UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

ý

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2010.

o

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______ to ______.

Commission file number 0-13124

COVER-ALL TECHNOLOGIES INC.

(Exact name of Registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)13-2698053
(I.R.S. Employer Identification No.)55 Lane Road, Fairfield, New Jersey
(Address of principal executive office)07004
(Zip Code)


(973) 461-5200(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share

Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o No x

Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes o No
x

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

Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post
such files).  Yes o No o

Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K.  o

Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of larger accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer
o

Accelerated filer o

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

Smaller reporting company x

Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Act).  Yes  o No x

The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant as of June 30, 2010, the last business day of the registrants most recently completed second fiscal quarter, was
approximately $22,792,000.

As of March 10, 2011, there were 25,074,801 shares outstanding of
our common stock.

Documents Incorporated by Reference:

Portions of the Registrants Proxy Statement for the 2011 Annual Meeting of
Stockholders (Proxy Statement), to be filed with the Securities and Exchange Commission (the SEC) not later than 120 days after the
close of the Registrants fiscal year, are incorporated by reference as described in Part III.



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FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this report, including, without
limitation, matters discussed under Item 1 - Business, Item 1A - Risk Factors and Item 7 - Managements Discussion and
Analysis of Financial Condition and Results of Operations, may constitute forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act).  These forward-looking statements are necessarily subjective and involve known and unknown
risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially
from any future results, performance or achievement described or implied by such statements.  Certain of these forward-looking statements can be identified
by the use of forward-looking terminology such as believes, expects, may, will, should,
seeks, approximately, intends, plans, estimates, or anticipates or the negative of these
terms or other comparable terminology, or by discussions of strategy, objectives, expectations, plans or intentions.  Statements contained in this report
that are not historical facts are forward-looking statements.  Without limiting the generality of the preceding statement, all statements in this
report concerning or relating to estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are
forward-looking statements.  In addition, through our senior management, from time to time we make forward-looking statements concerning our expected
future operations and performance and other developments.  Such forward-looking statements are necessarily estimates reflecting our best judgment based
upon current
information and involve a number of risks and uncertainties.  Other factors may affect the accuracy of these forward-looking statements and our actual
results may differ materially from the results anticipated in these forward-looking statements.  While it is impossible to identify all such factors,
factors that could cause actual results to differ materially from those estimated by us include, but are not limited to, those factors or conditions described
under Item 1A - Risk Factors and Item 7 - Managements Discussion and Analysis of Financial Condition and Results of Operations
 Critical Accounting Policies and Estimates and general conditions in the economy and capital markets.  Except to the extent required by
applicable laws and regulations, we undertake no obligations to update any forward-looking statements to reflect events or circumstances after the date of this
report or to reflect the occurrence of unanticipated events.











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TABLE OF CONTENTS



|         |  |  |  |                                                                                                              |  | Page
|-------- |  |  |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|PART
I  
|ITEM
1.  |  |  |  | BUSINESS                                                                                                     |  |     
|ITEM
1A. |  |  |  | RISK
FACTORS                                                                                                 |  |     
|ITEM
1B. |  |  |  | UNRESOLVED STAFF COMMENTS                                                                                    |  |     
|ITEM
2.  |  |  |  | PROPERTIES                                                                                                   |  |     
|ITEM
3.  |  |  |  | LEGAL PROCEEDINGS                                                                                            |  |     
|ITEM
4.  |  |  |  | [RESERVED]                                                                                                   |  |     
|PART
II 
|ITEM
5.  |  |  |  | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |  |     
|ITEM
6.  |  |  |  | SELECTED FINANCIAL DATA                                                                                      |  |     
|ITEM
7.  |  |  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                        |  |     
|ITEM
7A. |  |  |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                   |  |     
|ITEM
8.  |  |  |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                  |  |     
|ITEM
9.  |  |  |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                         |  |     
|ITEM
9A  |  |  |  | CONTROLS AND PROCEDURES                                                                                      |  |     
|ITEM
9B. |  |  |  | OTHER INFORMATION                                                                                            |  |     
|PART
III
|ITEM
10. |  |  |  | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                       |  |     
|ITEM
11. |  |  |  | EXECUTIVE COMPENSATION                                                                                       |  |     
|ITEM
12. |  |  |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS               |  |     
|ITEM
13. |  |  |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                    |  |     
|ITEM
14. |  |  |  | PRINCIPAL ACCOUNTING FEES AND SERVICES                                                                       |  |     
|PART
IV 
|ITEM
15. |  |  |  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                   |  |     



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PART I

ITEM  1.  BUSINESS

GENERAL

We provide unique, cost-effective business-focused solutions to the
property and casualty insurance industry.  Our customers include insurance companies, agents, brokers and managing general agents (MGAs).  Our
proprietary technology solutions and services are designed to enable our customers to introduce new products quickly, expand their distribution channels, reduce
costs and improve service to their customers.  In addition, we also offer an innovative Business Intelligence suite of products to enable our customers to
leverage their information assets for real time business insights and for better risk selection, pricing and financial reporting.

Our software products and services focus on the functions required to
underwrite, rate, quote, issue, print, bill and support the entire lifecycle of insurance policies.  Our products and services combine an in-depth
knowledge of property and casualty insurance with an innovative and proprietary state-of-the-art technology platform.  Our products provide advanced
insurance functionality available on an off-the-shelf basis yet also provide additional flexibility for accommodating a high degree of customization
for our customers to compete in the marketplace through differentiation.  Our software is licensed for use in the customers data centers or can be
provided through our application services provider, referred to as ASP, using third party technology platforms and support.

We generate revenue from software contract licenses, professional services
fees from ongoing software customization and continuing maintenance fees for technical and regulatory software updates on a monthly basis.  We
provide a wide range of professional services that support product customizations, conversion from existing systems, data integration with other software
or reporting agencies and other technical services.  We also offer ongoing support services including incorporating recent insurance rates, rules and forms
changes.  These support services provide turnkey solutions to our customers as we perform analysis, development, quality assurance, documentation and
distribution for delivering changes in a timely fashion.

Our ongoing maintenance and support services, usually through five-year
minimum customer contracts, typically generate significant recurring revenue of approximately 25 to 30 cents for every dollar spent on licensing fees.

We were incorporated in Delaware in April 1985 as Warner Computer Systems,
Inc. and changed our name to Warner Insurance Services, Inc. in March 1992.  In June 1996, we changed our name to Cover-All Technologies Inc.  Our
products and services are offered through our wholly-owned subsidiary, Cover-All Systems, Inc., also a Delaware corporation.

PRODUCTS

My Insurance Center

Our My Insurance Center, referred to as MIC, is a customizable and
configurable web-based, data-centric hub and spoke software platform built around a shared information hub and suite of product
components.  MIC is designed for insurance agents, brokers and carriers with integrated workflows and access to real-time information.  By
centralizing the data in the MIC platform and using customized components to enable processes, we can quickly build a unique solution for each customer.

My Insurance Center is designed to efficiently and rapidly adapt to changes in
our customers business needs as well as to address the complexity and rate of change of the insurance business, state regulation and technology
innovation.  The MIC architecture concept was originally introduced in 2001 and it has been significantly enhanced and expanded every year since.  The
early implementations of My Insurance Center utilized our then-existing rating and issuance products.  In 2009, we announced MIC NexGen, a set of
capabilities designed and built to support the entire policy issuance process to add significant functionality, enhance performance and position Cover-All to
introduce new service offerings.

Our My Insurance Center NexGen component is a powerful set of tools and
capabilities providing full policy support (data capture, rate, quote, issue, statistical reporting, print, audits and complete policy lifecycle management) for
customized products that we believe is unparalleled in the insurance industry.  We have also developed a set of processes and



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tools that enable us to work together with our customers in an interactive development process
that, when combined with our off-shore development resources, deliver these products in short time frames.

In addition to our ability to create and support custom products, we offer
off-the-shelf products including full support for such complex products as ISOs (Insurance Services Office) Commercial Automobile and Commercial Package
products for all states as well as full support for Workers Compensation.  Some of these new products have been developed and released in 2010.  With
the delivery of the NexGen products, we have completely replaced all our older platforms, collectively known as Classic, with new, fully integrated
state-of-the-art technologies.

These NexGen products have been redesigned by us to enable us to provide
services to our customers that can be measured in terms of quality, speed and value.  In addition, we are able to provide a significant number of
capabilities to our customers to enable them to customize, personalize and control their My Insurance Center platform in real time.

MIC is designed to be the platform to serve players throughout the entire
insurance value chain, including the insured, agents, brokers, insurance companies and reinsurers.  Because it is scalable, MIC is able to serve both large
and small organizations.  MIC can be accessed securely over the Internet.  MIC is designed to be deployed globally in the future to adapt to different
languages and currencies and to support different insurance products in other countries.

MIC provides an integrated platform with baseline common insurance functions
that can be customized by us for customers business needs.  MIC also provides many configuration capabilities that are used by customers for further
tailoring the application.  Finally, MIC allows end users to personalize screens and content for meeting their roles and responsibilities.

MIC is designed to fully support STP (Straight-Through-Processing).  MIC
enables our customers to utilize our rating, policy issuance, billing and other software components into a fully-integrated platform that, among other things,
eliminates redundant data entry.  Information is stored in a client-centric database and becomes immediately available to other users or functions.
 MIC may be customized to generate user alerts when a user-specified condition occurs.  Additionally, MIC has been designed to allow the customer to
configure features according to their own look and feel preferences and workflow processes.  For instance, the browser-based user interface allows
employees, agents and other end users to personalize their desktops so they see only the information they need or desire.  We believe that MIC allows our
customers to reduce costs, leverage the latest technologies, better manage risk, provide better service to their customers, enter new markets, introduce new
products and grow premiums.

We are investing in research and development for evolving the MIC platform to
meet customers business needs in a rapidly changing marketplace.  We have added new and advanced capabilities to MIC, such as our NexGen policy
administration platform, workflow management, rules-based underwriting, financial modules for determining profitability by policy, account-centric and
policy-centric views, integration with partners accounting, claims processing systems and certain other new components.  With these new capabilities,
MIC enables us to develop complex and custom products in shorter timeframes for introducing new insurance products into the marketplace.

My Insurance Center utilizes a data-centric architecture which enables us to
provide our customers with an integrated solution of shared information.  When combined with the straight-through processing and information access tools,
My Insurance Center provides outstanding access to information for business leaders.  In addition, this data centric approach enables us to interface with
external data sources and other internal systems very effectively.

Access to accurate and timely information can be a significant competitive
advantage for better pricing, risk selection and service.  With this access to information, our customers can develop insights and tools to create
competitive advantage.  The nimbleness of My Insurance Center can then be leveraged to open new markets, develop new products, or implement new predictive
modeling tools to improve underwriting.

In order to exploit these information-driven opportunities, in April 2010 we
purchased certain assets of Moore Stephens Business Solutions LLC (MSBS), a provider of custom business intelligence solutions for the property and
casualty insurance industry.  While creating custom business intelligence solutions for a number of insurance clients, MSBS had developed a template for
new customers that created a starting point for new implementations.  Utilizing our experience in creating customizable, out-of-the-box products, we are
developing a new product that, while utilizing some of the design concepts of MSBS, can be fully integrated with MIC.  We expect that this new product will
be available in 2011, will be sold



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as an additional component to MIC customers and will plug in to their existing MIC.
 In addition, the product will also be marketed as a stand-alone product with interfaces to other policy administration, claims and reinsurance systems.

MIC is being made available to users either for in-house implementation or
through our ASP.  We also support Software as a Service (SaaS) to meet emerging customer requirements.

MIC offers the following benefits to our customers:

·

Straight-Through-Processing  Business acquisition and the processing side of commercial
property and casualty insurance is not only complex but it is highly regulated and spans across multiple constituents in the value chain.
 Straight-Through-Processing helps customers to reduce expenses, provide faster service times and obtain a higher degree of compliance.  MIC provides
Straight-Through-Processing through browser-based accessibility, roles-based security, rules-based underwriting, advanced workflow referrals and
comprehensive insurance processing functions such as rating, issuance, printing and statistical coding.

·

Speed To Market  In a highly competitive insurance marketplace, insurers seek to maintain
competitive advantage and high profit margins through innovation and introduction of new insurance products.  The information-hub architecture of MIC
enables development of complex and custom products in rapid timeframes.

·

Regulatory Compliance  In highly state regulated insurance industry, compliance requires
frequent software updates and audit capabilities.  MIC provides regulatory updates, which are delivered on a monthly basis through our support services.

·

Security  MIC provides roles-based security with fine-grained access control, and encryption
with data auditing helps enterprise data centers meet their security requirements.

·

Configurability  MIC provides a wide scope of customization to allow MIC to meet
customers business and operational needs while taking advantage of its baseline common capabilities for achieving cost-effective and rapid implementation.

·

Integration  MIC provides real-time integration with audit logs for seamlessly integrating
MIC with other systems in our customers technical ecosystem.

·

Openness and Scalability  MIC is based on open technologies such as J2EE, XML, Oracle and
Web 2.0 (AJAX, GWT) through which we can deliver technological changes.  MIC is designed to scale horizontally without adding significant
cost to meet customers growing business needs.



MIC NexGen  The Policy Administration Component of MIC

The MIC NexGen software uses a unique design that separates the
insurance product definition from the actual technology engines.  The sophistication of this design is intended to enable us to
stay current with technology innovations while preserving our insurance knowledge investment.  In addition, by centralizing many of the
complexities of insurance in the core (similar to a video game console), we are able to create metadata-driven cartridges that define the actual
insurance product (rates, rules, forms, etc.) very quickly.  In addition, MIC NexGen is designed for change and flexibility.

The MIC NexGen software and products support the following policy functions:

·

Data capture and editing

·

Rating

·

Policy issuance including multiple recipient print

·

All policy transactions including quotes, new lines, endorsements, renewals, audits and cancellations

·

Statistical coding

·

Full Policy Print (with variable data)

·

Audits

·

Out of Sequence Processing

·

Full Policy Life Cycle support

·

Installments



MIC NexGen is designed to accommodate all lines of property and casualty
insurance.  We believe that it is especially effective in coping with the complexity and variability of commercial lines of insurance.



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We believe that this flexibility of MIC NexGen is a competitive advantage, and
we have utilized its capabilities to develop many custom products as well as all state support for Workers Compensation, ISO Commercial Automobile (delivered in
the first quarter of 2011) and ISO Commercial Package (expected to be delivered in the second quarter of 2011).  The NexGen products are replacing our
earlier MIC Rating & Issuance products that have been in use by our customers for many years.  Today, we offer off-the-shelf support for more than 40
lines of commercial business in all 50 states, the District of Columbia and Puerto Rico.

Both the older Rating & Issuance and the new NexGen platform leverage the
Engine/Metadata design and are fully integrated with the MIC platform.  The innovative design of the product isolates insurance product knowledge from the
application itself in data files, referred to as Metadata.  We have built an extensive knowledge base, estimated at more than 100 person-years
of effort, in this Metadata that defines the details of virtually hundreds of insurance policy types and coverages.

The MIC Rating & Insurance product is in use in over 35 companies.

The new NexGen policy administration platform of MIC provides the following
advanced capabilities:

·

Dynamic data capture for reducing data entry and different views for brokers and underwriters

·

Improved user interface and features for boosting user productivity

·

Custom and complex rating algorithm

·

Custom or branded document generation capability

·

Rapid development of new products and changes in existing products

·

Better audit support for compliance checks

·

Out of Sequence endorsement processing



My Insurance Center  Functional Capabilities

We have, through MIC, a deep inventory of insurance software components
combined with a sophisticated implementation platform.  MIC includes the following critical components:

·

My Insurance Center Portal

·

Enterprise, Customer-centric Oracle database

·

Underwriting Tools

·

End User access to information in real time  Straight-Through-Processing

·

Rating and Issuance

·

Full policy lifecycle support

·

Clear and comprehensive data collection with extensive real time edits

·

Policy history  easy policy changes and useful for activities such as coverage inquiries

·

On-line system, screen and field level look-ups

·

On-line Commercial Lines Manual Tables and Footnotes

·

Easy and direct system navigation

·

Standard ISO (Insurance Service Office)/NCCI coverages and rates support

·

Company customized coverages and rates support

·

Fully automated recipient-driven issuance of insurance policies, worksheets, ID cards, etc., including
print preview

·

Policy database

·

Multiple company/program/state/coverage support

·

Templates to reduce data entry time

·

Advanced Billing Capabilities  integrating with NetSuite

·

Claims Repository

·

Customer Relationship Management

·

Agency and Program Management

·

Advanced Administration Tools

·

Access to Web Services and Information Providers

·

Policy Dashboard  premium and loss information



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·

Advanced Workflows, Diaries

·

Electronic Underwriting files

·

Compliance Assist, Help Desk

·

Interfaces to back end accounting and reporting systems

·

Policy-level Premium and Loss Information for profitability tracking/accounting

·

Quote, Binder, Policy Lifecycle support



We continue to utilize and expand these capabilities to expand and leverage
our ability to respond to broadening marketplace and new customer opportunities with solutions that address the special needs of carriers, managing general
agents, agents, brokers and third party providers with both off-the-shelf and custom solutions.

We are also increasing and enhancing our services portfolio.  We have
expanded our professional services with conversion and interface offerings.  We developed new rules-based capabilities to enable us to implement data
exchange services that will save our customers time and effort converting to our products or linking our products to existing systems.  We also have
developed a custom service offering for customers who desire specially-tailored services, service level agreements and other services that enable
them to achieve their business objectives.

We believe that our business-focused approach allows customers to accelerate
their time to market, solve ongoing business challenges and achieve sustainable competitive advantages during periods of economic uncertainty.

COMPETITION

The computer software and services industry is highly competitive and rapidly
changing, as current competitors expand their product offerings and new companies enter the marketplace.  Because of our extensive base of knowledge in the
insurance industry, however, we believe that our products offer customers certain advantages not available from our competitors.  Our customers have access
to our extensive experience and software inventory in the area of rating and policy issuance of commercial lines policies, among the most complex of insurance
transactions.

There are a number of larger companies, including computer software, services
and outsourcing companies, consulting firms, computer manufacturers and insurance companies that have greater financial resources than we have and possess the
technological ability to develop software products similar to those we offer.  These companies represent a significant competitive challenge to our
business.  Very large insurers that internally develop systems similar to ours may or may not become our major customers for software or services.  We
compete on the basis of our insurance knowledge, products, service, price, system functionality and performance and technological advances.

