##### 



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  ANNUAL REPORT
 PURSUANT TO SECTIONS 13 OR
    15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    001-33184
  Double-Take Software,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

20-0230046(State or other jurisdiction
    of
    Incorporation or organization)

(I.R.S. Employer
    Identification No.)257 Turnpike Road,
    Suite 210
    Southborough, Massachusetts(Address of principal
    executive offices)

01772(Zip Code)   (877) 335-5674
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.001 par value

The NASDAQ Stock Market   Securities registered pursuant to Section 12(g) of the
    Act:
    None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  o o þ
  Rule 12b-2 o þ
  over-the-counter
    DOCUMENTS INCORPORATED BY REFERENCE
  Form 10-K




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CAUTIONARY
    ADVICE REGARDING FORWARD-LOOKING STATEMENT
  Form 10-K Form 10-K
    
    competition and competitive factors in the markets in which we
    operate;
    demand for replication software;
    the advantages of our technology as compared to others;
    changes in customer preferences and our ability to adapt our
    product and services offerings;
    our ability to obtain and maintain distribution partners and the
    terms of these arrangements;
    our ability to develop and maintain positive relationships with
    our customers;
    our ability to maintain and establish intellectual property
    rights;
    our ability to retain and hire necessary employees and
    appropriately staff our development, marketing, sales and
    distribution efforts;
    our cash needs and expectations regarding cash flow from
    operations;
    our ability to manage and grow our business and execution of our
    business strategy; and
    our financial performance.   1




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PART I
  Item 1.
    Business.  Overview
            
    the rapid growth in digital data, driven by increased usage of
    automated systems;
    an increased focus on protecting a growing number of
    business-critical applications, such as email applications,
    particularly in service-oriented industries;
    a heightened awareness of the potential for natural and man-made
    disasters;
    the increasingly high cost of downtime, which is partly
    attributable to an increase in the sharing of applications with
    customers, partners and remote users; and 2




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
    government and industry regulations, such as the Health
    Insurance Portability and Accountability Act of 1996 and the
    Sarbanes-Oxley Act of 2002, which require data protection and
    recovery.    Organization;
    Principal Executive Offices
  (877) 335-5674.
  Our
    Strategy
    
    Expand our Customer Base within our Current
    Markets.  We plan to gain additional customers in
    the markets we currently serve by expanding our distribution
    network to reach more customers and by leveraging our existing
    customer base. We believe our customers are very satisfied and
    will continue to provide references across multiple industries,
    multiple configurations and multiple applications. In addition,
    we plan to continue to offer enhancements to our current
    software to broaden its appeal.
    Cross-sell Existing and New Software to our Customer
    Base.  We plan to sell software for additional
    applications to our current customers and believe that many of
    our existing customers will acquire more licenses to the
    software that they are already using. We also believe that a
    large majority of our customers will renew in the future because
    of their satisfaction with our software and customer support. In
    2006, approximately 56% of our software sales were to existing
    customers. We plan to offer new software that complements our
    existing software and applications and achieves additional
    customer objectives. For example, in February 2006, we
    introduced a new software line for virtual servers and have
    already sold it to some existing customers. We expect that our
    new offerings primarily will be developed internally, but we
    anticipate that we may in some instances hire third-party
    developers to develop software on our behalf or acquire new
    offerings through strategic transactions.
    Enter New Markets.  We plan to enter into new
    markets and grow our presence in markets where we currently have
    a small presence. We expect to do this through expansion of our
    channel by creating or expanding relationships with partners
    that serve different markets. We also plan to continue to grow
    our presence in the larger enterprise market by leveraging our
    supportive customer base. We believe that small- and
    medium-sized enterprises frequently lead in the adoption of cost
    effective technology solutions out of necessity and that large
    institutions follow by replacing more expensive solutions with
    cost effective solutions. We have seen organizations in the
    larger enterprise market adopt our software, and we expect this
    trend to continue.
    Expand Globally.  We believe that the market
    potential outside the United States is at least as large as the
    market within and offers us significant growth potential. We
    plan to extend our global reach though the expansion of our
    direct and channel sales efforts and through strategic
    acquisitions. For example, in May 2006 we acquired our main
    European distributor, Sunbelt System Software S.A.S., which is
    now known as Double-Take Software S.A.S., or Double-Take EMEA,
    with offices in France, the United Kingdom and Belgium. We also
    work closely with Hewlett-Packard, which has a strong
    international presence and is our 3




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largest OEM, and we plan to continue our increased focus and
    sales support on international sales. In August of 2006, we
    established a full time presence in Asia.  
    Continue to Innovate.  We plan to continue to
    focus on enhancing our existing software and to develop new,
    innovative software. For example, in 2006 we released front-end
    application managers for Microsoft Exchange Server and Microsoft
    SQL server (Double-Take Application Manager) to facilitate the
    protection of Exchange and SQL servers, and we plan to offer
    additional front-end managers for other applications in the
    future. In early 2007, we introduced Double-Take Shadowcaster,
    which provides one to one full server system state recovery in a
    LAN environment, and Double-Take SRO (Server Recovery Option),
    which provides full server system state recovery on each server
    where it is installed. We believe that software innovations will
    also help us to expand our addressable market, and we have
    software in the development pipeline that we expect will help us
    to scale up to serve larger entities and to scale down to serve
    even smaller enterprises. For example, we have recently released
    software for support of Microsofts Small Business Server.
    We also plan to continue to monitor market dynamics and to
    prepare to apply our technology to other server operating
    systems to the extent significant market opportunities exist.  Our
    Software and Services
  Software.
      
    Real-time Byte Level Change Capture.  Our
    file system filtering technology monitors all file input and
    output (I/O) to files selected for protection and captures
    changes as they occur, without the overhead of additional disk
    reads to compare file content. This approach captures only the
    bytes written to the file system, rather than full files or disk
    blocks, and allows Double-Take to replicate any application
    data, including open files such as databases, messaging systems
    or other transactional applications. As a result, data can be
    protected continuously with very little system impact or
    overhead.
    Storage Architecture Independence.  Double-Take
    can replicate to or from almost any storage type supported by
    the host operating system. Not only can replication occur
    between storage types such as Fibre Channel or iSCSI Storage
    Area Networks and directly attached disks, but source and target
    disks that have completely different geometries or multiple
    source volumes can be consolidated onto a single large capacity
    target volume. As a result, customers can use their existing
    storage systems and even replicate between storage systems of
    different types. Only solutions that run along with the
    applications and replicate logical file system structures can
    provide this level of flexibility and performance.
    Integrated Application and Server
    Availability.  Software replicating between
    servers can easily monitor and failover other functions such as
    server name, IP addresses or integrated applications between
    servers. As a result, not only is data protected, but the
    applications that use that data to provide services to users can
    be activated quickly and automatically. Double-Take provides
    application managers for a variety of the business-critical
    applications that companies rely on to run their businesses.
    Standards-Based IP Networking
    Support.  Double-Take utilizes standard IP
    networking for data replication, monitoring and failover,
    allowing data to be protected and servers to be managed remotely
    over great distances. In addition to capturing the smallest byte
    level changes possible, our software is 4




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optimized for long-distance, wide-area network communications
    providing built-in data compression and flow control
    capabilities, as well as leveraging advanced functionality such
    as encryption, wide area network optimizations and quality of
    service controls provided by existing IP infrastructure.  Double-Take
    Features and Benefits
  Feature

Description

Customer BenefitContinuous, Real-time Data
    Replication

File system changes are captured
    as they are made on the source server(s) and transmitted
    immediately according to system policies.

Potential for data loss is reduced
    and sometimes eliminated.Delta File
    Replication

Only file changes or
    deltas are captured and transmitted across the
    network.

The amount of network bandwidth
    required to keep a secondary copy of data synchronized is
    minimized, and data can be replicated to a remote target server
    across any IP connection.Replicates Open Files

Even open files can be mirrored
    and changes replicated almost immediately.

Applications can be protected
    while they are in use providing increased availability and
    reducing potential for data loss.Many to One
    Replication

Data from many source servers may
    be replicated to a single target server.

Shares the cost of a target server
    among many source machines, and allows centralized data
    protection.Automatic Failover

Can stand in for multiple servers
    simultaneously; the target server assumes the IP addresses and
    names of failed servers and restarts applications.

Users can automatically access
    data on the target server, reducing down-time associated with a
    source (production) server failure.System State Recovery

Replicates changes, such as
    patches to operating systems and applications.

Enables full server recovery to
    most recent state, including files, operating systems and
    applications.File Selection

Users can define which files are
    to be replicated at a volume, directory, file and wildcard
    level. The location of data on the target can also be specified.

Allows exact control of which
    files are replicated and where they are stored for maximum
    flexibility.Flow Control

Automatically queues transactions
    on the source server if network resources are not available or
    are restricted by policy.

Runs reliably in spite of network
    disruptions or peak loads, without severely affecting the
    performance of the source server.Transmission Limiting

The amount of bandwidth available
    for replication, as well as start and stop conditions, may be
    defined by the network administrator.

Allows replication to share a
    network link with other applications, preserving bandwidth for
    other applications.Data Compression

Data transmitted between the
    source and target may be compressed, using various
    industry-standard algorithms.

Allows user to minimize the amount
    of network bandwidth used to protect data, especially in wide
    area network configurations. 5




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Feature

Description

Customer BenefitCentralized Enterprise
    Management

A graphical management interface
    is provided which can be run from anywhere on the network and
    allows the user to control all of the servers running our
    software in their environment.

Allows user to monitor a large
    number of servers running our software from a single central
    location, minimizing management costs.Extensive Reporting/
    Verification

An extensive collection of events,
    alerts and statistics are made available through standard
    mechanisms, including SNMP, Log Files and Windows NT/2000 Event
    Viewer/Performance Monitor.

