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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, 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, 2007ORo

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

(I.R.S. EmployerIncorporation or
    organization)

Identification No.)257 Turnpike Road, Suite 210

01772Southborough, Massachusetts

(Zip Code)(Address of principal executive
    offices)   (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
    Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    Company o   Rule 12b-2 o þ
      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;    
    the integration of TimeSpring Software Corporation, now known as
    Double-Take Software Canada, Inc. and TimeData products into our
    business;  
    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; 2




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
    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
    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. We
    plan to offer new software that complements our existing
    software and applications and achieves additional customer
    objectives. 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.
    For example, in December 2007 we acquired Montreal-based
    TimeSpring Software, now known as Double-Take Software Canada,
    Inc. Corporation, which provides software that allows users to
    recover protected data from any point in time. We plan to offer
    this functionality to new and existing customers in 2008.  
    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, now known as Double-Take Software S.A.S.,
    or Double- 3




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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 largest OEM, and we
    plan to continue our increased focus and sales support on
    international sales. In August 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 2007 we introduced new
    software products and features that protect the full system
    state of a server, including operating system and application
    configuration. 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 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
  Double-Take
    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
    operating system and applications that use that data to provide
    services to users can be replicated and activated quickly and
    automatically, even on different hardware or virtual servers.
    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 optimized for 4




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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.   TimeData Software. point-in-time. e-mails
  TimeData
    Features and Benefits
  Feature

Description

Customer BenefitContinuous, Real-time Data Protection

File system changes are captured as they are made on the data
    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.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.Any
    point-in-time
    Recovery

File changes are maintained in time sequence order, and can be
    replayed on the repository server to give the user a view of any
    file at any point-in-time.

Users can rollback to previous versions of files in the event of
    an operational error such as a deleted file, virus, or other
    file system error.Consistency Points

Software detects when protected data is in a good state, and
    allows users to select those points in time when recovering data.

Allows user to easily recover to a point-in-time at which the
    protected data is in a known, good state. 6




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Feature

Description

Customer BenefitApplication Awareness

Setup of protection for key applications such as Exchange and
    SQL are automated for the user.

Eases the process of configuring protection for critical
    application, and minimizes configuration errors.   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.
    Deployment Services.
 7




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Training. on-site
  Our
    Customers
  The American Lawyer
  Our
    Technology
             8




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Marketing
    and Sales
           9




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Competition
      
    technology;
    price;
    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 10




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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).  Continuous
    Data Protection typically refers 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. We plan to begin to
    offer this type of solution in 2008 with the integration of the
    TimeData products into our product line. Examples of companies
    and products in this category include Symantec (Revivio CPS),
    Mendocino Software RecoveryONE, EMC (Kashya KBX5000 Data
    Protection Platform) and Microsoft Data Protection Manager.          Research
    and Development
    Intellectual
    Property
     11




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® ® tm tm tm ® ® tm tm
  Employees
    Executive
    Officers of Double-Take Software
    Name

Age

PositionDean Goodermote


54


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


42


Vice President of EngineeringDavid J. Demlow


40


Chief Technology OfficerS. Craig Huke


46


Chief Financial OfficerDaniel M. Jones


40


Vice President of Sales and MarketingMichael Lesh


63


Vice President of Professional Services and SupportJo Murciano


56


Vice President of International   Dean Goodermote
  Robert L. Beeler
  David J. Demlow
 12




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S. Craig Huke
  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.
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Risks
    Related to Our Business
  Intense
    competition in our industry may hinder our ability to generate
    revenue and may adversely affect our margins.
          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.
     14




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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 for the Microsoft and VMware
    server environments, which expose us to risks if Microsoft or
    VMware products are not compatible with our software or if
    Microsoft, VMware or other open source vendors choose to compete
    more substantially with us 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.
     15




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The
    development and adoption of cloud computing could lead to
    declines in the demand for our software and
    services.
    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.
    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 acquisitions of
    Double-Take EMEA and TimeSpring Software
    Corporation.
  Double-Take
 16




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We may
    not receive significant revenue from our research and
    development efforts for several years, if at all.
    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.      The
    loss of key personnel or the failure to attract and retain
    highly qualified personnel could adversely affect our
    business.
   17




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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.
   18




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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.
   19




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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.   20




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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.
    We
    have only generated net profits one year since our inception and
    we may be unable to sustain profitability in the
    future.
    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 are 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.
   21




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
    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
  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
    pursuant to our currently effective shelf registration statement
    or in the future could cause the market price of our common
    stock to drop significantly, even if our business is doing
    well.
  No. 333-148840)
  Some
    of our stockholders may exert significant influence over
    us.
   22




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We do
    not anticipate paying any dividends on our common
    stock.
    Provisions
    in our organizational documents and in the Delaware General
    Corporation Law may prevent takeover attempts that could be
    beneficial to our stockholders.
    A
    research report published by a firm initially named as an
    underwriter for our secondary offering, but that did not
    ultimately participate as an underwriter, might have been issued
    in violation of the Securities Act.
  Form S-1 No. 333-144746)
      Item 1B.
    Unresolved
    Staff Comments.   23




---



##### 



Item 2.
    Properties.    Item 3.
    Legal
    Proceedings.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.    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, 2007

High


Low1st Quarter (January 1 through March 31)

$
16.22


$
10.742nd Quarter (April 1 through June 30)

$
17.61


$
13.533rd Quarter (July 1 through September 30)

$
19.11


$
15.074th Quarter (October 1 through December 31)

$
25.26


$
17.96Year ended December 31, 20064th Quarter (December 15 through December 31)

$
13.60


$
11.80     Stockholders
    Dividends
    Securities
    Authorized for Issuance under Equity Compensation
    Plans
   24




---



##### 



Performance
    Graph
    
  12/15/2006


12/29/2006


3/31/2007


6/30/2007


9/30/2007


12/31/2007Double-Take Software



100




101.7




106.7




129.6




150.9




171.6NASDAQ Composite Index



100




98.3




107.9




109.9




105.9




98.6NASDAQ Technology Index



100




97.0




97.1




106.9




112.6




119.0   Use of
    Proceeds
  Form S-1 (333-136499)
       25




---



##### 



Issuer
    Purchases of Equity Securities
    Item 6.
    Selected
    Financial Data.    Year Ended December 31,2007