MARKETING

We maintain an in-house sales and marketing staff. We also utilize outside
consultants and other complimentary service providers to market our products.  We redesigned our Internet site and established linkages to portals and
other websites.  We will continue to expand in 2011 as we focus on the Internet as a valuable source of information for current and potential customers
interested in our products and services.  We participate in, display and demonstrate our software products at industry trade shows.  Our consulting
staff, business partners and other third parties also generate sales leads.  We also communicate with our existing customers in a variety of ways including
an annual Customer Conference.

RESEARCH AND DEVELOPMENT

Our business is characterized by rapid business and technological change.
 We believe our success will depend, in part, on our ability to meet the new needs of our customers and the marketplace as well as continuing to enhance
our products based on new technologies.  Accordingly, we must maintain ongoing research and development programs to add value to our suite of products, as
well as any possible expansion of our product lines.

Our goal with all of our products and services is to enhance the ease of
implementation, functionality, long-term flexibility and the ability to provide improved customer service.

Research and development expenses were $847,000, $891,000 and $1,035,000 for
the years ended December 31, 2010, 2009 and 2008, respectively.



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INTELLECTUAL PROPERTY

We currently have no patents or patent applications pending.  We rely on
a combination of trade secret, copyright and trademark laws, nondisclosure and other contractual agreements and technical measures to protect our proprietary
rights.

BACKLOG

As of December 31, 2010, we had a backlog of software license, maintenance and
professional services agreements with customers expected to result in approximately $1,100,000 of future revenue, of which we expect approximately $850,000 to
be recognized in 2011.  Under some of these agreements, we must fulfill certain conditions prior to recognizing revenue, and there can be no assurance
when, if at all, we will be able to satisfy such conditions in each instance.  Purchase orders constituting backlog may also be cancelled or deferred by
customers and, therefore, may not be indicative of future revenue.

MAJOR CUSTOMERS

Our product line is in use in over 35 companies.  For the years ended
December 31, 2010, 2009 and 2008, we had four, three and three customers who contributed revenues in excess of 10% of our total revenues for the respective
years.

As our business has grown, we have become less reliant on any one major
customer, including three units of Chartis Inc., formerly units of American International Group, Inc. (CHARTIS).  For the year ended December
31, 2010, three customers, none of which are units of CHARTIS, generated approximately 19%, 11% and 10% of our revenues, respectively.

A fourth customer, a unit of CHARTIS, generated approximately 11%, 15% and 15%
of our revenues for the years ended December 31, 2010, 2009 and 2008, respectively.  Another customer, a second unit of CHARTIS, generated approximately
5%, 12% and 17% of our revenue for the years ended December 31, 2010, 2009 and 2008, respectively, and one other customer, a third unit of CHARTIS, generated
approximately 4%, 6% and 27% of our revenue for the years ended December 31, 2010, 2009 and 2008, respectively.  The aggregate percentage of our total
revenue generated by the three CHARTIS customers for the years ended December 31, 2010, 2009, 2008, respectively, is 20%, 33%, and 59%.

Our customer relationship with CHARTIS is governed by a Master Agreement for
Software License and Support Services and Professional Services (the Master Agreement) which we entered into with an affiliate of CHARTIS.  The
grant of any particular software license to any unit of CHARTIS referred above and the provision of any particular support services or professional services are
subject to the entry into of separate arrangements with such unit of CHARTIS pursuant to the Master Agreement, including Client Services Addenda and work
orders.  We entered into a separate Client Services Addendum with each of the three units of CHARTIS, respectively.  As amended, the Master Agreement
and the Client Services Addenda for the second and third of the CHARTIS units referred to above each have a term until September 30, 2012 and will automatically
renew for successive one-year terms unless one party delivers a written notice of non-renewal to the other party at least 180 days prior to the expiration of
the then current term.  The Client Services Addendum for the first of the CHARTIS units referred to above has a term until March 31, 2012 and, unless the
parties mutually agree otherwise, is subject to renewal or non-renewal seven months prior to the expiration date.

The Master Agreement contains the general terms and conditions for us to grant
software licenses and provide support services and professional services to the CHARTIS customers.  The related Client Services Addenda and work orders
with respect to each of the three units of CHARTIS constitute three separate and independent contractual arrangements, as the Client Services Addenda with the
respective units of CHARTIS cover different customers, different software and service components and different fees and payment structures.  There is no
cross-default provision in any of these Client Services Addenda, and each of them can be terminated individually without affecting the term of the remaining
ones.  Under these arrangements, none of the three units of CHARTIS has any obligation to continue to purchase any additional software license or
professional services from us without a separate agreement between us and the applicable unit of CHARTIS.  Each of the three units of CHARTIS, however, has
the obligation to continue to purchase our support services (which include our ASP services) during the applicable contractual term with such unit of CHARTIS.
 For the year ended December 31, 2010, the revenues we generated from such continuing support services (including our ASP services) for the three units of
CHARTIS represented approximately 9%, 4% and 4%, respectively, of our total revenues, and the total revenues we generated from the three units of CHARTIS
represented approximately 11%, 5% and 4%, respectively, of our total revenues.



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EMPLOYEES

We had 82 employees, all of whom were full-time employees, as of December 31,
2010.  None of our employees is represented by a labor union, and we have not experienced any work stoppages.  We believe that relations with our
employees are good.

AVAILABLE INFORMATION

We are subject to the reporting requirements of the Exchange Act, and the
rules and regulations promulgated thereunder, and accordingly file reports, information statements or other information with the SEC, including annual reports
on Form 10-K, quarterly reports on Form 10-Q, reports of current events on Form 8-K and proxy or information statements.  The public may read and copy
any materials we file with the SEC at its Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements
and other information regarding issuers that file electronically with the SEC.

Our website address is www.cover-all.com.  We make available, free
of charge, through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
 The information on our website is not incorporated by reference into this report.



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ITEM 1A.  RISK FACTORS

RISK FACTORS

In addition to the other information described elsewhere in this Annual
Report, you should carefully consider the following risk factors, which could materially adversely affect our business, financial condition and results of
operations.  The risks described below are not the only risks facing our Company.  Additional risks and uncertainties not currently known to us or
that we currently deem to be immaterial may materially adversely affect our business, financial condition and results of operations.

RISKS RELATED TO OUR BUSINESS AND OUR INDUSTRY

If we do not continue to innovate and provide products and services that
are useful to insurance companies in a cost-effective way, we may not remain competitive, and our revenues and operating results could suffer.

Our future success depends on our ability to provide innovative and quality
products and services for the insurance marketplace. Because our products and services represent the core functionality that powers the businesses of our
customers, our competitors are constantly developing innovations in similar products and services. As a result, we must continue to invest significant resources
in research and development in order to enhance our existing products and services and introduce new products and services that insurance companies can easily
and effectively use. If we are unsuccessful in these endeavors, we may not remain competitive, and our revenues and operating results could suffer.
 Additionally, we rely on our references from existing customers for new sales. If we are unable to provide quality products and services, then our
customers may become dissatisfied and may not provide these references. We also rely on an offshore software development vendor for developing and servicing our
products, and our operating results would suffer if we cannot maintain our current cost structure through offshore development resources in the future.

We depend on product introductions in order to remain competitive in our
industry.

We are currently investing resources in product development and expect to
continue to do so in the future.  Our future success will depend on our ability to continue to enhance our current product line and to continue to develop
and introduce new products that keep pace with competitive product introductions and technological developments, satisfy diverse and evolving insurance
industry requirements and otherwise achieve market acceptance.  We may not be successful in continuing to introduce and market, on a timely and
cost-effective basis, product enhancements or new products that respond to technological advances by others.  Any failure by us to anticipate or
respond adequately to changes in technology and insurance industry preferences, or any significant delays in product development or introduction, would
significantly and adversely affect our business, operating results and financial condition.

Our products may not achieve market acceptance, which may make it
difficult for us to compete.

Our future success will depend upon our ability to increase the number of
insurance companies that license our software products.  As a result of the intense competition in our industry and the rapid technological changes which
characterize it, our products may not achieve significant market acceptance.  Further, insurance companies are typically characterized by slow
decision-making and numerous bureaucratic and institutional obstacles which will make our efforts to significantly expand our customer base difficult.

We depend on key personnel.

Our success depends to a significant extent upon a limited number of members
of senior management and other key employees, including John W. Roblin, our Chief Executive Officer, Manish D. Shah, our President and Chief Technology Officer,
and Maryanne Gallagher, our Executive Vice President and Chief Operating Officer.  We maintain key-man life insurance on Mr. Roblin, Mr. Shah
and Ms. Gallagher in the amount of $1,000,000 per individual.  The loss of the service of one or more key managers or other key employees could have a
significant and adverse effect upon our business, operating results or financial condition.  In addition, we believe that our future success will depend in
large part upon our ability to attract and retain additional highly skilled technical, management, sales and marketing personnel.  Competition for such
personnel in the computer software industry is intense.  We may not be successful in attracting and retaining such personnel, and the failure to do so
could have a material adverse effect on our business, operating results or financial condition.



8

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We may be subject to information technology system failures and network
disruptions.

Information technology system failures, network disruptions and breaches of
data security caused by such factors, including, but not limited to, earthquakes, fire, flood, theft, fraud, malicious attack, acts of terrorism or other causes
could disrupt our operations.  While we have taken steps to address these concerns by implementing internal control measures, there can be no assurance
that such a system failure, disruption or breach will not materially adversely affect our financial condition and operating results, including loss of revenue
due to adverse customer reaction or required corrective action.  In addition, our property and business interruption insurance coverage may not be adequate
to fully compensate us for losses that may occur.

Our market is highly competitive.

Both the computer software and the insurance software systems industries are
highly competitive.  There are a number of larger companies, including computer manufacturers, computer service and software companies and insurance
companies, that have greater financial resources than we have.  These companies currently offer and have the technological ability to develop software
products that are core to the business of insurance companies and similar to those offered by us.  These companies present a significant competitive
challenge to our business.  Because we do not have the same financial resources as these competitors, we may have a difficult time in the future in
competing with these companies.  In addition, very large insurers internally develop systems similar to our systems and as a result, they may not become
customers of our software.  We compete on the basis of our insurance knowledge, products, service, price, system functionality and performance and
technological advances.  Although we believe we can continue to compete on the basis of these factors, some of our current competitors have longer
operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than we do.  Our
current competitors may be able to:

·

undertake more extensive marketing campaigns for their brands and services;

·

devote more resources to product development;

·

adopt more aggressive pricing policies; and

·

make more attractive offers to potential employees and third-party service providers.



We may need additional financing in order to continue to develop our
business.

We may need additional financing to continue to fund acquisitions and business
development and to expand and grow our business generally.  If equity securities are issued in connection with a financing or business acquisition,
dilution to our stockholders may result, and if additional funds are raised through the incurrence of debt, we may be subject to further restrictions on our
operations and finances both in and outside the ordinary course of business.  As of December 31, 2010, we had net stockholders equity of
approximately $15,204,000 and net working capital of approximately $5,013,000.

We depend upon proprietary technology and we are subject to the risk of
third party claims of infringement.

Our success and ability to compete depends in part upon our proprietary
software technology.  We also rely on certain software that we license from others.  We rely on a combination of trade secret, copyright and trademark
laws, nondisclosure and other contractual agreements and technical measures to protect our proprietary rights.  We currently have no patents or patent
applications pending.  Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain
and use information that we regard as proprietary.  The steps we take to protect our proprietary technology may not prevent misappropriation of our
technology, and this protection may not stop competitors from developing products which function or have features similar to our products.

While we believe that our products and trademarks do not infringe upon the
proprietary rights of third parties, third parties may claim that our products infringe, or may infringe, upon their proprietary rights.  Any infringement
claims, with or without merit, could be time-consuming, result in costly litigation and diversion of technical and management personnel, cause product shipment
delays or require us to develop non-infringing technology or enter into royalty or licensing agreements.  Royalty or licensing agreements, if required, may
not be available on terms acceptable to us or at all.  If a claim of product infringement against us is successful and we fail or are unable to develop
non-infringing technology or license the infringed or similar technology, our business, operating results and financial condition could be significantly and
adversely affected.



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We depend on existing major customers, the loss of one or more of which
could have a material adverse effect on our results of operations and financial condition.

We anticipate that our operations will continue to depend upon the continuing
business of our existing customers, particularly our major customers, and the ability to attract new customers.

In 2010, 2009 and 2008, our software products operations depended primarily on
certain existing major customers.  Three customers generated approximately 19%, 11%, and 10% of our revenues in 2010.  One additional customer, a unit
of CHARTIS, accounted for approximately 11%, 15% and 15% of our total revenues in 2010, 2009 and 2008, respectively.  One other customer, a second unit of
CHARTIS, accounted for approximately 5%, 12% and 17% of our total revenues in 2010, 2009 and 2008, respectively.  Another customer, a third unit of
CHARTIS, generated approximately 4%, 6% and 27% of our total revenues for the years ended December 31, 2010, 2009 and 2008, respectively.

Our contractual arrangements with these units of CHARTIS, however, do not
obligate any of them to continue to purchase from us any additional software license or professional services.  Each of the three units of CHARTIS has the
obligation to continue to purchase our support services (which include our ASP services) during the applicable contractual term with such unit.  The term
with respect to our contractual arrangement to provide these services to the first of the CHARTIS units referred to above will expire on March 31, 2012 and,
unless the parties mutually agree otherwise, is subject to renewal or non-renewal seven months prior to the expiration date.  The term with respect to our
contractual arrangement to provide these services to the remaining two units of CHARTIS will expire on September 30, 2012 and will automatically renew for
successive one-year terms unless a party delivers a written notice of non-renewal to the other party at least 180 days prior to the expiration of the then
current term.  For the year ended December 31, 2010, the revenues we generated from such continuing support services (including our ASP services) for the
three units of CHARTIS represented approximately 9%, 4% and 4%, respectively, of our total revenues, and the total revenues we generated from the three units of
CHARTIS represented approximately 11%, 5% and 4%, respectively.  See Business  Major Customers.  The loss of one or more of our
existing major customers or our inability to continue to attract new customers could significantly and adversely affect our business, operating results and
financial condition.

A decline in computer software spending may result in a decrease in our
revenues or lower our growth rate.

A decline in the demand for computer software among our current and
prospective customers may result in decreased revenues or a lower growth rate for us because our sales depend, in part, on our customers level of funding
for new or additional computer software systems and services.  Moreover, demand for our solutions may be reduced by a decline in overall demand for
computer software and services.  The current decline in overall technology spending may cause our customers to reduce or eliminate software and services
spending and cause price erosion for our solutions, which would substantially affect our sales of new software licenses and the average sales price for these
licenses.  Because of these market and economic conditions, we believe there will continue to be uncertainty in the level of demand for our products and
services. Accordingly, we cannot assure you that we will be able to increase or maintain our revenues.

We may not get the full benefit of our tax loss carry forwards.

Under the United States Internal Revenue Code, companies that have not been
operating profitably are allowed to apply certain of their past losses to offset future taxable income liabilities they may incur once they reach profitability.
 These amounts are known as net operating tax loss carryforwards.  At December 31, 2010, we had approximately $16 million of federal net operating tax
loss carryforwards expiring at various dates through 2026.  Because of certain provisions of the Tax Reform Act of 1986 related to change of control,
however, we may not get the full benefit of these loss carryforwards.  If we are limited from using net operating tax loss carryforwards to offset any of
our income, this would increase our taxes owed and reduce our cash for operations.

RISKS RELATED TO OUR COMMON STOCK

Holders of our common stock may have difficulty in selling those shares.

Our common stock is not currently traded on any national securities exchange.
 Our common stock is quoted on the OTCQB.  Securities quoted on the OTCQB do not enjoy the same liquidity as securities that trade on a national
securities exchange.  As a result, you may have difficulty in selling shares of our common stock.  In addition, our common stock is a penny
stock as that term is defined in the Exchange Act.  Brokers effecting transactions in a penny stock are subject to



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additional customer disclosure and record keeping obligations, including disclosure of the risks
associated with low price stocks, stock quote information and broker compensation.  In addition, brokers effecting transactions in a penny
stock are also subject to additional sales practice requirements under Rule 15g-9 of the Exchange Act including making inquiries into the suitability of
penny stock investments for each customer or obtaining a prior written agreement for the specific penny stock purchase.  Because of
these additional obligations, some brokers will not effect transactions in penny stocks.

Our stock price has been volatile.

Quarterly operating results have fluctuated and are likely to continue to
fluctuate.  The market price of our common stock has been and may continue to be volatile.  Factors that are difficult to predict, such as quarterly
revenues and operating results, limited trading volumes and overall market performance, may have a significant effect on the price of our common stock.
 Revenues and operating results have varied considerably in the past from period to period and are likely to vary considerably in the future.  We
plan product development and other expenses based on anticipated future revenue. If revenue falls below expectations, financial performance is likely to be
adversely affected because only small portions of expenses vary with revenue.  As a result, quarterly period-to-period comparisons of operating results are
not necessarily meaningful and should not be relied upon to predict future performance.

Provisions of our certificate of incorporation, as amended, and by-laws
and Delaware law might discourage, delay or prevent a change of control of or changes in our management and, as a result, depress the trading price of our
common stock.

Our certificate of incorporation, as amended (the Certificate of
Incorporation), and by-laws contain provisions that could discourage, delay or prevent a change in control or changes in our management that our
stockholders may deem advantageous.  These provisions:

·

require super-majority voting to amend some provisions in our Certificate of Incorporation and by-laws;

·

establish a staggered board of directors;

·

limit the ability of our stockholders to call special meetings of stockholders;

·

prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a
meeting of our stockholders;

·

provide that the board of directors is expressly authorized to make, alter or repeal our by-laws; and

·

establish advance notice requirements for nominations for election to our
board or for proposing matters that can be acted upon by stockholders at stockholder meetings.

In addition, we are subject to Section 203 of the Delaware General Corporation
Law, which, subject to some exceptions, prohibits business combinations between a Delaware corporation and an interested stockholder,
which is generally defined as a stockholder who becomes a beneficial owner of 15% or more of a Delaware corporations voting stock for a three-year period
following the date that the stockholder became an interested stockholder.  Section 203 could have the effect of delaying, deferring or preventing a change
in control that our stockholders might consider to be in their best interests.

These anti-takeover defenses could discourage, delay or prevent a transaction
involving a change in control.  These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect
directors of your choosing and cause us to take corporate actions other than those you desire.

We may not pay any cash dividends on our common stock in the future.

