========================================================================

                          SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549
                                     ___________

                                      FORM 10-K
                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
                     FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

                                                                                
                            COMMISSION FILE NUMBER 0-13124

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

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

           18-01 Pollitt Drive, Fair Lawn, New Jersey        07410
           (Address of principal executive office)           (Zip Code)

                                    (201)794-4800
                 (Registrant's telephone number, including area code)

             Securities registered pursuant to Section 12(b) of the
             Act:
                                              Name of Each Exchange on
                  Title of Each Class             Which Registered
                   ------------------         ------------------------


              Common Stock, par value $.01
                       per share            Philadelphia Stock Exchange
               -------------------------    ---------------------------
             Securities registered pursuant to Section 12(g) of the
             Act:
             ----------------------------------------------------------
                        Common Stock, par value $.01 per share
                        -------------------------------------

      Indicate by check mark whether the Registrant (1) has filed all reports
      required to be filed by Section 13 or 15(d) of the Securities Exchange
      Act of 1934 during the preceding 12 months (or for such shorter period
      that the Registrant was required to file such reports), and (2) has been
      subject to such filing requirements for the past 90 days.

                                  YES [X]     NO [ ]

      INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO
      ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE
      CONTAINED, TO THE BEST OF THE 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.  [X]

      THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF
      THE REGISTRANT AT APRIL 7, 1997 WAS $16,454,451.

                    NUMBER OF SHARES OUTSTANDING AT APRIL 7, 1997:

            16,720,297 SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE.


      THE DEFINITIVE PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS TO
      BE HELD JUNE 19, 1997, TO BE FILED WITH THE COMMISSION NOT LATER THAN 120
      DAYS AFTER THE CLOSE OF THE REGISTRANT'S FISCAL YEAR, HAS BEEN
      INCORPORATED BY REFERENCE IN WHOLE OR IN PART FOR PART III, ITEMS 10, 11,
      12 AND 13, OF THE DECEMBER 31, 1996 FORM 10-K
      =========================================================================

 <PAGE> 

      ITEM 1.        BUSINESS
      ------         --------

      GENERAL
      -------

           Cover-All Technologies Inc. (the "Company"), a Delaware corporation
      formed in 1971, is a provider of state-of-the-art software products for
      the property/casualty insurance industry through its wholly-owned
      subsidiary, COVER-ALL Systems, Inc. ("COVER-ALL").

           Historically, the Company (formerly Warner Insurance Services, Inc.)
      also provided services to the automobile insurance industry including
      underwriting, policy maintenance and claims adjustment which was carried
      out by its Insurance Services Division ("ISD").  However, in March 1996,
      the ISD business was transferred to a subsidiary of The Robert Plan
      Corporation, in connection with the settlement of two lawsuits between
      the Company and The Robert Plan Corporation and the release of the
      Company from its obligations under long-term processing contracts with
      the customers of ISD, and therefore the activities of the ISD are
      reflected as discontinued operations as more fully described in Note 2 to
      the Consolidated Financial Statements.

           During March 1997, the Company announced several major changes as
      part of its overall strategy.  Mr. Brian Magowan was named Chairman of
      the Board and Chief Executive Officer and Mr. Mark Johnston was named
      Chief Financial Officer.  Four of the existing Board members resigned and
      two additional Board members, Messrs. Earl Gallegos and Ian Meredith,
      were added.  Further, the Company raised $3 million of financing through
      the sale of 12 1/2% Convertible Debentures ("Debentures"), due March 
      2002. The Debentures are convertible into shares of Common Stock at
      $1.25 per share and carry certain restrictive covenants.  See Note 12
      to the Consolidated Financial Statements.

      OVERVIEW

           COVER-ALL offers standard as well as customized software application
      products together with implementation support services to the
      property/casualty insurance industry.  The Company derives revenue from
      Software Contract Licenses to new and existing customers and from
      continuing Maintenance Fees for servicing the product.  The Company also
      provides Professional Consulting Services to customize the software for
      specific uses.

           In December 1989, the Company purchased, through its wholly-owned
      subsidiary, the assets related to the exclusive proprietary rights to a
      PC-based software application for policy rating and issuance for
      property/casualty insurance companies.  This acquired software has been
      enhanced and is the Company's "Classic" product line which is one of two
      current product lines.

           The Classic product line is a self-contained rating, issuance and
      transaction management application system utilized in the
      property/casualty insurance industry.  This software was developed using
      the Microfocus COBOL language, and the Company has upgraded this product
      line for use in the Windows 95 operating system.  The Company believes
      that this software product provides cost-effectiveness and flexibility
      for self-contained Local Area Network ("LAN") systems.  The Classic
      product is in use in over 45 property/casualty insurance companies. Total
      Classic revenues were $3,654,587 for the year ended December 31, 1996 as
      compared to $2,752,055 and $1,926,822 for the years ended December 31,
      1995 and 1994, respectively.

           Since 1993, COVER-ALL has been developing its second product line
      entitled the Total Administrative Solution ("TAS 2000") and, as of
      December 31, 1996, COVER-ALL completed several modules.  TAS 2000
      comprises an architecture and a suite of application development tools
      for property/casualty insurers designed to enable a client-driven re-
      engineering of an insurer's business processes.  TAS 2000 applications
      run on commodity priced open computer systems and use state-of-the-art
      client/server software technology provided by Oracle Corporation.  Total
      TAS 2000 revenues were $1,814,085 for the year ended December 31, 1996 as
      compared to 

                                         -2-

 <PAGE> 


      $1,366,699 for the year ended December 31, 1995.  There were no TAS 2000
      revenues for the year ended December 31, 1994.

           In 1996, the Company was granted by Care Corporation Limited
      ("Care") the exclusive license for the Care software systems for use in
      the workers' compensation and group health claims administration markets
      in Canada, Mexico and Central and South America.  The Care software is an
      integrated suite of computer applications for the administration of
      claims processing of workers' compensation.  The software utilizes the
      "Open System" environment and, in particular, relational database
      technology.  The product has been successfully deployed in Australia and
      the United States in Third Party Administration ("TPA") and self insured
      environments, including city and state government operations as well as
      with major private corporations.  A feature of the software is the
      integration of advanced managed care algorithms and databases.  

      PRODUCT DESCRIPTION
      -------------------

           CLASSIC PRODUCT LINE
           --------------------

           The Classic product line is a set of LAN based PC software packages
      designed to automate the rating and issuance tasks in the property and
      casualty insurance industry.  Functionality includes rating and issuance
      for quoting new business, mid-term changes, cancellations, reinstatements
      and renewals.  Multiple recipient copies of all relevant documentation
      for each of these transactions, including quote summaries, declaration
      pages and mandatory and optional manuscript forms, are printed by the
      system's print engine.  This product life cycle functionality is
      supported for property and casualty lines of business in a user friendly
      system.