2006


2005


2004


2003Statement of Operations Data:Revenue:Software licenses

$
49,169


$
38,418


$
26,222


$
19,943


$
16,283Maintenance and professional services


33,599



22,422



14,488



9,895



7,650Total revenue


82,768



60,840



40,710



29,838



23,933Cost of revenue:Software licenses


411



1,355



38



559



1,426Maintenance and professional services


7,827



6,193



4,357



3,694



3,103Total cost of revenue


8,238



7,548



4,395



4,253



4,529Gross profit


74,530



53,292



36,315



25,585



19,404Operating expenses:Sales and marketing


28,872



22,211



17,191



16,188



13,654Research and development


11,896



10,679



9,748



8,717



6,373General and administrative


14,863



11,824



6,730



5,666



5,253Depreciation and amortization


2,346



1,613



805



527



1,617Legal fees and settlement costs










5,671



1,755



200Total operating expenses


57,977



46,327



40,145



32,853



27,097Operating income (loss)


16,553



6,965



(3,830
)


(7,268
)


(7,693
)Interest income


3,019



319



83



7



19Interest expense


(49
)


(91
)


(36
)


(765
)


(341
)Foreign exchange (losses) gains


(234
)


56











Income (loss) before income taxes


19,289



7,249



(3,783
)


(8,026
)


(8,015
)Income tax (benefit) expense


(789
)


494











Net income (loss)


20,078



6,755



(3,783
)


(8,026
)


(8,015
)Less:Accretion of preferred stock






(4,496
)


(5,332
)


(5,314
)


(4,928
)Reduction in Series B preferred stock conversion price


















(1,194
)Warrants exchanged for common stock


















Exchange of Series A for Series B preferred stock


















Dividends on preferred stock






(2,830
)


(2,686
)


(2,029
)


(1,637
)Net income (loss) attributable to common stockholders

$
20,078


$
(571
)

$
(11,801
)

$
(15,369
)

$
(15,774
)Net income (loss) per share attributable to common stockholders:Basic

$
0.94


$
(0.13
)

$
(3.11
)

$
(4.06
)

$
(4.16
)Diluted

$
0.87


$
(0.13
)

$
(3.11
)

$
(4.06
)

$
(4.16
)Weighted-average number of shares used in per share amounts:Basic


21,332



4,306



3,789



3,786



3,786Diluted


23,027



4,306



3,789



3,786



3,786  26




---



##### 



December 31,2007


2006


2005


2004


2003Balance Sheet Data:Current assets:Cash and cash equivalents

$
25,748


$
55,170


$
8,341


$
5,831


$
676Short term investments


38,977















Working Capital


56,807



42,674



(2,256
)


497



62Total Assets


114,606



77,026



18,590



13,318



8,772Deferred revenue


24,162



16,744



10,562



7,304



4,144Long-term deferred revenue


4,485



3,977



2,887



1,607



586Long-term deferred rent


272



406



518



610



668Long-term capital lease obligations


13



17



7



38



Redeemable convertible preferred stock










50,561



42,489



27,646Total stockholders equity (deficit)

$
75,544


$
45,230


$
(54,307
)

$
(42,601
)

$
(27,386
)   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 historical financial statements and the
    related notes included elsewhere in this annual report.
  Overview
          Some
    Important Aspects of Our Operations
   27




---



##### 



Revenue
    Software Licenses. EITF 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.   29




---



##### 



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.    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.
 30




---



##### 



Results
    of Operations
    Year Ended December 31,2007


2006


2005(In thousands)Revenue:Software licenses

$
49,169


$
38,418


$
26,222Maintenance and professional services


33,599



22,422



14,488Total revenue


82,768



60,840



40,710Cost of revenue:Software licenses


411



1,355



38Maintenance and professional services


7,827



6,193



4,357Total cost of revenue


8,238



7,548



4,395Gross profit


74,530



53,292



36,315Operating expenses:Sales and marketing


28,872



22,211



17,191Research and development


11,896



10,679



9,748General and administrative


14,863



11,824



6,730Depreciation and amortization


2,346



1,613



805Legal fees and settlement costs










5,671Total operating expenses


57,977



46,327



40,145Income (loss) from operations


16,553



6,965



(3,830
)Interest income


3,019



319



83Interest expense


(49
)


(91
)


(36
)Foreign exchange (losses) gains


(234
)


56



Income (loss) before income taxes


19,289



7,249



(3,783
)Income tax (benefit) expense


(789
)


494



Net income (loss)


20,078



6,755



(3,783
)Accretion on redeemable shares:Series B






(4,477
)


(5,310
)Series C






(19
)


(22
)Dividends on Series B






(2,140
)


(2,035
)Dividends on Series C






(690
)


(651
)Net income (loss) attributable to common stockholders

$
20,078


$
(571
)

$
(11,801
)   31




---



##### 



Year Ended December 31,2007


2006


2005Revenue:Software licenses


59
%


63
%


64
%Maintenance and professional services


41
%


37
%


36
%Total revenue


100
%


100
%


100
%Cost of revenue:Software licenses






2
%


Maintenance and professional services


10
%


10
%


11
%Total cost of revenue


10
%


12
%


11
%Gross profit


90
%


88
%


89
%Operating expenses:Sales and marketing


35
%


37
%


42
%Research and development


14
%


18
%


24
%General and administrative


18
%


19
%


17
%Depreciation and amortization


3
%


3
%


2
%Legal fees and settlement costs










14
%Total operating expenses


70
%


77
%


99
%Income (loss) from operations


20
%


11
%


(9
)%Interest income


3
%






Interest expense










Foreign exchange (losses) gains










Income (loss) before income taxes


23
%


11
%


(9
)%Income tax (benefit) expense


(1
)%


1
%


Net income (loss)


24
%


10
%


(9
)%Accretion on redeemable shares:Series B






(7
)%


(13
)%Series C










Dividends on Series B






(3
)%


(5
)%Dividends on Series C






(1
)%


(2
)%Net income (loss) attributable to common stockholders


24
%


(1
)%


(29
)%   2007
    Compared to 2006
  Revenue
    Software License Revenue.
 32




---



##### 



Maintenance and Professional Services
    Revenue.
  Cost of
    Revenue and Gross Profit
          Operating
    Expenses
  Sales and Marketing.
  Research and Development.
  General and Administrative.
 33




---



##### 



Depreciation and Amortization.
  Interest
    Income
    Foreign
    Exchange gains (losses)
    Income
    Tax Expense (benefit)
      Net
    Income
   34




---



##### 



Preferred
    Stock
      2006
    Compared to 2005
  Revenue
    Software License Revenue.
  Maintenance and Professional Services
    Revenue.
  Cost of
    Revenue and Gross Profit
         35




---



##### 



Operating
    Expenses
  Sales and Marketing.
  Research and Development.
  General and Administrative.
  Depreciation and Amortization.
  Legal Fees and Settlement Costs.
  Interest
    Income
    Foreign
    Exchange gains (losses)
    Income
    Tax Expense
  e
  Net
    Income (Loss)
   36