Prevents silent failures by
    confirming that your data protection systems are working
    properly.   Software Editions.
  Software Products

Supported SystemsDouble-Take for
    Windows   Server Edition

Windows Server 2003 Standard
    Edition, Windows Server 2003 Web Edition and Windows 2000 ServerDouble-Take for
    Windows   Advanced Edition

Windows Server 2003 Enterprise
    Edition, Windows 2000 Advanced Server and Windows Powered
    AppliancesDouble-Take for Virtual Systems

Supports up to five Windows guest
    operating systems running on a single virtual server hostDouble-Take for
    Windows   Datacenter Edition

Windows Server 2003 Datacenter
    Edition and Windows 2000 Datacenter ServerDouble-Take for
    Windows   Storage Server Edition (SSE)

Windows Storage Server 2003 and
    Windows Powered NAS devicesDouble-Take for
    Windows   Small Business Server Edition

Windows Small Business Server 2000
    Edition and Windows Small Business Server 2003 EditionGeoCluster for
    Windows   Advanced Edition

Microsoft Cluster Service (MSCS)
    that runs on Windows Server 2003 Enterprise Edition and Windows
    2000 Advanced ServerGeoCluster for
    Windows   Datacenter Edition

MSCS that runs on Windows Server
    2003 Datacenter Edition and Windows 2000 Datacenter ServerDouble-Take 
    Shadow-Caster

Runs on Windows Small Business
    Server 2003 Edition and provides one to one full server system
    state recovery in a LAN environment.Double-Take  SRO
    (Server Recovery Option)

An add-on module to Double-Take.
    Provides full server system state recovery on each server where
    it is installed.   Customer Support Services.
 6




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Deployment Services.
  Training. on-site
  Our
    Customers
  The American Lawyer
  Our
    Technology
         7




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Marketing
    and Sales
          Competition
      
    technology;
    price; 8




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
    product functionality and effectiveness;
    product reliability;
    product integration;
    capacity for sales support;
    scope and quality of customer support;
    relationships with OEMs; and
    reputation.    
    Tape Backup.  Tape backup solutions run on a
    scheduled basis, usually nightly or weekly, backing up all files
    to tape or scanning for files that have changed since the last
    backup and copying those files to tape. Full recovery from tape
    usually requires that the operating system and recovery software
    first be re-installed and re-configured on identical hardware
    before the data recovery component can begin. Examples of
    companies and products in this category include Symantec
    NetBackup and Backup Exec, IBM Tivoli Storage Manager, CA
    Brightstor Enterprise Backup, Legato Networker and CommVault
    Galaxy.
    Snapshots.  Hardware array based and operating
    system provided snapshots are tools that can reduce the time for
    recovering data, applications and servers. Snapshots operate on
    a disk volume basis by copying disk blocks that are about to be
    overwritten by changes before allowing new blocks to be written
    to disk. Because many snapshots are just differences from one
    point in time to another and not full copies of the volume, they
    are dependent on the survival of the original volume and exist
    in the same geographic location as the original volume.
    Therefore snapshots alone do not provide a complete solution,
    but can be used in conjunction with continuous data replication
    solutions like Double-Take to address many of the above
    limitations. Snapshot functionality is usually specific to a
    particular operating system volume manager or disk storage
    array. Examples of companies and products in this category
    include Microsoft Volume Shadow Copy Service, EMC TimeFinder and
    Snapview.
    Clustering.  Server clustering can improve the
    availability of data by providing one or more additional servers
    to resume processing in the event of a hardware or software
    failure. These systems are expensive, requiring matched server
    hardware and certified shared disk subsystems. In addition,
    server clusters are generally restricted to very short
    distances, making offsite disaster protection difficult. Shared
    disk clustering systems continue to have a single point of
    failure in the shared disk subsystem. Examples of companies and
    products in this category include Microsoft Cluster Service,
    Symantec Cluster Server, Steeleye LifeKeeper and Legato
    AutoStart.
    Remote Disk Mirroring.  Disk mirroring is
    typically implemented as software within a proprietary storage
    array or as a software driver or appliance between the server
    and the primary data storage. Changes are captured at the disk
    block level, with entire blocks of data being mirrored for any
    size change and any physical changes to the disk such as
    temporary files or defragmentation causing replication traffic.
    Typically, an operating system must boot and then
    mount the remotely mirrored drive in order to make
    the data accessible, which requires the operating system and
    applications to be installed and correctly configured to use the
    replicated volume, as well as extensive integrity checks.
    Examples of companies and products in this category include EMC
    SRDF and Mirrorview, Symantec Volume Replicator,
    FalconStorIPStor, DataCore SANmelody and Hitachi TrueCopy.
    Continuous Data
    Protection (CDP).  Although we have been
    providing continuous protection of data in our software for over
    10 years, some new vendors have attempted to redefine this
    term to refer to solutions that capture and store a sequenced
    log of I/O changes or otherwise allow a data set to be recovered
    by rolling back to a previous point in time. These
    solutions typically focus exclusively on the data
    rollback aspects and do not consider the need to
    recover servers and applications as well as data in order to
    resume providing services to users. Examples of companies and
    products in this category include Revivio CPS, Mendocino 9




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Software RecoveryONE, TimeSpring TimeData, Kashya KBX5000 Data
    Protection Platform and Microsoft Data Protection Manager.          Research
    and Development
    Intellectual
    Property
      ® ® tm Double-Take tm tm non-registered
 10




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Employees
    Executive
    Officers of Double-Take Software
    Name

Age

PositionDean Goodermote


53


President, Chief Executive Officer
    and Chairman of the Board of DirectorsRobert L. Beeler


41


Vice President of EngineeringDavid J. Demlow


39


Chief Technology OfficerS. Craig Huke


44


Chief Financial OfficerDaniel M. Jones


39


Vice President of Sales and
    MarketingMichael Lesh


62


Vice President of Professional
    Services and SupportJo Murciano


55


Vice President of EMEA and
    President of Double-Take EMEA   Dean Goodermote
  Robert L. Beeler
  David J. Demlow
  S. Craig Huke
 11




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Daniel M. Jones
  Michael Lesh
  Jo Murciano
  Available
    Information
  Form 10-K, Form 10-Q Form 8-K,
  Item 1A.Risk
    Factors.
  An investment in our stock involves a high degree of risk.
    You should carefully consider the following risks and all of the
    other information set forth in this annual report before
    deciding to invest in shares of our common stock. If any of the
    events or described below occur, our
    business, financial condition or results of operations could be
    negatively affected. In that case, the trading price of our
    common stock could decline, and you could lose all or part of
    your investment in our common stock.
  Risks
    Related to Our Business
  Intense
    competition in our industry may hinder our ability to generate
    revenue and may adversely affect our margins.
   12




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Because
    a large majority of our sales are made to or through
    distributors, value-added resellers and original equipment
    manufacturers, none of which have any obligation to sell our
    software applications, the failure of this distribution network
    to sell our software effectively could materially adversely
    affect our revenue and results of operations.
      We
    depend on growth in the storage replication market, and lack of
    growth or contraction in this market could materially adversely
    affect our sales and financial condition.
    Our
    current products are designed exclusively for the Microsoft
    server environment, which exposes us to risks if Microsoft
    products are not compatible with our software or if Microsoft
    chooses to compete more substantially with us in the
    future.
   13




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We
    have not generated net profits for any year since our inception
    and we may be unable to achieve or sustain profitability in the
    future.
    Because
    we generate substantially all of our revenue from sales of our
    Double-Take software and related services, a decline in demand
    for our Double-Take software could materially adversely affect
    our revenue, profitability and financial
    condition.
    We may
    not be able to respond to technological changes with new
    software applications, which could materially adversely affect
    our sales and profitability.
    cost-effective
  Our
    failure to offer high quality customer support services could
    harm our reputation and could materially adversely affect our
    sales of software applications and results of
    operations.
   14




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post-deployment
  Defects
    or errors in our software could adversely affect our reputation,
    result in significant costs to us and impair our ability to sell
    our software.
      
    lost or delayed market acceptance and sales of our software;
    loss of clients;
    product liability suits against us;
    diversion of development resources;
    injury to our reputation; and
    increased maintenance and warranty costs.  We may
    fail to realize the anticipated benefits of our acquisition of
    Sunbelt System Software S.A.S.
    We may
    not receive significant revenue from our research and
    development efforts for several years, if at all.
    The
    loss of key personnel or the failure to attract and retain
    highly qualified personnel could adversely affect our
    business.
     15




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We
    will not be able to maintain our sales growth if we do not
    retain or attract and train qualified sales
    personnel.
    Changes
    in the regulatory environment and general economic condition and
    other factors in countries in which we have international sales
    and operations could adversely affect our
    operations.
    
    difficulties in staffing and managing our international
    operations;
    costs and delays in downsizing
    non-United
    States workforces, if necessary, as a result of applicable
    non-United
    States employment and other laws;
    the adoption or imposition by foreign countries of additional
    withholding taxes, other taxes on our income, or tariffs or
    other restrictions on foreign trade or investment, including
    currency exchange controls;
    general economic conditions in the countries in which we operate
    could adversely affect our earnings from operations in those
    countries;
    imposition of, or unexpected adverse changes in, foreign laws or
    regulatory requirements may occur, including those pertaining to
    export duties and quota, trade and employment restrictions;
    longer payment cycles for sales in foreign countries and
    difficulties in collecting accounts receivables;
    competition from local suppliers; and
    political unrest, war or acts of terrorism.    We are
    exposed to domestic and foreign currency fluctuations that could
    harm our reported revenue and results of
    operations.
   16




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Protection
    of our intellectual property is limited, and any misuse of our
    intellectual property by others could materially adversely
    affect our sales and results of operations.
          Claims
    that we misuse the intellectual property of others could subject
    us to significant liability and disrupt our business, which
    could materially adversely affect our results of operations and
    financial condition.
   17