           The Company believes that the Classic product line brings to the
      customer many useful functions, features and capabilities.  Some are line
      of business specific and some are line of business independent.  These
      include:

           -  Clear and comprehensive data collection
           -  On-line system level, screen level, and field level help
           -  On-line ISO Commercial Lines Manual Tables and Footnotes
           -  Easy and direct system navigation
           -  Standard Bureau coverages and rates support
           -  Company customized coverages and rates support
           -  Fully automated recipient driven issuance of declaration pages,
              worksheets, ID card, etc.
           -  Help Desk assistance
           -  Remote diagnostic and fix capabilities

           The Classic products were originally brought to the marketplace in
      the mid 1980's and subsequently have been enhanced to provide greater
      functionality and to better utilize newer technology.  The Classic
      product line is based upon several specific proprietary design features. 
      COVER-ALL has upgraded the Classic product line for use in the Windows 95
      operating system.  This makes it a Graphical User Interface ("GUI")
      application.  This enhancement increases user friendliness and provides
      customers with an easier integration of peripheral support applications
      (e.g., imaging, work flow management, etc.).

           TAS 2000 PRODUCT LINE
           ---------------------

           The TAS 2000 product line was developed to be used for client/server
      Wide Area Network ("WAN") applications in the property/casualty industry. 
      COVER-ALL created the TAS 2000 product line to better position itself to
      penetrate the larger customer market segment.  The client/server
      architectural concept allows companies to take advantage of the power of
      distributed processing.  The TAS 2000 product line currently includes the
      following application modules:

                                         -3-

 <PAGE> 


           -  Client Management
           -  End User Tools
           -  Agency Profile Management
           -  Product Developer
           -  Policy Administration

           The TAS 2000 has Windows compliant GUI to enhance its user
      friendliness.  The TAS 2000 can be used on many different client/server
      hardware platforms and offers capability to process the voluminous
      transactions that are common to large scale insurance operations.  The
      TAS 2000 is an architecture of open LAN and WAN based modules possessing
      varying elements of interdependence.

           The changing of the century is an issue which has never been faced
      in the computer industry and poses a massive problem for automation
      systems previously designed and currently being used.  Companies must
      modify their systems to accommodate a four-digit year in order to
      properly affect the calculations and sorting routines which provide the
      core of their data processing accuracy.  Although seemingly minor, this
      change requires finding, analyzing, implementing and testing tens of
      thousands of isolated incidents within millions of lines of source code. 
      The cost for the industry can reach into the millions of dollars to
      affect proper change.  The TAS 2000 product line already accommodates the
      advent of the new century.  All of a customer's "date affected" programs
      must be fully tested for interoperatibility, as must any programs which
      transfer date sensitive data, to a customer's system, whether by
      Electronic Data Interchange ("EDI") or other means.  Any such program,
      which has not been correctly changed to address the millennium issue, has
      the potential to corrupt the customer's database and cause a system
      failure.

           COVER-ALL intends to continue to enhance both of its product lines
      based on customer needs and changes in technology.  COVER-ALL is also
      committed to maintaining a quality support service program for its
      customers.

      COMPETITIVE PRODUCTS
      --------------------

           The Company believes that its products offer customers certain
      advantages not available from COVER-ALL's competitors.  The Classic
      product line has significant functionality and can accommodate specific
      customer requirements while retaining a single source integrated core
      system, thus making the system cost effective.  TAS 2000's architecture
      is distinguished from competitive offerings by the integrated use of
      Oracle's relational database and the Designer 2000 and Developer 2000
      tool sets.  The underlying database and language used for the TAS 2000
      products are the Oracle Relational Database Management System and the
      Oracle Cooperative Development Environment products.  These products
      provide an integrated application environment.  Through Oracle's tools,
      these new products take advantage of the power of Oracle Version 7 on
      over 90 different server platforms.  This software allows processing to
      be centralized, dedicated to specific server(s) or clients or distributed
      across the network.  The TAS 2000 product line was developed with an
      emphasis on quality from the conceptual design stage using Oracle CASE
      tools through to the physical coding and testing phases.

           COVER-ALL's competitors for both of its product lines are in most
      instances larger and financially stronger than the Company.  The Classic
      product line competes primarily with three competitors who are also 
      actively selling LAN based policy rating and issuance software used by
      property/casualty insurance companies.  The TAS 2000 primary competitors
      are two systems' suppliers who are also larger and financially stronger
      than the Company.

      MARKETING
      ---------

           The Company maintains a sales staff at its principal executive
      offices in Fair Lawn, New Jersey.  The Company also utilizes distributors
      and outside consultants to market its products.  The Company also
      participates in and displays its software products at trade shows
      organized by industry trade groups.

                                         -4-

 <PAGE> 



      RESEARCH AND DEVELOPMENT
      ------------------------

           COVER-ALL's business is characterized by rapid technological change. 
      The Company's success will depend, in part, on its ability to keep its
      products current based on new technologies.  Accordingly, the Company
      must maintain ongoing research and development programs to continually
      add value to its suite of products, as well as any possible expansion of
      its product lines.  The Company believes that research and development
      expenditures will continue to constitute a significant percentage of
      revenues.

           Research and development expenses for COVER-ALL were $1,846,410,
      $1,932,920 and $2,499,436 for the years ended December 31, 1996, 1995 and
      1994, respectively.

      BACKLOG
      -------

           Backlog is not applicable to the business of the Company.

      MAJOR CUSTOMERS
      ---------------

           The Classic product line is in use in over forty-five
      property/casualty insurance companies while the TAS 2000 product line is
      currently in use in one property/casualty insurance company.  The
      Company's revenues from major customers (more than 10 percent of total
      revenues) for the years ended December 31, 1996, 1995 and 1994 as a
      percentage of total revenue were as follows:

                                          YEAR       YEAR       YEAR
                                         ENDED      ENDED      ENDED
                                        DECEMBER   DECEMBER   DECEMBER
                  CUSTOMER              31, 1996   31, 1995   31, 1994
                  --------              --------  ---------   --------

       Sun Alliance Management            27%        16%
       Services
       Glatfelter Insurance Group         13%
       Millers Insurance Group            13%                   13%
       New Jersey State Medical                      18%
       Underwriters
       Secura, Inc.                                  11%
       Empire Insurance Company                                 17%

           In 1996 and 1995 export sales were made to a U.K. customer of
      approximately $1,465,000 and $640,000, respectively.