---



##### 



Preferred
    Stock
        Critical
    Accounting Policies
    Revenue
    Recognition
  EITF 01-9, 97-2, Software Revenue Recognition SOP 98-4 SOP 98-9,
  SOP 98-9.
    when-and-if-available
 37




---



##### 



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
    Stock-Based
    Compensation
  Accounting Principles Board Opinion No. 25, Accounting
    for Stock Issued to Employees
 38




---



##### 



Statement of Accounting Standards No. 123,
    Accounting for Stock-Based Compensation Accounting
    Standards No. 148, Accounting for Stock-Based
    Compensation  Transition and Disclosure
  Statement of Financial Accounting Standards
    No. 123(R), Share-Based Payment
      
    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  
    the likelihood of achieving a liquidity event for the shares of
    common stock underlying the stock options granted in 2005.   39




---



##### 



40




---



##### 



EITF Issue
    No. 96-18,
    Accounting for Equity Instruments That Are Issued to Other Than
    Employees for Acquiring, or in Conjunction with Selling, Goods
    or Services
  Income
    Taxes
         41




---



##### 



non-U.S. income
  Statement of Financial Accounting Standards No. 154,
    Accounting Changes and Error Corrections
  Software
    Development Costs
  Accounting for the Costs of Computer Software to be Sold,
    Leased or Otherwise Marketed
  Liquidity
    and Capital Resources
  Overview
           42




---



##### 



Sources
    and Uses of Cash
      Year Ended December 31,2007


2006


2005(In thousands)Cash flow data:Net cash provided by operating activities

$
20,513


$
13,651


$
3,605Cash used by investing activities


(57,306
)


(4,123
)


(1,096
)Net cash provided by financing activities


7,593



37,193



1Effect of exchange rate changes on cash and cash equivalents


(222
)


108



Net increase (decrease) in cash and equivalents


(29,422
)


46,829



2,510Cash and cash equivalents, beginning of period


55,170



8,341



5,831Cash and equivalents, end of period

$
25,748


$
55,170


$
8,341   Cash
    Flows from Operating Activities
   43




---



##### 



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, 2007Capital (finance) lease obligations

$
85


$
51


$
34


$



$
Operating lease obligations


6,085



1,995



3,361



729



Purchase obligations


1,000



500



500







Total

$
7,170


$
2,546


$
3,895


$
729


$
    44




---



##### 



Off-Balance
    Sheet Arrangements
   45




---



##### 



Quarterly
    Results of Operations
    For the Three Months Ended2007


2006Dec. 31


Sep. 30


Jun. 30


Mar. 31


Dec. 31


Sep. 30


Jun. 30


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

$
14,176


$
12,612


$
11,991


$
10,390


$
12,178


$
10,231


$
9,637


$
6,372Maintenance and Professional Services


9,348



8,695



8,021



7,535



6,875



6,185



5,055



4,307Total revenue


23,524



21,307



20,012



17,925



19,053



16,416



14,692



10,679Cost of revenue:Cost of product


195



71



118



27



26



514



811



4Maintenance and Professional Services


2,035



1,927



2,008



1,857



1,767



1,703



1,462



1,261Total cost of revenue


2,230



1,998



2,126



1,884



1,793



2,217



2,273



1,265Gross profit


21,294



19,309



17,886



16,041



17,260



14,199



12,419



9,414Operating expensesSales and Marketing


8,189



6,935



6,845



6,903



6,620



5,641



5,620



4,330Research and Development


3,140



3,042



2,839



2,875



2,930



2,753



2,532



2,464General and Administrative


3,856



4,100



3,690



3,217



5,453



2,577



1,767



2,027Depreciation and Amortization


639



603



555



549



519



492



351



251Total Operating Expenses


15,824



14,680



13,929



13,544



15,522



11,463



10,270



9,072Operating Income


5,470



4,629



3,957



2,497



1,738



2,736



2,149



342Interest Income


806



798



772



643



106



92



70



51Interest Expense


(10
)


(9
)


(11
)


(19
)


(22
)


(26
)


(26
)


(17
)Foreign exchange (losses) gains


(184
)


(55
)


6



(1
)


(23
)


24



55Income (loss) before income taxes


6,082



5,363



4,724



3,120



1,799



2,826



2,248



376Income Tax (benefit) expense


(258
)


2,055



(2,768
)


182



91



317



83



3Net income


6,340



3,308



7,492



2,938



1,708



2,509



2,165



373Accretion on redeemable shares


















(496
)


(1,334
)


(1,332
)


(1,334
)Dividends


















(667
)


(743
)


(722
)


(698
)Net gain (loss) attributable to common stockholders

$
6,340


$
3,308


$
7,492


$
2,938


$
545


$
432


$
111


$
(1,659
)Net income (loss) per share, basic

$
0.29


$
0.15


$
0.36


$
0.14


$
0.09


$
0.11


$
0.03


$
(0.44
)Net income (loss) per share, diluted

$
0.27


$
0.14


$
0.33


$
0.13


$
0.07


$
0.07


$
0.02


$
(0.44
)Stock-based compensation expense included in above

$
726


$
1,140


$
483


$
272


$
1,030


$
487


$
253


$
446    46




---



##### 



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.     47




---



##### 



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


49Consolidated Balance Sheets as of December 31, 2007 and 2006


50Consolidated Statements of Operations for the years ended
    December 31, 2007, 2006 and 2005


51Consolidated Statement of Changes in Stockholders Equity
    (Deficit) for the years ended December 31, 2007, 2006 and
    2005


52Consolidated Statements of Cash Flows for the years ended
    December 31, 2007, 2006 and 2005


53Notes to Consolidated Financial Statements


54Schedule II  Valuation and Qualifying Accounts


84  48




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholders

Double-Take Software, Inc.



We have audited the accompanying consolidated balance sheets of
    Double-Take Software, Inc. and subsidiaries (the
    Company) as of December 31, 2007 and 2006, and
    the related consolidated statements of operations, changes in
    stockholders equity (deficit), cash flows and
    schedule II for each of the years in the three-year period
    ended December 31, 2007. These financial statements and
    schedule are the responsibility of the Companys
    management. Our responsibility is to express an opinion on these
    financial statements and schedule based on our audits.



We conducted our audits in accordance with the standards of the
    Public Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audit to obtain
    reasonable assurance about whether the financial statements and
    schedule II are free of material misstatement. An audit
    includes examining, on a test basis, evidence supporting the
    amounts and disclosures in the financial statements. An audit
    also includes assessing the accounting principles used and
    significant estimates made by management, as well as evaluating
    the overall financial statement presentation. We believe that
    our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements enumerated referred to
    above present fairly, in all material respects, the consolidated
    financial position of Double-Take Software, Inc. and
    subsidiaries as of December 31, 2007 and 2006, and the
    consolidated results of their operations and their consolidated
    cash flows for each of the years in the three-year period ended
    December 31, 2007 in conformity with U.S. generally
    accepted accounting principles. Also, in our opinion,
    schedule II referred to above, when considered in relation
    to the financial statements taken as a whole, presents fairly,
    in all material respects, the information stated therein.



