<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                  For the quarterly period ended March 31, 2007

                                       OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

       For the transition period from ________________ to ________________

                         Commission file number: 0-13124

                           COVER-ALL TECHNOLOGIES INC.
             (Exact name of registrant as specified in its charter)

            DELAWARE                                       13-2698053
(State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                        Identification No.)

55 LANE ROAD, FAIRFIELD, NEW JERSEY                            07004
(Address of principal executive offices)                     (Zip Code)

                                  917-461-5200
              (Registrant's telephone number, including area code)

                                      NONE
              (Former name, former address and former fiscal year,
                         if changed since last report)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [_]   Accelerated filer [_]   Non-accelerated filer [X]

     Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [_] No [X]

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

                Class                                 Outstanding at May 1, 2007
--------------------------------------                --------------------------
Common Stock, $.01 par value per share                   23,013,104 shares

<PAGE>

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

INDEX TO FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2007
--------------------------------------------------------------------------------

PART I:    FINANCIAL INFORMATION

ITEM 1.    Financial Statements

           Consolidated Balance Sheets as of March 31, 2007 (Unaudited)
           and December 31, 2006 (Audited)................................    3

           Consolidated Statements of Operations for the three
           months ended March 31, 2007 and 2006 (Unaudited)...............    5

           Consolidated Statements of Cash Flows for the three
           months ended March 31, 2007 and 2006 (Unaudited)...............    6

           Notes to Consolidated Financial Statements (Unaudited).........    7

ITEM 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations............................   11

ITEM 3.    Qualitative and Quantitative Disclosures
           About Market Risk..............................................   18

ITEM 4.    Controls and Procedures........................................   18

PART II:   OTHER INFORMATION

ITEM 1A.   Risk Factors...................................................   20

ITEM 2.    Unregistered Sales of Equity Securities and Use of Proceeds....   20

ITEM 6.    Exhibits.......................................................   20

SIGNATURES ...............................................................   21


                                        2

<PAGE>

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.
        ---------------------

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                   MARCH 31,    DECEMBER 31,
                                                                      2007          2006
                                                                   ----------   ------------
                                                                  (UNAUDITED)     (AUDITED)
<S>                                                                <C>           <C>
ASSETS:
Current Assets:
   Cash and Cash Equivalents ..................................    $  496,819    $  131,847
   Accounts Receivable (Less Allowance for Doubtful Accounts
      of $25,000 in 2007 and 2006) ............................     1,117,323     1,356,069
   Prepaid Expenses ...........................................       348,003       322,372
                                                                   ----------    ----------
   Total Current Assets .......................................     1,962,145     1,810,288
                                                                   ----------    ----------
Property and Equipment - At Cost:
   Furniture, Fixtures and Equipment ..........................       449,796       449,796
   Less: Accumulated Depreciation .............................      (266,383)     (251,304)
                                                                   ----------    ----------
   Property and Equipment - Net ...............................       183,413       198,492
                                                                   ----------    ----------
Capitalized Software (Less Accumulated Amortization of
   $9,513,725 and $9,301,096 respectively) ....................     1,429,212     1,376,437
                                                                   ----------    ----------
Deferred Financing Costs (Net of Accumulated Amortization of
   $189,183 and $180,565, respectively) .......................        52,128        60,746
                                                                   ----------    ----------
Other Assets ..................................................       110,026       110,151
                                                                   ----------    ----------
   Total Assets ...............................................    $3,736,924    $3,556,114
                                                                   ==========    ==========
</TABLE>

   The Accompanying Notes are an Integral Part of These Consolidated Financial
                                   Statements.


                                        3

<PAGE>

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                      MARCH 31,    DECEMBER 31,
                                                                        2007           2006
                                                                    ------------   ------------
                                                                     (UNAUDITED)    (AUDITED)
<S>                                                                 <C>            <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
   Accounts Payable .............................................   $    493,547   $    459,879
   Income Taxes Payable .........................................             --             --
   Accrued Liabilities ..........................................        411,560        609,510
   Deferred Charges .............................................          4,979          2,532
   Convertible Debentures .......................................         31,083        325,796
   Convertible Debenture - Related Party ........................         10,361         13,002
   Unearned Revenue .............................................      1,463,409      1,297,581
                                                                    ------------   ------------
   Total Current Liabilities ....................................      2,414,939      2,708,300
                                                                    ------------   ------------
Long-Term Liabilities:
   Deferred Charges .............................................        162,640        163,787
   Convertible Debentures .......................................        190,827      1,642,926
   Convertible Debenture - Related Party ........................         63,609         65,566
                                                                    ------------   ------------
   Total Long-Term Liabilities ..................................        417,076      1,872,279
                                                                    ------------   ------------
   Total Liabilities ............................................      2,832,015      4,580,579
                                                                    ------------   ------------
Commitments and Contingencies ...................................             --             --
                                                                    ------------   ------------
Stockholders' Equity:
   Common Stock, $.01 Par Value, Authorized 75,000,000 Shares;
      22,991,675 and 19,059,823 Shares Issued and 22,991,675
      and 16,559,823 Shares Outstanding, Respectively ...........        229,917        194,915

Capital In Excess Of Par Value ..................................     27,787,034     26,735,207

Accumulated Deficit .............................................    (27,112,042)   (27,251,587)

Treasury Stock - At Cost - 2,500,000 Shares .....................             --       (703,000)
                                                                    ------------   ------------
Total Stockholders' Equity ......................................        904,909     (1,024,465)
                                                                    ------------   ------------
Total Liabilities and Stockholders' Equity ......................   $  3,736,924   $  3,556,114
                                                                    ============   ============
</TABLE>

   The Accompanying Notes are an Integral Part of These Consolidated Financial
                                   Statements.