Declaration and payment of any dividend on our common stock is subject to the
discretion of our board of directors.  The timing and amount of dividend payments will be dependent upon factors such as our earnings, financial condition,
cash requirements and availability, and restrictions in our credit facilities.  While we paid a special cash dividend in April 2009, the payment of future
dividends is not guaranteed or assured.  Accordingly, it is likely that investors may have to rely on sales of their common stock after price appreciation,
which may never occur, as the only way to realize any future gains on their investment.



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RISKS RELATED TO ACQUISITION

We may fail to realize the anticipated benefits of the acquisition of
Moore Stephens Business Solutions, LLC.

On April 12, 2010, we acquired substantially all of the assets (excluding
working capital) of MSBS through our wholly-owned subsidiary, Cover-All Systems, Inc.  The success of the acquisition will depend on, among other things,
our ability to realize anticipated benefits, growth opportunities and cost savings and to integrate the operations of MSBS in a manner that does not materially
disrupt our own operations. If we are not able to successfully achieve these objectives, the anticipated benefits of the acquisition may not be realized fully,
or at all, or may take longer to realize than expected.  Further, it is possible that the integration process could result in the disruption of the ongoing
business or inconsistencies in standards, controls, procedures and policies that would adversely affect our business, financial condition or results of
operations.

ITEM 1B.  UNRESOLVED STAFF
COMMENTS

Not applicable.

ITEM  2.  PROPERTIES

Our headquarters is located in Fairfield, New Jersey, where we occupy
approximately 20,000 square feet under a lease that expires on October 31, 2012.  Currently, we fully utilize this facility.  We believe that our
headquarters is well maintained and adequate to meet our needs for the foreseeable future.  As a consequence of our acquisition of MSBS, we also have
office space of approximately 6,000 square feet located in mid-town Manhattan under a separate lease which is due to expire on January 31, 2014.  We
believe that this office space is also well maintained and will be adequate to meet our needs for the foreseeable future.

ITEM  3.  LEGAL
PROCEEDINGS

None.

ITEM  4.  [RESERVED]





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PART II

ITEM  5.  MARKET FOR
REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET PRICE OF AND DIVIDENDS ON COMMON STOCK

Since 2000, our common stock has been quoted on the OTC Bulletin Board.
 The quotations below reflect the high and low bid prices for our common stock since January 1, 2009 as reported on the OTC Bulletin Board.  The
quotations below reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

|2010:       |  |  |  | High |      | Low
|----------- |  |  |  | ---- | ---- | ---
|4th Quarter |  |  |  | $    | 1.62 |    
|3rd Quarter |  |  |  |      | 1.45 |    
|2nd Quarter |  |  |  |      | 1.75 |    
|1st Quarter |  |  |  |      | 1.49 |    

|2009:       |  |  |  | High |      | Low
|----------- |  |  |  | ---- | ---- | ---
|4th Quarter |  |  |  | $    | 1.45 |    
|3rd Quarter |  |  |  |      | 1.40 |    
|2nd Quarter |  |  |  |      | 1.10 |    
|1st Quarter |  |  |  |      | 1.33 |    

On February 23, 2011, our common stock was removed from listing on the OTC
Bulletin Board due to lack of quotations for four consecutive days by our market makers.  Our common stock continues to trade on the OTCQB market and can
now be found under the symbol COVR.PK.

As of March 10, 2011, there were 469 holders of record of our common stock.
 This number does not include beneficial owners who may hold their shares in street name.

On February 17, 2009, we announced that our board of directors declared a
special cash dividend in the amount of $0.03 per share on our common stock.  This dividend was paid on April 7, 2009 to common stockholders of record as of
the close of business on March 27, 2009.  Since 1994, we have not otherwise declared or paid any dividends on our common stock.  Our board of
directors will review its dividend policy from time to time and will take into account prevailing market conditions and our anticipated uses of cash.

The closing sales price for our common stock on March 10, 2011 was $2.05, as
reported by the OTCQB.



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PERFORMANCE GRAPH



The graph below compares the cumulative total stockholder returns (including
reinvestment of dividends) from the period from December 31, 2005 through December 31, 2010 on an investment of $100 in (i) our common stock, (ii) the Russell
MicroCap Index (an index of microcap companies), and (iii) an index of peer companies selected by us, as described below. You should be aware that historical
results are not necessarily indicative of future performance.

We have selected the Russell MicroCap Index for comparative
purposes.  We believe that, given our current size of operations and market capitalization, the Russell MicroCap Index, which measures the
performance of stocks in the micro-cap segment of the U.S. equity securities market, provides an appropriate benchmark against which to measure our stock
performance.

Our Peer Group consists of Computer Sciences Corporation, Ebix Inc.,
Pegasystems Inc. and Sapient Corp.



COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN

Among
Cover-All Technologies Inc., the Russell MicroCap Index and the Peer Group



|                            |  |  |  | December 31, |       
|--------------------------- |  |  |  | ------------ | ------
|
|Cover-All
Technologies Inc. |  |  |  | $            | 100.00
|Russell
MicroCap Index      |  |  |  | $            | 100.00
|Peer
Group                  |  |  |  | $            | 100.00







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ITEM 6. SELECTED FINANCIAL DATA



The following selected historical consolidated financial information as of
December 31, 2010 and 2009, and for each of the years ended December 31, 2010, 2009 and 2008, have been derived from and should be read in conjunction with our
audited consolidated financial statements and related notes thereto and Managements Discussion and Analysis of Financial Condition and Results of
Operations included elsewhere in this report.  The selected historical consolidated financial information as of December 31, 2008, 2007 and 2006 and
for the years ended December 31, 2007 and 2006 have been derived from our audited consolidated financial statements which are not included in this report.

Selected Five-Year Consolidated Financial Data

The following is a summary of selected five-year consolidated financial data
as of and for the years ended December 31, 2010, 2009, 2008, 2007 and 2006:

|                                      |  |  |  | Year ended December 31,                  |       
|------------------------------------- |  |  |  | ---------------------------------------- | ------
|
|Statement
of Operations Data:         |  |  |  | (in
thousands, except per share amounts)
|Revenues                              |  |  |  | $                                        | 17,457
|Income (loss)
before income tax       |  |  |  |                                          | 2,215 
|Net income
(loss)                     |  |  |  |                                          | 2,952 
|Net income
(loss) per share  basic   |  |  |  |                                          | 0.12  
|Net income
(loss) per share  diluted |  |  |  |                                          | 0.12  
|Cash
dividends per share              |  |  |  | $                                        |      

|                               |  |  |  | As of December 31, |       
|------------------------------ |  |  |  | ------------------ | ------
|
|Balance
Sheet Data:            |  |  |  | (in
thousands)    
|Cash and cash
equivalents      |  |  |  | $                  | 5,893 
|Working
capital (deficiency)   |  |  |  |                    | 5,013 
|Total
assets                   |  |  |  |                    | 19,513
|Short-term
debt                |  |  |  |                    | 400   
|Long-term
debt                 |  |  |  |                    |      
|Stockholders equity (deficit) |  |  |  |                    | 15,204

____________________

(1)

Net income for such year included a deferred income tax benefit of $0.8 million as a result of the
Companys reversal of a portion of its Deferred Tax Asset valuation allowance.

(2)

Net income for such year included a deferred income tax benefit of $1.7 million as a result of the
Companys reversal of a portion of its Deferred Tax Asset valuation allowance.





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Selected Quarterly Financial Data (Unaudited)

The following is a summary of selected quarterly financial data for the years
ended December 31, 2010 and 2009:

|                                         |  |  |  | 2010 |      
|---------------------------------------- |  |  |  | ---- | -----
|
|(in thousands, except per share
amounts)
|Total
revenues                           |  |  |  | $    | 3,754
|Operating
income                         |  |  |  |      | 792  
|Net
income                               |  |  |  |      | 721  
|Basic
earnings per common share          |  |  |  | $    | 0.03 
|Diluted
earnings per common share        |  |  |  | $    | 0.03 

|                                         |  |  |  | 2009 |      
|---------------------------------------- |  |  |  | ---- | -----
|
|(in thousands, except per share
amounts)
|Total
revenues                           |  |  |  | $    | 3,055
|Operating
income                         |  |  |  |      | 422  
|Net
income                               |  |  |  |      | 435  
|Basic
earnings per common share          |  |  |  | $    | 0.02 
|Diluted
earnings per common share        |  |  |  | $    | 0.02 





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ITEM  7.  MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

2010 OVERVIEW

We are a supplier of software products for the property and casualty insurance
industry, supplying a wide range of professional services that support product customization, conversion from existing systems and data integration with other
software or reporting agencies.  We also offer on-going support services including incorporating recent insurance rate and rule changes in our solutions.
 These support services also include analyzing the changes, developments, quality assurance, documentation and distribution of insurance rate and rule
changes.

We earn revenue from software contract licenses, ASP service fees, continuing
maintenance fees for servicing the product and professional services.  Total revenue in 2010 increased to $17,457,000 from $14,515,000 in 2009, due to an
increase in maintenance, professional services and ASP revenue.

The following is an overview of the key components of our revenue and other
important financial data in 2010:

Software Licenses.  License revenue was $2,288,000 in 2010
compared to $4,138,000 in 2009 as a result of fewer new customer sales and sales to existing customers in 2010.  Our new software license revenue is
affected by the strength of general economic and business conditions and the competitive position of our software products.  New software license sales are
characterized by long sales cycles and intense competition.  Timing of new software license sales can substantially affect our quarterly results.

Maintenance.  Maintenance revenue was $5,545,000 in 2010 compared
to $4,987,000 in 2009.  The increase in maintenance revenue in 2010 was mainly due to the annual renewal of existing customers maintenance and
maintenance from new customer contracts signed in 2009.  Maintenance revenue is influenced primarily by the following factors: the renewal rate from our
existing customer base, the amount of new maintenance associated with new license sales and annual price increases.

Professional Services.  The increase in professional services
revenue to $7,070,000 in 2010 from $3,282,000 in 2009, was a result of increased demand for new software capabilities and customizations from our current
customer base and the recent acquisition of MSBS.

ASP Services.  ASP services revenue was $2,554,000 in 2010
compared to $2,108,000 in 2009, due to expanded and extended contractual relationships with two large customers.

Income before Provision for Income Taxes.  Income before provision
for income taxes was $2,215,000 in 2010 compared to $3,335,000 in 2009, primarily due to a decrease in license revenue

Income Tax Benefit.We recorded income taxes, which
are comprised of New Jersey state tax and Federal alternative minimum tax, of $63,000 and $205,000 in 2010 and 2009, respectively.  We also recorded income
tax benefit of $800,000 and $787,000 in 2010 and 2009, respectively.

Net Income.  Net income for 2010 was $2,952,000 compared to
$3,917,000 in 2009, mainly as a result of a decrease in license revenue.

Cash Flow.  We generated $6,899,000 in positive cash flow from
operations in 2010 and ended the year with $5,893,000 in cash and cash equivalents and $1,895,000 in accounts receivable.

We continue to face competition for growth in 2011 mainly in the marketing and
selling of our products and services to new customers caused by a number of factors, including long sales cycles and general economic and business conditions.
 In addition, there are risks related to customers acceptance and implementation delays which could affect the timing and amount of license revenue
we are able to recognize.  However, given the positive response to our new software from existing customers, the significant expansion of our relationship
with a very large customer and the introduction of additional software capabilities, we are expanding our sales and marketing efforts to both new and existing
customers.  Consequently, we continue to incur additional sales and marketing expense in advance of generating the corresponding revenue.



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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

This discussion and analysis of our financial condition and results of
operations are based on our consolidated financial statements that have been prepared under accounting principles generally accepted in the United States.
 The preparation of financial statements requires our management to make estimates and assumptions that affect the reported amount of assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.  Actual results could
materially differ from those estimates.  We have disclosed all significant accounting policies in Note 1 to the consolidated financial statements included
in this annual report on Form 10-K.  The consolidated financial statements and the related notes thereto should be read in conjunction with the following
discussion of our critical accounting policies.  Critical accounting policies and estimates are:

·

Revenue Recognition;

·

Valuation of Capitalized Software;

·

Valuation of Allowance for Doubtful Accounts Receivable; and

·

Business Combinations and Goodwill.

Revenue Recognition

Revenue recognition rules are very complex, and certain judgments affect the
application of our revenue policy.  The amount and timing of our revenue is difficult to predict, and any shortfall in revenue or delay in
recognizing revenue could cause our operating results to vary significantly from quarter to quarter.  In addition to determining our results of operations
for a given period, our revenue recognition determines the timing of certain expenses, such as commissions, royalties and other variable expenses.

Our revenues are recognized in accordance with the Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC) 985-605, Software Revenue Recognition, as amended.  Revenue
from the sale of software licenses is predominately from standardized software and is recognized when standard software modules are delivered and accepted by
the customer, the license term has begun, the fee is fixed or determinable and collectibility is probable.  Revenue from software maintenance contracts and
ASP services is recognized ratably over the life of the contract.  Revenue from professional consulting services is recognized when the service is
provided.

Amounts invoiced to our customers in excess of recognized revenues are
recorded as deferred revenues.  The timing and amounts invoiced to customers can vary significantly depending on specific contract terms and can therefore
have a significant impact on deferred revenues in any given period.

Our revenue is derived from the licensing of our software products,
professional services, maintenance and support and ASP services.  We recognize revenue when persuasive evidence of an arrangement exists, we have delivered
the product or performed the service, the fee is fixed or determinable and collection is probable.

License Revenue

We recognize our license revenue upon delivery, provided collection is
determined to be probable and no significant obligations remain.

Services and Support Revenue

Our services and support revenue is composed of professional services (such as
consulting services and training) and maintenance and support and ASP services.  Our professional services revenue is recognized when the services are
performed.  Our maintenance and support and ASP offerings are recognized ratably over the term of the arrangement.

Multiple Element Arrangement

We enter into revenue arrangements in which a customer may purchase a
combination of software, maintenance and support, and professional services (multiple-element arrangements).  When vendor-specific objective evidence
(VSOE) of fair value exists for all elements, we allocate revenue to each element based on the relative fair value of each of the
elements.  VSOE of fair value is established by the price charged when that element is sold separately.  For maintenance and support, VSOE of
fair value is established by renewal rates when they are sold separately.  For arrangements where VSOE of



18

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fair value exists only for the undelivered elements, we defer the full fair value of the
undelivered elements and recognize the difference between the total arrangement fee and the amount deferred for the undelivered items as revenue, assuming all
other criteria for revenue recognition have been met.

Valuation of Capitalized Software

Costs for the conceptual formulation and design of new software products are
expensed as incurred until technological feasibility has been established.  Once technological feasibility has been established, we capitalize costs to
produce the finished software products.  Capitalization ceases when the product is available for general release to customers.  Costs associated
with product enhancements that extend the original products life or significantly improve the original products marketability are also capitalized
once technological feasibility has been established.  Amortization is calculated on a product-by-product basis as the greater of the amount computed using
(a) the ratio that current gross revenues for a product bear to the total current and anticipated future gross revenues for that product or (b) the
straight-line method over the remaining economic life of the product.  At each balance sheet date, the unamortized capitalized costs of each computer
software product is compared to the net realizable value of that product.  If an amount of unamortized capitalized costs of a computer software product is
found to exceed the net realizable value of that asset, such amount will be written off.  The net realizable value is the estimated future gross
revenues from that product reduced by the estimated future costs of completing and deploying that product, including the costs of performing maintenance and
customer support required to satisfy our responsibility set forth at the time of sale.

Valuation of Allowance for Doubtful Accounts Receivable

Our estimate of the allowance for doubtful accounts is based on historical
information, historical loss levels and an analysis of the collectibility of individual accounts.  We routinely assess the financial strength of our
customers and, based upon factors concerning credit risk, establish an allowance for uncollectible accounts.  We believe that accounts receivable credit
risk exposure beyond such allowance is limited.

Business Combination, Goodwill and Other Intangible Assets

ASC 805, Business Combinations, requires that the purchase method of
accounting be used for all business combinations.  It further specifies criteria as to intangible assets acquired in a business combination that must be
recognized and reported separately from goodwill.  The intangible assets, other than goodwill, acquired in the MSBS transaction will be amortized using the
straight-line method over their estimated useful lives.

Goodwill represents the cost of the MSBS assets in excess of the fair value of
identifiable tangible and intangible net assets purchased.  Goodwill is not amortized but is tested for impairment.  We review our goodwill for
impairment annually in the fourth quarter.  We also analyze whether any indicators of impairment exist each quarter.  A significant amount of judgment
is involved in determining if an indicator of impairment has occurred.  Such indicators may include a sustained, significant decline in our share price and
market capitalization, a decline in our expected future cash flows, a significant adverse change in legal factors or in the business climate, unanticipated
competition, the testing for recoverability of our assets, and/or slower growth rates, among others.

We estimate the fair value of MSBS using discounted expected future cash
flows, supported by the results of various market approach valuation models.  If the fair value of MSBS exceeds net book value, goodwill is not impaired,
and no further testing is necessary.  If the net book value exceeds fair value, we perform a second test to measure the amount of impairment loss.  To
measure the amount of any impairment charge, we determine the implied fair value of goodwill in the same manner as in a business combination.

Specifically, we allocate fair value to all assets and liabilities, including
any unrecognized intangible assets, in a hypothetical calculation that would yield the implied fair value of goodwill.  If the implied fair value of
goodwill is less than the goodwill recorded on our consolidated balance sheet, we record an impairment charge for the difference.