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
    pay damages, including actual monetary damages, royalties, lost
    profits or other damages and third-partys attorneys
    fees, which may be substantial;
    expend significant time and resources to modify or redesign the
    affected products or procedures so that they do not infringe a
    third-partys patents or other intellectual property
    rights; further, there can be no assurance that we will be
    successful in modifying or redesigning the affected products or
    procedures;
    obtain a license in order to continue manufacturing or marketing
    the affected products or processes, and pay license fees and
    royalties; if we are able to obtain such a license, it may be
    non-exclusive, giving our competitors access to the same
    intellectual property, or the patent owner may require that we
    grant a
    cross-license
    to part of our proprietary technologies; or
    stop the development, manufacture, use, marketing or sale of the
    affected products through a court-ordered sanction called an
    injunction, if a license is not available on acceptable terms,
    or not available at all, or our attempts to redesign the
    affected products are unsuccessful.            
    stop selling our products or using the technology that contains
    the allegedly infringing intellectual property;
    attempt to obtain a license to use the relevant intellectual
    property, which may not be available on reasonable terms or at
    all; and
    attempt to redesign the products that allegedly infringed upon
    the intellectual property.   18




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We may
    engage in future acquisitions or investments that present many
    risks, and we may not realize the anticipated financial and
    strategic goals for any of these transactions.
    
    we may be unable to achieve the anticipated benefits from the
    acquisition or investment;
    we may have difficulty integrating the operations and personnel
    of the acquired business, and may have difficulty retaining the
    key personnel of the acquired business;
    we may have difficulty incorporating the acquired technologies
    or products with our existing software and technology;
    our ongoing business and managements attention may be
    disrupted or diverted by transition or integration issues and
    the complexity of managing geographically and culturally diverse
    locations;
    we may have difficulty maintaining uniform standards, controls,
    procedures and policies across locations; and
    we may experience significant problems or liabilities associated
    with product quality, technology and legal contingencies.      We
    cannot predict our future capital needs and we may be unable to
    obtain additional financing to fund acquisitions, which could
    materially adversely affect our business, results of operations
    and financial condition.
   19




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We are
    incurring significant costs as a result of operating as a public
    company that we have not previously incurred, and our management
    and key employees will required to devote substantial time to
    compliance initiatives.
    Risks
    Related to Our Common Stock
  We may
    experience a decline in revenue or volatility in our operating
    results, which may adversely affect the market price of our
    common stock.
    
    the possibility that our customers may cancel, defer or limit
    purchases as a result of reduced information technology budgets;
    the possibility that our customers may defer purchases of our
    software applications in anticipation of new software
    applications or updates from us or our competitors;
    the ability of our distributors, value-added resellers and OEMs
    to meet their sales objectives;
    market acceptance of our new applications and enhancements;
    our ability to control expenses;
    changes in our pricing and distribution terms or those of our
    competitors;
    the demands on our management, sales force and services
    infrastructure as a result of the introduction of new software
    applications or updates; and
    the possibility that our business will be adversely affected as
    a result of the threat of terrorism or military actions taken by
    the United States or its allies.  period-to-period
 20




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If
    securities analysts do not publish research or reports about our
    business or if they publish negative evaluations of our stock,
    the price of our stock could decline.
    Sales
    of outstanding shares of our common stock into the market in the
    future could cause the market price of our common stock to drop
    significantly, even if our business is doing well.
  lock-up Form S-1 SEC Form S-3,
      Some
    of our stockholders may exert significant influence over
    us.
    We do
    not anticipate paying any dividends on our common
    stock.
   21




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Provisions
    in our organizational documents and in the Delaware General
    Corporation Law may prevent takeover attempts that could be
    beneficial to our stockholders.
    Item 1B.
    Unresolved
    Staff Comments.  Not applicable.
  Item 2.
    Properties.    Item 3.
    Legal
    Proceedings.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.  1-for-4.9
     22




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PART II
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  Market
    Information
      Year Ended December 31, 2006

High


Low4th Quarter
    (December 15 through December 31)

$
13.60


$
11.80     Stockholders
    Dividends
    Securities
    Authorized for Issuance under Equity Compensation
    Plans
   23




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Performance
    Graph
    
  12/15/2006

12/29/2006Double-Take Software


100



101.7NASDAQ Composite Index


100



98.3NASDAQ Technology Index


100



97.0   Use of
    Proceeds
  Form S-1 (333-136499) over-allotment
    
    Underwriting discounts and commissions  $3,850,000 24




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
    Other expenses  $3,601,000, which included payments
    for legal services incurred on behalf of certain of the selling
    stockholders for their participation in the offering, including:
    ABS Capital Partners IV, L.P., ABS Capital Partners IV-A, L.P.,
    ABS Capital Partners IV Offshore L.P. and ABS Capital
    Partners IV Special Offshore L.P., which we refer to
    collectively as the ABS Entities, for whom two of our directors,
    Laura S. Witt and Ashoke (Bobby) Goswami, each serve as a
    managing member of the general partner; Robert Beeler; Dave
    Demlow; and Mike Lesh.
    Total expenses  $7,451,000          Issuer
    Purchases of Equity Securities
    Item 6.
    Selected
    Financial Data.    Year Ended December 31,2006


2005


2004


2003


2002Statement of Operations
    Data:Revenue:Software licenses

$
38,418


$
26,222


$
19,943


$
16,283


$
10,200Maintenance and professional
    services


22,422



14,488



9,895



7,650



4,125Total revenue


60,840



40,710



29,838



23,933



14,325Cost of revenue:Software licenses


1,355



38



559



1,426



1,351Maintenance and professional
    services


6,193



4,357



3,694



3,103



2,182Total cost of revenue


7,548



4,395



4,253



4,529



3,533Gross profit


53,292



36,315



25,585



19,404



10,792 25




---



##### 



Year Ended December 31,2006


2005


2004


2003


2002Operating expenses:Sales and marketing


22,211



17,191



16,188



13,654



10,307Research and development


10,679



9,748



8,717



6,373



6,645General and administrative


11,824



6,730



5,666



5,253



3,532Depreciation and amortization


1,613



805



527



1,617



1,753Legal fees and settlement costs






5,671



1,755



200



Total operating expenses


46,327



40,145



32,853



27,097



22,237Operating income (loss)


6,965



(3,830
)


(7,268
)


(7,693
)


(11,445
)Interest income


319



83



7



19



19Interest expense


(91
)


(36
)


(765
)


(341
)


(2,923
)Foreign exchange gains


56















Income (loss) before income taxes


7,249



(3,783
)


(8,026
)


(8,015
)


(14,349
)Income tax expense


494















Net income (loss)


6,755



(3,783
)


(8,026
)


(8,015
)


(14,349
)Less:Accretion of preferred stock


(4,496
)


(5,332
)


(5,314
)


(4,928
)


(1,240
)Reduction in Series B
    preferred stock conversion price














(1,194
)


Warrants exchanged for common stock


















(4
)Exchange of Series A for
    Series B preferred stock


















(1,511
)Dividends on preferred stock


(2,830
)


(2,686
)


(2,029
)


(1,637
)


(206
)Net loss attributable to common
    stockholders

$
(571
)

$
(11,801
)

$
(15,369
)

$
(15,774
)

$
(17,310
)Net loss per share attributable to
    common stockholders:Basic and diluted

$
(0.13
)

$
(3.11
)

$
(4.06
)

$
(4.16
)

$
(6.57
)Weighted-average number of shares
    used in per share amounts:Basic and diluted


4,306



3,789



3,786



3,786



2,633   December 31,2006


2005


2004


2003


2002Balance Sheet Data:Current assets:Cash and cash equivalents

$
55,170


$
8,341


$
5,831


$
676


$
4,373Working Capital


42,674



(2,256
)


497



62



3,955Total Assets


77,026



18,590



13,318



8,772



11,307Deferred revenue


16,744



10,562



7,304



4,144



2,292Long-term deferred revenue


3,977



2,887



1,607



586



Long-term deferred rent


406



518



610



668



692Long-term capital lease obligations


17



7



38







Redeemable convertible preferred
    stock






50,561



42,489



27,646



19,501Total stockholders equity
    (deficit)

$
45,230


$
(54,307
)

$
(42,601
)

$
(27,386
)

$
(13,077
)  26




---



##### 



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  You should read the following discussion and analysis
    together with our financial statements and the related notes
    included elsewhere in this annual report.
  Overview
          Some
    Important Aspects of Our Operations
       27




---



##### 



Revenue
    Software Licenses. 01-9,
      Maintenance and Professional Services. when-and-if-available
       28




---



##### 



Cost
    of Revenue
    Cost of Software Revenue.
  Cost of Services Revenue.
  Operating
    Expenses
    Sales and Marketing.
  
    personnel and related costs for employees engaged in sales,
    corporate marketing, product marketing and product management,
    including salaries, commissions and other incentive
    compensation, including equity-based compensation, related
    employee benefit costs and allocated overhead expenses;
    travel related expenses to meet with existing and potential
    customers, and for other sales and marketing related
    purposes; and
    sales promotion expenses, public relations expenses and costs
    for marketing materials and other marketing events, including
    trade shows, industry conventions and advertising, and marketing
    development funds for our distribution partners.  We expense our sales commissions at the time of
    sale.
  Research and Development.
  
    personnel and related costs, including salaries, employee
    benefits, equity and other incentive compensation and allocated
    overhead expenses, for research and development personnel,
    including software engineers, software quality assurance
    engineers and systems engineers; and
    contract labor expense and consulting fees paid to independent
    consultants and others who provide software engineering services
    to us, as well as other expenses associated with the design and
    testing of our software.   29




---



##### 



General and Administrative.
  
    personnel and related costs including salaries, employee
    benefits, equity and other incentive compensation and allocated
    overhead expenses, for our executives, finance, human resources,
    corporate information technology systems, strategic business,
    corporate quality, corporate training and other administrative
    personnel;
    legal and accounting professional fees;
    recruiting and training costs;
    travel related expenses for executives and other administrative
    personnel; and
    computer maintenance and support for our internal information
    technology system.    Depreciation and Amortization.
  Legal Fees and Settlement Costs. dollar-for-dollar
 30