As discussed in Notes F and J[4] to the consolidated
    financial statements, the Company adopted the provisions of
    Financial Accounting Standard Board Interpretation No. 48,
    Accounting for Uncertainty in Income Taxes, an
    Interpretation of FASB Statement No. 109, effective
    January 1, 2007 and changed its method of accounting for
    stock based compensation in accordance with Statement of
    Financial Accounting Standards No. 123 (R)
    Share-Based Payment, effective January 1, 2006.



We also have audited, in accordance with the standards of the
    Public Company Accounting Oversight Board (United States),
    Double-Take Software, Inc.s internal control over
    financial reporting as of December 31, 2007, based on
    criterias established in Internal Control 
    Integrated Framework issued by the Committee of Sponsoring
    Organizations of the Treadway Commission (COSO), and our report
    dated March 14, 2008 expressed an unqualified opinion thereon.



/s/  Eisner
    LLP



New York, New York

March 14, 2008

49




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.



Consolidated
    Balance Sheets  December 31,2007


2006(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
25,748


$
55,170Short term investments


38,977



Accounts receivable, net of allowance for doubtful accounts of
    $599 and $570 at December 31, 2007 and 2006, respectively


18,171



12,676Inventory






14Prepaid expenses and other current assets


5,019



2,210Deferred tax assets


3,184



Total current assets


91,099



70,070Property and equipment  at cost, net of accumulated
    depreciation of $4,505 and $2,838 at December 31, 2007 and
    2006, respectively


4,184



3,000Customer relationships, net of accumulated amortization of $727
    and $274 at December 31, 2007 and 2006, respectively


1,540



1,993Marketing relationships, net of accumulated amortization of $399
    and $150 at December 31, 2007 and 2006, respectively


1,593



1,842Technology related intangibles, net of accumulated amortization
    of $8 and $0 at December 31, 2007 and 2006, respectively


1,928



Goodwill


11,408



Other assets


149



121Long-term deferred tax assets


2,705



Total assets

$
114,606


$
77,026LIABILITIESCurrent liabilities:Accounts payable

$
1,983


$
2,217Accrued expenses


7,396



6,845Accrued purchase price






1,425Other liabilities


751



135Deferred revenue


24,162



16,774Total current liabilities


34,292



27,396Long-term deferred revenue


4,485



3,977Long-term deferred rent


272



406Long-term capital lease obligations


13



17Total long-term liabilities


4,770



4,400Total liabilities


39,062



31,796Stockholders equityCommon stock, $.001 par value per share;
    130,000,000 shares authorized; 21,928,664 and
    20,726,589 shares issued and outstanding at
    December 31, 2007 and 2006, respectively


22



21Additional paid-in capital


148,628



138,398Accumulated deficit


(73,239
)


(93,317
)Accumulated other comprehensive incomeUnrealized gain on short term investments


14



Cumulative foreign currency translation adjustment


119



128Total stockholders equity (deficit)


75,544



45,230Total liabilities and stockholders equity (deficit)

$
114,606


$
77,026    50




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.



Consolidated
    Statements of Operations  Year Ended December 31,2007


2006


2005(In thousands, except share andper share amounts)Revenue:Software licenses

$
49,169


$
38,418


$
26,222Maintenance and professional services


33,599



22,422



14,488Total revenue


82,768



60,840



40,710Cost of revenue:Software licenses


411



1,355



38Maintenance and professional services


7,827



6,193



4,357Total cost of revenue


8,238



7,548



4,395Gross profit


74,530



53,292



36,315Operating expenses:Sales and marketing


28,872



22,211



17,191Research and development


11,896



10,679



9,748General and administrative


14,863



11,824



6,730Depreciation and amortization


2,346



1,613



805Legal fees and settlement costs










5,671Total operating expenses


57,977



46,327



40,145Operating income (loss)


16,553



6,965



(3,830
)Interest income


3,019



319



83Interest expense


(49
)


(91
)


(36
)Foreign exchange (loss) gains


(234
)


56



Income (loss) before income taxes


19,289



7,249



(3,783
)Income tax (benefit) expense


(789
)


494



Net income (loss)


20,078



6,755



(3,783
)Accretion on redeemable shares:Series B






(4,477
)


(5,310
)Series C






(19
)


(22
)Dividends on Series B






(2,140
)


(2,035
)Dividends on Series C






(690
)


(651
)Net income (loss) attributable to common stockholders

$
20,078


$
(571
)

$
(11,801
)Net income (loss) per share attributable to common stockholders:Basic

$
0.94


$
(0.13
)

$
(3.11
)Diluted

$
0.87


$
(0.13
)

$
(3.11
)Weighted-average number of shares used in per share amounts:Basic


21,332,128



4,305,789



3,788,733Diluted


23,026,937



4,305,789



3,788,733    51




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.



Consolidated
    Statements of Changes in Stockholders Equity
    (Deficit)  AccumulatedAdditional








OtherCommon Stock


Paid-in


Accumulated


Comprehensive


ComprehensiveShares


Amount


Capital


Deficit


Income


Income


Total(In thousands, except share and per share amounts)Balance  January 1, 2005


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


$
45,230Net income for the year














20,078



20,078







20,078Foreign currency translation adjustment


















(9
)


(9
)


(9
)Unrealized gain on short term investments


















14



14



14Total comprehensive income

















$
20,083Options issued for services










2,621















2,621Exercise of stock options


1,018,407



1



1,588















1,589Exercise of warrants


67,918























Excess tax benefits on stock based compensation










4,895















4,895Proceeds from public offering, net of expenses


115,750







1,126















1,126Balance  December 31, 2007


21,928,664


$
22


$
148,628


$
(73,239
)





$
133


$
75,544    52




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.