19

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RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain items from
the consolidated statements of operations expressed as a percentage of total revenues:

|                                               |  |  |  | Year Ended December 31, |      
|---------------------------------------------- |  |  |  | ----------------------- | -----
|
|Revenues:                                      |  |  |  |                         |      
|License                                        |  |  |  |                         | 13.1 
|Maintenance                                    |  |  |  |                         | 31.8 
|Professional
Services                          |  |  |  |                         | 40.5 
|Applications
Service Provider (ASP) Services |  |  |  |                         | 14.6 
|Total
Revenues                                 |  |  |  |                         | 100.0
|                                               |  |  |  |                         |      
|Cost of
Revenues:                              |  |  |  |                         |      
|License                                        |  |  |  |                         | 7.6  
|Maintenance                                    |  |  |  |                         | 16.3 
|Professional
Services                          |  |  |  |                         | 28.5 
|ASP
Services                                   |  |  |  |                         | 9.6  
|Total Cost
of Revenues                         |  |  |  |                         | 62.0 
|Direct
Margin                                  |  |  |  |                         | 38.0 
|                                               |  |  |  |                         |      
|Operating
Expenses:                            |  |  |  |                         |      
|Sales and
Marketing                            |  |  |  |                         | 8.2  
|General and
Administrative                     |  |  |  |                         | 10.9 
|Acquisition
Costs                              |  |  |  |                         | 1.6  
|Research and
Development                       |  |  |  |                         | 4.8  
|Provision for
Doubtful Accounts                |  |  |  |                         |     
|Total
Operating Expenses                       |  |  |  |                         | 25.5 
|Operating
Income                               |  |  |  |                         | 12.5 
|                                               |  |  |  |                         |      
|Other
(Income) Expense:                        |  |  |  |                         |      
|Interest
Expense                               |  |  |  |                         | 0.1  
|Interest
Expense - Related Party               |  |  |  |                         |     
|Interest
Income                                |  |  |  |                         | (0.1 
|Other
Expense                                  |  |  |  |                         |     
|Other
Income                                   |  |  |  |                         | (0.2 
|Total
Other (Income) Expense                   |  |  |  |                         | (0.2 
|Income
Before Income Taxes                     |  |  |  |                         | 12.7 
|Income Tax
Benefit:                            |  |  |  |                         | 4.2  
|Net
Income                                     |  |  |  |                         | 16.9 



YEAR ENDED DECEMBER 31, 2010 COMPARED WITH YEAR ENDED DECEMBER 31, 2009

Revenues

Total revenues were $17,457,000 for the year ended December 31, 2010 compared
to $14,515,000 for the year ended December 31, 2009, an increase of 20%.  License fees were $2,288,000 for the year ended December 31, 2010 compared to
$4,138,000 in 2009, as a result of fewer new customer license sales and sales to existing customers in 2010.  For the year ended December 31, 2010,
maintenance revenues were $5,545,000 compared to $4,987,000 of the prior year, due to the annual renewal of existing customers maintenance and maintenance
from new customer contracts signed in 2009.  Professional services revenue contributed $7,070,000 for the year ended December 31, 2010 compared to
$3,282,000 for the



20

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year ended December 31, 2009 as a result of increased demand for new software capabilities and
customizations from our current customer base and our recent acquisition of MSBS.  ASP revenues were $2,554,000 for the year ended December 31, 2010
compared to $2,108,000 for the year ended December 31, 2009 due primarily to an expanded and extended contractual relationship with two large customers.

Cost of sales increased to $10,817,000 for the year ended December 31, 2010 as
compared to $7,760,000 for 2009, due to higher salaries and personnel-related expenses associated with staffing changes and our recent acquisition of MSBS.
 Non-cash capitalized software amortization was $618,000 for the year ended December 31, 2010 as compared to $917,000 in 2009.  We capitalized
software development costs of $3,260,000 in 2010 compared to $1,411,000 in 2009.

Expenses

Research and Development.  Research and development expenses were
$847,000 for the year ended December 31, 2010 compared to $891,000 in 2009, primarily due to our research and development staff working on developing various
new software capabilities that were capitalized in 2010.  We intend to continue to maintain our ongoing effort to enhance the functionality of our products
and solutions to remain competitive.

Sales and Marketing.  Sales and marketing expenses increased to
$1,424,000 for the year ended December 31, 2010 from $906,000 in 2009, primarily due to costs related to increased advertising and promotion and
personnel-related costs.

Acquisition.  Acquisition expenses were approximately $285,000 for
the year ended December 31, 2010 as compared to zero in the same period of 2009.  These expenses were in connection with the acquisition of MSBS.

General and Administrative.  General and administrative expenses
were $1,902,000 in 2010 as compared to $1,674,000 in 2009.  The increase in the general and administrative expenses was mainly due to the costs related to
our recent acquisition of MSBS.

Other Expense.We had $0 of other expense for the year ended
December 31, 2010 compared to $1,000 for the year ended December 31, 2009.

Other Income.  We had $43,000 of other income for the year ended
December 31, 2010 compared to $45,000 of other income for the year ended December 31, 2009.

Income Tax Benefit.In 2010, we recorded income taxes of $63,000,
which is comprised of New Jersey state tax and Federal alternative minimum tax.  We also recorded an income tax benefit of $800,000 in 2010.

YEAR ENDED DECEMBER 31, 2009 COMPARED WITH YEAR ENDED DECEMBER 31, 2008

Revenues

Total revenues were $14,515,000 for the year ended December 31, 2009 compared
to $13,467,000 for the year ended December 31, 2008, an increase of 8%.  License fees were $4,138,000 for the year ended December 31, 2009 compared to
$3,802,000 in 2008, an increase of 9%, as a result of three new license sales and sales to existing customers in 2009.  For the year ended December
31, 2009, maintenance revenues were $4,987,000 compared to $4,151,000 of the prior year, due to the annual renewal of existing customers maintenance and
maintenance from new customer contracts signed in 2008.  Professional services revenue contributed $3,282,000 for the year ended December 31, 2009 compared
to $3,477,000 for the year ended December 31, 2008 as a result of decreased demand for new software capabilities and customizations from our two new customers
signed in 2009 and our current customer base.  We expect that the new license sales in 2009 will generate significant additional professional services
revenue in 2010.  ASP revenues were $2,108,000 for the year ended December 31, 2009 compared to $2,037,000 for the year ended December 31, 2008 due
primarily to an expanded and extended contractual relationship with two large customers.

Cost of sales increased to $7,760,000 for the year ended December 31, 2009 as
compared to $7,145,000 for 2008, due to higher salaries and personnel-related expenses associated with staffing changes.  Non-cash capitalized software
amortization was $917,000 for the year ended December 31, 2009 as compared to $868,000 in 2008.  We capitalized software development costs of $1,411,000 in
2009 compared to $1,136,000 in 2008.



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Expenses

Research and Development.  Research and development expenses were
$891,000 for the year ended December 31, 2009 compared to $1,035,000 in 2008, primarily due to our research and development staff working on developing various
new software capabilities that were capitalized in 2009.  We intend to continue to maintain our ongoing effort to enhance the functionality of our products
and solutions to remain competitive.

Sales and Marketing.  Sales and marketing expenses increased to
$906,000 for the year ended December 31, 2009 from $883,000 in 2008, primarily due to costs related to our new website and personnel-related costs.

General and Administrative.  General and administrative expenses
were $1,674,000 in 2009 as compared to $1,540,000 in 2008.  The increase in the general and administrative expenses was mainly due to the costs of filing a
registration statement with the SEC to register the resale of some of our outstanding shares of common stock.

Other Expense.We had $1,000 of other expense for the year ended
December 31, 2009 compared to $0 for the year ended December 31, 2008.

Other Income.  We had $45,000 of other income for the year ended
December 31, 2009 compared to $40,000 of other income for the year ended December 31, 2008.

Provision for Doubtful Accounts.  We had $0 provision for doubtful
accounts in 2009 compared to $21,000 for 2008, due to the write-off of the account receivable balances of two customers who decided not to purchase our
software.

Income Tax Benefit.In 2009, we recorded income taxes of
$205,000, which is comprised of New Jersey state tax and Federal alternative minimum tax.  We also recorded an income tax benefit of $787,000 in 2009.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

We have funded our operations primarily from cash flow from operations.
 Cash from operations results primarily from net income from the income statement plus non-cash expenses (depreciation and amortization) and adjusted for
changes in working capital from the balance sheet.

Our largest source of operating cash flows is cash collections from our
customers following the purchase or renewal of software licenses, product support agreements and other related services.  Payments from customers for
software licenses are generally received at the beginning of the contract term.  Payments from customers for product support and ASP services are generally
received in advance on a quarterly basis.  Payments for professional services are generally received 30 days after the services are performed.

At December 31, 2010, we had cash and cash equivalents of $5,893,000
compared to cash and cash equivalents of $4,324,000 at December 31, 2009.  The increase in cash and cash equivalents is primarily attributable to
payments due from new contract sales in 2009.  Three new contracts were signed at the end of 2009 for which payment
was due in 2010.

Cash Flows

Our ability to generate cash has depended on a number of different factors,
primarily our ability to continue to secure and retain customers and generate new license sales and related product support agreements.  In order to
attract new customers and maintain or grow existing revenue streams, we utilize our existing sources of capital to invest in sales and marketing, technology
infrastructure and research and development.

Our ability to continue to control expenses, maintain existing revenue streams
and anticipate new revenue will impact the amounts and certainty of cash flows.  We intend to maintain our expenses in line with existing revenue
streams from maintenance support, ASP services and professional services.

Balance sheet items that should be considered in assessing our liquidity
include cash and cash equivalents, accounts receivable, prepaid expenses, accounts payable and accrued liabilities.  Income statement items that should be
considered in



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assessing our liquidity include revenue, cost of revenue (net of depreciation and amortization),
operating expenses (net of depreciation and amortization) and other expenses.  Statement of cash flows items that should be considered in assessing our
liquidity include net cash flows from operating activities, net cash flows from investing activities and net cash flows from financing activities.

In December 31, 2010, we had working capital of $5,013,000 compared to working
capital of $7,232,000 at December 31, 2009.  This decrease in our working capital resulted primarily from a decrease in license revenue in 2010.  Net
cash provided from operating activities totaled approximately $6,899,000 in 2010 compared to approximately $1,776,000 in 2009.  In 2010, cash flow
from operating activities represented the Companys principal source of cash and results primarily from net income (loss), less non-cash expense and
changes in working capital.  The Company had a significant increase in its accounts receivable in 2009 due to the license sales to new customers offset by
non-cash expenses and payment of liabilities.

In 2010, net cash used for investing activities was approximately $5,172,000
compared to approximately $1,413,000 in 2009.  The increase in net cash used for investing activities was mainly due to capitalized acquisition
expenditures related to the acquisition of MSBS and a significant increase in capitalized software.  We expect capital expenditures and capital software
expenditures to continue to be funded by cash generated from operations.  We use cash to invest in capital and other assets to support our growth.

In 2010, net cash provided from (used for) financing activities was
approximately $(159,000) compared to approximately $(725,000) in 2009.  The cash provided from financing activities in 2010 consisted of proceeds from the
exercise of stock options and warrants and included the payment of debt related to the acquisition of MSBS.  The cash provided from (used for) financing
activities in 2009 consisted of dividends paid to common stockholders and proceeds from the exercise of stock options and warrants.

Funding Requirements

Our primary uses of cash are for personnel-related expenditures, facilities
and technology costs.

We do not anticipate any large capital expenditures that will require us to
seek new sources of capital.  We lease computer equipment for terms of three years in order to have the latest available technology to serve our customers
and develop new products.

On June 18, 2008, we announced that the Board of Directors authorized a share
buyback plan of up to 1,000,000 shares of the Companys common stock, in accordance with Rule 10b-18 of the Exchange Act.

In 2008, the Company purchased an aggregate of 201,870 shares of the
Companys common stock on the open market at an average purchase price of $0.82 per share for a total purchase price of approximately $164,894.

On February 17, 2009, we announced that our board of directors declared a
special cash dividend in the amount of $0.03 per share on our common stock.  This dividend was paid on April 7, 2009 to common stockholders of record as of
the close of business on March 27, 2009.  The Company also announced that in light of its decision to declare a special cash dividend, the Board of
Directors had determined that the Company would suspend its common stock buyback plan until further notice.

On April 12, 2010, the Company announced the acquisition of MSBS, a provider
of business intelligence and advanced analytical solutions to the insurance industry based in New York, New York.  The Company acquired substantially all
of MSBS assets (excluding working capital) for an aggregate purchase price of $2,450,000, with no assumed indebtedness, payable as follows: (i) a cash
flow payment in the amount of $1,760,000; (ii) the execution and delivery by the Company to MSBS of a non-negotiable, subordinated promissory note in the
aggregate principal amount of $600,000; and (iii) the delivery to MSBS of 76,014 shares of our common stock, which number of shares had a fair market value of
$90,000 calculated as provided for in the purchase agreement.

We prepare monthly cash flow projections on a rolling twelve-month basis based
on a detailed review of anticipated receipts and revenue from licenses, maintenance, ASP and professional services.  We also perform a detailed review of
our disbursements, including fixed costs, variable costs, legal costs, payroll costs and other specific payments, on a rolling  twelve-month basis.



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We believe that our current cash balances and anticipated cash flows from
operations will be sufficient to meet our normal operating needs for at least the next twelve months.  We do not anticipate any material changes in our
sources of and needs for capital.  Our ability to fund our working capital needs and address planned capital expenditures will depend on our ability to
generate cash in the future.  We anticipate generating future working capital through sales to new customers and continued sales and services to our
existing customers.

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

·

Our ability to generate cash is subject to general economic, financial, competitive and other factors
beyond its control;

·

Our need to invest resources in product development in order to continue to enhance our current product,
develop new products, attract and retain customers and keep pace with competitive product introductions and technological developments;

·

We experience intense competition in our industry and continuing technological changes;

·

Insurance companies typically are slow in making decisions and have numerous bureaucratic and
institutional obstacles, which can make our efforts to attain new customers difficult;

·

We compete with a number of larger companies who have greater resources than those of ours  we do
so on the basis of insurance knowledge, products, services, price, technological advances and system functionality and performance;

·

Our operations depend upon the continuing business of our existing customers and our ability to attract
new customers; and

·

A decline in software spending in the insurance industry could result in a decrease in our revenue.



Material risks to cash flow from operations include delayed or reduced cash
payments accompanying sales of new licenses or a decline in our services business.  There can be no assurance that changes in our plans or other events
affecting our operations will not result in materially accelerated or unexpected expenditures.

We do not expect for there to be a change in the mix or relative cost of our
sources of capital.

Net Operating Tax Loss Carryforwards

At December 31, 2010, we had approximately $17,000,000 of federal net
operating tax loss carryforwards expiring at various dates through 2026.  The Tax Reform Act of 1986 enacted a complex set of rules which limits a
companys ability to utilize net operating tax loss carryforwards and tax credit carryforwards in periods following an ownership change.  These rules
define ownership change as a greater than 50 percent point change in stock ownership within a defined testing period, which is generally a three-year period.
 As a result of stock which may be issued by us from time to time or the result of other changes in ownership of our outstanding stock, we may experience
an ownership change and consequently our utilization of net operating tax loss carryforwards could be significantly limited.

CONTRACTUAL OBLIGATIONS

The following table summarizes our significant contractual obligations at
December 31, 2010:

Payments due by period
(in thousands)



|Contractual Obligations |  |  |  | Total |       | Less than 1 Year |  | 1-3 Years |     | 3-5 Years |  | More than 5 Years
|----------------------- |  |  |  | ----- | ----- | ---------------- |  | --------- | --- | --------- |  | -----------------
|Operating
Leases        |  |  |  | $     | 2,166 |                  |  | $         | 876 |           |  |                  
|Total                   |  |  |  | $     | 2,166 |                  |  | $         | 876 |           |  |                  



We lease one facility in Fairfield, New Jersey, which lease expires at October
31, 2012 and one facility in New York, New York, which lease expires January 31, 2014.  We also lease various telephone and computer equipment.



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OFF-BALANCE-SHEET ARRANGEMENTS

During the fiscal year ended December 31, 2010, we did not have any
off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K promulgated under the Exchange Act.

RECENT ACCOUNTING AND AUDITING DEVELOPMENTS

In July 2010, the FASB issued Accounting Standards Update (ASU)
No. 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.ASU No. 2010-20 requires a greater
level of disaggregation in disclosures relating to the credit quality of the Companys financing receivables and allowance for loan losses.
 Furthermore, ASU 2010-20 also requires enhanced disclosures around nonaccurual and past due financing receivables, impaired loans and loan modifications.
 The standard is effective for the first interim or annual reporting periods ending on or after December 15, 2010.

In January 2010, the FASB issued updated accounting guidance related to fair
value measurements and disclosures which amends and clarifies existing disclosure requirements.  This updated accounting guidance requires new disclosures
related to amounts transferred into and out of Level 1 and 2 fair value measurements as well as separate disclosures of purchases, sales, issuances, and
settlements related to amounts reported as Level 3 fair value measurements.  This guidance also clarifies existing fair value disclosure requirements
related to the level of disaggregation and the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value
measurements.  This guidance is effective for interim and annual periods beginning after December 15, 2009, except for the separate disclosures of
purchases, sales, issuances, and settlements related to amounts reported as Level 3 fair value measurements, which is effective for fiscal years beginning after
December 15, 2010.  The Company does not believe the adoption of this guidance will have a material impact on its consolidated financial statements.

In February 2010, the FASB issued an additional accounting pronouncement that
amended certain requirements for subsequent events (FASB ASC Topic 855), which requires an SEC filer or a conduit bond obligor to evaluate subsequent events
through the date the financial statements are available to be issued and removes the previous requirements to disclose the date through which subsequent events
have been evaluated.  The amended amendments were effective on issuance of the final pronouncement.  The adoption of this pronouncement had no effect
on our consolidated financial statements.

In September 2009, the FASB issued ASU 2009-13, Multiple-Deliverable
Revenue Arrangements, and ASU 2009-14, Certain Revenue Arrangements That Include Software Elements  a consensus of the FASB Emerging Issues Task
Force, to amend the existing revenue recognition guidance.  ASU 2009-13 amends ASC 605, Revenue Recognition, Section 25, Multiple-Element
Arrangements, as follows: modifies criteria used to separate elements in a multiple-element arrangement, introduces the concept of best estimate of
selling price for determining the selling price of a deliverable, requires use of the relative selling price method and prohibits use of the residual
method to allocate arrangement consideration among units of accounting, and expands the disclosure requirements for all multiple-element arrangements within the
scope of ASC 605-25.

ASU 2009-14 amends the scope of ASC 985, Software, and ASC 605,
Revenue Recognition, to exclude certain tangible products and related deliverables that contain embedded software from the scope of this guidance.
 Instead, the excluded products and related deliverables must be evaluated for separation, measurement, and allocation under the guidance of ASC 605-25, as
amended by ASU 2009-13.  The amended guidance is effective prospectively for revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010.  Early adoption is permitted.  An entity may elect retrospective application to all revenue arrangements for all
periods presented using the guidance in ASC 250, Accounting Changes and Error Corrections.  Entities must adopt the amendments resulting from both
of these ASUs in the same period using the same transition method, where applicable.  Management is reviewing ASU 2009-13 and ASU 2009-14 for applicability
to the Companys revenue recognition policies.  The Company will adopt this standard for our fiscal year beginning January 1, 2011.



25

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ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company and this Item is not applicable to us.

ITEM  8.  FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA

The financial statements and supplementary data listed in Item 15(a)(1) and
(2) of this report are included beginning on page F-1 herein.