---



##### 



Results
    of Operations
    Year Ended December 31,2006


2005


2004(In thousands)Revenue:Software licenses

$
38,418


$
26,222


$
19,943Maintenance and professional
    services


22,422



14,488



9,895Total revenue


60,840



40,710



29,838Cost of revenue:Software licenses


1,355



38



559Maintenance and professional
    services


6,193



4,357



3,694Total cost of revenue


7,548



4,395



4,253Gross profit


53,292



36,315



25,585Operating expenses:Sales and marketing


22,211



17,191



16,188Research and development


10,679



9,748



8,717General and administrative


11,824



6,730



5,666Depreciation and amortization


1,613



805



527Legal fees and settlement costs






5,671



1,755Total operating expenses


46,327



40,145



32,853Income (loss) from operations


6,965



(3,830
)


(7,268
)Interest income


319



83



7Interest expense


(91
)


(36
)


(765
)Foreign exchange gains (losses)


56







Income (loss) before income taxes


7,249



(3,783
)


(8,026
)Income tax expense


494







Net income (loss)


6,755



(3,783
)


(8,026
)Accretion on redeemable shares:Series B


(4,477
)


(5,310
)


(5,310
)Series C


(19
)


(22
)


(4
)Dividends on Series B


(2,140
)


(2,035
)


(1,882
)Dividends on Series C


(690
)


(651
)


(147
)Net loss attributable to common
    stockholders

$
(571
)

$
(11,801
)

$
(15,369
)   31




---



##### 



Year Ended December 31,2006


2005


2004Revenue:Software licenses


63
%


64
%


67
%Maintenance and professional
    services


37
%


36
%


33
%Total revenue


100
%


100
%


100
%Cost of revenue:Software licenses


2
%






2
%Maintenance and professional
    services


10
%


11
%


12
%Total cost of revenue


12
%


11
%


14
%Gross profit


88
%


89
%


86
%Operating expenses:Sales and marketing


37
%


42
%


54
%Research and development


18
%


24
%


29
%General and administrative


19
%


17
%


19
%Depreciation and amortization


3
%


2
%


2
%Legal fees and settlement costs






14
%


6
%Total operating expenses


77
%


99
%


110
%Income (loss) from operations


11
%


(9
)%


(24
)%Interest income










Interest expense










(3
)%Foreign exchange gains (losses)










Income (loss) before income taxes


11
%


(9
)%


(27
)%Income tax expense


1
%






Net income (loss)


10
%


(9
)%


(27
)%Accretion on redeemable shares:Series B


(7
)%


(13
)%


(18
)%Series C










Dividends on Series B


(3
)%


(5
)%


(6
)%Dividends on Series C


(1
)%


(2
)%


Net loss attributable to common
    stockholders


(1
)%


(29
)%


(51
)%   2006
    Compared to 2005
  Revenue
    Software License Revenue.
 32




---



##### 



Double-Take
  Maintenance and Professional Services
    Revenue.
  Cost of
    Revenue and Gross Profit
          Operating
    Expenses
  Sales and Marketing.
  Research and Development.
  General and Administrative. Double-Take
  Depreciation and Amortization.
 33




---



##### 



Legal Fees and Settlement Costs.
  Interest
    Income
    Foreign
    Exchange gains (losses)
    Income
    Tax Expense
  e
  Net
    Income (Loss)
    Preferred
    Stock
        2005
    Compared to 2004
  Revenue
   34




---



##### 



Software License Revenue.
  Maintenance and Professional Services
    Revenue.
  Cost of
    Revenue and Gross Profit
          Operating
    Expenses
  Sales and Marketing.
  Research and Development.
  General and Administrative.
  Depreciation and Amortization.
 35




---



##### 



Legal Fees and Settlement Costs.
  Interest
    Expense
    Interest
    Income
    Net
    Income (Loss)
    Preferred
    Stock
      Critical
    Accounting Policies
    Revenue
    Recognition
  97-2, SOP 98-4 SOP 98-9,
  SOP 98-9.
 36




---



##### 



when-and-if-available
    SOP 98-9.
    Persuasive evidence of an arrangement with the customer
    exists.
  Delivery or performance has
    occurred. and/or
  Fee is fixed or determinable.
  Collection is probable. customer-by-customer
 37




---



##### 



Stock-Based
    Compensation
          
    the sale of our Series C preferred stock at $0.98 per share
    in a private placement in 2004 to venture capital investors,
    which, taking into account the effect on the conversion rate of
    the Series C preferred stock of the reverse stock split of
    our common stock on November 3, 2006, is equivalent to
    $4.80 per share, including the superior rights and
    preferences of the Series C preferred stock to our common
    stock;
    the superior rights and preferences of all classes of our
    preferred stock to our common stock, including the aggregate
    liquidation preference, accrued and unpaid dividends, conversion
    provisions and superior voting rights;
    our financial and operating performance in 2005;
    our stage of development and business strategy in 2005; and 38




---



##### 




    the likelihood of achieving a liquidity event for the shares of
    common stock underlying the stock options granted in 2005.         39




---



##### 



No. 96-18,
  Income
    Taxes
     40




---



##### 



Software
    Development Costs
    Liquidity
    and Capital Resources
  Overview
      dollar-for-dollar
       41




---



##### 



Sources
    and Uses of Cash
      Year EndedDecember 31,2006


2005


2004(In thousands)Cash flow data:Net cash provided by (used in)
    operating activities

$
13,651


$
3,605


$
(464
)Cash used by investing activities


(4,123
)


(1,096
)


(1,218
)Net cash provided by financing
    activities


37,193



1



6,837Effect of exchange rate changes on
    cash and cash equivalents


108







Net increase in cash and
    equivalents


46,829



2,510



5,155Cash and cash equivalents,
    beginning of period


8,341



5,831



676Cash and equivalents, end of period

$
55,170


$
8,341


$
5,831   Cash
    Flows from Operating Activities
  add-backs
   42




---



##### 



Cash
    Flows from Investing Activities
      Cash
    Flows from Financing Activities
      Cash
    Requirements
    Payments Due by PeriodLess Than


1 to 3


3 to 5Total


1 Year


Years


Years


5+ Years(In thousands)Contractual
    obligationsAs of December 31,
    2006Capital (finance) lease obligations

$
36


$
36


$



$



$
Operating lease obligations


6,403



1,679



4,306



418



Purchase obligations


2,000



500



1,000



500



Total

$
8,439


$
2,215


$
5,306


$
918


$
      43




---



##### 



Off-Balance
    Sheet Arrangements
    Quarterly
    Results of Operations
    For the Three Months Ended2006


2005Dec. 31


Sep. 30


Jun. 30


Mar. 31


Dec. 31


Sep. 30


Jun. 30


Mar. 31(In thousands, except per share data)Revenue:Product

$
12,178


$
10,231


$
9,637


$
6,372


$
7,881


$
7,315


$
5,752


$
5,274Maintenance and Professional
    Services


6,875



6,185



5,055



4,307



3,948



3,790



3,556



3,194Total revenue


19,053



16,416



14,692



10,679



11,829



11,105



9,308



8,468Cost of revenue:Cost of product


26



514



811



4



7



8



12



11Maintenance and Professional
    Services


1,767



1,703



1,462



1,261



1,143



1,151



1,118



945Total cost of revenue


1,793



2,217



2,273



1,265



1,150



1,159



1,130



956Gross profit


17,260



14,199



12,419



9,414



10,679



9,946



8,178



7,512Operating expensesSales and Marketing


6,620



5,641



5,620



4,330



4,546



4,302



4,279



4,064Research and Development


2,930



2,753



2,532



2,464



2,456



2,543



2,372



2,377General and Administrative


5,453



2,577



1,767



2,027



1,462



1,648



1,544



2,076Depreciation and Amortization


519



492



351



251



235



216



187



167Legal fees and Settlement costs


















4,631



404



268



368Total Operating Expenses


15,522



11,463



10,270



9,072



13,330



9,113



8,650



9,052 44




---



##### 



For the Three Months Ended2006


2005Dec. 31


Sep. 30


Jun. 30


Mar. 31


Dec. 31


Sep. 30


Jun. 30


Mar. 31(In thousands, except per share data)Operating Income (loss)


1,738



2,736



2,149



342



(2,651
)


833



(472
)


(1,540
)Interest Income


106



92



70



51



48



26



5



4Interest Expense


(22
)


(26
)


(26
)


(17
)


(15
)


(8
)


(9
)


(4
)Foreign exchange gains (losses)


(23
)


24



55



















Income (loss) before income taxes


1,799



2,826



2,248



376



(2,618
)


851



(476
)


(1,540
)Income Tax expense


91



317



83



3















Net income (loss)


1,708



2,509



2,165



373



(2,618
)


851



(476
)


(1,540
)Accretion on redeemable shares


(496
)


(1,334
)


(1,332
)


(1,334
)


(1,332
)


(1,334
)


(1,332
)


(1,334
)Dividends


(667
)


(743
)


(722
)


(698
)


(698
)


(684
)


(662
)


(642
)Net gain (loss) attributable to
    common stockholders

$
545


$
432


$
111


$
(1,659
)

$
(4,648
)

$
(1,167
)

$
(2,470
)

$
(3,516
)Net loss per share, basic

$
0.09


$
0.11


$
0.03


$
(0.44
)

$
(1.23
)

$
(0.31
)

$
(0.65
)

$
(0.92
)Net loss per share, diluted

$
0.07


$
0.07


$
0.02


$
(0.44
)

$
(1.23
)

$
(0.31
)

$
(0.65
)

$
(0.92
)Stock-based compensation expense
    included in above

$
1,030


$
487


$
253


$
446


$
119


$
0


$
0


$
0   period-to-period
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.     45




---



##### 



Item 8.
    Financial
    Statements and Supplementary Data.  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageDouble-Take Software,
    Inc.:Consolidated Financial Statements:Report of
    Independent Registered Public Accounting Firm


47Consolidated
    Balance Sheets as of December 31, 2006 and 2005


48Consolidated
    Statements of Operations for the years ended December 31,
    2006, 2005 and 2004


