124) filed on August 10, 2007].
10(i)(19)
Limited
      Waiver to Convertible Loan Agreement, dated as of September 30, 2007, by
      John Roblin and Stuart Sternberg [incorporated by reference to Exhibit
      10(i)(19) to the Registrant's Quarterly Report on Form 10-Q (Commission
      File No. 0-13124) filed on November 13,
2007].
10(j)(i)
Asset
      Purchase Agreement, dated January 22, 2007, between the Registrant and
      Maloy Risk Services, Inc. [incorporated by reference to Exhibit 10(j)(i)
      to the Registrant's Form 8-K (Commission File No. 0-13124) filed on
      January 26, 2007].
10(j)(ii)
Commission
      Agreement, dated January 22, 2007, between the Registrant and Maloy Risk
      Services, Inc. [incorporated by reference to Exhibit 10(j)(ii) to the
      Registrant's Form 8-K (Commission File No. 0-13124) filed on January 26,
      2007].
21
Subsidiaries
      of the Registrant [incorporated by reference to Exhibit 21 to the
      Registrant's Annual Report on Form 10-K (Commission File No. 0-13124)
      filed on April 11, 1996].
23.1*
Consent
      of MSPC.
23.2*
Consent
      of DLA Piper LLP (US) [included in Exhibit
5].
24*
Power
      of Attorney [included on the signature
page].
_____________
*      Filed
herewith.
60