ITEM  9.  CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.  CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the
effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange
Act).  Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures
are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (1) recorded, processed,
summarized and reported, within the time periods specified in the SECs rules and forms, and (2) accumulated and communicated to our management, including
our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting.  The Exchange Act defines internal control over financial reporting in Rule 13a-15(f) and 15d-15(f) as
a process designed by, or under the supervision of, the companys principal executive and principal financial officers and effected by the companys
board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

·

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the assets of the company;

·

provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and

·

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the companys assets that could have a material effect on the consolidated financial statements.



Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Companys management assessed the effectiveness of the Companys
internal control over financial reporting as of December 31, 2010.  In making this assessment, the Companys management used the criteria set forth by
the Committee of Sponsoring Organizations, or COSO, of the Treadway Commission in Internal Control  Integrated Framework.



26

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Based upon its assessment, management concluded that, as of December 31, 2010,
the Companys internal control over financial reporting is effective based upon those criteria.



CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There has been no change in our internal control over financial reporting
during the quarter ended December 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.

ITEM 9B.  OTHER INFORMATION

Not applicable.



27

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PART III

ITEM  10.  DIRECTORS, EXECUTIVE
OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item and not otherwise set forth below will be
included in the Proxy Statement and is incorporated herein by reference.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information, as of March 10, 2011,
regarding our executive officers:

|Name                  |  |  |  | Age |  | Position                                                      
|--------------------- |  |  |  | --- |  | --------------------------------------------------------------
|John W.
Roblin        |  |  |  | 65  |  | Chairman of the Board of Directors and Chief Executive Officer
|Manish D.
Shah        |  |  |  | 39  |  | Director, President and Chief Technology Officer              
|Maryanne Z.
Gallagher |  |  |  | 49  |  | Executive Vice President and Chief Operating Officer          
|Ann F.
Massey         |  |  |  | 52  |  | Chief
Financial Officer and Secretary                         



The biographies of our executive officers are set forth below:

John W. Roblinhas served as our Chief Executive Officer since December
1999 and as a director since March 2000.  He was named Chairman of the Board of Directors in February 2001.  He served as our President from December
1999 to November 2008.  Prior to joining us, Mr. Roblin was Chief Information Officer and Senior Vice President for CIGNA Property and Casualty, positions
he held since 1998.  From 1994 until 1998, he was Chief Information Officer and Senior Vice President for Advanta Corporation.  Prior to 1994, he was
the Chief Information Officer at Chubb & Son, USF&G and Travelers Personal Lines Division.

Manish D. Shahhas served as a member of our Board and as our President
since November 2008 and has served as our Chief Technology Officer since May 2004.  Prior to his promotion to the position of our President, he served as
our Executive Vice President since May 2008.  Mr. Shah served as our Director of Technology from December 2002 through May 2004 and served as our
technology consultant from September 2000 through December 2001.  He graduated with Honors from the Columbia University Executive MBA Program in May 2008.
 Prior to joining us, Mr. Shah held several technology management positions at various companies such as Andersen Consulting, P&O Nedlloyd and Tata
Consultancy Services in different industries for over 10 years.

Maryanne Z. Gallagher has served as our Executive Vice President and
Chief Operating Officer since May 2008 and February 2001, respectively.  Prior to holding the position of Chief Operating Officer, she served as our
Senior Vice President since January 2000.  From November 1998 until December 1999, Ms. Gallagher served as our Vice President - Customer Service.  Ms.
Gallagher joined us in 1990 and has held various development and support positions in our Classic division through 1998.

Ann F. Massey has served as our Chief Financial Officer since February
2001, as our Secretary since April 1997 and as our Controller since March 1997.  From March 1996 to March 1997, Ms. Massey served as our Assistant
Treasurer.  From 1994 until February 1996, Ms. Massey served as Assistant Controller for our insurance services division.  Prior to 1994, Ms. Massey
had served as our Accounting Manager.

ITEM  11.  EXECUTIVE COMPENSATION

The information required by this Item will be included in the Proxy Statement
and is incorporated herein by reference.



28

---





ITEM  12.  SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item will be included in the Proxy Statement
and is incorporated herein by reference.

ITEM  13.  CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item will be included in the Proxy Statement
and is incorporated herein by reference.

ITEM  14.  PRINCIPAL ACCOUNTING FEES
AND SERVICES

The information required by this Item will be included in the Proxy Statement
and is incorporated herein by reference.



29

---



PART IV

ITEM  1.  EXHIBITS AND FINANCIAL
STATEMENT SCHEDULES

(a)

The following documents are filed as a part of this report.

(1)

Financial Statements

Reference is made to the Index to Financial Statements on Page 31 of this
report.

(2)

Financial Statement Schedule

Schedule II - Valuation and Qualifying Accounts.
     F-24




All other schedules are omitted since the required information is not present
or is not present in amounts sufficient to require submission of the schedules, or because the information required is included in the financial statements and
notes thereto.

(3)

Exhibits.

See Exhibit Index.







30

---





COVER-ALL TECHNOLOGIES INC.




INDEX TO CONSOLIDATED FINANCIAL STATEMENTS







|                                                                                                          |  |  |  | Page
|--------------------------------------------------------------------------------------------------------- |  |  |  | ----
|Report of
Independent Registered Public Accounting Firm                                                   |  |  |  | F-1 
|Consolidated
Balance Sheets  December 31, 2010 and 2009                                                  |  |  |  | F-2 
|Consolidated
Statements of Operations  Years Ended December 31, 2010, 2009 and 2008                      |  |  |  | F-4 
|Consolidated
Statements of Changes in Stockholders Equity  Years Ended December 31, 2010, 2009 and 2008 |  |  |  | F-6 
|Consolidated
Statements of Cash Flows  Years Ended December 31, 2010, 2009 and 2008                      |  |  |  | F-7 
|Notes to
Consolidated Financial Statements                                                                |  |  |  | F-9 
|Financial
Statement Schedule II  Valuation and Qualifying Accounts                                       |  |  |  | F-24



31


---





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM




To the Stockholders and the Board of Directors
of    Cover-All Technologies Inc.




We have audited the accompanying consolidated balance
sheets of Cover-All Technologies Inc. and its subsidiary as of December 31, 2010 and 2009, and the related consolidated statements of operations,
changes in stockholders equity, and cash flows for each of the three years in the period ended December 31, 2010. These consolidated financial
statements and the consolidated financial statement schedule are the responsibility of the Companys management. Our responsibility is to express
an opinion on these consolidated financial statements and consolidated financial statement 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 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 consolidated financial statements
referred to above present fairly, in all material respects, the financial position of Cover-All Technologies Inc. and its subsidiary as of December 31,
2010 and 2009, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2010,
in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set
forth therein.




We were not engaged to examine managements assessment
of the effectiveness of Cover-All Technologies Inc.s internal control over financial reporting as of December 31, 2010, included in the
accompanying Managements Report on Internal Control Over Financial Reporting and, accordingly, we do not express an opinion
thereon.




/s/ MSPC




Certified Public Accountants and
Advisors, A Professional Corporation




New York, New York March 24, 2011




F-1


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY




CONSOLIDATED BALANCE SHEETS







|                                                                                                                   |  |  |  | December 31, |           
|------------------------------------------------------------------------------------------------------------------ |  |  |  | ------------ | ----------
|
|Assets:                                                                                                            |  |  |  |              |           
|Current
Assets:                                                                                                    |  |  |  |              |           
|Cash and Cash
Equivalents                                                                                          |  |  |  | $            | 5,892,649 
|Accounts
Receivable (Less Allowance for Doubtful Accounts of $25,000 in 2010 and 2009)                             |  |  |  |              | 1,895,205 
|Prepaid
Expenses                                                                                                   |  |  |  |              | 691,020   
|Deferred Tax
Asset                                                                                                 |  |  |  |              | 800,000   
|Total
Current Assets                                                                                               |  |  |  |              | 9,278,874 
|                                                                                                                   |  |  |  |              |           
|Property
and Equipment  At Cost:                                                                                  |  |  |  |              |           
|Furniture,
Fixtures and Equipment                                                                                  |  |  |  |              | 956,269   
|Less:
Accumulated Depreciation                                                                                     |  |  |  |              | 530,701   
|Property
and Equipment  Net                                                                                       |  |  |  |              | 425,568   
|Goodwill                                                                                                           |  |  |  |              | 1,039,114 
|                                                                                                                   |  |  |  |              |           
|Capitalized Software (Less Accumulated Amortization of $12,584,710 and $11,966,365 in 2010 and 2009, Respectively) |  |  |  |              | 5,804,093 
|Customer
Lists/Relationships (Less Accumulated Amortization of $52,759 and $-0- in 2010 and 2009, Respectively)    |  |  |  |              | 167,241   
|Non-Competition Agreements (Less Accumulated Amortization of $46,044 and $-0- in 2010 and 2009, Respectively)      |  |  |  |              | 113,955   
|Deferred
Tax Asset                                                                                                 |  |  |  |              | 2,467,500 
|Other
Assets                                                                                                       |  |  |  |              | 217,015   
|Total
Assets                                                                                                       |  |  |  | $            | 19,513,360



See Notes to Consolidated Financial
Statements.




F-2


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY




CONSOLIDATED BALANCE SHEETS







|                                                                                                                                                                                    |  |  |  | December 31, |            
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | ------------ | -----------
|
|Liabilities and Stockholders Equity:                                                                                                                                               |  |  |  |              |            
|Current
Liabilities:                                                                                                                                                                |  |  |  |              |            
|Accounts
Payable                                                                                                                                                                    |  |  |  | $            | 273,910    
|Note
Payable                                                                                                                                                                        |  |  |  |              | 400,000    
|Accrued
Liabilities                                                                                                                                                                 |  |  |  |              | 1,363,706  
|Taxes
Payable                                                                                                                                                                       |  |  |  |              |           
|Deferred
Charges                                                                                                                                                                    |  |  |  |              | 52,545     
|Unearned
Revenue                                                                                                                                                                    |  |  |  |              | 2,175,683  
|Total
Current Liabilities                                                                                                                                                           |  |  |  |              | 4,265,844  
|                                                                                                                                                                                    |  |  |  |              |            
|Long-Term
Liabilities:                                                                                                                                                              |  |  |  |              |            
|Deferred
Charges                                                                                                                                                                    |  |  |  |              | 43,788     
|Total
Liabilities                                                                                                                                                                   |  |  |  |              | 4,309,632  
|Commitments and Contingencies                                                                                                                                                       |  |  |  |              |           
|                                                                                                                                                                                    |  |  |  |              |            
|Stockholders Equity:                                                                                                                                                               |  |  |  |              |            
|Common Stock,
$.01 Par Value, Authorized 75,000,000 Shares; 25,201,671 and 24,885,656 Shares Issued and 24,999,801 and 24,683,786 Shares Outstanding in 2010 and
2009, Respectively |  |  |  |              | 252,017    
|                                                                                                                                                                                    |  |  |  |              |            
|Capital In
Excess of Par Value                                                                                                                                                      |  |  |  |              | 30,450,122 
|                                                                                                                                                                                    |  |  |  |              |            
|Accumulated
Deficit                                                                                                                                                                 |  |  |  |              | (15,333,517
|                                                                                                                                                                                    |  |  |  |              |            
|Treasury
Stock  201,870 Shares  At Cost                                                                                                                                           |  |  |  |              | (164,894   
|                                                                                                                                                                                    |  |  |  |              |            
|Total
Stockholders Equity                                                                                                                                                          |  |  |  |              | 15,203,728 
|                                                                                                                                                                                    |  |  |  |              |            
|Total
Liabilities and Stockholders Equity                                                                                                                                          |  |  |  | $            | 19,513,360 



See Notes to Consolidated Financial
Statements.




F-3


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY




CONSOLIDATED STATEMENTS OF OPERATIONS







|                                              |  |  |  | Years ended |           
|--------------------------------------------- |  |  |  | ----------- | ----------
|
|
|Revenues:                                     |  |  |  |             |           
|Licenses                                      |  |  |  | $           | 2,288,202 
|Maintenance                                   |  |  |  |             | 5,545,142 
|Professional
Services                         |  |  |  |             | 7,069,715 
|Application
Service Provider (ASP) Services |  |  |  |             | 2,553,766 
|Total
Revenues                                |  |  |  |             | 17,456,825
|                                              |  |  |  |             |           
|Costs of
Revenues:                            |  |  |  |             |           
|Licenses                                      |  |  |  |             | 1,326,973 
|Maintenance                                   |  |  |  |             | 2,834,910 
|Professional
Services                         |  |  |  |             | 4,976,200 
|ASP
Services                                  |  |  |  |             | 1,679,248 
|Total
Costs of Revenues                       |  |  |  |             | 10,817,331
|Direct
Margin                                 |  |  |  |             | 6,639,494 
|                                              |  |  |  |             |           
|Operating
Expenses:                           |  |  |  |             |           
|Sales and
Marketing                           |  |  |  |             | 1,423,656 
|General and
Administrative                    |  |  |  |             | 1,901,673 
|Acquisition
Costs                             |  |  |  |             | 285,240   
|Research and
Development                      |  |  |  |             | 847,496   
|Provision for
Doubtful Accounts               |  |  |  |             |          
|Total
Operating Expenses                      |  |  |  |             | 4,458,065 
|Operating
Income                              |  |  |  |             | 2,181,429 
|                                              |  |  |  |             |           
|Other
(Income) Expense:                       |  |  |  |             |           
|Interest
Expense                              |  |  |  |             | 18,740    
|Interest
Expense  Related Party              |  |  |  |             |          
|Interest
Income                               |  |  |  |             | (8,687    
|Other
Expense                                 |  |  |  |             |          
|Other
Income                                  |  |  |  |             | (43,477   
|Total
Other (Income) Expense                  |  |  |  |             | (33,424   
|Income
Before Income Taxes                    |  |  |  |             | 2,214,853 
|Income Tax
(Benefit)                          |  |  |  |             | (736,933  
|Net
Income                                    |  |  |  | $           | 2,951,786 



See Notes to Consolidated Financial
Statements.




F-4


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY




CONSOLIDATED STATEMENTS OF OPERATIONS







|                                                                                                  |  |  |  | Years ended |           
|------------------------------------------------------------------------------------------------- |  |  |  | ----------- | ----------
|
|
|Basic
Earnings Per Common Share                                                                   |  |  |  | $           | .12       
|Diluted
Earnings Per Common Share                                                                 |  |  |  | $           | .12       
|Weighted
Average Number of Common Shares Outstanding for Basic Earnings Per Common Share          |  |  |  |             | 24,828,000
|Weighted
Average Number of Common Shares Outstanding for Diluted Income Earnings Per Common Share |  |  |  |             | 25,590,000



See Notes to Consolidated Financial
Statements.




F-5


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY




CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS
EQUITY (DEFICIT)







|                                                                          |  |  |  | Common Stock |         | Capital in Excess of Par Value |  | Accumulated Deficit |            | Treasury Stock |  | Total Stockholders Equity
|------------------------------------------------------------------------- |  |  |  | ------------ | ------- | ------------------------------ |  | ------------------- | ---------- | -------------- |  | --------------------------
|Balance at
January 1, 2008                                                |  |  |  | $            | 231,923 |                                |  | $                   | 28,073,659 |                |  | $                         
|Exercise of
540,539 Stock Options                                         |  |  |  |              | 5,405   |                                |  |                     | 275,945    |                |  |                           
|Grant of
83,169 Shares of Common Stock to Non-Employee Directors          |  |  |  |              | 832     |                                |  |                     | 83,168     |                |  |                           
|Conversion of
$62,265 of Convertible Debt                                 |  |  |  |              | 8,742   |                                |  |                     | 253,523    |                |  |                           
|Purchase of
201,870 Shares of Treasury Stock                              |  |  |  |              |        |                                |  |                     |           |                |  |                           
|Non-Cash
Stock-Based Compensation                                         |  |  |  |              |        |                                |  |                     | 499,351    |                |  |                           
|Net
Income                                                                |  |  |  |              |        |                                |  |                     |           |                |  |                           
|Balance at
December 31, 2008                                              |  |  |  |              | 246,902 |                                |  |                     | 29,185,646 |                |  |                           
|Exercise of
26,429 Stock Options and Warrants                             |  |  |  |              | 264     |                                |  |                     | 13,036     |                |  |                           
|Vesting of
75,000 Shares of Restricted Stock to One of Our Executives     |  |  |  |              | 750     |                                |  |                     | (750       | )              |  |                           
|Grant of
84,000 Shares of Restricted Stock to Non- Employee Directors     |  |  |  |              | 840     |                                |  |                     | 83,160     |                |  |                           
|Grant of
10,000 Shares of Restricted Stock to Our Investor Relations Firm |  |  |  |              | 100     |                                |  |                     | 12,400     |                |  |                           
|Non-Cash
Stock-Based Compensation                                         |  |  |  |              |        |                                |  |                     | 409,762    |                |  |                           
|Dividends
Paid to Common Stockholders                                     |  |  |  |              |        |                                |  |                     |           |                |  |                           
|Net
Income                                                                |  |  |  |              |        |                                |  |                     |           |                |  |                           
|Balance at
December 31, 2009                                              |  |  |  |              | 248,856 |                                |  |                     | 29,703,254 |                |  |                           
|Exercise of
60,000 Stock Options and Warrants                             |  |  |  |              | 600     |                                |  |                     | 40,700     |                |  |                           
|Vesting of
107,500 Shares of Restricted Stock to Several of Our Employees |  |  |  |              | 1,075   |                                |  |                     | (1,075     | )              |  |                           
|Grant of
72,501 Shares of Restricted Stock to Non- Employee Directors     |  |  |  |              | 725     |                                |  |                     | 99,164     |                |  |                           
|Grant of
76,014 Shares of Stock to MSBS Related to the Acquisition        |  |  |  |              | 760     |                                |  |                     | 89,240     |                |  |                           
|Non-Cash
Stock-Based Compensation                                         |  |  |  |              |        |                                |  |                     | 518,839    |                |  |                           
|Net
Income                                                                |  |  |  |              |        |                                |  |                     |           |                |  |                           
|Balance at
December 31, 2010                                              |  |  |  | $            | 252,016 |                                |  | $                   | 30,450,122 |                |  | $                         



See Notes to Consolidated Financial
Statements.