49Consolidated
    Statement of Changes in Stockholders Equity (Deficit) for
    the years ended December 31, 2006, 2005 and 2004


50Consolidated
    Statements of Cash Flows for the years ended December 31,
    2006, 2005 and 2004


51Notes to
    Consolidated Financial Statements


52Schedule II 
    Valuation and Qualifying Accounts


79  46




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM             
    47




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Consolidated Balance Sheets
  December 31,2006


2005(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
55,170


$
8,341Accounts receivable, net of
    allowance for doubtful accounts of $570 and $274 at
    December 31, 2006 and 2005, respectively


12,676



7,982Inventory


14



Prepaid expenses and other current
    assets


2,210



345Total current assets


70,070



16,668Property and equipment 
    at cost, net of accumulated depreciation of $2,838 and $1,400 at
    December 31, 2006 and 2005, respectively


3,000



1,864Customer relationships, net of
    accumulated amortization of $274 at December 31, 2006


1,993



Marketing relationships, net of
    accumulated amortization of $150 at December 31, 2006


1,842



Other assets


121



58Total assets

$
77,026


$
18,590LIABILITIESCurrent liabilities:Accounts payable

$
2,217


$
1,537Accrued expenses


6,845



6,825Accrued purchase price


1,425



Other liabilities


135



Deferred revenue


16,774



10,562Total current liabilities


27,396



18,924Long-term deferred revenue


3,977



2,887Long-term deferred rent


406



518Long-term capital lease obligations


17



7Total long-term liabilities


4,400



3,412Total liabilities


31,796



22,336Redeemable shares:Redeemable convertible
    Series B preferred stock; 14,451,572 shares
    authorized; 0 and 13,633,334 shares issued and outstanding
    at December 31, 2006 and 2005; redemption value of $0 and
    $46,663 at December 31, 2006 and 2005, respectively






42,184Redeemable convertible
    Series C preferred stock; 8,382,201 shares authorized;
    0 and 7,772,094 shares issued and outstanding at
    December 31, 2006 and 2005; redemption value of $0 and
    $8,361 at December 31, 2006 and 2005, respectively






8,377Total redemption value






50,561Stockholders equity
    (deficit)Preferred Stock, $.01 par
    value per share, 20,000,000 shares authorized;
    0 shares issued and outstanding at December 31, 2006






Common stock, $.001 par value
    per share; 130,000,000 shares authorized; 20,726,589 and
    3,789,270 shares issued and outstanding at
    December 31, 2006 and 2005, respectively


21



4Additional paid-in capital


138,398



42,931Accumulated deficit


(93,317
)


(97,242
)Accumulated other comprehensive
    incomeCumulative foreign currency
    translation adjustment


128



Total stockholders equity
    (deficit)


45,230



(54,307
)Total liabilities, redeemable
    shares and stockholders equity (deficit)

$
77,026


$
18,590    48




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Consolidated
    Statements of Operations
  Year Ended December 31,2006


2005


2004(In thousands, except share and per share amounts)Revenue:Software licenses

$
38,418


$
26,222


$
19,943Maintenance and professional
    services


22,422



14,488



9,895Total revenue


60,840



40,710



29,838Cost of revenue:Software licenses


1,355



38



559Maintenance and professional
    services


6,193



4,357



3,694Total cost of revenue


7,548



4,395



4,253Gross profit


53,292



36,315



25,585Operating expenses:Sales and marketing


22,211



17,191



16,188Research and development


10,679



9,748



8,717General and administrative


11,824



6,730



5,666Depreciation and amortization


1,613



805



527Legal fees and settlement costs






5,671



1,755Total operating expenses


46,327



40,145



32,853Operating income (loss)


6,965



(3,830
)


(7,268
)Interest income


319



83



7Interest expense


(91
)


(36
)


(765
)Foreign exchange gains


56







Income (loss) before income taxes


7,249



(3,783
)


(8,026
)Income tax expense


494







Net income (loss)


6,755



(3,783
)


(8,026
)Accretion on redeemable shares:Series B


(4,477
)


(5,310
)


(5,310
)Series C


(19
)


(22
)


(4
)Dividends on Series B


(2,140
)


(2,035
)


(1,882
)Dividends on Series C


(690
)


(651
)


(147
)Net loss attributable to common
    stockholders

$
(571
)

$
(11,801
)

$
(15,369
)Net loss per share attributable to
    common stockholders:Basic and diluted

$
(0.13
)

$
(3.11
)

$
(4.06
)Weighted-average number of shares
    used in per share amounts:Basic and diluted


4,306



3,789



3,786    49




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Consolidated
    Statements of Changes in Stockholders Equity
    (Deficit)
  AccumulatedAdditional











OtherCommon Stock


Paid-in


Accumulated


Comprehensive


Deferred


ComprehensiveShares


Amount


Capital


Deficit


Income


Compensation


Income


Total(In thousands, except share and per share amounts)Balance  January 1,
    2004


3,785,588



4



53,480



(80,718
)






(154
)






(27,388
)Net loss for the year














(8,026
)


(8,026
)










(8,026
)Total comprehensive income

















$
(8,026
)Accretion of difference between
    carrying amount and redemption price  Series B










(5,310
)


















(5,310
)Redeemable convertible preferred
    stock dividends  Series B














(1,882
)














(1,882
)Accretion of difference between
    carrying amount and redemption price  Series C










(4
)


















(4
)Redeemable convertible preferred
    stock dividends  Series C














(147
)














(147
)Exercise of stock options


2,198







2



















2Amortization of deferred
    compensation






















154







154Balance 
    December 31, 2004


3,787,786



4



48,168



(90,773
)














(42,601
)Net loss for the year














(3,783
)


(3,783
)










(3,783
)Total comprehensive income

















$
(3,783
)Accretion of difference between
    carrying amount and redemption price  Series B










(5,310
)


















(5,310
)Redeemable convertible preferred
    stock dividends  Series B














(2,035
)














(2,035
)Accretion of difference between
    carrying amount and redemption price  Series C










(22
)


















(22
)Redeemable convertible preferred
    stock dividends  Series C














(651
)














(651
)Options issued for services










94



















94Exercise of stock options


1,484







1



















1Balance 
    December 31, 2005


3,789,270



4



42,931



(97,242
)














(54,307
)Net income for the year














6,755



6,755











6,755Foreign currency translation
    adjustment


















128







128



128Total comprehensive income

















$
6,883Accretion of difference between
    carrying amount and redemption price  Series B










(4,477
)


















(4,477
)Redeemable convertible preferred
    stock dividends  Series B














(2,140
)














(2,140
)Return of Capital 
    Series B










(10,225
)


















(10,225
)Accretion of difference between
    carrying amount and redemption price  Series C










(19
)


















(19
)Redeemable convertible preferred
    stock dividends  Series C














(690
)














(690
)Conversion of preferred stock


11,553,130



12



57,979



















57,991Public offering, net of expenses


5,000,000



5



47,544



















47,549Options issued for services










2,240



















2,240Exercise of stock options


158,198







528



















528Exercise of warrants


67,996



























Shares issued to CEO


157,995







1,897



















Balance 
    December 31, 2006


20,726,589


$
21


$
138,398


$
(93,317
)





$



$
128


$
45,230    50




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Consolidated
    Statements of Cash Flows
  Year Ended December 31,2006


2005


2004(In thousands, except share and per share amounts)Cash flows from operating
    activities:Net income (loss)

$
6,755


$
(3,783
)

$
(8,026
)Adjustments to reconcile net income
    (loss) to net cash provided by (used in) operating activities:Depreciation and amortization


1,189



805



1,042Amortization of intangible assets


424







Amortization of debt discount and
    financing costs










83Amortization of deferred
    compensation










154Provision for doubtful accounts


200



100



116Issuance of options for services


2,215



119



Issuance of common stock to CEO


3,241







Issuance of redeemable convertible
    Series C preferred to management as compensation


103



54



Issuance of redeemable convertible
    Series C preferred stock as additional interest










513Changes in:Accounts receivable


(1,939
)


(2,590
)


232Prepaid expenses and other assets


(1,684
)


4



(176
)Inventory


328







Other assets


(2
)


15



Accounts payable and accrued
    expenses


(2,159
)


4,343



838Accrued interest payable










50Other liabilities


(887
)






Deferred revenue


5,867



4,538



4,181Restricted cash










529Net cash provided by (used in)
    operating activities


13,651



3,605



(464
)Cash flows from investing
    activities:Purchase of property and equipment


(2,050
)


(1,096
)


(1,218
)Acquisition of Double-Take EMEA,
    net of cash acquired


(2,073
)






Net cash used in investing
    activities


(4,123
)


(1,096
)


(1,218
)Cash flows from financing
    activities:Proceeds (repayments) from
    revolving line of credit, net










(100
)Borrowing under bridge financing










2,000Issuance of redeemable convertible
    preferred stock  Series C










5,000Costs incurred in issuance of
    redeemable convertible preferred stock  Series C










(65
)Return of Capital 
    Series B


(10,225
)






Proceeds from public offering, net
    of expenses


48,319







Repurchase of common stock from CEO


(1,343
)






Proceeds from exercise of stock
    options


453



1



2Payment on capital lease obligation


(11
)






Net cash provided by financing
    activities


37,193



1



6,837Effect of exchange rate changes on
    cash


108







Net increase in cash and cash
    equivalents


46,721



2,510



5,155Cash and cash
    equivalents  beginning of year


8,341



5,831



676Cash and cash
    equivalents  end of year

$
55,170


$
8,341


$
5,831Supplemental disclosures of cash
    flow information:Cash paid during the period for:Interest

$
78


$
51


$
119Income taxes

$
1,066


$
3


$
14Supplemental disclosures of noncash
    investing and financing activities:Issuance of preferred stock upon
    conversion of bridge financing including interest of $50









$
2,050Issuance of warrants in connection
    with revolving line of credit










Accrued purchase price payments










Accrued costs for public offering

$
770







Receivable from employees in
    connection with exercise of stock options

$
74







    51




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial Statements
 December 31, 2006, 2005 and 2004
 (in thousands, except for share and per share amounts)
  Note A 
    Organization and Significant Accounting Policies
  [1] The
    Company:
        