                                        4

<PAGE>

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED MARCH 31,
                                                       ----------------------------
                                                           2007           2006
                                                        -----------   ------------
<S>                                                     <C>           <C>
REVENUES:
   Licenses ........................................    $   203,465   $   248,229
   Maintenance .....................................        826,074       843,694
   Professional Services ...........................        517,308       331,063
   Applications Service Provider ("ASP") Services ..        384,618       316,185
                                                        -----------   -----------
   TOTAL REVENUES ..................................      1,931,465     1,739,171
                                                        -----------   -----------
COST OF REVENUES:
   Licenses ........................................        215,214       314,710
   Maintenance .....................................        726,487       750,432
   Professional Services ...........................        239,917       130,793
   ASP Services ....................................         94,592        90,088
                                                        -----------   -----------
   TOTAL COST OF REVENUES ..........................      1,276,210     1,286,023
                                                        -----------   -----------
   DIRECT MARGIN ...................................        655,255       453,148
                                                        -----------   -----------
OPERATING EXPENSES:
   Sales and Marketing .............................        110,196       236,216
   General and Administrative ......................        277,703       288,238
   Research and Development ........................         90,713       174,973
                                                        -----------   -----------
   TOTAL OPERATING EXPENSES ........................        478,612       699,427
                                                        -----------   -----------
   OPERATING INCOME (LOSS) .........................        176,643      (246,279)
                                                        -----------   -----------
OTHER INCOME (EXPENSE):
   Interest Expense ................................        (35,641)      (42,308)
   Interest Expense - Related Party ................         (1,459)       (1,646)
   Interest Income .................................              2             4
   Other Income ....................................             --           243
                                                        -----------   -----------
   TOTAL OTHER INCOME (EXPENSE) ....................        (37,098)      (43,707)
                                                        -----------   -----------
   INCOME (LOSS) BEFORE INCOME TAXES (BENEFIT) .....        139,545      (289,986)
INCOME TAXES (BENEFIT) .............................             --            --
                                                        -----------   -----------
NET INCOME (LOSS) ..................................    $   139,545   $  (289,986)
                                                        ===========   ===========
BASIC EARNINGS (LOSS) PER COMMON SHARE .............    $       .01   $     (0.02)
                                                        ===========   ===========
DILUTED EARNINGS (LOSS) PER COMMON SHARE ...........    $       .01   $     (0.02)
                                                        ===========   ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
   OUTSTANDING FOR BASIC EARNINGS (LOSS)
   PER COMMON SHARE ................................     17,873,000    16,560,000
                                                        ===========   ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
   OUTSTANDING FOR DILUTED EARNINGS (LOSS)
   PER COMMON SHARE ................................     19,431,000    16,560,000
                                                        ===========   ===========
</TABLE>

   The Accompanying Notes are an Integral Part of These Consolidated Financial
                                   Statements.


                                        5

<PAGE>

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED MARCH 31,
                                                                   ----------------------------
                                                                          2007        2006
                                                                       ---------   ---------
<S>                                                                    <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income (Loss) ...........................................       $ 139,545   $(289,986)
   Adjustments to Reconcile Net Income (Loss) to
      Net Cash Provided From (Used For) Operating Activities:
         Depreciation ..........................................          15,079      17,018
         Amortization of Capitalized Software ..................         212,629     263,681
         Amortization of Deferred Financing Costs ..............           8,618       8,618
   Changes in Assets and Liabilities:
      (Increase) Decrease in:
         Accounts Receivable ...................................         238,746     833,194
         Prepaid Expenses ......................................         (25,631)     38,859
         Other Assets ..........................................             125        (294)
      Increase (Decrease) in:
         Accounts Payable ......................................          33,668    (230,375)
         Accrued Liabilities ...................................        (197,952)    (27,130)
         Deferred Charges ......................................           1,300       1,301
         Unearned Revenue ......................................         165,828    (101,186)
                                                                       ---------   ---------
   Net Cash Provided From (Used For) Operating Activities ......         591,955     513,700
                                                                       ---------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital Expenditures ........................................              --          --
   Capitalized Software Expenditures ...........................        (265,404)   (152,229)
                                                                       ---------   ---------
   Net Cash Provided From (Used For) Investing Activities ......        (265,404)   (152,229)
                                                                       ---------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from Exercise of Stock Options and Warrants ........          38,421          --
                                                                       ---------   ---------
   Net Cash Provided From Financing Activities .................          38,421          --
                                                                       ---------   ---------
CHANGE IN CASH AND CASH EQUIVALENTS ............................         364,972     361,471
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD ................         131,847     296,159
                                                                       ---------   ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD ......................       $ 496,819   $ 657,630
                                                                       =========   =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
   CASH PAID DURING THE PERIODS FOR:
      Interest .................................................       $  35,641   $  42,308
      Interest - Related Party .................................           1,459       1,646
      Income Taxes .............................................              --          --
</TABLE>

   The Accompanying Notes are an Integral Part of These Consolidated Financial
                                   Statements.