F-6


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY




CONSOLIDATED STATEMENTS OF CASH FLOWS







|                                                                       |  |  |  | Years ended |           
|---------------------------------------------------------------------- |  |  |  | ----------- | ----------
|
|
|Cash Flows
from Operating Activities:                                  |  |  |  |             |           
|Net
Income                                                             |  |  |  | $           | 2,951,786 
|Adjustments
to Reconcile Net Income to Net                             |  |  |  |             |           
|Cash Provided
by Operating Activities:                                 |  |  |  |             |           
|Bad Debt
Expense                                                       |  |  |  |             |          
|Depreciation                                                           |  |  |  |             | 159,835   
|Amortization
of Capitalized Software                                   |  |  |  |             | 618,345   
|Amortization
of Customer Lists/Relationships                           |  |  |  |             | 52,759    
|Amortization
of Non-Competition Agreements                             |  |  |  |             | 46,044    
|Amortization
of Deferred Financing Costs                               |  |  |  |             |          
|Amortization
of Stock-Based Compensation                               |  |  |  |             | 518,839   
|Stock-Based
Compensation Provided for Services                         |  |  |  |             | 99,889    
|Deferred Tax
Benefit                                                   |  |  |  |             | (800,000  
|Write-off of
Leasehold Improvement                                     |  |  |  |             |          
|                                                                      
|Changes in
Assets and Liabilities:                                     |  |  |  |             |           
|(Increase)
Decrease in:                                                |  |  |  |             |           
|Accounts
Receivable                                                    |  |  |  |             | 3,191,277 
|Prepaid
Expenses                                                       |  |  |  |             | (245,274  
|Other
Assets                                                           |  |  |  |             | (106,864  
|Increase
(Decrease) in:                                                |  |  |  |             |           
|Accounts
Payable                                                       |  |  |  |             | 65,096    
|Accrued
Liabilities                                                    |  |  |  |             | 88,648    
|Taxes
Payable                                                          |  |  |  |             | (139,035  
|Deferred
Charges                                                       |  |  |  |             | (27,510   
|Unearned
Revenue                                                       |  |  |  |             | 425,380   
|Net Cash
Provided from Operating Activities                            |  |  |  |             | 6,899,215 
|                                                                      
|Cash Flows
from Investing Activities:                                  |  |  |  |             |           
|Capital
Expenditures                                                   |  |  |  |             | (119,810  
|Capitalized
Software Expenditures                                      |  |  |  |             | (3,260,479
|Cost of
Acquisition                                                    |  |  |  |             | (1,792,023
|                                                                      
|Net Cash
Used for Investing Activities                                 |  |  |  |             | (5,172,312
|                                                                      
|Cash Flows
from Financing Activities:                                  |  |  |  |             |           
|Payment of
Debt                                                        |  |  |  |             | (200,000  
|Dividends
Paid to Common Stockholders                                  |  |  |  |             |          
|Proceeds from
Exercise of Stock Options, Restricted Stock and Warrants |  |  |  |             | 41,300    
|Purchase of
Treasury Stock                                             |  |  |  |             |          
|                                                                      
|Net Cash
Provided from (Used for) Financing Activities                 |  |  |  |             | (158,700  
|Increase
(Decrease) in Cash and Cash Equivalents                       |  |  |  |             | 1,568,203 
|                                                                      
|Cash and
Cash Equivalents  Beginning of Years                         |  |  |  |             | 4,324,446 
|                                                                      
|Cash and
Cash Equivalents  End of Years                               |  |  |  | $           | 5,892,649 



See Notes to Consolidated Financial
Statements.




F-7


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY




CONSOLIDATED STATEMENTS OF CASH FLOWS







|Supplemental
Disclosures of Cash Flow Information:                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |   |            |   |  |   |        |  |  |   |        | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | - | ---------- | - |  | - | ------ |  |  | - | ------ | 
|Cash paid
during the years for:                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |   |            |   |  |   |        |  |  |   |        | 
|Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  | $ | 18,740     |   |  | $ |       |  |  | $ | 9,469  | 
|Interest
 Related Party                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  | $ |           |   |  | $ |       |  |  | $ | 2,615  | 
|Income
Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |  |  | $ | 267,102    |   |  | $ | 66,140 |  |  | $ | 27,367 | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Supplemental Disclosures of Non-Cash Financing Activities:On June 25, 2008, John Roblin, our Chairman and Chief
Executive Officer, and certain other investors elected to convert all of the unpaid principal amount due on convertible debentures in their possession,
totaling $262,265, into an aggregate of 874,217 shares of our common stock at the conversion price of $0.30 per share. We made an aggregate of $10,000
of interest payments on the debentures during 2008.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Supplemental Disclosures of Non-Cash Investing Activities:On April 12, 2010, the Company purchased certain
assets of Moore Stephens Business Solutions, LLC (MSBS). In connection with the acquisition, debt was issued as follows:                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Fair Value of
Assets Acquired                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  | $ | 2,482,023  |   |  |   |        |  |  |   |        | 
|Cash Paid for
the Assets Acquired                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |  |  |   | (1,792,023 | ) |  |   |        |  |  |   |        | 
|Fair Value of
Common Stock Issued                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |  |  |   | (90,000    | ) |  |   |        |  |  |   |        | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Debt
Issued                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  | $ | 600,000    |   |  |   |        |  |  |   |        | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|The Company issued an aggregate of 76,014 shares of its common stock in connection with the acquisition. See Note 3 of the
Consolidated Financial Statements for further details on the acquisition.                                                                                                                                                                                                                                                                              



See Notes to Consolidated Financial
Statements.




F-8


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS




[1] Summary of Significant Accounting
Policies




Description of Business  Cover-All
Technologies Inc., through its wholly-owned subsidiary, Cover-All Systems, Inc., licenses and maintains its software products for the property/casualty
insurance industry throughout the United States and Puerto Rico. The subsidiary also provides professional consulting services to its customers
interested in customizing their software.




Principles of Consolidation  The
consolidated financial statements include the accounts of Cover-All Technologies Inc. and its wholly-owned subsidiary. All material intercompany
balances and transactions have been eliminated.




Use of Estimates  The preparation of
financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.




Revenue Recognition  Our revenues are
recognized in accordance with Accounting Standards Codification (ASC) 986-605, Software Revenue Recognition. Revenue from the sale
of software licenses is recognized when standardized software modules are delivered to and accepted by the customer, the license term has begun, the
fee is fixed or determinable and collectibility is probable. Revenue from software maintenance contracts and ASP services are recognized ratably over
the lives of the contracts. Revenue from professional services is recognized when the service is provided.




We enter into revenue arrangements in which a customer may
purchase a combination of software, maintenance and support, and professional services (multiple-element arrangements). When vendor-specific objective
evidence (VSOE) of fair value exists for all elements, we allocate revenue to each element based on the relative fair value of each of the
elements. VSOE of fair value is established by the price charged when that element is sold separately. For maintenance and support, VSOE of fair value
is established by renewal rates, when they are sold separately. For arrangements where VSOE of fair value exists only for the undelivered elements, we
defer the full fair value of the undelivered elements and recognize the difference between the total arrangement fee and the amount deferred for the
undelivered items as revenue, assuming all other criteria for revenue recognition have been met.




Cash and Cash Equivalents  We consider
all highly liquid investments, with a maturity of three months or less when purchased, to be cash equivalents.




Risk Concentrations  Financial
instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts
receivable. We place our cash and cash equivalents with high credit quality institutions to limit credit exposure. We believe no significant
concentration of credit risk exists with respect to these deposits. Management believes that the amount of cash beyond insured amounts at December 31,
2010 is not at significant risk.




Concentrations of credit risk with respect to trade
accounts receivable are limited due to the wide variety of customers principally major insurance companies, who are dispersed across many geographic
regions. As of December 31, 2010, four customers accounted for approximately 70% of our trade accounts receivable portfolio. As of December 31, 2009,
three customers accounted for approximately 71% of our trade accounts receivable portfolio. We routinely assess the financial strength of customers
and, based upon factors concerning credit risk, we establish an allowance for doubtful accounts. Management believes that accounts receivable credit
risk exposure beyond such allowance is limited.




F-9


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COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, Sheet #2




[1] Summary of Significant Accounting Policies
[Continued]




Impairment of Long-Lived Assets  We
review our long-lived assets and identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future cash flows associated with
the future use and disposal of the related asset or group of assets to their respective carrying amounts. Impairment, if any, is measured as the excess
of the carrying amount over the fair value based on market value (when available) or discounted expected cash flows of those assets, and is recorded in
the period in which the determination is made.




Stock-Based Compensation  We follow the
guidance of ASC 718, Accounting for Stock Options and Other Stock-Based Compensation. ASC 718 requires companies to record compensation expense
for share-based awards issued to employees and directors in exchange for services provided. The amount of the compensation expense is based on the
estimated fair value of the awards on their grant dates and is recognized over the required service periods. Our share-based awards include stock
options and restricted stock awards. Prior to our adoption of ASC 718, we applied the intrinsic value method to calculate the compensation expense for
share-based awards. Historically, we have generally set the exercise price for our stock options equal to the market value on the grant date. As a
result, the options generally had no intrinsic value on their grant dates, and we did not record any compensation expense unless the terms of the
options were subsequently modified. For restricted stock awards, the calculation of compensation expense is the same.




For the year ended December 31, 2010, we recognized
$618,728 of stock-based compensation expense in our consolidated financial statements. For the year ended December 31, 2009, we recognized $506,262 of
stock-based compensation expense in our consolidated financial statements. For the year ended December 31, 2008, we recognized $583,351 of stock-based
compensation expense in our consolidated financial statements. We recognized expense because we had (a) stock options granted prior to January 1, 2006
that had not yet vested as of January 1, 2006 and (b) stock options and restricted stock granted subsequent to January 1, 2006.




The estimated fair value underlying our calculation of
compensation expense for stock options is based on the Black-Scholes pricing model. ASC 718 requires forfeitures of share-based awards to be estimated
at the time of grant and revised, if necessary, in subsequent periods if our estimates change based on the actual amount of forfeitures we have
experienced.




Property and Equipment  Furniture,
fixtures and equipment are carried at cost. Depreciation is recorded on the straight-line method over three to ten years, which approximates the
estimated useful lives of the assets. Depreciation expense in 2010, 2009 and 2008 was $159,835, $72,165 and $70,706, respectively.




Routine maintenance and repair costs are charged to expense
as incurred and renewals and improvements that extend the useful life of the assets are capitalized. Upon sale or retirement, the cost and related
accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is reported in the statement of
operations.




F-10


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, Sheet #3




[1] Summary of Significant Accounting Policies
[Continued]




Intangible Assets  All of the
Companys intangible assets are amortized using the straight-line method over their estimated useful lives, which ranges from 30 months to 3
years. The Company evaluates its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such
assets may not be recoverable. Impairment is assessed by comparing the undiscounted cash flows expected to be generated by the intangible asset to its
carrying value. If an impairment exists, the Company calculates the impairment by comparing the carrying value of the intangible asset to its fair
value as determined by discounted expected cash flows. The Company has not recorded any impairments in 2010, 2009 or 2008.




Goodwill  We review our goodwill for
impairment annually in the fourth quarter. We also analyze whether any indicators of impairment exist each quarter. A significant amount of judgment is
involved in determining if an indicator of impairment has occurred. Such indicators may include a sustained, significant decline in our share price and
market capitalization, a decline in our expected future cash flows, a significant adverse change in legal factors or in the business climate,
unanticipated competition, the testing for recoverability of our assets, and/or slower growth rates, among others.




We estimate the fair value of MSBS using discounted
expected future cash flows, supported by the results of various market approach valuation models. If the fair value of MSBS exceeds net book value,
goodwill is not impaired, and no further testing is necessary. If the net book value exceeds fair value, we perform a second test to measure the amount
of impairment loss. To measure the amount of any impairment charge, we determine the implied fair value of goodwill in the same manner as in a business
combination.




Specifically, we allocate fair value to all assets and
liabilities, including any unrecognized intangible assets, in a hypothetical calculation that would yield the implied fair value of goodwill. If the
implied fair value of goodwill is less than the goodwill recorded on our consolidated balance sheet, we record an impairment charge for the difference.
There was no recorded impairment of goodwill during the year ended December 31, 2010.




Capitalized Software  Costs for the
conceptual formulation and design of new software products are expensed as incurred until technological feasibility has been established. Once
technological feasibility has been established, we capitalize costs to produce the finished software products. Capitalization ceases when the product
is available for general release to customers. Costs associated with product enhancements that extend the original products life or significantly
improve the original products marketability are also capitalized once technological feasibility has been established. Amortization is calculated
on a product-by-product basis as the greater of the amount computed using (a) the ratio that current gross revenues for a product bear to the total of
current and anticipated future gross revenues for that product or (b) the straight-line method over the remaining economic life of the product. At each
balance sheet date, the unamortized capitalized costs of each computer software product is compared to the net realizable value of that product. If an
amount of unamortized capitalized costs of a computer software product is found to exceed the net realizable value of that asset, such amount will be
written off. The net realizable value is the estimated future gross revenues from that product reduced by the estimated future costs of completing and
deploying that product, including the costs of performing maintenance and customer support required to satisfy our responsibility set forth at the time
of sale.




Advertising Expense  We expense
advertising costs as incurred. Advertising expense in 2010, 2009 and 2008 was $243,136, $121,460 and $79,166, respectively, and is reported as a
component of sales and marketing expense.




F-11


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COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, Sheet #4




[1] Summary of Significant Accounting Policies
[Continued]




Income Taxes  As defined by ASC 740,
Accounting for Income Taxes, income tax expense (or benefit) for the year is the sum of deferred tax expense (or benefit) and income taxes
currently payable (or refundable). Deferred tax expense (or benefit) is the change during the year in a companys deferred tax liabilities and
assets. Deferred tax liabilities and assets are determined based on differences between financial reporting and tax bases of assets and liabilities,
and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.




Earnings Per Share  We follow the
provisions of ASC 260, Earnings per Share. Basic earnings per share is computed by dividing income available to common stockholders by the
weighted average number of common shares outstanding during the period. ASC 260 also requires a dual presentation of basic and diluted earnings per
share on the face of the statement of operations for all companies with complex capital structures. Diluted earnings per share reflects the amount of
earnings for the period available to each share of common stock outstanding during the reporting period, while giving effect to all dilutive potential
common shares that were outstanding during the period, such as common shares that could result from the potential exercise or conversion of securities
into common stock.




The computation of diluted earnings per share does not
assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on per share amounts (i.e., increasing earnings
per share or reducing loss per share). The dilutive effect of outstanding options and warrants and their equivalents are reflected in dilutive earnings
per share by the application of the treasury stock method which recognizes the use of proceeds that could be obtained upon exercise of options and
warrants in computing diluted earnings per share. It assumes that any proceeds would be used to purchase common stock at the average market price
during the period. Options and warrants will have a dilutive effect only when the average market price of the common stock during the period exceeds
the exercise price of the options or warrants. Equity instruments that may dilute earnings per share in the future are listed in Note
8.




The dilutive effect of convertible debt is reflected in
diluted earnings per share by the application of the if-converted method. The convertible debt could potentially dilute basic earnings per share in
future periods.




Deferred Charges  The Companys
lease on its premises provides for periodic increases over the lease term. Pursuant to ASC 840, Accounting for Leases, the Company records rent
expense on a straight-line basis. The effect of this difference is recorded as deferred charges.




Fair Value of Financial Instruments 
Generally accepted accounting principles require disclosing the fair value of financial instruments to the extent practicable for financial
instruments, which are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily
representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or
settlement. In assessing the fair value of these financial instruments, the Company used a variety of methods and assumptions, which were based on
estimates of market conditions and risks existing at that time. For certain instruments, including the cash accounts receivable, accounts payable and
accrued expenses, it was estimated that the carrying amount approximated fair value for the majority of these instruments because of their short
maturity. The fair value of property and equipment is estimated to approximate their net book value.




F-12


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, Sheet #5




[2] Recently Issued Accounting
Standards




In July 2010, the Financial Accounting Standards Board
(FASB) issued Accounting Standards Update (ASU) No. 2010-20, Disclosures about the Credit Quality of Financing Receivables
and the Allowance for Credit Losses. ASU No. 2010-20 requires a greater level of disaggregation in disclosures relating to the credit quality of
the Companys financing receivables and allowance for loan losses. Furthermore, ASU No. 2010-20 also requires enhanced disclosures around
nonaccrual and past due financing receivables, impaired loans and loan modifications. The standard is effective for the first interim or annual
reporting periods ending on or after December 15, 2010.




In January 2010, the FASB issued updated accounting
guidance related to fair value measurements and disclosures which amends and clarifies existing disclosure requirements. This updated accounting
guidance requires new disclosures related to amounts transferred into and out of Level I and 2 fair value measurements as well as separate disclosures
of purchases, sales, issuances, and settlements related to amounts reported as Level 3 fair value measurements. This guidance also clarifies existing
fair value disclosure requirements related to the level of disaggregation and the valuation techniques and inputs used to measure fair value for both
recurring and nonrecurring fair value measurements. This guidance is effective for interim and annual periods beginning after December 15, 2009, except
for the separate disclosures of purchases, sales, issuances, and settlements related to amounts reported as Level 3 fair value measurements, which is
effective for fiscal years beginning after December 15, 2010. The Company does not believe the adoption of this guidance has had a material impact on
its consolidated financial position or results of operations.




In September, 2009, the FASB issued ASU No. 2009-13,
Multiple-Deliverable Revenue Arrangements, and ASU No. 2009-14, Certain Revenue Arrangements That Include Software Elementsa consensus
of the FASB Emerging Issues Task Force, to amend the existing revenue recognition guidance. ASU No. 2009-13 amends ASC 605, Revenue Recognition,
25, Multiple-Element Arrangements, as follows: modifies criteria used to separate elements in a multiple-element arrangement, introduces the
concept of best estimate of selling price for determining the selling price of a deliverable, establishes a hierarchy of evidence for
determining the selling price of a deliverable, requires use of the relative selling price method and prohibits use of the residual method to allocate
arrangement consideration among units of accounting, and expands the disclosure requirements for all multiple-element arrangements within the scope of
ASC 605-25.




ASU No. 2009-14 amends the scope of ASC 985, Software, 605,
Revenue Recognition, to exclude certain tangible products and related deliverables that contain embedded software from the scope of this
guidance. Instead, the excluded products and related deliverables must be evaluated for separation, measurement, and allocation under the guidance of
ASC 605-25, as amended by ASU No. 2009-13. The amended guidance is effective prospectively for revenue arrangements entered into or materially modified
in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. An entity may elect retrospective application to all revenue
arrangements for all periods presented using the guidance in ASC 250, Accounting Changes and Error Corrections. Entities must adopt the
amendments resulting from both of these ASUs in the same period using the same transition method, where applicable. Management is reviewing ASU No.
2009-13 and ASU No. 2009-14 for applicability to the Companys revenue recognition policies. The Company will adopt these standards for our fiscal
year beginning January 1, 2011.