Consolidated
    Statements of Cash Flows  Year Ended December 31,2007


2006


2005(In thousands, except share and per share amounts)Cash flows from operating activities:Net income (loss)

$
20,078


$
6,755


$
(3,783
)Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation


1,636



1,189



805Amortization of intangible assets


710



424



Provision for doubtful accounts


19



200



100Issuance of options for services


2,621



2,215



119Issuance of common stock to CEO






3,241



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






103



54Deferred income tax benefit


(5,889
)






Changes in:Accounts receivable


(4,840
)


(1,939
)


(2,590
)Prepaid expenses and other assets


(1,128
)


(1,684
)


4Inventory


14



328



Other assets


(20
)


(2
)


15Accounts payable and accrued expenses


(349
)


(2,159
)


4,343Other liabilities


582



(887
)


Deferred revenue


7,079



5,867



4,538Net cash provided by operating activities


20,513



13,651



3,605Cash flows from investing activities:Purchase of property and equipment


(2,340
)


(2,050
)


(1,096
)Purchase of short term investments


(65,179
)






Sales of short term investments


26,445







Acquisitions, net of cash acquired


(16,232
)


(2,073
)


Net cash used in investing activities


(57,306
)


(4,123
)


(1,096
)Cash flows from financing activities:Return of Capital  Series B






(10,225
)


Proceeds from public offering, net of expenses


1,126



48,319



Repurchase of common stock from CEO






(1,343
)


Proceeds from exercise of stock options


1,589



453



1Excess tax benefits from stock based compensation


4,895







Payment on capital lease obligation


(17
)


(11
)


Net cash provided by financing activities


7,593



37,193



1Effect of exchange rate changes on cash


(222
)


108



Net increase (decrease) in cash and cash equivalents


(29,200
)


46,721



2,510Cash and cash equivalents  beginning of year


55,170



8,341



5,831Cash and cash equivalents  end of year

$
25,748


$
55,170


$
8,341Supplemental disclosures of cash flow information:Cash paid during the period for:Interest

$



$
78


$
51Income taxes

$
1,852


$
1,066


$
3Supplemental disclosures of noncash investing and financing
    activities:Issuance of common stock upon cashless exercise of warrants

$
201


$



$
Accrued costs for public offering

$



$
770



Receivable from employees in connection with exercise of stock
    options

$



$
74



    53




---



##### 



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.  
    On January 3, 2007, the underwriters of the Companys
    initial public offering exercised their over-allotment option to
    purchase an additional 1,125,000 shares of common stock of
    the Company from certain existing stockholders. The Company did
    not receive any proceeds from the sale of the shares of the
    selling stockholders.      
    There were 2.8 million shares of common stock sold at
    $16.00 per share to the public, comprising 100,000 shares
    of common stock sold by the Company and 2.7 million shares
    of common stock sold by existing stockholders. The Company did
    not receive any proceeds from shares of common stock sold by the
    selling stockholders. The Company received gross proceeds of
    $1,600, or $1,002 after deducting underwriting discounts and
    commissions of $88 and offering costs of $510. The Company paid
    the offering costs of the selling stockholders.
    On August 13, 2007, the underwriters of the Companys
    secondary offering exercised their over-allotment option to
    purchase an additional 15,750 shares from the Company and
    402,750 shares from one of the selling stockholders. The
    Company did not receive any proceeds from the sale of shares by
    the selling stockholder. The Company received gross proceeds of
    $252, or $238 after underwriting commissions of $14.  Principles
    of Consolidation
   54




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
    [2]  Acquisition
    of TimeSpring Software Corporation:
        Cash purchase price

$
8,339Working capital adjustments


818Transaction costs


620Total initial purchase price

$
9,777     LifeBank overdraft

$
(149
)Accounts receivable


60Prepaid expenses and other current assets


1,215Account payable


(25
)Accrued expenses


(113
)Other liabilities


(92
)Deferred revenue


(36
)Properties and equipment


453



3-5 yearsTechnology related intangible


1,936



5 yearsGoodwill


6,528Net assets acquired

$
9,777  55




---



##### 



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


2006Total Revenue

$
83,142


$
61,373Net income (loss) attributable to common stockholders

$
15,461


$
(5,841
)Basic income (loss) per share

$
0.72


$
(1.36
)Diluted income (loss) per share

$
0.67


$
(1.36
)Weighted average shares outstanding  basic


21,332



4,306Weighted average shares outstanding  diluted


23,027



4,306   [3]  Acquisition
    of Double-Take EMEA:
  earn-out
      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   Business Combinations
 56




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
      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.    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  57




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
  [4]  Cash
    and cash equivalents:
    [5]  Short
    term investments
    [6]  Accounts
    receivable and allowance for doubtful accounts:
    [7]  Fair
    value of financial instruments:
    [8]  Revenue
    recognition:
  EITF 01-9, 97-2, Software Revenue Recognition SOP 98-4 SOP 98-9,
  SOP 98-9.
   58




---



##### 



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
 59




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
    [9]  Cost
    of revenue:
  Cost of software revenue.
  Cost of services revenue.
  [10]  Property,
    plant and equipment:
    [11]  Software
    development costs:
  Accounting for the Costs of Computer Software to be Sold,
    Leased or Otherwise Marketed
  [12]  Goodwill:
  Goodwill and
    Other Intangible Assets
  [13]  Intangible
    assets:
    [14]  Impairment
    of long-lived assets:
  Accounting for the Impairment or Disposal of
    Long-Lived Assets
 60




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
  [15]  Advertising
    expense:
    [16]  Income
    taxes:
  Accounting for Income Taxes
  [17]  Sales
    tax:
    [18]  Accounting
    estimates:
    [19]  Concentration
    of credit risk:
    [20]  Foreign
    Currency Translation
  Foreign Currency Translation
  [21]  Comprehensive
    Income (Loss)
   61




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
  [22]  Stock-based
    compensation:
  Accounting for Stock Issued to Employees Accounting for Stock-Based
    Compensation Accounting for
    Stock-Based Compensation  Transition and Disclosure
  Share-Based Payment Accounting
    for Stock Issued to Employees
      No. 96-18, Accounting for Equity Instruments That Are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling,
    Goods or Services
  [23]  Net
    income (loss) per share:
  Earnings Per
    Share
 62




---



##### 



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


2006


2005Stock options


727



2,929



2,562Warrants






82



163Redeemable convertible preferred stock










10,668   [24]  Recent
    accounting pronouncements:
  Fair Value
    Measurements
  Employers Accounting
    for Defined Benefit Pension and Other Postretirement Plans
  The Fair Value Option for
    Financial Assets and Financial Liabilities
  Accounting for Uncertainty in Income Taxes
  FSP 115-1
 63




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
  Accounting for Certain Investments in
    Debt and Equity Securities The Equity Method of Accounting for Investments in Common
    Stock FSP 115-1
  No. 06-3, Disclosure Requirements for Taxes Assessed by a Government
    Authority on Revenue-Producing Transactions No. 06-3). EITF 06-3 EITF 06-3
  Accounting for Certain
    Hybrid Financial Instruments Accounting for Derivative Instruments
    and Hedging Activities Application of Statement
    133 to Beneficial Interests in Securitized Financial Assets
  Business Combinations
  Noncontrolling Interests
    in Consolidated Financial Statements-an amendment of ARB
    No. 51
 64