                                        6

<PAGE>

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

[1] GENERAL

          For a summary of significant accounting policies, refer to Note 1 of
Notes to Consolidated Financial Statements included in Cover-All Technologies
Inc.'s (the "Company") Annual Report on Form 10-K for the year ended December
31, 2006. While the Company believes that the disclosures herein presented are
adequate to make the information not misleading, these consolidated financial
statements should be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company's latest annual report.
Certain amounts for the prior period have been reclassified to conform with the
current period's financial statement presentation. The financial statements
include on a consolidated basis the results of its subsidiary. All material
intercompany transactions and balances have been eliminated.

          In the opinion of management, the accompanying consolidated financial
statements include all adjustments which are necessary to present fairly the
Company's consolidated financial position as of March 31, 2007, and the results
of their operations for the three month periods ended March 31, 2007 and 2006,
and their cash flows for the three month periods ended March 31, 2007 and 2006.
Such adjustments are of a normal and recurring nature. The results of operations
for the three month periods ended March 31, 2007 and 2006 are not necessarily
indicative of the results to be expected for a full year.

[2] CONVERTIBLE DEBENTURES

          In 2001, we issued $1,800,000 aggregate principal amount of 8%
convertible debentures due 2008, which we refer to as the 2008 Debentures, and
in 2002, we issued $700,000 aggregate principal amount of 8% convertible
debentures due 2009, which we refer to as the 2009 Debentures. The 2008
Debentures were issued to two funds managed by RENN Capital Group, Inc., for an
aggregate of $1,400,000, and the remainder of the 2008 Debentures were issued to
John Roblin, our Chairman, President and Chief Executive Officer, and certain
other investors. Our 2009 Debentures were issued only to the two RENN funds. Our
debentures are convertible at the election of the holders into shares of our
common stock, at a conversion price of $0.30 per share, subject to adjustment.

          In 2006, the holders of the 2008 Debentures and the 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 the 2008 Debentures and the 2009 Debentures an aggregate of 424,181 shares of
our common stock. In January 2007, the holders of the 2008 Debentures and the
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 of the 2008 Debentures and the 2009
Debentures an aggregate of 399,358 shares of our common stock. We made an
aggregate of $173,000 of interest payments on the debentures during 2006.

          On March 23, 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 5,438,670 shares of our common stock.
After giving effect to this conversion, as of March 23, 2007, our only
outstanding debentures are an aggregate principal amount of $295,880 that
remains outstanding on the 2008 Debentures, which, at the conversion price of
$0.30 per share, are convertible into an aggregate of 986,267 shares of our
common stock. Interest on the unpaid principal amount of the debentures is
payable monthly at the rate of 8% per annum. The 2008 Debentures mature on July
1, 2008, unless the debentures are earlier redeemed by us or the holder or
converted into shares of our common stock at the holder's option at a conversion
price of $0.30 per share, subject to adjustment. We may redeem the debentures
for cash at 101% of the principal amount, together with accrued and unpaid
interest through the redemption date, upon the occurrence of certain events
specified in the debentures. The related financing costs incurred of $187,090 in
connection with establishing these debentures have been deferred and are being
amortized over the life of the debt. We have been required to repay principal on
the 2008 Debentures and 2009 Debentures, since July 1, 2004 and July 1, 2005,
respectively, in monthly installments of ten dollars ($10) per thousand dollars
($1,000) of the then remaining principal amount.


                                        7

<PAGE>

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

          As of March 31, 2006, we were not in compliance with certain of the
financial covenants of the convertible loan agreements and, as of such date, we
received limited waivers under which the holders of our debentures waived such
non-compliance. As consideration for the receipt of such waivers, we issued to
the holders an aggregate of 128,000 warrants to purchase such number of shares
of our common stock at an exercise price of $0.35 per share. The warrants expire
in 2011 and are exercisable in equal installments on each of May 9, 2006, June
30, 2006 and September 30, 2006.

          As of March 31, 2007, we were not in compliance with one of the
financial covenants of the remaining convertible loan agreement and, as of such
date, we received limited waivers to the convertible loan agreement under which
the holders of our debentures waived such non-compliance.

          At March 31, 2007, principal payments due on the convertible
debentures were as follows:

                      2007 ....................   $ 33,616
                      2008 ....................    262,264
                      2009 ....................         --
                      2010 ....................         --
                      2011 ....................         --
                                                  --------
                         TOTAL                    $295,880
                                                  ========

[3] EARNINGS PER SHARE DISCLOSURES

          The following is a reconciliation of the numerators and denominators
of the basic and diluted earnings per share ("EPS") computations:

<TABLE>
<CAPTION>
                                                        FOR THE THREE MONTHS ENDED
                                                              MARCH 31, 2007
                                                 ---------------------------------------
                                                    INCOME         SHARES      PER SHARE
                                                 (NUMERATOR)   (DENOMINATOR)     AMOUNT
                                                 -----------   -------------   ---------
<S>                                                <C>           <C>              <C>
Basic EPS:
   (Loss) Available to Common Stockholders ...     $139,545      17,873,480       $.01
Interest Reversal Convertible Debentures
   (Net of Tax) ..............................        3,551              --         --
Effect of Dilutive Securities:
   Exercise of Options .......................           --         492,889         --
   Exercise of Warrants ......................           --          78,572         --
   Conversion of Convertible Debentures ......           --         986,272         --
                                                   --------      ----------       ----
Diluted EPS:
   (Loss) Available to Common Stockholders
       Plus Assumed Conversions...............     $143,096      19,431,213       $.01
                                                   ========      ==========       ====
</TABLE>

          Options to purchase 1,008,000 shares of common stock at prices ranging
from $1.13 to $2.00 per share were outstanding at March 31, 2007, but were not
included in the computation of diluted EPS because the options' exercise prices
were greater than the average market price of the common shares.