F-13


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, Sheet #6




[3] Acquisition, Goodwill and Other Intangible
Assets




On April 12, 2010, the Company announced the acquisition of
MSBS, a provider of business intelligence and advanced analytics solutions to the insurance industry based in New York, New York. The Company acquired
substantially all of MSBS assets (excluding working capital) for an aggregate purchase price of $2,450,000, with no assumed indebtedness, payable
as follows: (i) a cash payment in the amount of $1,760,000; (ii) the execution and delivery by us to MSBS of a non-negotiable, subordinated promissory
note in the aggregate principal amount of $600,000; and (iii) the delivery to MSBS of 76,014 shares of our common stock, which number of shares had a
fair market value of $90,000 calculated as provided for in the purchase agreement.




MSBS serves the insurance industry exclusively, providing
business intelligence and advanced analytics solutions. Leveraging its Insurance Analytic Framework (IAF), which delivers accurate, available and
actionable key metric and dimensions specific to the insurance industry, MSBS has established a dominant presence in an otherwise underserved market.
With the integration of these capabilities into the Cover-All portfolio, the combined company will be well positioned to deliver additional value to
the existing customers of both companies, as well as benefit from an unrivaled and unique competitive advantage in its combined
offerings.




On April 12, 2010 the MSBS acquisition was valued at
$2,482,023. As a result of that acquisition, the Company acquired the following assets:







|Prepaid
Expenses             |  |  |  | $ | 30,253    | 
|---------------------------- |  |  |  | - | --------- | 
|Computer
Equipment           |  |  |  |   | 106,400   | 
|Furniture and
Fixtures       |  |  |  |   | 89,480    | 
|Leasehold
Improvements       |  |  |  |   | 16,775    | 
|Partially
Complete Software  |  |  |  |   | 820,000   | 
|Agreements                   |  |  |  |   | 160,000   | 
|Customer
Lists/Relationships |  |  |  |   | 220,000   | 
|Goodwill                     |  |  |  |   | 1,039,115 | 
|                            
|Total                        |  |  |  | $ | 2,482,023 | 



The above amounts represent the allocation of the purchase
price based on the asset valuation which occurred during April 2010. Goodwill resulted from the acquisition price exceeding the fair market value of
assets acquired.




[4] Commitments, Contingencies and Related Party
Transactions




Operating Leases  We lease
approximately 20,000 square feet of office space under a lease which expires in October 2012 and approximately 6,000 square feet of office space under
a lease which expires in January 2014.




Rent expense was $600,904, $442,816 and $403,507 for the
years ended December 31, 2010, 2009 and 2008, respectively.




Our future minimum lease commitments under the
noncancellable operating leases for rental of our office space in effect at December 31, 2010 were as follows:







|Year
ending December 31, |  |  |  |   |           | 
|------------------------ |  |  |  | - | --------- | 
|2011                     |  |  |  | $ | 696,891   | 
|2012                     |  |  |  |   | 630,450   | 
|2013                     |  |  |  |   | 277,048   | 
|2014 and
Thereafter      |  |  |  |   | 23,125    | 
|                        
|Total                    |  |  |  | $ | 1,627,514 | 



F-14


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, Sheet #7




[4] Commitments, Contingencies and Related Party
Transactions [Continued]




Employment Contracts  Effective January
1, 2010, we have an employment contract with one of our executives with an expiration date of December 31, 2011. The aggregate commitment for future
salary at December 31, 2010 was approximately $350,000. The aggregate commitment for future salary at December 31, 2009 was approximately $700,000. The
contract also includes a bonus based on the performance of the Company. The contract also grants 150,000 stock options and 150,000 shares of restricted
stock on the effective date. We had an employment contract with one of our executives with an expiration date of December 31, 2009. The aggregate
commitment for future salary at December 31, 2008 was approximately $325,000. The contract also included a bonus based on the performance of the
Company. The contract also granted 72,463 stock options and 150,000 shares of restricted stock on the effective date.




[5] Income Taxes




An analysis of the components of the income tax provision
is as follows:







|                     |  |  |  | Years ended |         
|-------------------- |  |  |  | ----------- | --------
|
|
|Current:             |  |  |  |             |         
|Federal              |  |  |  | $           | 11,492  
|State                |  |  |  |             | 51,575  
|                    
|Totals               |  |  |  |             | 63,067  
|Deferred:            |  |  |  |             |         
|Federal              |  |  |  |             | (800,000
|State                |  |  |  |             |        
|                    
|Totals               |  |  |  |             | (800,000
|                    
|Income Tax (Benefit) |  |  |  | $           | (736,933



The income tax for continuing operations differs from the
amount computed by applying the statutory federal income tax rate as follows:







|                                                       |  |  |  | Years ended |         
|------------------------------------------------------ |  |  |  | ----------- | --------
|
|
|Computed
Federal Statutory Tax                         |  |  |  | $           | 753,050 
|Valuation
Allowance Adjustment to Deferred Tax Asset   |  |  |  |             | (800,000
|Tax Benefit
of Federal Net Operating Loss Carryforward |  |  |  |             | (689,983
|                                                      
|Actual Tax (Benefit)                                   |  |  |  | $           | (736,933



F-15


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, Sheet #8




[5] Income Taxes [Continued]




The components of the net deferred tax asset and liability
were as follows:


|                                            |  |  |  | Years ended |           
|------------------------------------------- |  |  |  | ----------- | ----------
|
|
|Deferred Tax
Assets  Current:              |  |  |  |             |           
|Accounts
Receivable Allowance               |  |  |  | $           | 10,000    
|Vacation
Accrual                            |  |  |  |             | 10,000    
|Net Operating
Loss Carryforward             |  |  |  |             | 780,000   
|                                           
|Current Deferred Tax Asset                  |  |  |  | $           | 800,000   
|                                            |  |  |  |             |           
|Deferred Tax
Asset (Liability)  Long-Term: |  |  |  |             |           
|Net Operating
Loss Carryforward             |  |  |  | $           | 6,232,000 
|Capitalized
Software                        |  |  |  |             | (2,322,000
|Depreciation
and Amortization               |  |  |  |             | 64,000    
|Valuation
Allowance                         |  |  |  |             | (1,506,500
|Long-Term Deferred Tax Asset                |  |  |  | $           | 2,467,500 



We adjusted our Deferred Tax Asset Valuation Allowance as
of December 31, 2010 by decreasing the allowance by $800,000. This amount represents the tax benefit, which is based upon anticipated profitability
that we have determined to be more likely than not to be realized in future periods. The net change during 2010 in the total valuation allowance was
$2,156,750.




We adjusted our Deferred Tax Asset Valuation Allowance as
of December 31, 2009 by decreasing the allowance by $787,500. This amount represents the tax benefit, which is based upon anticipated profitability
that we have determined to be more likely than not to be realized in future periods. The net change during 2010 in the total valuation allowance was
$2,078,750.




At December 31, 2010, we had approximately $16,000,000 of
federal net operating tax loss carryforwards expiring at various dates through 2026. The Tax Reform Act of 1986 enacted a complex set of rules which
limits a companys ability to utilize net operating loss carryforwards and tax credit carryforwards in periods following an ownership change.
These rules define an ownership change as a greater than 50 percent point change in stock ownership within a defined testing period which is generally
a three-year period. As a result of stock which may be issued by us from time to time, and the conversion of outstanding warrants, or the result of
other changes in ownership of our outstanding stock, we may experience an ownership change and consequently our utilization of net operating loss
carryforwards could be significantly limited.




[6] Note Payable




In connection with the acquisition of MSBS (see Note 3),
the Company issued a $600,000, 5% note payable. The note is to be paid in $100,000 quarterly installments, with the final payment to be made on October
12, 2011.




F-16


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, Sheet #9




[7]    Stock-Based
Compensation




Stock Options




In June 2005, we adopted the 2005 Stock Incentive Plan
(which was amended in 2006 and in 2008). Options and stock awards for the purchase of up to 5,000,000 shares may be granted by the Board of Directors
to our employees and consultants at an exercise or grant price determined by the Board of Directors on the date of grant. Options may be granted as
incentive or nonqualified stock options with a term of not more than ten years. The 2005 Plan allows the Board of Directors to grant restricted or
unrestricted stock awards or awards denominated in stock equivalent units, securities or debentures convertible into common stock, or any combination
of the foregoing and may be paid in common stock or other securities, in cash, or in a combination of common stock or other securities and cash. At
December 31, 2010 and 2009, an aggregate of 2,238,037 and 3,192,537 shares, respectively, were available for grant under the 2005 Stock Incentive
Plan.




The Company uses the Black-Scholes-Merton option-pricing
model (Black-Scholes) to measure fair value of the share-based awards. The Black-Scholes model requires us to make significant judgments
regarding the assumptions used within the model, the most significant of which are the expected stock price volatility, the expected life of the option
award, the risk-free interest rate of return and dividends during the expected term.




  Expected volatilities are based on
historical volatility of the Companys stock during the preceding periods. The Company uses Level 1 inputs, which are our trading
market values in active markets.




  The Company uses historical data to
estimate expected life of the option award. The expected term of options granted is derived from the output of the option valuation model and
represents the period of time that options granted are expected to be outstanding.




  The risk-free interest rate for periods
within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.




  The Company does not anticipate issuance
of dividends during the expected term.







|                            |  |  |  | 2010 |        | 2009
|--------------------------- |  |  |  | ---- | ------ | ----
|Expected
volatility         |  |  |  |      | 45%50 | %   
|Weighted-average volatility |  |  |  |      | 47     | %   
|Expected
dividends          |  |  |  |      | 0      | %   
|Expected term
(in years)    |  |  |  |      | 35    |     
|Risk-free
interest rate     |  |  |  |      | 3      | %   



As of December 31, 2010, there was approximately $889,000
of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted by the Company. That cost is expected to be
recognized over a weighted-average period of 2.0 years.




F-17


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, Sheet #10




[7]    Stock-Based Compensation
[Continued]




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







|                           |  |  |  | Shares |           | ExercisePricePer Share |  | Weighted-Average RemainingContractual Life |            | Weighted-Average Exercise Price
|-------------------------- |  |  |  | ------ | --------- | ---------------------- |  | ------------------------------------------ | ---------- | -------------------------------
|Balance,
January 1, 2008   |  |  |  |        | 2,533,000 |                        |  |                                            | $0.34-2.00 |                                
|                          
|Granted                    |  |  |  |        | 347,463   |                        |  |                                            | 0.85-1.38  |                                
|Exercised                  |  |  |  |        | (625,000  | )                      |  |                                            | 0.34-0.60  |                                
|Canceled                   |  |  |  |        |          |                        |  |                                            |           |                                
|Expired                    |  |  |  |        | (758,000  | )                      |  |                                            | 1.25-2.00  |                                
|                          
|Balance,
December 31, 2008 |  |  |  |        | 1,497,463 |                        |  |                                            | $0.36-1.40 |                                
|                          
|Granted                    |  |  |  |        | 360,000   |                        |  |                                            | 1.00-1.05  |                                
|Exercised                  |  |  |  |        | (55,000   | )                      |  |                                            | 0.61-1.16  |                                
|Canceled                   |  |  |  |        |          |                        |  |                                            |           |                                
|Expired                    |  |  |  |        |          |                        |  |                                            |           |                                
|                          
|Balance,
December 31, 2009 |  |  |  |        | 1,802,463 |                        |  |                                            | $0.36-1.40 |                                
|                          
|Granted                    |  |  |  |        | 567,500   |                        |  |                                            | 1.12-1.55  |                                
|Exercised                  |  |  |  |        | (10,000   | )                      |  |                                            | 1.05       |                                
|Canceled                   |  |  |  |        | (75,000   | )                      |  |                                            | 1.25       |                                
|Expired                    |  |  |  |        |          |                        |  |                                            |           |                                
|                          
|Balance,
December 31, 2010 |  |  |  |        | 2,284,963 |                        |  |                                            | $0.36-1.55 |                                



The options granted during 2010 are distributed as
follows:







|                              |  |  |  | NumberGranted |         | Weighted-AverageExercise Price |  | Weighted-Average Fair Value
|----------------------------- |  |  |  | ------------- | ------- | ------------------------------ |  | ---------------------------
|Exercise
Price at Stock Price |  |  |  |               | 567,500 |                                |  | $                          



The options granted during 2009 are distributed as
follows:







|                              |  |  |  | NumberGranted |         | Weighted-AverageExercise Price |  | Weighted-Average Fair Value
|----------------------------- |  |  |  | ------------- | ------- | ------------------------------ |  | ---------------------------
|Exercise
Price at Stock Price |  |  |  |               | 360,000 |                                |  | $                          



The options granted during 2008 are distributed as follows,
relative to the difference between the exercise price and the stock price at grant date:







|                              |  |  |  | NumberGranted |         | Weighted-Average Exercise Price |  | Weighted-Average Fair Value
|----------------------------- |  |  |  | ------------- | ------- | ------------------------------- |  | ---------------------------
|Exercise
Price at Stock Price |  |  |  |               | 347,463 |                                 |  | $                          



F-18


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, Sheet #11




[7]    Stock-Based Compensation
[Continued]




Exercisable options at December 31, 2010, 2009 and 2008
were as follows:







|December 31, |  |  | Number ofExercisable Options |  |  |  | Weighted-Average Exercise Price
|------------ |  |  | ---------------------------- |  |  |  | -------------------------------
|2010         |  |  | 1,385,963                    |  |  |  | $.92                           
|2009         |  |  | 1,145,463                    |  |  |  | $.86                           
|2008         |  |  | 699,152                      |  |  |  | $.70                           



The following table summarizes information about stock
options at December 31, 2010:







|            |  |  |  | Outstanding Stock Options |           | Exercisable Stock Options | 
|----------- |  |  |  | ------------------------- | --------- | ------------------------- | 
|
|$ .36-$ .41 |  |  |  |                           | 220,000   |                           | 
|$ .79-$1.05 |  |  |  |                           | 1,125,000 |                           | 
|$1.12-$1.55 |  |  |  |                           | 939,963   |                           | 
|           
|            |  |  |  |                           | 2,284,963 |                           | 



Warrants




There were 100,000 warrants outstanding at December 31,
2010. The exercise prices for all the warrants issued and outstanding as of December 31, 2010 were equal to or greater than the market price of our
stock at the date of grant.




A summary of the changes in outstanding warrants is as
follows:







|                           |  |  |  | Outstandingand ExercisableWarrants |         | ExercisePricePer Warrant |  | Weighted-Average RemainingContractual Life |     | Weighted-Average Exercise Price
|-------------------------- |  |  |  | ---------------------------------- | ------- | ------------------------ |  | ------------------------------------------ | --- | -------------------------------
|Balance,
December 31, 2008 |  |  |  |                                    | 121,429 |                          |  | $                                          | .35 |                                
|                          
|Exercised                  |  |  |  |                                    | (21,429 | )                        |  |                                            | .35 |                                
|                          
|Balance,
December 31, 2009 |  |  |  |                                    | 100,000 |                          |  | $                                          | .35 |                                
|                          
|Balance,
December 31, 2010 |  |  |  |                                    | 100,000 |                          |  | $                                          | .35 |                                



Exercisable Warrants at December 31, 2010, 2009 and 2008
were as follows:







|December 31, |  |  | Number ofExercisable Warrants |  |  |  | Weighted-Average Exercise Price
|------------ |  |  | ----------------------------- |  |  |  | -------------------------------
|2010         |  |  | 100,000                       |  |  |  | $.35                           
|2009         |  |  | 100,000                       |  |  |  | $.35                           
|2008         |  |  | 121,429                       |  |  |  | $.35                           



F-19


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, Sheet #12




[7]    Stock-Based Compensation
[Continued]




Time-Based Restricted Stock
Units




In 2010, 2009 and 2008, we granted 387,000, -0- and
257,500, respectively, time-based RSUs vesting through June 2, 2013.




A summary of our time-based RSUs for the years ended
December 31, 2010, 2009 and 2008 are as follows:







|                           |  |  |  | Shares |          | Weighted-Average Grant Date Fair Value
|-------------------------- |  |  |  | ------ | -------- | --------------------------------------
|Balance,
January 1, 2008   |  |  |  |        | 125,000  |                                       
|                           |  |  |  |        |          |                                       
|Granted                    |  |  |  |        | 257,500  |                                       
|Vested                     |  |  |  |        |         |                                       
|Forfeited or
Expired       |  |  |  |        |         |                                       
|                          
|Balance, December 31, 2008 |  |  |  |        | 382,500  |                                       
|                           |  |  |  |        |          |                                       
|Granted                    |  |  |  |        |         |                                       
|Vested                     |  |  |  |        | (150,000 | )                                     
|Forfeited or
Expired       |  |  |  |        | (17,500  | )                                     
|                          
|Balance, December 31, 2009 |  |  |  |        | 215,000  |                                       
|                           |  |  |  |        |          |                                       
|Granted                    |  |  |  |        | 387,000  |                                       
|Vested                     |  |  |  |        | (107,500 | )                                     
|Forfeited or
Expired       |  |  |  |        | (25,000  | )                                     
|                          
|Balance, December 31, 2010 |  |  |  |        | 469,500  |                                       



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




We follow ASC 718, Accounting for Stock Options and
Other Stock-Based Compensation. Among other items, ASC 718 requires companies to record compensation expense for share-based awards issued to
employees and directors in exchange for services provided. The amount of the compensation expense is based on the estimated fair value of the awards on
their grant dates and is recognized over the required service periods. Our share-based awards include stock options and restricted stock awards. For
restricted stock awards, the calculation of compensation expense under ASC 718 is based on the intrinsic value of the grant.




F-20


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, Sheet #13




[7]    Stock-Based Compensation
[Continued]




For the year ended December 31, 2010, we recognized
$518,839 of stock-based compensation expense in our consolidated financial statements. For the year ended December 31, 2009, we recognized $409,762 of
stock-based compensation expense in our consolidated financial statements. For the year ended December 31, 2008, we recognized $583,351 of stock-based
compensation expense in our consolidated financial statements.