      EMPLOYEES
      ---------

           The Company had over 80 employees during 1996 and 52 employees at
      year-end.  None of the Company's employees are represented by a labor
      union, and the Company has not experienced any work stoppages.  The
      Company believes that relations with its employees are good.

      DISCONTINUED OPERATIONS
      -----------------------

           INSURANCE SERVICES DIVISION
           ---------------------------

           ISD revenues decreased substantially in 1994 and 1995 because of
      lower fees attributable to the reduced number of policies and claims
      being handled on contracts that were winding down or were completed.  As
      a result, ISD suffered losses and operated under considerable uncertainty
      as a result of the pendency of lawsuits with certain affiliates of The
      Robert Plan Corporation.  In March 1996, the Company entered into a
      series of agreements which 

                                         -5-

 <PAGE> 



      provided for the transfer and discontinuance of its ISD operations and
      the issuance of the Company's Common Stock and Warrants to certain
      customers of the ISD business in exchange for the release of the Company
      from its obligations to provide insurance services to ISD customers and
      to The Robert Plan Corporation in exchange for the settlement and
      dismissal of two lawsuits with The Robert Plan Corporation.  Effective
      March 1, 1996 the Company discontinued providing insurance processing
      services to the automobile insurance industry and reflected those
      activities as discontinued operations in its Financial Statements.  See
      Note 2 to the Consolidated Financial Statements.

           As part of the restructuring transactions (the "Restructuring"), the
      Company transferred certain assets, employees, contracts and leased
      premises relating to its ISD business to a subsidiary of The Robert Plan
      Corporation, which replaced the Company as the provider of insurance
      services to the ISD customers.  In exchange for settling the lawsuits,
      releasing the Company's obligations to provide insurance services under
      its contracts and executing mutual releases, the Company issued to
      certain of the ISD customers and certain parties to the litigation:  (a)
      a total of 3,256,201 shares of the Company's Common Stock, (b) five-year
      Warrants to purchase up to an additional aggregate of 1,553,125 shares of
      the Company's Common Stock at $2.00 per share and (c) cash of $2.5
      million.  The Company had the option, exercisable for a period of six
      months, to (i) purchase 50% of the aforementioned 3,256,201 shares at a
      cash price equal to the greater of $3.00 or 50% of the then market price
      of a share of the Company's Common Stock and (ii) acquire 50% of the
      1,553,125 Warrants at a cash price equal to $1.00 per Warrant.  On March
      31, 1996, the Company assigned its aforementioned repurchase option
      applicable to the Company's Common Stock and Warrants to Software
      Investments Limited ("SIL").  SIL subsequently exercised all of the
      options to purchase the Company's Common Stock and Warrants as discussed
      in Note 9 to the Consolidated Financial Statements.  As a result of the
      issuance of shares described in Note 9, the antidilution provisions of
      the Warrants required an adjustment of shares to 1,725,694 from 1,553,125
      and a price adjustment to $1.80 from $2.00 per share.  As a result of the
      issuance of the 12 1/2% Convertible Debentures discussed in Note 12 to the
      Consolidated Financial Statements, the Warrants may require a further
      adjustment to the number of shares purchasable and the exercise price.

           In late 1993, the Company established Alerion, a wholly-owned
      property/casualty insurance subsidiary.  By early 1994, the Company had
      funded Alerion with approximately $10 million of cash and securities and
      Alerion entered into a reinsurance agreement with Clarendon National
      Insurance Company ("Clarendon") to reinsure a portion of the risk on
      certain insurance policies written by a primary insurer.  In late 1994,
      the Company decided to discontinue assuming any underlying insurance
      risk.  This was accomplished by Alerion commuting all its rights and
      obligations under the reinsurance contract back to Clarendon and paying
      to Clarendon all amounts received in excess of payments made since the
      inception.  In 1996, Alerion surrendered its Certificate of Authority to
      transact insurance business in New Jersey.

      ITEM 2.        PROPERTIES
      ------         ----------

           The Company's headquarters is located in Fair Lawn, New Jersey where
      it occupies approximately 36,000 square feet under a lease which expires
      in 2000 at a current annual rental expense of approximately $400,000.

           In addition, the Company also leased a facility with approximately
      22,000 square feet in Somerset, New Jersey.  This lease was to expire in
      2002 but was terminated in December 1996 at a cost of $371,408.  This
      facility was previously used by ISD and the Company did not anticipate
      utilizing this facility in the near future.

           Pursuant to the Restructuring entered into in March 1996 (See
      Discontinued Operations) the Company's lease for its former principal
      headquarters has been transferred to The Robert Plan Corporation.

           The Company believes that its headquarters is well maintained and
      adequate to meet its needs in the foreseeable future.

                                         -6-

 <PAGE> 



      ITEM 3.        LEGAL PROCEEDINGS
      -------        -----------------

           In March 1994, Material Damage Adjustment Corporation ("MDA"), a
      subsidiary of The Robert Plan Corporation and a subcontractor for the
      Company performing claims processing work, instituted an action in the
      Superior Court of New Jersey seeking injunctive relief requiring that the
      Company turn over to MDA in excess of $1 million that the Company had
      withheld from certain claims fees allegedly owed to MDA.  This action
      arose out of the Company's servicing contract with the Market Transition
      Facility of New Jersey ("MTF").  The Company had withheld the funds as a
      set off to cover unpaid invoices for data processing services rendered by
      the Company for MDA.  MDA also added a claim for approximately $2.5
      million of surcharge fees paid to the Company by the MTF.  The MTF was
      brought into the case to resolve disputes between MTF and MDA over
      refunds of claims fees paid on claims later closed without payment
      ("CWP's").  The Company vigorously contested MDA's claims and asserted
      counterclaims against MDA to establish the Company's entitlement to the
      disputed sums.

           In May 1994, the Company filed an action in the Superior Court of
      New Jersey against Lion Insurance Company, National Consumer Insurance
      Corporation and The Robert Plan Corporation seeking payment of
      unsatisfied invoices under an April 1991 agreement totalling
      approximately $2.7 million.  Under the agreement, the Company agreed to
      provide data processing services for a three-year term in support of Lion
      Insurance Company's "depopulation pool" automobile insurance business in
      New Jersey.  Lion Insurance Company is a subsidiary of The Robert Plan
      Corporation whose affiliate, National Consumer Insurance Corporation, has
      taken over the "depopulation pool" business. The Robert Plan Corporation
      guaranteed Lion's performance and payment.

           On March 1, 1996, the two lawsuits described above were settled as
      part of the overall settlement with certain of the Company's insurance
      services customers.  The settlement and restructuring transactions are
      described in Note 2 to the Consolidated Financial Statements.