          The Company's options and warrants were not included in the
computation of EPS for the period ended March 31, 2007 because to do so would be
antidilutive. The Company's convertible debt does not affect the EPS calculation
for the period ended March 31, 2007 because it would be antidilutive.


                                        8

<PAGE>

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                         FOR THE THREE MONTHS ENDED
                                                               MARCH 31, 2006
                                                  ---------------------------------------
                                                     INCOME         SHARES      PER SHARE
                                                  (NUMERATOR)   (DENOMINATOR)     AMOUNT
                                                  -----------   -------------   ---------
<S>                                                <C>            <C>            <C>
Basic EPS:
Income (Loss) Available to Common
   Stockholders ...............................    $(289,986)     16,559,823     $(0.02)
Interest Reversal Convertible Debentures
   (Net of Tax) ...............................           --              --         --
Effect of Dilutive Securities:
   Exercise of Options ........................           --              --         --
   Exercise of Warrants .......................           --              --         --
   Conversion of Convertible Debentures .......           --              --         --
                                                   ---------      ----------     ------
Diluted EPS:
   Income (Loss) Available to Common
      Stockholders Plus Assumed Conversions ...    $(289,986)     16,559,823     $(0.02)
                                                   =========      ==========     ======
</TABLE>

          The Company's options and warrants were not included in the
computation of EPS for the period ended March 31, 2006 because to do so would be
antidilutive. The Company's convertible debt does not affect the EPS calculation
for the period ended March 31, 2006 because it would be antidilutive.

[4] STOCK OPTION AND STOCK PURCHASE PLANS

          On January 1, 2006, we adopted SFAS No. 123R, "SHARE-BASED PAYMENT,"
or SFAS 123R, which is a revision of SFAS No. 123 "ACCOUNTING FOR STOCK-BASED
COMPENSATION," or SFAS 123, and supersedes APB No. 25, "ACCOUNTING FOR STOCK
ISSUES TO EMPLOYEES," or APB 25. Among other items, SFAS 123R requires companies
to record compensation expense for share-based awards issued to employees and
directors in exchange for services provided. The amount of the compensation
expense is based on the estimated fair value of the awards on their grant dates
and is recognized over the required service periods. Our share-based awards
include stock options and restricted stock awards. Prior to our adoption of SFAS
123R, we applied the intrinsic value method set forth in APB 25 to calculate the
compensation expense for share-based awards. Historically, we have generally set
the exercise price for our stock options equal to the market value on the grant
date. As a result, the options generally had no intrinsic value on their grant
dates, and we did not record any compensation expense unless the terms of the
options were subsequently modified. For restricted stock awards, the calculation
of compensation expense under APB 25 and SFAS 123R is the same.

          We adopted SFAS 123R using the modified prospective transition method,
which requires the application of the accounting standard to all share-based
awards issued on or after January 1, 2006 and any outstanding share-based awards
that were issued but not vested as of January 1, 2006. In the three months ended
March 31, 2006 and 2007, we recognized no stock-based compensation expense in
our consolidated financial statements. We did not recognize expense because we
did not have any (a) stock options granted prior to January 1, 2006 that had not
yet vested as of January 1, 2006, (b) stock options granted subsequent to
January 1, 2006 and (c) restricted stock award grants made both before and after
January 1, 2006 that had not yet vested.

          The estimated fair value underlying our calculation of compensation
expense for stock options is based on the Black-Scholes pricing model. SFAS 123R
requires forfeitures of share-based awards to be estimated at the time of grant
and revised, if necessary, in subsequent periods if our estimates change based
on the actual amount of forfeitures we have experienced. In the pro-forma
information required under SFAS 123 for periods prior to January 1, 2006, we
accounted for forfeitures as they occurred.

          SFAS 123R requires us to calculate the pool of excess tax benefits, or
the APIC pool, available as of January 1, 2006, to absorb tax deficiencies
recognized in subsequent periods, assuming we had applied the provisions of the
standard in prior periods. Pursuant to the provisions of FASB Staff Position
123R-3, "TRANSITION ELECTION RELATED TO ACCOUNTING FOR THE TAX EFFECTS OF
SHARE-BASED PAYMENT AWARDS," we adopted the alternative


                                       9

<PAGE>

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

method for determining the tax effects of share-based compensation, which, among
other things, provides a simplified method for estimating the beginning APIC
pool balance.

          In June 2005, we adopted the 2005 Stock Incentive Plan (which we refer
to as the 2005 Plan). Options and stock awards for the purchase of up to
5,000,000 shares may be granted by the Board of Directors to our employees as
consultants at an exercise or grant price determined by the Board of Directors
on the date of grant. Options may be granted as incentive or nonqualified stock
options with a term of not more than ten years. The 2005 Plan allows the Board
of Directors to grant restricted or unrestricted stock awards or awards
denominated in stock equivalent units, securities or debenture convertible into
common stock, or any combination of the foregoing and may be paid in common
stock or other securities, in cash, or in a combination of common stock or other
securities and cash. At March 31, 2007, 4,780,000 shares were available for
grant under the 2005 Plan.