    The Company effected a 1 for 4.9 reverse stock split of its
    common stock on November 3, 2006. All share and per share
    amounts related to common stock, options and warrants included
    in the consolidated financial statements have been restated to
    reflect the reverse stock split. The conversion ratios of the
    Companys Series B Preferred Stock and Series C
    Preferred Stock have also been adjusted to reflect the reverse
    split.
    There were 7.5 million shares of common stock sold at
    $11.00 per share to the public, comprising 5 million
    shares of common stock sold by the Company and 2.5 million
    shares of common stock sold by existing stockholders. The
    Company received gross proceeds of $55,000, or $47,549 after
    deducting underwriting discounts and commissions of $3,850 and
    offering costs of $3,601. Upon closing of the IPO, all shares of
    redeemable preferred stock automatically converted into
    11,553,130 shares of common stock  Principles
    of Consolidation
    [2] Acquisition
    of Double-Take EMEA:
     52




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
      Earn-out payments for the period
    January 1, 2006 through April 30, 2006

$
1,133Amount due to former Double-Take
    EMEA shareholders


932Transaction costs


318Total initial purchase price

$
2,383       LifeCash and cash equivalents

$
1,778Accounts receivable, net of
    allowance


2,927Inventory


1,381Prepaid expenses


2,694Account payable


(1,229
)Accrued expenses


(1,790
)Other liabilities


(144
)Deferred revenue


(3,944
)Properties and equipment


275



5 yearsOther assets


54Customer relationships


2,267



5 yearsMarketing relationships(1)


1,992



8 yearsTotal assets acquired

$
6,261Purchase Price paid through
    December 31, 2006

$
4,836Accrued purchase price


1,425Total

$
6,261     (1)
    
    The acquired intangible marketing relationship included in the
    acquisition of Double-Take EMEA relates to the reacquisition of
    a preexisting distribution arrangement between Double-Take
    Software and Double-Take EMEA for software marketing rights that
    had previously been granted to Double-Take EMEA. Under the
    agreement, Double-Take EMEA purchases software licenses from
    Double-Take Software at rates that were negotiated at arms
    length and that represented current market rates. At the date of
    acquisition, the agreement between Double-Take Software and
    Double-Take EMEA was continued without any amendments upon the
    acquisition and was neither favorable nor unfavorable to either
    party. Accordingly, there was no gain or loss recorded upon the
    reacquisition of the preexisting arrangement. 53




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
     Year Ended December 31,2006


2005Total Revenue

$
65,621


$
51,009Net income (loss) attributable to
    common stockholders

$
(417
)

$
(13,065
)Basic and diluted income (loss)
    per share

$
(0.10
)

$
(3.45
)Weighted average shares
    outstanding  basic and diluted


4,306



3,789   [3] Cash
    and cash equivalents:
    [4] Accounts
    receivable and allowance for doubtful accounts:
    [5] Fair
    value of financial instruments:
    [6] Revenue
    recognition:
  01-9, 97-2, SOP 98-4 SOP 98-9,
  SOP 98-9.
   54




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
    when-and-if-available
    SOP 98-9.
    Persuasive evidence of an arrangement with the customer
    exists.
  Delivery or performance has
    occurred. and/or
  Fee is fixed or determinable.
  Collection is probable. customer-by-customer
 55




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
      [7] Cost
    of revenue:
  Cost of software revenue.
  Cost of services revenue.
  [8] Property,
    plant and equipment:
    [9] Software
    development costs:
    [10]
    Intangible assets:
    [11] Impairment
    of long-lived assets:
   56




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
   [12] Advertising
    expense:
    [13] Income
    taxes:
    [14] Accounting
    estimates:
    [15] Concentration
    of credit risk:
    [16] Foreign
    Currency Translation:
  Foreign Currency Translation
  [17] Comprehensive
    Income (Loss):
    [18] Stock-based
    compensation:
   57




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
          No. 96-18,
  [19] Net
    loss per share:
   58




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
     Year Ended December 31,2006


2005


2004Stock options


2,929



2,562



2,509Warrants


82



163



163Redeemable convertible preferred
    stock


0



10,668



9,829   [20] Recent
    accounting pronouncements:
          FSP 115-1 other-than-temporary, other-than-temporary other-than-temporary
 59




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
  115-1 115-1
  No. 06-3, No. 06-3). 06-3 EITF 06-E 06-3 06-3
       60




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
     Note B 
    Revolving Line of Credit
  12-month 12-month
    Note C 
    Property and Equipment
    December 31,2006


2005Equipment

$
95


$
69Furniture and fixtures


460



148Motor Vehicles


104



Computer hardware


4,561



2,592Leasehold improvements


618



4555,838



3,264Less accumulated depreciation and
    amortization


2,838



1,400$
3,000


$
1,864  61




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
      Note D 
    Intangible Assets
        Customer relationships

$
2,267Less accumulated amortization


(274
)Balance, December 31, 2006

$
1,993Marketing relationships

$
1,992Less accumulated amortization


(150
)Balance, December 31, 2006

$
1,842     Year Ending
    December 31,2007

$
7022008

$
7022009

$
7022010

$
7022011

$
428Thereafter

$
599Total

$
3,835   Note E 
    Notes Payable
     62




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
   Note F 
    Provision for Income Taxes
    Year Ended December 31,2006


2005


2004Domestic


5,755



(3,783
)


(8,026
)Foreign


1,494



0



0Total


7,249



(3,783
)


(8,026
)     2006


2005


2004Federal


0



0



0State and local


0



0



0Foreign


494



0



0Total


494



0



0     Year Ended December 31,2006


2005


2004Statutory federal income tax
    expense (benefit) rate


34
%


(34
)%


(34
)%Increase (decrease) in valuation
    allowance


(47
)%


33
%


38
%State taxes (benefit)


6
%


(4
)%


(4
)%Impact of permanent difference


9
%


3
%


2
%Foreign taxes


7
%


0
%


0
%Other


(2
)%


2
%


(2
)%Effective income tax expense
    (benefit) rate


7
%


0
%


0
%  63




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
    Year Ended December 31,2006


2005Deferred tax assets:Current:Allowance for doubtful accounts

$
184


$
106Deferred revenue


1,127



318Accrued expenses


0



1,454Prepaid expenses


(374
)


0Total current deferred tax assets


937



1,878Non-current:Fixed assets

$
513


$
1,465Straight-line rent


200



236Net operating loss carryforward


23,284



24,675Sales tax reserve


97



213Other


4



11Total non-current deferred tax
    assets


24,098



26,600Total deferred tax assets


25,035



28,478Valuation allowance


(25,035
)


(28,478
)Net deferred tax assets

$
0


$
0       Note G 
    Commitments and Contingencies
  [1] Leases:
   64




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
    Year Ending
    December 31,2007

$
1,6792008

$
1,6562009

$
1,5572010

$
1,093Thereafter

$
418$
6,403       [2] Litigation:
      Note H 
    Concentration
         65




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
     Note I 
    Employment Agreements
  4-year
      Number of

Exercise


December 31, 2006


December 31, 2005Options

Price


Vested


Unvested


Vested


Unvested


Expiring102,040

$
19.60



102,040







102,040







200810,209

$
4.90



10,209







10,209







2008366,181

$
0.94



366,181







205,976



160,205



20086,125

$
0.94



6,125







2,680



3,445



20086,637

$
1.52



6,637







1,244



5,393



2008491,192






491,192







322,149



169,043        66




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
        Note J 
    Stockholders Equity
  [1] Redeemable
    preferred stock:
  (a) Series A
    preferred stock:
    (b) Series B
    preferred stock:
       67




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
     
    Convertible, including accrued dividends at 8% per year
    (compounded monthly) through the date of conversion or
    redemption, into common stock at $3.68 per share post
    split. In addition, if converted immediately prior to a
    Liquidation Event (defined to include a sale of the Company,
    except upon the election of a majority of the holders of the
    Series C Preferred) or a qualified public offering
    requiring mandatory conversion, or a public offering not
    requiring mandatory conversion, then the holders of the
    Series B were also entitled to a cash payment equal to
    $0.75 per share (50% of the Original Issue Price).
    Adjustment of Conversion Price  conversion price was
    to be reduced by 20% if at any time prior to July 1, 2003
    the Company failed to meet minimum ending cash balances of
    $4,000 for each of three consecutive months and achieve
    aggregate revenues of $18,000 for the nine-month period ended
    June 30, 2003, or after July 1, 2003, and until the
    Company is cash flow positive, it failed to maintain a minimum
    cash balance of $4,000. In 2003, the Company did not meet these
    requirements and the conversion price was reduced by 20%,
    resulting in a beneficial conversion feature charge of $1,194.
    Automatic Conversion  upon a qualified public
    offering, automatically converts, including accrued dividends,
    to common stock at $3.68 per share post split. In addition,
    the holders of the Series B Preferred are also entitled to
    a cash payment equal to $0.75 per share (50% of the
    Original Issue Price).
    Cumulative dividends at 8% accrued through the earliest of the
    conversion, liquidation or redemption, payable only after
    payment of all dividends due to the holders of the Series C
    Preferred.
    Liquidation Preference  after payment has been made
    in full to the holders of the Series C Preferred Stock, the
    Liquidation Preference was the greater of
    (i) 200% of the Original Issue Price plus accrued and
    unpaid dividends or (ii) pro rata participation on an as
    converted to common stock basis, plus a cash payment of $0.75
    (50% of the Original Issue Price). Upon any liquidation of the
    Company, after the preferred payments to the holders of the
    Series B Preferred and the Series C Preferred, the
    Series B Preferred would participate ratably on an as
    converted basis, with the Series C Preferred and the common
    stock, until the Liquidation Preference and common stock
    proceeds equaled 300% of the Original Issue Price. In December
    2006, the Company paid $10,225 to the holders of the
    Series B Preferred shares upon closing of the IPO.
    Participation in all dividends on an as-converted basis.    
    Voting Rights  Voted on an as-converted
    basis.  In addition, the holders of a majority of the
    shares of Series B Preferred had to consent to, among other
    things, changes in the designations of the Series B
    Preferred and the Series C Preferred, the payment of
    dividends and any sale of or change in control of the Company.
    Redemption  redeemable at the option of the holder on
    or after November 12, 2006 at a price equal to the
    Liquidation Preference plus declared but unpaid dividends (the
    Redemption Value). The minimum redemption value
    was equal to 200% of the Original Issue Price plus accrued and
    unpaid dividends. If the holders of the Series C Preferred
    requested redemption prior to when the redemption payment for
    the Series B Preferred was made, then the Series C
    Preferred was to be paid in full prior to any redemption of the
    Series B preferred.   68