           On February 2, 1995, Sol M. Seltzer commenced an action in the
      Supreme Court of New York against Mr. Krieger, the then Chairman of the
      Board and former President of the Company, and each of the other then
      members of the Board of Directors.  The plaintiff, Sol M. Seltzer, who
      purported to sue derivatively on behalf of the Company and COVER-ALL,
      sought among other things, compensatory damages in an amount to be
      determined at trial and punitive damages in an aggregate amount of $12
      million.  Sol M. Seltzer was a vice president of the Company and a
      director of COVER-ALL until he resigned from such positions in late 1994. 
      The plaintiff alleged, among other things, breach of fiduciary duty,
      waste and mismanagement, as well as alleged wrongful acts by the Board
      and the former President, including among other things, self-dealing and
      misuse of corporate funds by the former President.  The Company, and the
      other defendants, contested Mr. Seltzer's claims and on July 23, 1996 won
      a motion to dismiss the case.  Mr. Seltzer attempted to file a notice of
      appeal from the order of dismissal, but failed to do so in a timely
      manner.  He has since motioned the court to recognize his notice of
      appeal and it is anticipated that the court will rule on such motion in
      the near future.

           On February 6, 1995, the Company commenced an action in the Superior
      Court of New Jersey against Sol M. Seltzer, a former vice president of
      the Company and a director of COVER-ALL, alleging fraud, mismanagement,
      negligent misrepresentation and breach of fiduciary duty with respect to
      the development and implementation of COVER-ALL's TAS 2000 software
      product.  The Company claimed compensatory and punitive damages in an
      amount to be determined at trial.  The case was largely inactive pending
      the motion to dismiss Seltzer's New York action.  After the dismissal of
      the New York case brought by Seltzer, the Company voluntarily dismissed
      the New Jersey case without prejudice.

           In addition to the above lawsuits, the Company is named as defendant
      in a number of legal actions arising from its operations.  All of these
      actions have been considered in establishing liabilities.  Management and
      its legal counsel are of the opinion that these actions  will not have 
      a material adverse effect on the Company's financial position or 
      results of operations.


                                         -7-

 <PAGE> 


      ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
      ------         ---------------------------------------------------

           No matters were submitted to a vote of the Company's security
      holders through the solicitation of proxies or otherwise during the
      fourth quarter ended December 31, 1996.

      ITEM 5.        MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
      STOCKHOLDER    MATTERS
      -----------    ----------------------------------------------------------

           Since May 23, 1996, the Company's Common Stock has been traded on
      The Nasdaq SmallCap Market tier of The Nasdaq Stock Market, initially
      under the symbol "WISI".  As of July 1, 1996, the symbol for the
      Company's Common Stock on The Nasdaq SmallCap Market tier of The Nasdaq
      Stock Market was changed to "COV".  As of August 2, 1996, the Company's
      Common Stock has also been trading on the Philadelphia Stock Exchange
      under the symbol "CVA."

           From March 8, 1996 to March 14, 1996, the Company's Common Stock was
      traded on the Over the Counter market and from March 15, 1996, to May 22,
      1996 was quoted on the NASD OTC Bulletin Board under the symbol "WISI." 
      Prior to March 4, 1996, the Company's Common Stock was traded on the New
      York Stock Exchange under the symbol "WCP."  The quotations below reflect
      the high and low closing sale prices since January 1, 1994 on the
      principal trading market on which the Common Stock traded during such
      period.


                          HIGH      LOW
                          ----      ---

           CALENDAR 1996:
           1st Quarter    $5.000    $1.625
           2nd Quarter     7.375     3.375
           3rd Quarter     6.250     1.500
           4th Quarter     2.375     0.875

           CALENDAR 1995:
           1st Quarter    $3.000    $1.500
           2nd Quarter     1.750     0.875
           3rd Quarter     2.250     1.250
           4th Quarter     1.625     1.000

           CALENDAR 1994:
           1st Quarter    $5.250    $4.125
           2nd Quarter     4.250     2.375
           3rd Quarter     4.250     2.250
           4th Quarter     4.125     2.125

           As of April 7, 1997, there were approximately 750 holders of record
      of the Company's Common Stock.  This number does not include beneficial
      owners who may hold their shares in street name.  The closing sale price
      for the Company's Common Stock on April 7, 1997 was $1.813, as reported
      by the Nasdaq SmallCap Market.

           The Company does not currently anticipate paying any dividends.  The
      Company paid quarterly cash dividends of $.01 per share from the first
      quarter of 1993 through the second quarter of 1994 but discontinued this
      policy in the third quarter of 1994.

                                         -8-

 <PAGE>


      ITEM 6.        SELECTED FINANCIAL DATA
      -------        -----------------------

           The following selected financial data of the Company are derived
      from the consolidated financial statements.  The data should be read in
      conjunction with the consolidated financial statements, related notes,
      and other financial information included herein.

                               (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE
                                                   DATA)
                                          YEARS ENDED DECEMBER 31,
                                          ------------------------

                                       1996           1995           1994
                                       ----           ----           ----
      STATEMENTS OF OPERATIONS
      DATA:
      Revenues:                     $ 5,469        $ 4,119       $  1,927
      Loss from continuing
      operations(1)                  (5,608)        (3,544)        (7,466)

      (Loss) income from
      discontinued operations
      less applicable income
      taxes/(benefit) of none,
      none, ($924), $670,
      $3,633 and $2,852,
      respectively                       --         (7,108)        (6,754)
      Loss on disposal of
      discontinued operations,
      no tax benefit provided          (393)          (750)
      Net (loss) income              (6,001)       (11,402)       (14,220)

      Loss per share from
      continuing operations            (.38)          (.41)          (.84)
      Net (loss) income per
      share(2)                         (.40)         (1.33)         (1.60)
      Cash dividends per share           --             --           $.02

      BALANCE SHEET DATA:
      Working capital
      (deficiency)                  $(1,293)       $(8,717)       $ 3,110
      Total assets                    8,243          8,369         18,795
      Short-term debt                    --             --          2,000

      Stockholders' equity
      (deficit)                       4,911         (6,013)         5,376


                                                  YEARS ENDED OCTOBER 31,
                                  TWO MONTHS      -----------------------
                                    ENDED
                                 DECEMBER 31,
                                     1993             1993           1992
                                     ----             ----           ----
      STATEMENTS OF OPERATIONS
      DATA:

      Revenues:                     $   224        $ 1,740        $ 1,802
      Loss from continuing
      operations(1)                    (781)        (1,943)          (850)
      (Loss) income from
      discontinued operations
      less applicable income
      taxes/(benefit) of none,
      none, ($924), $670,
      $3,633 and $2,852,
      respectively                    1,158          5,653          4,116