          In November 1994, we adopted the 1994 Stock Option Plan for
Independent Directors. Options for the purchase of up to 300,000 shares may be
granted to our directors who are not employees. The Plan was amended in June
2000 to increase the aggregate number of shares of common stock available for
grant from 300,000 to 750,000. Each non-employee director who is serving on a
"Date of Grant" shall automatically be granted an option to purchase 10,000
shares of common stock at the fair market value of common stock on the date the
option is granted. Dates of Grant are November 15, 1994, 1999, 2004 and 2009 for
non-employee directors serving on November 15, 1994. For individuals who become
non-employee directors after November 15, 1994, such directors' Dates of Grant
will be the date such individual becomes a director and the fifth, tenth and
fifteenth anniversaries of such date. Options are exercisable in full 6 months
after the applicable date of grant and expire 5 years after the date of grant.
At March 31, 2007, 750,000 shares were available for grant under the 1994 Stock
Option Plan for Independent Directors.

          A summary of the changes in outstanding common stock options for all
outstanding plans is as follows:

<TABLE>
<CAPTION>
                                                             WEIGHTED-AVERAGE
                                             EXERCISE PRICE     REMAINING      WEIGHTED-AVERAGE
                                    SHARES     PER SHARE    CONTRACTUAL LIFE     EXERCISE PRICE
                                  ---------   -----------   ----------------   ----------------
<S>                               <C>         <C>              <C>                   <C>
Balance, December 31, 2006 ...    2,018,000   $.23 - 2.00      1.8 years             $.93
   Granted ...................           --            --                              --
   Exercised .................      (55,000)  $ .27 - .27             --             $.27
   Canceled ..................           --            --                              --
   Expired ...................           --            --                              --
Balance, March 31, 2006 ......    1,963,000   $.34 - 2.00      1.6 years             $.95
</TABLE>

          The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because our employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of our employee stock options.


                                       10

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--------------------------------------------------------------------------------

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.
        -----------------------------------------------------------------------

          CERTAIN OF THE MATTERS DISCUSSED IN THIS REPORT, INCLUDING, WITHOUT
LIMITATION, MATTERS DISCUSSED UNDER THIS ITEM 2, "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," MAY CONSTITUTE
FORWARD-LOOKING STATEMENTS (AS SUCH TERM IS DEFINED IN THE PRIVATE SECURITIES
LITIGATION REFORM ACT) AND ARE SUBJECT TO THE OCCURRENCE OF CERTAIN
CONTINGENCIES WHICH MAY NOT OCCUR IN THE TIME FRAMES ANTICIPATED OR OTHERWISE,
AND, AS A RESULT, COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM SUCH
STATEMENTS. IN ADDITION TO OTHER FACTORS AND MATTERS DISCUSSED ELSEWHERE IN THIS
REPORT ON FORM 10-Q AND IN OUR FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON APRIL 2, 2007, AND OTHER PERIODIC REPORTS FILED, THESE RISKS,
UNCERTAINTIES AND CONTINGENCY INCLUDE, BUT ARE NOT LIMITED TO, RISKS ASSOCIATED
WITH INCREASED COMPETITION, CUSTOMER DECISIONS, THE SUCCESSFUL COMPLETION OF
CONTINUING DEVELOPMENT OF NEW PRODUCTS, THE SUCCESSFUL NEGOTIATION, EXECUTION
AND IMPLEMENTATION OF ANTICIPATED NEW SOFTWARE CONTRACTS, THE SUCCESSFUL
ADDITION OF PERSONNEL IN THE MARKETING AND TECHNICAL AREAS AND OUR ABILITY TO
COMPLETE DEVELOPMENT AND SELL AND LICENSE OUR PRODUCTS AT PRICES WHICH RESULT IN
SUFFICIENT REVENUES TO REALIZE PROFITS, AND OTHER BUSINESS FACTORS BEYOND OUR
CONTROL.

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
ASPs, continuing maintenance fees for servicing the product and professional
services. Total revenue for the three months ended March 31, 2007 increased from
$1,739,000 to $1,931,000 for the three months ended March 31, 2006, mainly due
to an increase in professional services and ASP revenue, which was partially
offset by a decrease in license and maintenance revenue.


          The following is an overview of the key components of our revenue and
other important financial data for the three months ended March 31, 2007:

          SOFTWARE LICENSES. Our license revenue in the three months ended March
31, 2007 of $203,000 was from existing customers who chose to renew, add onto or
extend their use of our software. For the three months ended March 31, 2006, we
generated $248,000 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 $826,000 in the three months
ended March 31, 2007 compared to $844,000 in the same period in 2006. The
decrease in the first three months of 2007 was mainly due to the non-renewal of
existing customers. 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 $331,000 in the three months ended March 31, 2006 to $517,000 in the same
period of 2007, was a result of increased demand for new software capabilities
and customizations from our current customer base.

          ASP SERVICES. ASP services revenue was $385,000 in the first three
months of 2007 compared to $316,000 in the same period in 2006, due to an
expanded and extended contractual relationship with a large customer.

          INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES. Income (loss) before
provision for income taxes was $140,000 in the three months ended March 31, 2007
compared to $(290,000) in the same period of 2006 primarily due to an increase
in professional services and ASP revenue and a reduction in operating expenses.


                                       11

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--------------------------------------------------------------------------------

          NET INCOME (LOSS). Net income (loss) for the three months ended March
31, 2007 increased to $140,000 from $(290,000) in the same period of 2006 as a
result of an increase in professional services and ASP revenue and a reduction
in operating expenses.

          CASH FLOW. We generated $592,000 in positive cash flow from operations
in the first three months of 2007 and ended the period with $497,000 in cash and
cash equivalents and $1,117,000 in accounts receivable.

          We continue to face competition for growth in 2007 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
---------------------

          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 MARCH 31,
                                                             ---------------
                                                               2007    2006
                                                              ------  ------
          REVENUES:
             License                                            10.5%   14.3%
             Maintenance                                        42.8    48.5
             Professional Services                              26.8    19.0
             Applications Service Provider ("ASP") Services     19.9    18.2
                                                              ------  ------
             TOTAL REVENUES                                    100.0   100.0
                                                              ------  ------

          COST OF REVENUES:
             License                                            11.2    18.1
             Maintenance                                        37.6    43.1
             Professional Services                              12.4     7.5
             ASP Services                                        4.9     5.2
                                                              ------  ------
             TOTAL COST OF REVENUES                             66.1    73.9
                                                              ------  ------
             DIRECT MARGIN                                      33.9    26.1
                                                              ------  ------

          OPERATING EXPENSES:
             Sales and Marketing                                 5.7    13.6
             General and Administrative                         14.4    16.6
             Research and Development                            4.7    10.1
                                                              ------  ------
             TOTAL OPERATING EXPENSES                           24.8    40.3
                                                              ------  ------
             OPERATING INCOME (LOSS)                             9.1   (14.2)
                                                              ------  ------

          OTHER EXPENSE (INCOME):
             Interest Expense                                    1.9     2.5
             Interest Income                                      --      --
             Other Income                                         --      --
                                                              ------  ------
             TOTAL OTHER EXPENSE (INCOME)                        1.9     2.5
                                                              ------  ------
             INCOME (LOSS) BEFORE INCOME TAXES                   7.2   (16.7)
                                                              ------  ------

          INCOME TAXES                                            --      --
                                                              ------  ------
          NET INCOME (LOSS)                                      7.2%  (16.7)%
                                                              ------  ------


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--------------------------------------------------------------------------------

THREE MONTHS ENDED MARCH 31, 2007 COMPARED TO THREE MONTHS ENDED MARCH 31, 2006
-------------------------------------------------------------------------------

          Total revenues for the three months ended March 31, 2007 were
$1,931,000 as compared to $1,739,000 for the same period in 2006. License fees
were $203,000 for the three months ended March 31, 2007 compared to $248,000 in
the same period in 2006 as a result of fewer sales to existing customers in
2007. For the three months ended March 31, 2007, maintenance revenues were
$826,000 compared to $844,000 in the same period of the prior year primarily due
in part to the non-renewal of a few customers. For the three months ended March
31, 2007, ASP revenues were $385,000 as compared to $316,000 in the same period
for the prior year, due to an expanded and extended contractual relationship
with a very large customer. Professional services revenue contributed $517,000
in the three months ended March 31, 2007 compared to $331,000 in the first
quarter of 2006, as a result of increased demand for new software capabilities
and customizations from our current customer base.

          Cost of sales remained relatively constant at $1,276,000 for the three
months ended March 31, 2007 as compared to $1,286,000 for the same period in
2006. Non-cash capitalized software amortization was $213,000 for the three
months ended March 31, 2007 as compared to $264,000 for the same period in 2006.
The Company capitalized $265,000 of software development costs in the first
three months of 2007 as compared to $152,000 in the same period in 2006.

          Research and development expenses decreased to $91,000 for the three
months ended March 31, 2007 as compared to $175,000 for the same period in 2006,
primarily as a result of our efforts to streamline research and development
projects and shift resources to assist in servicing our customer base. 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 $110,000 for the three months ended
March 31, 2007 as compared to $236,000 in the same period of 2006. This decrease
in 2007 was primarily due to a reduction in our marketing and sales headcount,
resulting in a decrease in personnel-related costs.

          General and administrative expenses were $278,000 in the three months
ended March 31, 2007 as compared to $288,000 in the same period in 2006. This
decrease in 2007 was mainly due to decrease in personnel-related costs.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

          Sources of Liquidity
          --------------------

          We have funded our operations primarily from cash flow from operations
and the proceeds from our 2008 Debentures and our 2009 Debentures. Cash from
operations results primarily from net loss from the income statement plus
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 March 31, 2007, we had cash and cash equivalents of $497,000
compared to cash and cash equivalents of $658,000 at March 31, 2006. The
decrease in cash and cash equivalents is primarily attributable to the decrease
in license sales and maintenance revenues in the three months ended March 31,
2007.


                                       13

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COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

          Cash Flows
          ----------

          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. We may require
cash to service our indebtedness, which consists primarily of our obligations to
make monthly principal and interest payments on our outstanding debentures.

          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.