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
  Note B 
    Revolving
    Line of Credit  12-month 12-month
          Note C 
    Investments     65




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
  Note D 
    Property
    and Equipment    December 31,2007


2006Equipment

$
183


$
95Furniture and fixtures


637



460Motor Vehicles


114



104Computer hardware


7,060



4,561Leasehold improvements


695



6188,689



5,838Less accumulated depreciation and amortization


4,505



2,838$
4,184


$
3,000       Note E 
    INTANGIBLE
    ASSETS      December 31,2007


2006Customer relationships

$
2,267


$
2,267Less accumulated amortization


(727
)


(274
)$
1,540


$
1,993   December 31,2007


2006Marketing relationships

$
1,992


$
1,992Less accumulated amortization


(399
)


(150
)$
1,593


$
1,842   December 31,2007


2006Technology related intangibles

$
1,936


$
Less accumulated amortization


(8
)


$
1,928


$
  66




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
    Year Ending December 31,2008

$
1,0902009

$
1,0902010

$
1,0902011

$
8152012

$
628Thereafter

$
348Total

$
5,061   Note F 
    Provision
    for Income Taxes    Year Ended December 31,2007


2006


2005Domestic


15,979



5,755



(3,783
)Foreign


3,310



1,494



Total


19,289



7,249



(3,783
)     2007


2006


2005CurrentFederal


2,986







State and Local


1,093







Foreign


1,021



494



DeferredFederal


(4,959
)






State and Local


(930
)






Foreign










Total


(789
)


494



     Year Ended December 31,2007


2006


2005Statutory federal income tax expense (benefit) rate


34
%


34
%


(34
)%Increase (decrease) in valuation allowance


(46
)%


(47
)%


33
%State taxes (benefit)


5
%


6
%


(4
)%Impact of permanent difference


3
%


9
%


3
%Foreign taxes


0
%


7
%


0
%Other


0
%


(2
)%


2
%Effective income tax expense (benefit) rate


(4
)%


7
%


0
%  67




---



##### 



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


2006Deferred tax assets:Current:Allowance for doubtful accounts

$
185


$
184Deferred revenue


816



1,127Prepaid expenses


(495
)


(374
)Net operating loss carryforword


2,678



Total current deferred tax assets


3,184



937Non-current:Fixed assets


163



513Straight-line rent


159



200Net operating loss carryforward


28,630



23,284Sales tax reserve


39



97Other


313



4Total non-current deferred tax assets


29,304



24,098Total deferred tax assets


32,488



25,035Deferred liabilities:Intangible


(569
)


Total deferred liability


(569
)


Valuation allowance


(26,030
)


(25,035
)Net deferred tax assets

$
5,889


$
    68




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
        non-U.S. income
      Note G 
    Commitments
    and Contingencies  [1]  Leases:
    Year Ending December 31,2008





$
1,9952009





$
1,6922010





$
1,2112011





$
4582012





$
458Thereafter





$
271$
6,085    69




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
    [2]  Litigation:
        Note H 
    Concentration      Note I 
    Employment
    Agreements  4-year
   70




---



##### 



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

Exercise


December 31, 2007


December 31, 2006Options Granted

Price


Vested


Outstanding


Vested


Outstanding


Expiring102,040

$
19.60



102,040



102,040



102,040



102,040



200810,209

$
4.90



10,209







10,209







2008366,181

$
0.94



366,181







366,181



366,181



20086,125

$
0.94



6,125



6,125



6,125



6,125



20086,637

$
1.52



6,637



6,637



6,637



6,637



2008491,192






491,192



114,802



491,192



480,983          71




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
  12-month
  12-month
  Note J 
    Stockholders Equity  [1]
    Redeemable preferred stock:
  (a)
    Series A
    preferred stock:    (b)
    Series B
    preferred stock:       72




---



##### 



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.   73




---



##### 



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).   74




---



##### 



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.  
    On January 3, 2007, the underwriters of the Companys
    initial public offering exercised their over-allotment option to
    purchase an additional 1,125,000 shares of common stock of
    the Company from certain existing stockholders. The Company did
    not receive any proceeds from the sale of the shares of the
    selling stockholders.      
    There were 2.8 million shares of common stock sold at
    $16.00 per share to the public, comprising 100,000 shares
    of common stock sold by the Company and 2.7 million shares
    of common stock sold by existing stockholders. The Company did
    not receive any proceeds from shares of common stock sold by the
    selling stockholders. The Company received gross proceeds of
    $1,600, or $1,002 after deducting underwriting discounts and
    commissions of $88 and offering costs of $510. The Company paid
    the offering costs of the selling stockholders.
    On August 13, 2007, the underwriters of the Companys
    secondary offering exercised their over-allotment option to
    purchase an additional 15,750 shares from the Company and
    402,750 shares from one of the selling stockholders. The
    Company did not receive any proceeds from the sale of shares by
    the selling stockholder. The Company received gross proceeds of
    $252, or $238 after underwriting commissions of $14.    [3]  Warrants:
  (a)
    Common
    stock:     75




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
  (b)
    Preferred
    stock:    [4]  Stock
    option plans:
               76




---



##### 



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


2006


2005Weighted





Weighted





WeightedAverage





Average





AverageExercise





Exercise





ExerciseShares


Price


Shares


Price


Shares


PriceOutstanding at beginning of year


2,929,081


$
3.12



2,561,309


$
3.79



2,508,347


$
5.77Options granted


612,603


$
17.66



638,637


$
4.55



832,011


$
1.52Options cancelled


(99,782
)

$
10.31



(112,667
)

$
26.32



(777,565
)

$
7.76Options exercised(1)


(1,018,407
)

$
1.55



(158,198
)

$
0.98



(1,484
)

$
0.94Outstanding at end of year


2,423,495


$
7.15



2,929,081


$
3.12



2,561,309


$
3.78Options exercisable at year end


1,566,352


$
4.43



2,048,651


$
3.05



1,211,057


$
6.60Options not vested at year end(2)


857,143


$
12.13



880,430


$
3.26     (1)
    
    Intrinsic value of $16,147, $1,398 and $1 in 2007, 2006 and
    2005, respectively. Cash received of $1,589, $453 and $1 in
    2007, 2006 and 2005, respectively.(2)
    
    481,460 options are expected to vest in 2008.    Year EndedDecember 31, 2007WeightedAverageGrant DateShares


Fair ValueNonvested options at beginning of year


880,430


$
5.21Options granted


612,603


$
13.19Options vested


(567,266
)

$
4.77Options cancelled


(68,624
)