      Loss on disposal of
      discontinued operations,
      no tax benefit provided
      Net (loss) income                 377          3,710          3,266
      Loss per share from
      continuing operations            (.09)          (.21)          (.09)

      Net (loss) income per
      share(2)                          .04            .40            .36
      Cash dividends per share         $.01           $.03             --
      Balance Sheet Data:
      Working capital
      (deficiency)                  $12,475        $12,843        $17,102

      Total assets                   22,748         22,443         18,544
      Short-term debt                    --             --             --
      Stockholders' equity
      (deficit)                      20,574         20,541         17,637


      (1)  Includes a $1,165 ($.14 per share) and $3,373 ($.25 per share
           net of tax) special charge in 1995 and 1994, respectively.
      (2)  All per share amounts are based on the increased number of
           shares giving retroactive effect to the impact of the five for
           four stock split by way of a twenty-five percent (25%) stock
           dividend declared on March 18, 1993.
      (3)  Revenues of the discontinued operations (ISD) were none,
           $20,228, $32,893, $8,589, $68,515 and $88,858 respectively, for
           each of the periods above.


                                         -9-

 <PAGE> 


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


      RESULTS OF OPERATIONS
      ---------------------

      DISCONTINUED OPERATIONS
      -----------------------

           During the years 1994 and 1995, the Company derived most of its
      revenues from providing full service automobile insurance services
      (policy processing, policy administration and claims administration)
      through its ISD business.  The Company has also provided state-of-the-art
      computer products for the property casualty insurance industry through
      its wholly-owned subsidiary, COVER-ALL.

           ISD revenues in 1994 and 1995 primarily consisted of policy
      administration and claims servicing fees from customers such as
      Atlantic/Pacific Employers Insurance Company and to a lesser extent,
      Clarendon National Insurance Company ("Clarendon"), for servicing
      policies in the New Jersey voluntary and assigned risk markets.  The
      contract with Atlantic/Pacific Employers Insurance Company reached its
      peak level of activity in 1994 and policy volumes declined sharply in
      1995.  During 1995 and 1996, Atlantic/Pacific Employers Insurance Company
      planned to non-renew all of their auto insurance policies in New Jersey
      in accordance with the accelerated withdrawal order entered into with the
      New Jersey Department of Insurance in August 1994.  In addition, the MTF
      program had been phasing out since 1994 and, as of March 1, 1996, the
      Company's contracted activity for the MTF ended.

           Revenues earned under the contract with Clarendon involved full
      service policy administration and claims services for approximately 18
      percent of the assigned risk drivers in New Jersey.  This activity
      started in 1993 with the commencement of the New Jersey Personal
      Automobile Insurance Plan ("PAIP") following the end of New Jersey's
      direct insurance program provided by its MTF.  The Company's service for
      Clarendon was performed under New Jersey's Limited Assignment
      Distribution Program ("LAD") which required that servicing carriers such
      as the Company bear some of the underlying insurance risk of the policies
      being handled.  For this reason, the Company formed a wholly-owned
      insurance subsidiary, Alerion, and effective January 1, 1994, Alerion
      reinsured a portion of Clarendon's insurance risk under the PAIP program.

           By the end of 1994, the Company decided that risk taking, even as a
      reinsurer, was not an attractive business strategy, particularly because
      of the substantial capital required by its insurance subsidiary relative
      to other Company capital commitments.  The Company and Clarendon agreed,
      therefore, to end the reinsurance arrangement in the fourth quarter of
      1994 and "commute" all reinsurance  interests and liabilities back to the
      inception of the agreement, thus eliminating all reinsurance activity of
      Alerion.  This had the effect of reducing revenues by $6.1 million and
      operating income by $.5 million in the fourth quarter of 1994.  Since the
      Company was no longer willing to share in the underlying insurance risk
      of PAIP policies, it could not, by law, continue to provide policy
      administration and claims servicing to Clarendon under the LAD program
      after 1994.

           Most of the Company's insurance services contracts included a
      variable fee structure based on the loss ratios of the underlying
      insurance policies which could increase or decrease fee revenues.  The
      Company obtained periodic independent actuarial evaluations of the loss
      ratios for these programs and adjusted the amount of its revenue when
      required.  Subsequent to December 31, 1994, the Company obtained
      independent actuarial projections of loss adjustment expenses expected to
      be incurred in 1995 and beyond with respect to the Company's contractual
      obligations under its insurance services contracts.  As a result of this
      review, the Company determined that its deferred contract revenues at the
      end of 1994 should be increased by $4.1 million to adequately cover
      contract costs and profit margins in 1995 and beyond.  This change in
      accounting estimate was recorded in the fourth quarter of 1994 as a
      reduction of insurance services revenue.

                                         -10-

 <PAGE> 


           In the fourth quarter of 1994, ISD wrote off $2.3 million of
      unamortized capitalized software development costs previously incurred to
      develop a version of the COVER-ALL system for use in-house to process
      policies and claims.

           As a result of the developments discussed above, ISD was suffering
      losses and, in addition, was operating under considerable uncertainty
      because of the pendency of lawsuits with certain affiliates of The Robert
      Plan Corporation, a customer and subcontractor for the Company.  In March
      1996, the Company entered into a series of agreements resulting in the
      settlement and dismissal of the lawsuits and the release of the Company
      from continuing obligations under contracts for the provision of
      insurance services to ISD customers.  See Note 2 to the Consolidated
      Financial Statements for a discussion of the various financial elements
      of those agreements.  In essence, the Company no longer offers full
      service automobile insurance services, and its ISD operations have been
      transferred to a subsidiary of The Robert Plan Corporation which has
      replaced the Company as a service provider to such customers.

           These agreements have resulted in a net loss for 1996 and 1995 of
      $392,872 and $749,758, respectively.  The additional net loss for 1996
      relates to additional loss adjustment expenses (mostly legal fees),
      pertaining to the discontinued operations, in excess of the amount
      accrued in 1995.  The 1995 net loss includes a provision for estimated
      ISD losses in 1996 prior to the March 1, 1996 effective date of the
      Restructuring.

           Accordingly, the Company's Consolidated Financial Statements have
      been restated for all periods to reflect ISD operations as "discontinued
      operations."