          At March 31, 2007, we had working capital (deficit) of approximately
$(453,000) compared to a working capital (deficit) of approximately $(446,000)
at March 31, 2006. This increase in our working capital deficit resulted
primarily from a decrease in license and maintenance revenues. For the three
months ended March 31, 2007, net cash provided from (used for) operating
activities totaled approximately $592,000 compared to approximately $514,000 for
the three months ended March 31, 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. The Company had a significant increase in its accounts receivable in
2006 due to the license sale to one large customer offset by non-cash expenses
and payment of liabilities.

          For the three months ended March 31, 2007, net cash used for investing
activities was approximately $265,000 compared to approximately $152,000 for the
three months ended March 31, 2006 due to an increase in capitalized projects.
The Company expects capital expenditures and capital software expenditures to
continue to be funded by cash generated from operations. For the three months
ended March 31, 2007, net cash provided from financing activities was
approximately $38,000 compared to approximately $0 for the three months ended
March 31, 2006. The cash provided from financing activities in 2007 consisted of
proceeds from the exercise of stock options and warrants.

          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 $1,800,000. Interest on the unpaid principal amount of the debentures
is payable at the rate of 8% per annum. We have 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, and at maturity we
will be required to pay the remaining unpaid principal amount.

          In 2006, the holders of the 2008 Debentures and the 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


                                       14

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COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

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 and the 2009 Debentures an aggregate of
424,181 shares of our common stock. In January 2007, the holders of the 2008
Debentures and the 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 of the 2008 Debentures and the 2009
Debentures an aggregate of 399,358 shares of our common stock.

          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.

          As of March 23, 2007, an aggregate principal amount of $295,880
remains outstanding on the 2008 Debentures. In 2007, we will be required to make
payments of $33,616 in principal amount of the 2008 Debentures and we expect to
make interest payments of approximately $23,700 in the aggregate during 2007. In
addition, upon maturity of our 2008 Debentures in July 2008, we will be required
to repay the outstanding principal balance on our 2008 Debentures, which is
expected to be approximately $262,264.

          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,
address planned capital expenditures and make payments on or refinance our
indebtedness 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. We may require a
significant amount of cash to service our indebtedness, which consists primarily
of our obligations to make monthly principal and interest payments on the
debentures.

          Our future liquidity and capital resource requirements will depend on
many factors, including but not limited to the following trends and
uncertainties we face:

          o    Our ability to generate cash is subject to general economic,
               financial, competitive and other factors beyond our control.
          o    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.
          o    We experience intense competition in our industry and continuing
               technological changes.
          o    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.
          o    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.
          o    Our operations continue to depend upon the continuing business of
               our existing customers and our ability to attract new customers.
          o    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


                                       15

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COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

events affecting our operations will not result in materially accelerated or
unexpected expenditures. We cannot be assured that our cash flow from operations
will be sufficient, or that future borrowing will be available, to enable us to
pay our indebtedness. Furthermore, we cannot be assured that any or all of the
holders of our debentures will continue to elect to convert all or a portion of
their monthly cash installments of principal into shares of our common stock in
any future periods. If we are unable to pay our indebtedness through cash flows
from operations, we may need additional financing, and we cannot be certain that
we will be able to obtain additional financing with favorable terms.

          We do not expect for there to be a change in the mix or relative cost
of our sources of capital. If we were to seek to obtain additional capital, we
would be required to obtain approval from the holders of our debentures. We do
not foresee difficulty in obtaining such approval, but we have not recently
sought approval to raise additional capital.

          Net Operating Loss Carryforwards
          --------------------------------

          At December 31, 2006, we had approximately $26,700,000 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 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, including the stock which may be
issued relating to our outstanding convertible debentures and the conversion of
outstanding warrants, 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 loss carryforwards could be significantly limited.

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.

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:

          o    Revenue Recognition
          o    Valuation of Capitalized Software
          o    Valuation of Allowance for Doubtful Accounts Receivable


                                       16

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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.

          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


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--------------------------------------------------------------------------------

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
        -----------------------------------------------------------

          We are exposed to the impact of interest rate changes and changes in
the market value of our investments.

          Interest Rate Risk. Our exposure to market rate risk for changes in
interest rates relates primarily to our investment portfolio. We have not used
derivative financial instruments in our investment portfolio. We invest our
excess cash in a major bank money market account. We protect and preserve our
invested funds by limiting default, market and reinvestment risk.

          Investments in this account carry a degree of interest rate risk.
Fixed rate securities may have their fair market value adversely impacted due to
a rise in interest rates, while floating rate securities may produce less income
than expected if interest rates fall. Due in part to these factors, our future
investment income may fall short of expectations due to changes in interest
rates or we may suffer losses in principal if forced to sell securities which
have declined in market value due to changes in interest rates.

ITEM 4. CONTROLS AND PROCEDURES.
        ------------------------

          As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and our Chief Financial Officer, of the
effectiveness of the design and operation of the Company's "disclosure controls
and procedures" (as defined in Rule 13a-15(e) under the Securities Exchange Act
of 1934, as amended). Based upon that evaluation, our Chief Executive Officer
and our Chief Financial Officer concluded that our disclosure controls and
procedures are effective to ensure that information required to be disclosed by
us in reports that we file or submit under the Exchange Act are recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission (the "SEC") rules and forms, and include
controls and procedures designed to ensure that information required to be
disclosed by us in such reports is accumulated and communicated to our
management, including our Chief Executive Officer and our Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.

          There has been no change in our internal control over financial
reporting during the quarter ended March 31, 2007 that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting.