[8]    Basic Earnings Per Share
Disclosures




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







|                                                                                         |  |  |  | 2010 |            | 2009 |  | 2008
|---------------------------------------------------------------------------------------- |  |  |  | ---- | ---------- | ---- |  | ----
|Numerator:                                                                               |  |  |  |      |            |      |  |     
|Net
Income                                                                               |  |  |  | $    | 2,951,786  |      |  | $   
|                                                                                        
|Numerator for Diluted Earnings Per Common Share                                          |  |  |  | $    | 2,951,786  |      |  | $   
|                                                                                        
|Denominator:                                                                             |  |  |  |      |            |      |  |     
|Weighted
Average Number of Common Shares Outstanding for Basic Earnings Per Common Share |  |  |  |      | 24,828,000 |      |  |     
|                                                                                        
|Effect of
Dilutive Securities:                                                           |  |  |  |      |            |      |  |     
|Exercise of
Options and Restricted Stock                                                 |  |  |  |      | 687,000    |      |  |     
|Exercise of
Warrants                                                                     |  |  |  |      | 75,000     |      |  |     
|                                                                                        
|Denominator for Diluted Earnings Per Common Share                                        |  |  |  |      | 25,590,000 |      |  |     
|                                                                                        
|Basic Earnings Per Common Share                                                          |  |  |  | $    | .12        |      |  | $   
|                                                                                        
|Diluted Earnings Per Common Share                                                        |  |  |  | $    | .12        |      |  | $   



Equity instruments that may dilute earnings per share in
the future are listed in Note 5. We use the treasury stock method to compute diluted earnings per share, whereby the proceeds from the exercise of
dilutive instruments are hypothetically used to repurchase outstanding shares at market prices.




Options to purchase an aggregate of 342,500 shares of
common stock and restricted stock of 229,500 shares ranging from $1.50 to $1.55 per share were outstanding at December 31, 2010, but were not included
in the computation of diluted EPS because the options exercise prices were greater than the average market price of the common
shares.




Options to purchase an aggregate of 554,963 shares of
common stock at prices ranging from $1.38 to $1.40 per share were outstanding at December 31, 2009, but were not included in the computation of diluted
EPS because the options exercise prices were greater than the average market price of the common shares.




Options to purchase an aggregate of 577,463 shares of
common stock at prices ranging from $1.16 to $1.40 per share were outstanding at December 31, 2008, but were not included in the computation of diluted
EPS because the options exercise prices were greater than the average market price of the common shares.




F-21


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, Sheet #14




[9]    Supplemental
Data




Accrued liabilities consist of the
following:







|                                                                               |  |  |  | Years ended December 31, |          
|------------------------------------------------------------------------------ |  |  |  | ------------------------ | ---------
|
|Accrued
Bonuses, Payroll, Commissions, Benefits, Temporary Help and Consulting |  |  |  | $                        | 1,080,402
|Accrued
Professional Fees                                                      |  |  |  |                          | 227,900  
|Other                                                                          |  |  |  |                          | 55,404   
|                                                                              
|Totals                                                                         |  |  |  | $                        | 1,363,706



[10]    401(k)
Plan




Upon date of hire, employees are eligible to participate in
our Tax Saver 401(k) Salary Reduction Plan. Employees can save a percentage of pay on a pre-tax basis to an annual maximum of $22,000 for the year
ended December 31, 2010. We match $.50 for each $1.00 of the first 5% of pay employees elect to defer. Expenses associated with this plan in 2010, 2009
and 2008 were approximately $127,228, $81,274 and $76,184, respectively.




[11]    Stockholders
Equity




In February 2009, we announced that our Board of Directors
declared a special cash dividend in the amount of $0.03 per share on our common stock. This dividend was paid on April 7, 2009 to common stockholders
of record as of the close of business on March 27, 2009. The Company also announced that, in light of their decision to declare a special cash
dividend, the Board of Directors had determined that the Company would suspend its common stock buyback plan until further notice.




On June 25, 2008, John Roblin, our Chairman and Chief
Executive Officer, and certain other investors elected to convert all of the unpaid principal amount due on convertible debentures in their possession,
totaling $262,265, into an aggregate of 874,217 shares of our common stock at the conversion price of $0.30 per share. We made an aggregate of $10,000
of interest payments on the debentures during 2008.




In June 2008, the Board of Directors authorized a share
buyback plan of up to 1,000,000 shares of the Companys Common Stock.




In 2008, we purchased an aggregate of 201,870 shares of
treasury stock on the open market at an average purchase price of $0.82 per share for a total purchase price of approximately
$164,894.




F-22


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, Sheet #15




[12]    Fair Value of Financial
Instruments




ASC 825, Disclosures about Fair Value of Financial
Instruments, defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction
between willing parties. In assessing the fair value of our cash and cash equivalents, trade receivables and accounts payables and accrued expenses,
management concluded that the carrying amount of these financial instruments approximates fair value because of their short
maturities.




[13]    Major
Customers




For the year ended December 31, 2010, sales to four
customers amounted to approximately 19%, 11%, 11% and 10% of revenues, respectively.




For the year ended December 31, 2009, sales to three
customers amounted to approximately 15%, 15% and 12% of revenues, respectively.




For the year ended December 31, 2008, sales to three
customers amounted to approximately 27%, 17% and 15% of revenues, respectively.




All of the major customers referred to above, other than
the three customers in 2010 with 19%, 11% and 10% of revenues, and one customer in 2009 with 15% of revenues, are units of CHARTIS, Inc., formerly
associated with American International Group, Inc.









.    .    .    .    .    .    .    .    .    .









F-23


---



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY




SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS







|                                                                       |  |  |  | Balance at Beginningof Period |            | Additions |  | Deductions |         | Balance at End of Period
|---------------------------------------------------------------------- |  |  |  | ----------------------------- | ---------- | --------- |  | ---------- | ------- | ------------------------
|Accumulated
amortization of capitalized software and software license: |  |  |  |                               |            |           |  |            |         |                         
|Year Ended
December 31, 2010                                           |  |  |  | $                             | 11,966,365 |           |  | $          | 618,345 |                         
|Year Ended
December 31, 2009                                           |  |  |  | $                             | 11,049,157 |           |  | $          | 917,208 |                         
|Year Ended
December 31, 2008                                           |  |  |  | $                             | 10,180,752 |           |  | $          | 868,405 |                         
|                                                                      
|Accumulated
amortization of Customer lists/relationship:               |  |  |  |                               |            |           |  |            |         |                         
|Year Ended
December 31, 2010                                           |  |  |  | $                             |           |           |  | $          | 52,759  |                         
|Year Ended
December 31, 2009                                           |  |  |  | $                             |           |           |  | $          |        |                         
|Year Ended
December 31, 2008                                           |  |  |  | $                             |           |           |  | $          |        |                         
|                                                                      
|Accumulated
amortization of non-compete agreements:                    |  |  |  |                               |            |           |  |            |         |                         
|Year Ended
December 31, 2010                                           |  |  |  | $                             |           |           |  | $          | 46,044  |                         
|Year Ended
December 31, 2009                                           |  |  |  | $                             |           |           |  | $          |        |                         
|Year Ended
December 31, 2008                                           |  |  |  | $                             |           |           |  | $          |        |                         
|                                                                      
|Allowance for
Doubtful Accounts:                                       |  |  |  |                               |            |           |  |            |         |                         
|Year Ended
December 31, 2010                                           |  |  |  | $                             | 25,000     |           |  | $          |        |                         
|Year Ended
December 31, 2009                                           |  |  |  | $                             | 25,000     |           |  | $          |        |                         
|Year Ended
December 31, 2008                                           |  |  |  | $                             | 25,000     |           |  | $          | 20,770  |                         



F-24


---



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

COVER-ALL TECHNOLOGIES INC.

Date:  March 24, 2011

By:   /s/ John W. Roblin

John W. Roblin

Chairman of the Board of Directors and

Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

|Signatures                                 |  |  |  | Title                                                                                                            |  | Date          
|------------------------------------------ |  |  |  | ---------------------------------------------------------------------------------------------------------------- |  | --------------
|/s/ John W.
RoblinJohn W. Roblin           |  |  |  | Chairman of the Board and Chief Executive Officer (Principal Executive Officer)                                  |  | March
24, 2011
|                                           |  |  |  |                                                                                                                  |  |               
|/s/ Ann F.
MasseyAnn F. Massey             |  |  |  | Chief
Financial Officer, Controller and Secretary (Principal Financial Officer and Principal Accounting Officer) |  | March
24, 2011
|                                           |  |  |  |                                                                                                                  |  |               
|/s/ Manish D.
ShahManish D. Shah           |  |  |  | Director, President and Chief Technology Officer                                                                 |  | March
24, 2011
|                                           |  |  |  |                                                                                                                  |  |               
|/s/ Russell
ClevelandRussell Cleveland     |  |  |  | Director                                                                                                         |  | March
24, 2011
|                                           |  |  |  |                                                                                                                  |  |               
|/s/ Earl
GallegosEarl Gallegos             |  |  |  | Director                                                                                                         |  | March
24, 2011
|                                           |  |  |  |                                                                                                                  |  |               
|/s/ Stephen M.
MulreadyStephen M. Mulready |  |  |  | Director                                                                                                         |  | March
24, 2011











---





EXHIBIT INDEX

The following is a list of exhibits required by Item 601 of Regulation S-K
filed as part of this Form 10-K.  For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated in parentheses.

Exhibit No.

Description

2

Certificate of Merger of the Company Computer Systems, Inc. (a New York
corporation) into the Registrant, filed on June 11, 1985 [incorporated by reference to Exhibit 2 to the Registrants Annual Report on Form 10-K
(Commission File No. 0-13124) filed on January 29, 1986].

3(a)

Certificate of Incorporation of the Registrant filed on April 22, 1985
[incorporated by reference to Exhibit 3 (a)to the Registrants Annual Report on Form 10-K (Commission File No. 0-13124) filed on January 29, 1986].

3(b)

Certificate of Amendment of Certificate of Incorporation of the Registrant
filed on May 6, 1987 [incorporated by reference to Exhibit 3.2 to the Registrants Registration Statement on Form S-1 (Commission File No.
33-17533) filed on September 29, 1987].

3(c)

Certificate of Amendment of Certificate of Incorporation of the Registrant
filed on March 26, 1990 [incorporated by reference to Exhibit 3(d) to the Registrants Quarterly Report on Form 10-Q (Commission File No. 0-13124) filed on
June 14, 1990].

3(d)

Certificate of Amendment of Certificate of Incorporation of the Registrant
filed on March 18, 1992 [incorporated by reference to Exhibit 1 to the Registrants Current Report on Form 8-K (Commission File No. 0-13124) filed on
March 30, 1992].

3(e)

Certificate of Amendment of Certificate of Incorporation of the Registrant
[incorporated by reference to Exhibit 3(e) to the Registrants Amendment No. 1 to Registration Statement on Form S-3 (Commission File No. 0-13124)
filed on July 10, 1996].

3(f)

Certificate of Amendment of Certificate of Incorporation of the Registrant
filed on July 12, 2000 [incorporated by reference to Exhibit 3(g) to the Registrants Quarterly Report on Form 10-Q (Commission File No. 0-13124)
filed on August 11, 2000].

3(g)

By-laws of the Registrant, as amended [incorporated by reference to Exhibit
3(g) to the Registrants Amendment No. 1 to Registration Statement on Form S-3 (Commission file No. 0-13124) filed on July 10, 1996].

4

Form of Common Stock Certificate of the Registrant [incorporated by reference
to Exhibit 4(a) to the Registrants Annual Report on Form 10-K (Commission File No. 0-13124) filed on January 29, 1986].

4(b)

Non-Negotiable Subordinated Promissory Note, dated April 12, 2010, in the
principal amount of $600,000 for the benefit of Moore Stephens Business Solutions, LLC [incorporated by reference to Exhibit 4(b) to the Registrants
Post-Effective Amendment No. 1 to Form S-1 (SEC File No. 333-156397) filed on May 7, 2010].

10(a)

Warner Insurance Services, Inc. Tax Saver 401(k) Salary Reduction Plan adopted
May 31, 1985 and restated as of August 11, 1992 [incorporated by reference to Exhibit 10(k) to the Registrants Annual Report on
Form 10-K (Commission File No. 0-13124) filed on January 28, 1993].

10(c)(9)

Amendment to Non-Qualified Stock Option Agreement, dated as of December 20,
2004, between the Registrant and Earl Gallegos [incorporated by reference to Exhibit 10(c)(9) to the Registrants Quarterly Report on Form 10-Q (Commission
File No. 0-13124) filed on August 15, 2005].

10(c)(10)

Amendment to Incentive Stock Option Agreement, dated as of December 20, 2004,
between the Registrant and John Roblin [incorporated by reference to Exhibit 10(c)(10) to the Registrants Quarterly Report on Form 10-Q
(Commission File No. 0-13124) filed on August 15, 2005].

10(c)(11)

Amendment to Incentive Stock Option Agreement, dated as of December 20, 2004,
between the Registrant and John Roblin [incorporated by reference to Exhibit 10(c)(11) to the Registrants Quarterly Report on Form 10-Q
(Commission File No. 0-13124) filed on August 15, 2005].









---



10(c)(14)

Form of Non-Qualified Stock Option Agreement [incorporated by reference to
Exhibit 10(c)(14) the Registrants Quarterly Report on Form 10-Q (Commission File No. 0-13124) filed on May 15, 2006].

10(c)(15)

Form of Incentive Stock Option Agreement [incorporated by reference to Exhibit
10(c)(15) the Registrants Quarterly Report on Form 10-Q (Commission File No. 0-13124) filed on May 15, 2006].

10(c)(16)

Form of Restricted Stock Grant Agreement [incorporated by reference to Exhibit
10(c)(16) the Registrants Quarterly Report on Form 10-Q (Commission File No. 0-13124) filed on May 15, 2006].

10(c)(17)

Form of Non-Qualified Stock Option Agreement (for Consultants) [incorporated
by reference to Exhibit 10 (c)(13) the Registrants Quarterly Report on Form 10-Q (Commission File No. 0-13124) filed on May 15, 2006].

10(c)(18)

Cover-All Technologies, Inc. Amended and Restated 2005 Stock Incentive Plan
[incorporated by reference to Exhibit 10(c)(18) to the Registrants Form 8-K (Commission File No. 0-13124) filed on March 27, 2008].

10(c)(19)

Summary of 2009 Non-Employee Director Compensation dated March 2, 2009
[incorporated by reference to Exhibit 99.1 to the Registrants Form 8-K (Commission File No. 0-13124) filed on March 2, 2009].

10(c)(20)

Summary of 2010 Non-Employee Director Compensation dated March 12, 2010
[incorporated by reference to Exhibit 10(c)(20) to the Registrants Form 8-K (Commission File No. 0-13124) filed on March 16, 2010].

10(c)(21)

Amendment No. 1 to the Cover-All Technologies Inc. Amended and Restated 2005
Stock Incentive Plan [incorporated by reference to Exhibit 10(c)(21) to the Registrants Form 8-K (Commission File No. 0-13124) filed on January 3, 2011].

10(d)(1)

Lease Agreement, dated March 3, 2005, by and between the Registrant and
Fairfield 80 Venture, LLC [incorporated by reference to Exhibit 10(d)(4) to the Registrants Annual Report on Form 10-K (Commission File No. 0-13124) filed
on March 25, 2005].

10(d)(2)*

Agreement of Lease, dated December 11, 2008, by and between Moore Stephens
Business Solutions, LLC and Green 317 Madison, LLC.

10(e)(5)

Employment Agreement, dated December 26, 2006, by and between the Registrant
and John Roblin [incorporated by reference to Exhibit 10(e)(5) to the Registrants Form 8-K (Commission File No. 0-13124) filed on December 27, 2006].

10(e)(6)

Amendment No. 1 to the Employment Agreement, dated April 26, 2007, between the
Registrant and John Roblin [incorporated by reference to Exhibit 10(e)(6) to the Registrants Form 8-K (Commission File No. 0-13124) filed on April 30,
2007].

10(e)(7)

Employment Agreement, dated December 26, 2007, by and between the Registrant
and John Roblin [incorporated by reference to Exhibit 10(e)(7) to the Registrants Form 8-K (Commission File No. 0- 13124) filed on December 27, 2007].

10(e)(8)

Employment Agreement, dated December 22, 2009, by and between the Registrant
and John Roblin [incorporated by reference to Exhibit 10(e)(8) to the Registrants Form 8-K (Commission File No. 0- 13124) filed on December 23, 2009].

10(j)(i)

Asset Purchase Agreement, dated January 22, 2007, between the Registrant and
Maloy Risk Services, Inc. [incorporated by reference to Exhibit 10(j)(i) to the Registrants Form 8-K (Commission File No. 0-13124) filed on January 26,
2007].

10(j)(ii)

Commission Agreement, dated January 22, 2007, between the Registrant and Maloy
Risk Services, Inc. [incorporated by reference to Exhibit 10(j)(ii) to the Registrants Form 8-K (Commission File No. 0-13124) filed on January 26, 2007].

10(k)

Client Services Addendum, effective as of January 1, 2005, between the
Registrant and AIG [incorporated by reference to Exhibit 10(k) to the Registrants Registration Statement on Form S-1/A (Commission File No. 333-156397)
filed on August 6, 2009].**

10(l)(1)

Asset Purchase Agreement, dated April 12, 2010, among the Registrant, Hays
& Company LLP, Moore Stephens Consulting Limited and The Rachlin Group [incorporated by reference to Exhibit 10(l)(1) to the









---



Registrants Post-Effective Amendment No. 1 to Form S-1 (SEC File No.
333-156397) filed on May 7, 2010].

10(l)(2)

Mutual Non-Competition Agreement, dated April 12, 2010, between the Registrant
and Moore Stephens Consulting Limited [incorporated by reference to Exhibit 10(l)(2) to the Registrants Post-Effective Amendment No. 1 to Form S-1 (SEC
File No. 333-156397) filed on May 7, 2010].

10(m)

Employment Agreement, dated April 12, 2010, by and between the Registrant and
Seth Rachlin [incorporated by reference to Exhibit 10(m) to the Registrants Post-Effective Amendment No. 1 to Form S-1 (SEC File No. 333-156397) filed on
May 7, 2010].

14

Code of Ethics and Business Conduct [incorporated by reference to Exhibit 14
to the Registrants Annual Report on Form 10-K (Commission File No. 0-13124) filed on March 31, 2006].

21

Subsidiaries of the Registrant [incorporated by reference to Exhibit 21 to the
Registrants Annual Report on Form 10-K (Commission File No. 0-13124) filed on April 11, 1996].

23.1*

Consent of MSPC.

31.1*

Certification of Chief Executive Officer pursuant to Securities Exchange Act
Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Chief Financial Officer pursuant to Securities Exchange Act
Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

____________________

*

Filed herewith.

**

Confidential treatment has been requested for certain provisions of this
Exhibit pursuant to Rule 24b-2 under the Exchange Act.



Denotes a management contract or compensatory plan or arrangement.









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