      CONTINUING OPERATIONS
      ---------------------

      Year Ended December 31, 1996 Compared with Year Ended December 31, 1995
      -----------------------------------------------------------------------

           Total revenues were $5,468,672 for the year ended December 31, 1996
      as compared to $4,118,754 for the year ended December 31, 1995, an
      increase of 33%.  License fees were $1,044,460 for the year ended
      December 31, 1996 compared to $1,421,866 in the same period in 1995 due
      to the sale of one additional contract in 1995.  For the year ended
      December 31, 1996, maintenance revenues were $2,252,378 compared to
      $1,174,150 in the same period of the prior year due to an increased
      customer base and renegotiations of all contracts resulting in higher
      fees to customers.  Professional services revenue contributed $2,171,834
      for the year ended December 31, 1996 compared to $1,522,738 for the year
      1995 as a result of new contracts signed and customers requesting
      additional modifications to the existing systems.

           Cost of sales increased to $4,585,727 for the year ended December
      31, 1996 as compared to $1,329,693 for 1995.  Significant increases in
      capitalized software and license fees amortization, and salary and
      benefit costs relating to dedication of resources to maintenance and
      professional services, accounted for the bulk of the increase.  In
      addition, the Company wrote off approximately $500,000 of unamortized
      capitalized software costs representing certain modules of the TAS 2000
      product line not expected to be completed in the near future due to
      reprioritizing of marketing and development efforts.

           Research and development expenses in 1996 decreased slightly to
      $1,846,410 compared to $1,932,920 for the year ended December 31, 1995
      due to personnel reductions in the Engineering Department and the
      decision to focus the Company's Engineering resources on completing
      several TAS 2000 modules for the marketplace.  In the future, the Company
      will continue to dedicate significant resources to its ongoing research
      and development efforts since its success depends on its ability to keep
      products current based on new technologies.

           Sales and marketing expenses increased to $1,124,884 in 1996
      compared to $465,045 as of December 31, 1995 due mostly to increased
      salary and benefit costs.  The Company allocated additional resources to
      its sales and marketing group to work on a proposal for a major contract. 

                                         -11-

 <PAGE> 



           General and administrative expenses increased approximately 27% to
      $3,519,973 in 1996 from $2,770,186 for the year ended December 31, 1995
      due to costs incurred in connection with the procurement of the SIL and
      CARE contracts and additional staffing.  In addition, the Company
      terminated the lease at the Somerset facility for a cost of $371,408
      since the anticipated utilization of this facility to house a significant
      number of new employees to work on a joint venture project with a new
      customer did not occur.

           A loss from discontinued operations of $392,872 was recorded in the
      year ended December 31, 1996 as a result of additional loss adjustment
      expenses in excess of the amount anticipated at December 31, 1995.

           The Company is working toward fulfilling long-term objectives.  In
      the Classic line, COVER-ALL has been positioned to increase market share
      in 1997 as a result of the successful completion of the project making it
      Windows 95 compliant and maintaining the strengths upon which its current
      market acceptance is based.

           In 1996, COVER-ALL formed an alliance with ORACLE Corporation
      related to the TAS 2000 product to facilitate the advance of both
      organizations in the property and casualty insurance marketplace.  ORACLE
      will provide technical assistance, consultative services as well as sales
      direction and support to the TAS 2000 market entry.  The Company has
      completed some of the major components of the TAS 2000 product.  Future
      development of additional modules will be customer driven.

           COVER-ALL has commenced marketing efforts in the United Kingdom.  A
      contract for the TAS 2000 product successfully installed in a large
      insurer in the United Kingdom is expected to expand in the next year. 
      This successful installation has increased customer awareness of the TAS
      2000 product in the United Kingdom and Europe.

           A marketing campaign for the Care software is presently under way in
      Canada.

           The preceding forward-looking statements (as such term is defined in
      the Private Securities Litigation Reform Act) are subject to the
      occurrence of certain contingencies which may not occur in the time
      frames anticipated or otherwise, and, as a result, could cause actual
      results to differ materially from such statements.  These contingencies
      include the successful completion of continuing developmental efforts
      under existing software contracts within anticipated time frames or
      otherwise, the successful negotiation, execution and implementation of
      anticipated new software contracts, the successful utilization of
      additional personnel in the marketing and technical areas, the continuing
      favorable responses to the Company's products from existing and potential
      new customers, and the Company's ability to complete development and sell
      and license its products at prices which result in sufficient revenues to
      realize profits.

      YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED DECEMBER 31, 1994
      -----------------------------------------------------------------------

           Total revenues were $4,118,754 for the year ended December 31, 1995
      as compared with $1,926,822 for the year ended December 31, 1994,
      reflecting increasing progress on initial installations of TAS 2000 and
      increased fee arrangements for professional support to most customers.

           In December 1994, management adopted a plan to reduce the COVER-ALL
      marketing and product development costs until revenues increased to
      significantly higher levels.  The total cash outlay had grown to a level
      of approximately $1 million per month but the revenues from customers
      continued to lag expectations.  The total head count, including employees
      and technical consultants, was reduced by approximately one half in the
      first quarter of 1995 and a business plan was adopted for 1995 which
      would match slowly growing revenues with reduced costs.  In addition, the
      sales offices in most cities were closed and sales staffing reduced by
      over 50 percent.

           As a result of this reorganization plan for COVER-ALL, special
      charges were reported in the fourth quarter of 1994 to write down a
      substantial portion of the unamortized capitalized software development
      costs (approximately $2.7 million) and accrue for excess facilities and
      other costs ($.6 million).  Additional costs were

                                        -12- 

 <PAGE> 



      incurred in the first quarter of 1995 for executive severance, employee
      severance, and write-off of software development costs as the COVER-ALL
      reorganization was completed. These 1995 provisions and write-offs, 
      aggregating $1,165,000, were reflected as special charges in the 
      Statement of Operations for the quarter ended March 31, 1995.

           As described in Note 6 to the Consolidated Financial Statements, no
      net income tax benefit is available to the Company with respect to the
      loss it incurred in 1995.

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

           At December 31, 1996, the Company had a working capital deficit of
      $1,293,128 compared to a working capital deficit of $8,716,643 in 1995. 
      The improvement in working capital was due to the discharging of
      liabilities relating to the discontinued operations through the issuance
      of the Company's common stock and warrants with a fair value of
      approximately $7 million.

           In March 1996, the Company received $3,022,391 from the sale of
      Common Stock and Warrants and another $1,553,124 in May 1996 from the
      sale of additional Common Stock pursuant to a series of transactions with
      Software Investments Limited and Care Corporation Limited that are
      described in Note 9 to the Consolidated Financial Statements.