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
    (c) Series C
    preferred stock:
            
    Convertible, including accrued dividends at 8% per year
    (compounded monthly) through the date of conversion, into common
    stock at $4.80 per share post split.
    Automatic Conversion  upon a qualified public
    offering, automatically converts, including dividends, to common
    stock at the Series C Original Issue Price.
    Cumulative dividends at 8% accrued through the earliest of the
    conversion, liquidation or redemption.
    Liquidation Preference  upon any Liquidation of the
    Company, the Series C Liquidation Preference was equal to
    the greater of (i) the Series C Original Issue Price
    plus accrued dividends and (ii) the amount the holders of
    the Series C Preferred would have received on an
    as-converted basis, ratably with the holders of the
    Series B Preferred and the common stock (with the
    Series B Preferred participating only up to 300% of the
    Original Issue Price), after the payment of all preferential
    amounts to the holders of Series B Preferred and
    Series C Preferred. A Liquidation was defined to also
    include a sale of the Company, unless a majority of the holders
    of the Series C Preferred elect not to do so.
    Participation in all dividends on an as-converted basis.
    Voting Rights  Voted on an as-converted basis. In
    addition, the holders of a majority of the shares of
    Series C Preferred must consent to, among other things,
    changes in the designations of the Series B Preferred and
    the Series C Preferred, the payment of dividends and any
    sale of or change in control of the Company.
    Redemption  redeemable at the option of the holder on
    or after November 12, 2006 at a price equal to the
    Series C Liquidation Preference plus accrued dividends (the
    Redemption Value).   69




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
   [2] Common
    stock:
      
    The Company effected a 1 for 4.9 reverse stock split of its
    common stock on November 3, 2006. All share and per share
    amounts related to common stock, options and warrants included
    in the consolidated financial statements have been restated to
    reflect the reverse stock split. The conversion ratios of the
    Companys Series B Preferred Stock and Series C
    Preferred Stock have also been adjusted to reflect the reverse
    split.
    There were 7.5 million shares of common stock sold at
    $11.00 per share to the public, comprising 5 million
    shares of common stock sold by the Company and 2.5 million
    shares of common stock sold by existing stockholders. The
    Company received gross proceeds of $55,000, or $47,549 after
    deducting underwriting discounts and commissions of $3,850 and
    offering costs of $3,601. Upon closing of the IPO, all shares of
    redeemable preferred stock automatically converted into
    11,553,130 shares of common stock.    [3] Warrants:
  (a) Common
    stock:
      (b) Preferred
    stock:
    [4] Stock
    option plans:
     70




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
                  71




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
  Year Ended December 31,2006


2005


2004Weighted





Weighted





WeightedShares


Average


Shares


Average


Shares


AverageOutstanding at beginning of year


2,561,309


$
3.79



2,508,347


$
5.77



2,507,683


$
6.29Options granted


638,637


$
4.55



832,011


$
1.52



156,921


$
0.99Options cancelled


(112,667
)

$
26.32



(777,565
)

$
7.76



(154,059
)

$
9.44Options exercised(1)


(158,198
)

$
0.98



(1,484
)

$
0.94



(2,198
)

$
0.94Outstanding at end of year


2,929,081


$
3.12



2,561,309


$
3.78



2,508,347


$
5.77Options exercisable at year end


2,048,651


$
3.05



1,211,057


$
6.60



1,226,078


$
10.44Options not vested at year end(2)


880,430


$
3.26     (1)
    
    Intrinsic value of $1,398, $1 and $1 in 2006, 2005 and 2004,
    respectively. Cash received of $453, $1 and $2 in 2006, 2005 and
    2004, respectively.(2)
    
    413,512 options are expected to vest in 2007.    Year Ended December 31, 2006WeightedAverage Grant DateShares


Fair ValueNonvested options at beginning of
    year


1,250,252


$
1.26Options granted


638,637


$
8.15Options vested


(1,091,528
)

$
4.83Options forfeited


(16,931
)

$
2.53Nonvested options at end of year


880,430


$
5.21    72




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
     December 31, 2006Weighted AverageNumber


Number


Remaining Contractualof Shares


of Shares


Life of Shares ExercisableExercise Price

Outstanding


Exercisable


(in years)$0.94


1,260,218



1,120,154



6.48$1.52


817,394



578,259



8.12$1.96


371,795



104,763



6.24$4.90


3,963



3,963



0.92$7.06


189,311



5,612



6.71$10.29


61,926



61,926



0.25$11.00


70,908



20,408



6.96$19.60


142,856



142,856



3.26$37.29


10,710



10,710



2.522,929,081



2,048,651   December 31, 2005Weighted AverageNumber


Number


Remaining Contractualof Shares


of Shares


Life of Shares ExercisableExercise Price

Outstanding


Exercisable


(in years)$0.94


1,349,152



758,094



7.48$1.52


832,448



73,254



9.12$4.90


74,798



74,798



1.96$10.29


75,393



75,393



1.22$19.60


142,856



142,856



4.26$37.29


86,662



86,662



0.752,561,309



1,211,057      73




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
     December 31,


December 31,2006


2005Shares reserved for:The Directors Plan


61,224



61,2241996 Option Plan


219,455



379,7912003 Option Plan


3,258,708



2,241,2112006 Option Plan


2,653,061



Common stock warrants


35,714



117,346Conversion of Series B
    preferred stock including accrued dividends






8,915,266Series B warrants


45,918



45,918Conversion of Series C
    preferred stock including accrued dividends






1,752,3196,274,080



13,513,075   Disclosure about
    Fair Value of Financial Instruments
  Year Ended December 31,2006

2005

2004Expected Term

7 years

10 years

10 yearsVolatility

80.00%

0.01%

0.01%Risk free rate

4.36%-5.12%

3.63%-4.53%

3.83%-4.73%Dividend Yield





Discount





  74




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
    Fair MarketValue per ShareNumber of





on AccountingOptions


Exercise


Measurement


IntrinsicMeasurement Date

Granted


Price


Date


ValueJan  Mar 2005


420,104


$
1.52


$
1.52


$
0.00Apr  Jun 2005


394,264


$
1.52


$
1.52


$
0.00Jul  Sep 2005


12,755


$
1.52


$
1.52


$
0.00Oct  Dec 2005


5,000


$
1.52


$
1.52


$
0.00Jan  Mar 2006














Apr  Jun 2006


376,520


$
1.96


$
7.06


$
5.09Jul  Sep 2006


179,126


$
7.06


$
9.02


$
1.96Oct 2006


10,204


$
7.06


$
9.02


$
1.96Nov  Dec 2006


70,908


$
11.00


$
11.00


$
0.00      75




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
                  Year Ended


Year EndedDecember 31,


December 31,2006


2005Cost of revenue, maintenance and
    professional services


118



Sales and marketing


242



Research and development


266



General and administrative

$
1,589


$
119$
2,215


$
119  76




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
  [5] Stock
    purchase plan/executive bonus plans:
        Note K 
    Profit Sharing Plan
    Note L 
    Segment Information
      Year Ended December 31,2006


2005


2004Revenue:North America

$
43,089


$
31,291


$
21,648Europe, Middle East &
    Africa


15,815



7,168



6,458Asia-Pacific


1,936



2,251



1,732$
60,840


$
40,710


$
29,838   December 31,2006


2005Long-lived assets:North America

$
2,733


$
1,864Europe, Middle East &
    Africa


267



Asia-Pacific






$
3,000


$
1,864   Note M 
    Related Party Transactions
     77




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
    December 31,2006Trade Receivable

$
931Trade Payable

$
20   May 24, 2006toDecember 31,2006Sales to Sunbelt Distribution

$
4,537Purchases from Sunbelt Distribution

$
265  78




---



##### 



Double-Take
    Software, Inc.
  Schedule II 
    Valuation and Qualifying Accounts
  AdditionsBalance at


Charged





Balance atBeginning


to Costs and


Deductions (See


End ofof Period


Expenses


Notes Below)


Period(In thousands, except for share and per share amounts)Year ended December 31,
    2004:Allowance for doubtful accounts

$
84


$
116






$
200Valuation allowance on deferred
    tax assets

$
24,206


$
3,038






$
27,244Year ended December 31,
    2005:Allowance for doubtful accounts

$
200


$
100


$
26


$
274Valuation allowance on deferred
    tax assets

$
27,244


$
1,234






$
28,478Year ended December 31,
    2006:Allowance for doubtful accounts

$
274


$
296






$
570Valuation allowance on deferred
    tax assets

$
28,478


$
(3,443
)





$
25,035     (1)
    
    Deductions from provisions represent losses or expenses for
    which the respective provisions were created. In the case of the
    provision for doubtful accounts, such deductions are reduced by
    recoveries of amount previously written-off.(2)
    
    Adjustments associated with the Companys assessment of its
    deferred tax assets (principally related to federal and state
    net operating loss carryforwards. 79




---



##### 



Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.          Item 9B.
    Other
    Information.    PART III
  Item 10.
    Directors,
    Executive Officers and Corporate Governance.  Executive
    Officers
  Form 10-K,
  Code of
    Ethics
  http://www.doubletake.com. Form 8-K
  Additional
    Information
   80