                                * * * * * * * * *

          Statements in this Form 10-Q, other than statements of historical
information are forward-looking statements that are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks which may cause the
Company's actual results in future periods to differ materially from expected
results. Those risks include, among others, risks associated with increased
competition, customer decisions, the successful completion of continuing
development of new products, the successful negotiation, execution and
implementation of anticipated new software contracts, the


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<PAGE>

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

successful addition of personnel in the marketing and technical areas and our
ability to complete development and sell and license our products at prices
which result in sufficient revenues to realize profits, and other business
factors beyond our control. Those and other risks are described in the Company's
filings with the SEC over the last 12 months, including our Form 10-K filed with
the SEC on April 2, 2007, copies of which are available from the SEC or may be
obtained upon request from the Company.


                                       19

<PAGE>

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

PART II: OTHER INFORMATION

ITEM 1A. RISK FACTORS.
         -------------

          The risk factors included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2006, have not materially changed.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
        ------------------------------------------------------------

          On January 24, 2007, the holders of our debentures elected to convert
an aggregate of $119,807, principal amount of such debentures, representing
their remaining unpaid principal amount due on the debentures in 2006 (in lieu
of receiving such installment payments in cash), 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. 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 the 2008 Debentures and 2009
Debentures, representing all of their remaining unpaid principal amount due on
such 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 of
1933 as an exchange of securities by an issuer with its existing security
holders where no commission or other renumeration was paid or given directly or
indirectly for soliciting such exchange.

ITEM 6. EXHIBITS.
        --------

    EXHIBIT
      NO.                         DESCRIPTION

   10(i)(17)   Limited Waiver to the Convertible Loan Agreement, dated as of
               March 31, 2007, by and between John Roblin and Stuart Sternberg.

     31.1      Chief Executive Officer Certification pursuant to
               Section 13a-15(e) of the Securities Exchange Act.

     31.2      Chief Financial Officer Certification pursuant to
               Section 13a-15(e) of the Securities Exchange Act.

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

     32.2      Certification of Ann F. Massey pursuant to 18 U.S.C.
               Section 1350, as adopted pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.


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<PAGE>

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY
--------------------------------------------------------------------------------

SIGNATURES
--------------------------------------------------------------------------------

          Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        COVER-ALL TECHNOLOGIES INC.


Date: May 11, 2007                      By: /s/ John W. Roblin
                                            ------------------------------------
                                            John W. Roblin, Chairman of the
                                            Board of Directors, President and
                                            Chief Executive Officer


Date: May 11, 2007                      By: /s/ Ann F. Massey
                                            ------------------------------------
                                            Ann F. Massey, Chief Financial
                                            Officer


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<PAGE>

                                                               Exhibit 10(c)(17)

                                 LIMITED WAIVER
                                       TO
                           CONVERTIBLE LOAN AGREEMENT

          This Limited Waiver to the Convertible Loan Agreement ("Limited
Waiver") is made, as of this 31st day of March, 2007, by and between John Roblin
and Stuart Sternberg, who are the holders of not less than a majority of the
outstanding principal amount of the Debentures (as defined below) (the
"Holders").

               WHEREAS, Cover-All Technologies Inc., a Delaware corporation (the
          "Company") and John Roblin, Arnold Schumsky and Stuart Sternberg
          (collectively, the "Lenders"), and Stuart Sternberg, as agent for the
          Lenders, are parties to that certain Convertible Loan Agreement, dated
          as of June 28, 2001 (as amended, the "Loan Agreement"), pursuant to
          which the Lenders purchased from the Company 8% Convertible Debentures
          due 2008 for an aggregate principal amount of $400,000 (the
          "Debentures"); and

               WHEREAS, terms not otherwise defined herein shall have the
          meanings as set forth in the Loan Agreement; and

               WHEREAS, for the fiscal quarter ending March 31, 2007, the
          Company is not in compliance with one of the financial covenants set
          forth in Section 7.01 of the Loan Agreement; and

               WHEREAS, the Company has requested that the Lenders, pursuant to
          Sections 12.02 and 11.04 of the Loan Agreement, waive, solely for the
          fiscal quarter ending March 31, 2007, the Company's failure to comply
          with one of the financial covenants set forth in Section 7.01 of the
          Loan Agreement.

               NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the undersigned hereby agree as follows:

               1. The Holders do hereby waive, solely for the fiscal quarter
ending March 31, 2007, the Company's non-compliance with one of the financial
covenants contained in Section 7.01 of the Loan Agreement.

               2. The Holders do hereby acknowledge and agree that the Company's
non-compliance with one of the financial covenants contained in Section 7.01 of
the Loan Agreement is not, and shall not be deemed, a Default or an Event of
Default under the Loan Agreement.

                  [Remainder of page intentionally left blank.]


                                       22

<PAGE>

               IN WITNESS WHEREOF, this Limited Waiver is entered into as of the
date set forth above.

                                        HOLDERS:


                                        /s/ John Roblin
                                        ----------------------------------------
                                        John Roblin
                                        (holding approximately 25% of the
                                        outstanding principal amount of the
                                        Debentures)


                                        /s/ Stuart Sternberg
                                        ----------------------------------------
                                        Stuart Sternberg
                                        (holding approximately 50% of the
                                        outstanding principal amount of the
                                        Debentures)


                                       23