           On March 31, 1997, the Company sold $3,000,000 of 12 1/2% Convertible
      Debentures due March 2002 (the "Debentures") to an institutional
      investor.  The Debentures were sold at face value, pay interest quarterly
      and are convertible, in whole or in part, into shares of Common Stock of
      the Company at $1.25 per share, subject to adjustment.  The Debentures
      contain certain covenants which restrict the Company's ability to incur
      indebtedness, grant liens, pay dividends or other defined restricted
      payments and make investments and acquisitions.  The Company cannot
      redeem the Debentures for two years and thereafter may only call the
      Debentures if the closing price of the Company's Common Stock for the
      twenty business days preceding the redemption date exceeds $1.50.  The
      net proceeds from this financing will be used for working capital
      purposes.

           At December 31, 1996 and 1995 the Company had approximately
      $14,000,000 and $7,000,000 of operating  tax loss carryforwards expiring
      in 2011 and 2010, respectively.  The Tax Reform Act of 1986 enacted a
      complex set of rules which limit 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 issued relative to the Restructuring and other stock
      which may be issued related to the Debentures (see Note 12 to the 
      Consolidated Financial Statements) the Company may experience an
      ownership change and consequently the Company's utilization of its 
      net operating losses could be significantly limited.

           At this time the Company does not anticipate having to make any
      significant investment in software development.  The Company believes
      that the proceeds from the sale of the Debentures, its current cash
      balances and anticipated cash flows from continuing operations will be
      sufficient to meet normal operating needs for the continuing COVER-ALL
      business in 1997.

      ITEM 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
      ------         -------------------------------------------

           The financial statements and supplementary data listed in Item
      14(a)(1) and (2) are included in this report beginning on page 16.


      Item 9.        Changes in and Disagreements with Accountants on
                     Accounting and Financial Disclosure
                     -------------------------------------------------

           None.




				-13-

   <PAGE> 


                                       PART III
                                       --------

           The information called for by Part III (Items 10, 11, 12 and 13) of
      this Report is hereby incorporated by reference from the Company's
      definitive Proxy Statement to be filed pursuant to Regulation 14A under
      the Securities Act of 1934 in connection with the election of directors
      at the 1997 Annual Meeting of Stockholders of the Company, which
      definitive Proxy Statement will be filed with the Securities and Exchange
      Commission not later than 120 days after the end of the Company's fiscal
      year ended December 31, 1996.


                                       PART IV
                                       -------

      ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
      --------  ---------------------------------------------------------------

           (a)  The following are filed as a part of this report.

           (1)  Financial Statements
                --------------------

                                                                                
                                                                           Page
                                                                           ----

      Report of Independent Auditors                                         15

      Consolidated Balance Sheets December 31, 1996 and 1995                 16

      Consolidated Statements of Operations Years ended December 31, 1996,
        1995 and 1994                                                        18

      Consolidated Statements of Changes in Stockholders' Equity -
        Years ended December 31, 1996, 1995 and 1994                         19

      Consolidated Statements of Cash Flows Years ended December 31, 1996,
        1995 and 1994                                                        21

      Notes to Consolidated Financial Statements                             24

           (2)  Financial Statement Schedule
                ----------------------------

      II Valuation and qualifying accounts                                  39

      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 pages 40 to 44.


           (b)  Reports on Form 8-K
                -------------------

                None.

                                         -14-


 <PAGE>

                            REPORT OF INDEPENDENT AUDITORS


      The Board of Directors
      Cover-All Technologies Inc.

      We have audited the accompanying consolidated balance sheets of Cover-All
      Technologies Inc. (formerly Warner Insurance Services, Inc.) as of
      December 31, 1996 and 1995 and the related consolidated statements of
      operations, changes in stockholders' equity (deficit) and cash flows for
      the years ended December 31, 1996, 1995, and 1994.  Our audits also
      included the financial statement schedule listed in the Index at Item
      14(a).  These financial statements and schedule are the responsibility of
      the Company's management.  Our responsibility is to express an opinion on
      these financial statements and schedule based on our audits.

      We conducted our audits in accordance with generally accepted auditing
      standards.  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 consolidated financial
      position of Cover-All Technologies Inc. at December 31, 1996 and 1995 and
      the consolidated results of its operations and its cash flows for the
      years ended December 31, 1996, 1995 and 1994 in conformity with generally
      accepted accounting principles.  Also, in our opinion, the related
      financial statement schedule, when considered in relation to the basic
      financial statements taken as a whole, presents fairly in all material
      respects the information set forth therein.





                                              /s/ Ernst & Young, LLP
                                              ----------------------
                                              Ernst & Young LLP




      Hackensack, New Jersey
      April 11, 1997


                                         -15-



 <PAGE>

                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS


                                           December 31,   December 31,
                                               1996           1995
                                           -----------    ------------

       ASSETS

       Current assets:
         Cash and cash equivalents        $  446,672     $1,576,745
         Accounts receivable, less
          allowance for doubtful
          accounts of $43,870 and none     1,585,398      1,763,890
         Income taxes receivable                  --      2,300,000
         Prepaid expenses                      7,161          5,355
                                          ----------     ----------
           Total current assets            2,039,231      5,645,990
                                          ----------     ----------

       Property and equipment, at cost:
         Furniture, fixtures and
          equipment                        3,072,706      3,095,529
         Less accumulated depreciation    (2,662,713)    (2,369,873)
                                          ----------     ----------
            Property and equipment-net       409,993        725,656
                                          ----------     ----------

       Software license, less
       amortization of $750,000            4,250,000             --

       Capitalized software, less
       amortization of $1,005,964 and
       $489,227                            1,477,950      1,510,782
        
       Other assets                           66,181        486,726
                                          ----------     ----------

                                         $ 8,243,355     $8,369,154
                                           =========   ============


                                         -16-


 <PAGE> 



                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS -(CONTINUED)

                                           December 31,   December 31,
                                               1996           1995
                                            ----------     ----------

       LIABILITIES AND STOCKHOLDERS'
       EQUITY (DEFICIT)
       Current liabilities:
         Accounts payable                $    536,172   $    955,060
         Accrued liabilities                1,614,612      4,123,641
         Unearned revenue                   1,181,575        635,564
         Liabilities in excess of assets
          of ISD business discontinued          --         8,648,368
          in 1996                           ----------    ----------
             Total current liabilities      3,332,359     14,362,633
                                           ----------     ----------
       Deferred income taxes                    --            20,000
                                            ----------    ----------
       Commitments and contingencies
        (Notes 4 and 5)
       Stockholders' equity (deficit):
         Common Stock, $.01 par value:
         authorized 30,000,000 shares,
         issued 17,351,883 and 9,194,890
          shares                              173,519         91,949
         Capital in excess of par value    27,258,352     10,414,253
         Accumulated deficit              (19,953,668)   (13,952,474)
         Treasury stock at cost-633,986    (2,567,207)    (2,567,207)
          shares                           ----------     ----------
           Total stockholders' equity       4,910,996     (6,013,479)
            (deficit)                      ----------     ----------
                                         $  8,243,355   $  8,369,154
                                           ----------     ----------
                                           ----------     ----------



      See accompanying notes.