$
8.97Nonvested options at end of year


857,143


$
12.13    77




---



##### 



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


Number


Remaining Contractualof Shares


of Shares


Life of Shares ExercisableExercise Price

Outstanding


Exercisable


(in years)$0.94


415,354



412,382



5.39$1.52


724,942



620,706



7.13$1.96


337,692



186,688



5.24$7.06


166,760



101,963



5.71$11.00


28,995



23,202



5.96$14.90


22,706



4,679



6.13$16.77


399,190



65,977



6.34$17.20


16,400



249



6.58$17.42


37,500







6.36$19.60


142,856



142,856



2.26$21.27


100,750







6.99$21.58


22,700







6.84$37.29


7,650



7,650



2.522,423,495



1,566,352   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      78




---



##### 



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


December 31,2007


2006Shares reserved for:The Directors Plan


25,510



61,2241996 Option Plan


150,506



219,4552003 Option Plan


1,472,350



3,258,7082006 Option Plan


2,631,767



2,653,061Common stock warrants






35,714Series B warrants






45,9184,280,133



6,274,080   Disclosure about
    Fair Value of Financial Instruments
  Year Ended December 31,2007

2006

2005Expected Term

7 years

7 years

10 yearsVolatility

77.46%  80.0%

80.00%

0.01%Risk free rate

4.12%-4.82%

4.36%  5.12%

3.63%  4.53%Dividend Yield





  79




---



##### 



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      80




---



##### 



DOUBLE-TAKE
    SOFTWARE, INC.
  Notes to
    Consolidated Financial Statements 
    (Continued)
               81




---



##### 



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


Year Ended


Year EndedDecember 31,


December 31,


December 31,2007


2006


2005Cost of revenue, maintenance and professional services


190



118



Sales and marketing


451



242



Research and development


280



266



General and administrative

$
1,700


$
1,589


$
119$
2,621


$
2,215


$
119   [5]  Stock
    purchase plan/executive bonus plans:
        Note
    k  Profit Sharing Plan
      Note
    l  Segment Information
      Year Ended December 31,2007


2006


2005Revenue:North America

$
53,673


$
43,089


$
31,291Europe, Middle East & Africa


26,690



15,815



7,168Asia-Pacific


2,405



1,936



2,251$
82,768


$
60,840


$
40,710   82




---



##### 



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


2006Long-lived assets:North America

$
3,921


$
2,733Europe, Middle East & Africa


263



267Asia-Pacific






$
4,184


$
3,000Intangible assets:North America

$
1,928


$
Europe, Middle East & Africa


3,133



3,835Asia-Pacific






$
5,061


$
3,000   Note m  Related Party Transactions
    December 31,2007


2006Trade Receivable

$
2,901


$
931Trade Payable

$
47


$
20   May 24,2006Year Ended


toDecember 31,


December 31,2007


2006Sales to Sunbelt Distribution

$
10,865


$
4,537Purchases from Sunbelt Distribution

$
233


$
265   Note
    n  Subsequent events
  Form S-3 Form S-3
 83




---



##### 



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, 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
)





$
25,035Year ended December 31, 2007:Allowance for doubtful accounts

$
570


$
43



14


$
599Valuation allowance on deferred tax assets

$
25,035


$
9,955(3
)

$
8,960


$
26,030     (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.  (3)
    
    Includes a valuation allowance of $6,425 representing 100% of
    the deferred tax asset of Double-Take Software Canada, Inc.
    acquired in December 2007. 84




---



##### 



Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Disclosure
    Controls and Procedures
      Changes
    in Internal Controls and Procedures
    Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Rule 13a-15(f)
         85




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
             86




---



##### 



Item 9B.
    Other
    Information.   87




---



##### 



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
    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 ofNumber of





SecuritiesSecurities to be





Remaining AvailableIssued Upon


Weighted-Average


for Future IssuanceExercise of


Exercise Price of


Under EquityOutstanding


Outstanding


Compensation PlansOptions, Warrants


Options, Warrants


(Excluding SecuritiesPlan Category

and Rights


and Rights


Reflected in Column (a)(a)


(b)


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


2,423,495


$
7.15



1,835,344Equity compensation plans not approved by security holders


0


$
0.00



0total


2,423,495


$
7.15



1,835,344     (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. 88




---



##### 



Security
    Ownership of Certain Beneficial Owners and Management
    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.    Item 14.
    Principal
    Accountant Fees and Services.    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.    (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.     89




---



##### 



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
    S. Goodermote

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

March 17, 2008/s/  S.
    Craig HukeS.
    Craig Huke

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

March 17, 2008/s/  Paul
    BirchPaul
    Birch

Director

March 17, 2008/s/  Ashoke
    (Bobby) GoswamiAshoke
    (Bobby) Goswami

Director

March 17, 2008/s/  John
    B. LandryJohn
    B. Landry

Director

March 17, 2008/s/  Laura
    L. WittLaura
    L. Witt

Director

March 17, 2008/s/  John
    W. YoungJohn
    W. Young

Director

March 17, 2008  90




---



##### 



INDEX TO
    EXHIBITS
  Exhibit No.

Exhibit Description2
.01(1)

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.2
.02(7)

Share Purchase Agreement among Double-Take Software Canada, Inc.
    a Canadian Corporation, Double-Take Software, Inc., a Delaware
    Corporation, TimeSpring Software Corporation, a Canadian
    Corporation, and the Shareholders of TimeSpring Software
    Corporation for the sale of all of the issued and outstanding
    shares of TimeSpring Software Corporation as of
    December 24, 2007.3
.01(1)

Second Amended and Restated Certificate of Incorporation of the
    Company.3
.02(1)

Second Amended and Restated Bylaws of the Company.4
.01(1)

Form of certificate representing the Common Stock, par value
    $.001 per share, of the Company.10
.01*(1)

1996 Employees Stock Option Plan.10
.02*(1)

Form of Incentive Stock Award pursuant to the 1996 Employees
    Stock Option Plan.10
.03*(1)

Non-Executive Director Stock Option Plan.10
.04*(1)

Form of Non-Qualified Incentive Stock Option Award pursuant to
    the Non-Executive Director Stock Option Plan.10
.05*(1)

2003 Employees Stock Option Plan.10
.06*(1)

Form of Incentive Stock Award pursuant to the 2003 Employees
    Stock Option Plan.10
.07*(1)

Double-Take Software 2006 Omnibus Incentive Plan.10
.08A*(1)

Form of Incentive Stock Option Agreement pursuant to the
    Double-Take Software 2006 Omnibus Incentive Plan.10
.08B*(1)

Form of Nonqualified Stock Option Agreement pursuant to the
    Double-Take Software 2006 Omnibus Incentive Plan.10
.08C*(1)