---



##### 



Item 11.
    Executive
    Compensation.    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.  Securities
    Authorized for Issuance under Equity Compensation
    Plans
    Equity
    Compensation Plan Information
  Number ofSecuritiesNumber of





Remaining AvailableSecurities to be





for Future IssuanceIssued Upon


Weighted-Average


Under EquityExercise of


Exercise Price of


Compensation PlansOutstanding


Outstanding


(ExcludingOptions, Warrants


Options, Warrants


Securitiesand Rights


and Rights


Reflected in ColumnPlan Category

(a)


(b)


(a)(c)Equity compensation plans approved
    by security holders(1)


3,010,713


$
3.10



2,416,205Equity compensation plans not
    approved by security holders


0


$
0.00



0Total


3,010,713


$
3.10



2,416,205     (1)
    
    Consists of shares of common stock to be issued upon exercise of
    outstanding options granted under our Non-Executive Director
    Stock Option Plan, 2003 Employees Stock Option Plan and 2006
    Omnibus Incentive Plan. Of these plans, the only plan under
    which options may be granted in the future is the 2006 Omnibus
    Incentive Plan.  Security
    Ownership of Certain Beneficial Owners and Management
    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.    Item 14.
    Principal
    Accounting Fees and Services.   81




---



##### 



PART IV
  Item 15.
    Exhibits,
    Financial Statement Schedules.  (a)  (1)
    The information required by this item is included in Item 8
    of Part II of this annual report.  (2)
    The information required by this item is included in Item 8
    of Part II of this annual report.(3)
    Exhibits: See Index to Exhibits. The Exhibits listed in the
    accompanying Index to Exhibits are filed or incorporated by
    reference as part of this annual report.  (b)
    Exhibits: See Index to Exhibits. The Exhibits listed in the
    accompanying Index to Exhibits are filed or incorporated by
    reference as part of this annual report.  (c)
    Not applicable. 82




---



##### 



SIGNATURES
      By:
    /s/  Dean
    S. Goodermote  Dean Goodermote
 President, Chief Executive Officer and
 Chairman of the Board of Directors
     Name

Title

Date/s/  Dean
    S. GoodermoteDean
    Goodermote

President, Chief Executive
    Officer, and Chairman of the Board of Directors (Principal
    Executive Officer)

March 29, 2007/s/  S.
    Craig HukeS.
    Craig Huke

Chief Financial Officer
    (Principal Financial Officer and
    Principal Accounting Officer)

March 29, 2007/s/  Paul
    BirchPaul
    Birch

Director

March 29, 2007/s/  Ashoke
    (Bobby) GoswamiAshoke
    (Bobby) Goswami

Director

March 29, 2007/s/  John
    B. LandryJohn
    B. Landry

Director

March 29, 2007/s/  Laura
    L. WittLaura
    L. Witt

Director

March 29, 2007/s/  John
    W. YoungJohn
    W. Young

Director

March 29, 2007  83




---



##### 



INDEX TO
    EXHIBITS
  Exhibit No.

Exhibit Description2
.01

Share Purchase Agreement dated as
    of May 23, 2006, by and among Double-Take Software, Inc.
    (the Company), Sunbelt International S.A.R.L. and
    Mr. Joe Murciano.3
.01

Second Amended and Restated
    Certificate of Incorporation of the Company.3
.02

Second Amended and Restated Bylaws
    of the Company.4
.01

Form of certificate representing
    the Common Stock, par value $.001 per share, of the Company.10
.01*

1996 Employees Stock Option Plan.10
.02*

Form of Incentive Stock Award
    pursuant to the 1996 Employees Stock Option Plan.10
.03*

Non-Executive Director Stock
    Option Plan.10
.04*

Form of Non-Qualified Incentive
    Stock Option Award pursuant to the Non-Executive Director Stock
    Option Plan.10
.05*

2003 Employees Stock Option Plan.10
.06*

Form of Incentive Stock Award
    pursuant to the 2003 Employees Stock Option Plan.10
.07*

Double-Take Software 2006 Omnibus
    Incentive Plan.10
.08A*

Form of Incentive Stock Option
    Agreement pursuant to the Double-Take Software 2006 Omnibus
    Incentive Plan.10
.08B*

Form of Nonqualified Stock Option
    Agreement pursuant to the Double-Take Software 2006 Omnibus
    Incentive Plan.10
.08C*

Form of Director Nonqualified
    Stock Option Agreement pursuant to the Double-Take Software 2006
    Omnibus Incentive Plan.10
.09*

Form of Double-Take Software, Inc.
    Indemnification Agreement.10
.10*

NSI Executive Compensation Plan
    2006.10
.11

Amended and Restated Registration
    Rights Agreement dated as of October 6, 2004, among the
    Company and the Holders Named Therein (the Registration
    Rights Agreement).10
.12

Amendment and Joinder to the
    Registration Rights Agreement dated as of July 31, 2006.10
.13

Lease Agreement, dated
    June 12, 2000, between
    E-L Allison
    Pointe II, LLP and the Company.10
.14

First Amendment to the Lease
    Agreement, dated June 15, 2000, by and between
    E-L Allison
    Pointe II, LLP and the Company.10
.15

Loan and Security Agreement dated
    as of October 16, 2003, among the Company and Silicon
    Valley Bank.10
.16

Loan Modification Agreement, dated
    as of April 26, 2004, by and between Silicon Valley Bank
    and the Company.10
.17

Third Loan Modification Agreement,
    by and between Silicon Valley Bank and the Company.10
.18

Fifth Loan Modification Agreement,
    by and between Silicon Valley Bank and the Company.10
.19

Seventh Loan Modification
    Agreement, by and between Silicon Valley Bank and the Company.10
.20

Eighth Loan Modification
    Agreement, between Silicon Valley Bank and the Company.10
.21

Ninth Loan Modification Agreement,
    between Silicon Valley Bank and the Company.10
.22*

Employment Letter, dated
    August 7, 2006, between Double-Take Software, Inc. and Dean
    Goodermote.10
.23*

Employment Letter, dated
    October 31, 2006, between Double-Take Software, Inc. and S.
    Craig Huke.10
.24*

Employment Letter, dated
    October 31, 2006, between Double-Take Software, Inc. and
    Daniel M. Jones.10
.25+

Products License and Distribution
    Agreement, dated as of November 16, 2001, by and between
    the Company and Dell Products L.P. by and on behalf of itself
    and Dell Computer Corporation.10
.26

Amendment 3 to Products License
    and Distribution Agreement, dated as of December 2, 2003,
    between the Company and Dell Computer Corporation.10
.27+

Amendment 4 to Products License
    and Distribution Agreement, effective as of July 25, 2003,
    between the Company and Dell Computer Corporation. 84




---



##### 



Exhibit No.

Exhibit Description10
.28+

Amendment 5 to Products License
    and Distribution Agreement, dated as of December 2, 2003,
    between the Company and Dell Computer Corporation.10
.29

Amendment 6 to Products License
    and Distribution Agreement, effective as of February 26,
    2004, between the Company and Dell Computer Corporation.10
.30

Amendment 7 to Products License
    and Distribution Agreement, effective as of February 18,
    2005, between the Company and Dell Computer Corporation.10
.31+

Amendment to Products License and
    Distribution Agreement, effective as of January 31, 2006,
    between the Company and Dell Computer Corporation.10
.32

Restated Xcelerate! Distributor
    Agreement, dated as of August 28, 2006, between Double-Take
    Software, Inc. and Sunbelt International.10
.33

Xcelerate! Partner Agreement,
    dated August 2, 2001, between the Company and Sunbelt
    Software Distribution Inc.10
.34

Addendum 1 to Xcelerate Partner
    Agreement, dated August 2, 2001, between the Company and
    Sunbelt Software Distribution Inc.10
.35

Addendum 3 to Xcelerate Partner
    Agreement, dated November 27, 2001, between the Company and
    Sunbelt Software Distribution Inc.10
.36

Addendum 4 to Xcelerate Partner
    Agreement, dated May 31, 2002, between the Company and
    Sunbelt Software Distribution Inc.10
.37

Addendum 4 to Xcelerate Partner
    Agreement, dated August 27, 2002, between the Company and
    Sunbelt Software Distribution Inc.10
.38

Amendment 5 to Xcelerate Partner
    Agreement, dated February 13, 2004, between the Company and
    Sunbelt Software Distribution Inc.10
.39

Amendment 6 to Xcelerate Partner
    Agreement, dated February 14, 2004, between the Company and
    Sunbelt Software Distribution Inc.10
.40

Amendment 7 to Xcelerate Partner
    Agreement, dated March 22, 2005, between the Company and
    Sunbelt Software Distribution Inc.10
.41

Amendment 8 to Xcelerate Partner
    Agreement, dated April 1, 2005, between the Company and
    Sunbelt Software Distribution Inc.10
.42

Amendment 9 to Xcelerate Partner
    Agreement, dated February 15, 2006, between the Company and
    Sunbelt Software Distribution Inc.10
.46*

Amended and Restated
    Employment/Severance Agreement, dated October 31, 2006,
    between Double-Take Software, Inc. and Robert L. Beeler.10
.47*

Amended and Restated
    Employment/Severance Agreement, dated October 31, 2006,
    between Double-Take Software, Inc. and David J. Demlow.10
.48*

Form of Non-Disclosure
    Confidentiality Agreement.21
.01

Subsidiaries of the Company (filed
    herewith).23
.01

Consent of Eisner LLP (filed
    herewith).31
.01

Certification of Chief Executive
    officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934 as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 (filed
    herewith).31
.02

Certification of Chief Financial
    Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934 as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 (filed
    herewith).32
.01

Certification of Chief Executive
    Officer and Chief Financial Officer pursuant to 18 U.S.C.
    Section 1350 as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002 (filed herewith).     Form S-1 No. 333-136499).
  *
    
    Represents a management contract or compensatory plan or
    arrangement.+
    
    Confidential treatment has been granted for certain portions of
    these agreements, and the confidential portions were filed
    separately with the SEC. 85