Form of Director Nonqualified Stock Option Agreement pursuant to
    the Double-Take Software 2006 Omnibus Incentive Plan.10
.09*(1)

Form of Double-Take Software, Inc. Indemnification Agreement.10
.10*(1)

NSI Executive Compensation Plan 2006.10
.11(1)

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(1)

Amendment and Joinder to the Registration Rights Agreement dated
    as of July 31, 2006.10
.13(1)

Lease Agreement, dated June 12, 2000, between
    E-L Allison
    Pointe II, LLP and the Company.10
.14(1)

First Amendment to the Lease Agreement, dated June 15,
    2000, by and between
    E-L Allison
    Pointe II, LLP and the Company.10
.15(1)

Loan and Security Agreement dated as of October 16, 2003,
    among the Company and Silicon Valley Bank.10
.16(1)

Loan Modification Agreement, dated as of April 26, 2004, by
    and between Silicon Valley Bank and the Company.10
.17(1)

Third Loan Modification Agreement, by and between Silicon Valley
    Bank and the Company.10
.18(1)

Fifth Loan Modification Agreement, by and between Silicon Valley
    Bank and the Company.10
.19(1)

Seventh Loan Modification Agreement, by and between Silicon
    Valley Bank and the Company.10
.20(1)

Eighth Loan Modification Agreement, between Silicon Valley Bank
    and the Company.10
.21(1)

Ninth Loan Modification Agreement, between Silicon Valley Bank
    and the Company.10
.22*(1)

Employment Letter, dated August 7, 2006, between
    Double-Take Software, Inc. and Dean Goodermote.10
.23*(1)

Employment Letter, dated October 31, 2006, between
    Double-Take Software, Inc. and S. Craig Huke.10
.24*(1)

Employment Letter, dated October 31, 2006, between
    Double-Take Software, Inc. and Daniel M. Jones. 91




---



##### 



Exhibit No.

Exhibit Description10
.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(1)

Amendment 3 to Products License and Distribution Agreement,
    dated as of December 2, 2003, between the Company and Dell
    Computer Corporation.10
.27+(1)

Amendment 4 to Products License and Distribution Agreement,
    effective as of July 25, 2003, between the Company and Dell
    Computer Corporation.10
.28+(1)

Amendment 5 to Products License and Distribution Agreement,
    dated as of December 2, 2003, between the Company and Dell
    Computer Corporation.10
.29(1)

Amendment 6 to Products License and Distribution Agreement,
    effective as of February 26, 2004, between the Company and
    Dell Computer Corporation.10
.30(1)

Amendment 7 to Products License and Distribution Agreement,
    effective as of February 18, 2005, between the Company and
    Dell Computer Corporation.10
.31+(1)

Amendment to Products License and Distribution Agreement,
    effective as of January 31, 2006, between the Company and
    Dell Computer Corporation.10
.31A(3)

Amendment to the products License and Distribution Agreement,
    effective as of June 13, 2007, between the Company and Dell
    Computer C10
.32(1)

Restated Xcelerate! Distributor Agreement, dated as of
    August 28, 2006, between Double-Take Software, Inc. and
    Sunbelt International.10
.33(1)

Xcelerate! Partner Agreement, dated August 2, 2001, between
    the Company and Sunbelt Software Distribution Inc.10
.34(1)

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

Addendum 3 to Xcelerate Partner Agreement, dated
    November 27, 2001, between the Company and Sunbelt Software
    Distribution Inc.10
.36(1)

Addendum 4 to Xcelerate Partner Agreement, dated May 31,
    2002, between the Company and Sunbelt Software Distribution Inc.10
.37(1)

Addendum 4 to Xcelerate Partner Agreement, dated August 27,
    2002, between the Company and Sunbelt Software Distribution Inc.10
.38(1)

Amendment 5 to Xcelerate Partner Agreement, dated
    February 13, 2004, between the Company and Sunbelt Software
    Distribution Inc.10
.39(1)

Amendment 6 to Xcelerate Partner Agreement, dated
    February 14, 2004, between the Company and Sunbelt Software
    Distribution Inc.10
.40(1)

Amendment 7 to Xcelerate Partner Agreement, dated March 22,
    2005, between the Company and Sunbelt Software Distribution Inc.10
.41(1)

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

Amendment 9 to Xcelerate Partner Agreement, dated
    February 15, 2006, between the Company and Sunbelt Software
    Distribution Inc.10
.48*(1)

Form of Non-Disclosure Confidentiality Agreement.10
.49(2)

Loan Modification Agreement dated May 9, 2007 between
    Silicon Valley Bank and Double-Take Software, Inc.10
.50*(4)

Form of Change in Control Severance Agreement between
    Double-Take Software, Inc. and Dean Goodermote, S. Craig, Huke,
    Daniel M. Jones and Michael Lesh.10
.51*(5)

Amended and Restated Employment/Severance Agreement, dated
    November 9, 2007, between Double-Take Software, Inc. and
    Robert L. Beeler.10
.52*(6)

Amended and Restated Employment/Severance Agreement, dated
    November 9, 2007, between Double-Take Software, Inc. and
    David J. Demlow.21
.01

Subsidiaries of the Company.23
.01

Consent of Eisner LLP. 92




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##### 



Exhibit No.

Exhibit Description31
.01

Certification of Chief Executive Officer and 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 2002.31
.02

Certification of Chief Financial Officer and 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 2002.32
.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.     *
    
    Represents a management contract or compensatory plan or
    arrangement.+
    
    Confidential treatment has been requested for certain portions
    of these agreements, and the confidential portions were filed
    separately with the SEC.(1)
    
    The copy of this exhibit filed as the same exhibit number to the
    Companys Registration Statement on
    Form S-1
    (File
    No. 333-136499)
    is incorporated herein by reference.(2)
    
    The copy of this exhibit filed as Exhibit 10.1 to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2007 is incorporated herein
    by reference.(3)
    
    The copy of this exhibit filed as the same exhibit number to the
    Companys Current Report on
    Form 8-K/A
    filed on July 23, 2007 is incorporated herein by reference.(4)
    
    The copy of this exhibit filed as the Exhibit 10.48 to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2007 is incorporated
    herein by reference.(5)
    
    The copy of this exhibit filed as the Exhibit 10.49 to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2007 is incorporated
    herein by reference.(6)
    
    The copy of this exhibit filed as the Exhibit 10.50 to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2007 is incorporated
    herein by reference.(7)
    
    The copy of this exhibit filed as the same exhibit number to the
    Companys Current Report on
    Form 8-K
    filed on December 28, 2007 is incorporated herein by
    reference. 93