                                         -17-

 <PAGE> 



                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS


                                  Year Ended    Year Ended     Year Ended
                                 December 31,   December 31,   December 31,
                                     1996           1995           1994
                                  ----------     ----------     ----------
       Revenues:
         Licenses             $  1,044,460   $  1,421,866   $  1,184,860
         Maintenance             2,252,378      1,174,150        548,116
         Professional services   2,171,834      1,522,738        193,846
                                ----------     ----------     ----------
                                 5,468,672      4,118,754      1,926,822
                                ----------     ----------     ----------

       Costs and expenses:
         Cost of sales           4,585,727      1,329,693        675,119
         Research and
          development            1,846,410      1,932,920      2,499,436
         Sales and marketing     1,124,884        465,045      1,584,902
         General and
          administrative         3,519,973      2,770,186      5,107,161
         Special charges                --      1,165,000      3,373,000
                                ----------     ----------     ----------
                                11,076,994      7,662,844     13,239,618
                                ----------     ----------     ----------

       Loss from continuing
        operations before
        income tax (benefit)    (5,608,322)    (3,544,090)   (11,312,796)
       Income tax (benefit)           --             --       (3,846,351)
                                  ----------     ----------   ----------

       Loss from continuing
       operations               (5,608,322)    (3,544,090)    (7,466,445)

       Loss from discontinued
       operations,
         less applicable
          income tax (benefit)
          of none, none, and
          $(923,649),
          respectively                --       (7,107,987)    (6,753,637)

       Loss on disposal of
          discontinued
          operations,             (392,872)      (749,758)          --
          without tax benefit   ----------     ----------       ----------

       Net loss               $  6,001,194)  $(11,401,835)  $(14,220,082)
                                ----------     ----------     ----------
                                ----------     ----------     ----------
       Loss per share from
        continuing operations       $(0.38)        $(0.41)        $(0.84)
                                ----------     ----------     ----------
                                ----------     ----------     ----------

       Net loss per share           $(0.40)        $(1.33)        $(1.60)
                                ----------     ----------     ----------
                                ----------     ----------     ----------
       Weighted average number
        of common shares
        outstanding             14,865,757      8,559,307      8,868,926
                                ----------     ----------     ----------
                                ----------     ----------     ----------


      See accompanying notes.


                                         -18-


 <PAGE> 




                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)


                                                                     RETAINED
                                                       CAPITAL       EARNINGS
                                          COMMON     IN EXCESS    (ACCUMULATED
                                           STOCK     OF PAR VALUE    DEFICIT)
                                         ----------   ----------    ----------
   BALANCE AT DECEMBER 31, 1993        $91,317     $10,229,608    $11,846,300

    Sale of 33,748 shares of
     Common Stock under employee
     stock purchase plans                  337          76,948          --

    Sale of 21,875 shares of
     Common Stock under stock
     option plans                          219          95,438          --

    Purchase of treasury stock --
     108,900 shares                              --         --          --

    Net loss                                     --         --    (14,220,082)

    Payment of cash dividends                    --         --       (176,857)


    Loan to officer/stockholder
     exchanged for 268,111
     shares of Treasury Stock                    --         --          --
     in January 1995                     ----------   ----------    ----------

    BALANCE AT DECEMBER 31, 1994         91,873      10,401,994     (2,550,639)

    Sale of 7,567 shares of
     Common Stock under employee
     stock purchase plan                    76          12,259          --

    Net loss                                --            --      (11,401,835)
                                    ----------        ----------   ----------
    BALANCE AT DECEMBER 31, 1995        91,949      10,414,253  (13,952,474)

    Sale of 125,187
     shares of Common Stock under
     stock option plans                  1,252         370,562          --

    Issuance of 3,256,201 shares
     of Common Stock under the
     Restructuring Agreement            32,562       6,479,840          --


                                                          Total
                                          Treasury    Stockholders'
                                            Stock         Equity
                                                        (Deficit)
                                       -----------   --------------
    BALANCE AT DECEMBER 31, 1993      $(1,592,793)   $20,574,432

     Sale of 33,748 shares of
      Common Stock under employee
      stock purchase plans                   --           77,285

     Sale of 21,875 shares of
      Common Stock under stock
      option plans                           --           95,657

     Purchase of treasury stock --
      108,900 shares                     (338,657)      (338,657)

     Net loss                                --      (14,220,082)

     Payment of cash dividends               --         (176,857)

     Loan to officer/stockholder
      exchanged for 268,111
      shares of Treasury Stock           (635,757)      (635,757)
      in January 1995                  ----------     ----------

    BALANCE AT DECEMBER 31, 1994       (2,567,207)     5,376,021

     Sale of 7,567 shares of
      Common Stock under employee
      stock purchase plan                    --           12,335

                                             --      (11,401,835)
     Net loss                            ----------   ----------

     BALANCE AT DECEMBER 31, 1995      (2,567,207)    (6,013,479)

     Sale of 125,187
      shares of Common Stock under
      stock option plans                     --          371,814

     Issuance of 3,256,201 shares
      of Common Stock under the
      Restructuring Agreement                --        6,512,402


                                      -19-

 <PAGE> 


                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CHANGES IN 
                     STOCKHOLDERS' EQUITY (DEFICIT) -- CONTINUED


                                                                    RETAINED
                                                      CAPITAL       EARNINGS
                                          COMMON     IN EXCESS    (ACCUMULATED
                                          STOCK     OF PAR VALUE    DEFICIT)
                                        ----------   ----------    ----------
    Issuance of five-year
      warrants to purchase up 
      to an aggregate of 1,725,694 
      shares of Common Stock under the 
      Restructuring Agreement              --        465,938         --

    Sale of 1,412,758 shares of
     Common Stock to Software
     Investments Limited ("SIL")        14,128       2,811,388          --

    Sale of five year warrants to
     purchase an aggregate of
     196,875 shares of Common Stock
     to SIL                                 --         196,875          --

    Issuance of 2,500,000 shares of
     Common Stock to Care
     Corporation Limited                25,000       4,975,000          --

    Exercise of five-year warrants to
     purchase 862,847 shares of
     Common Stock                        8,628       1,544,496          --


                                             --               --   (6,001,194)
    Net loss                              ----------   ----------   ----------

                                      $173,519     $27,258,352   $(19,953,668)
   BALANCE AT DECEMBER 31, 1996     ==========      ==========     ==========


                                                          Total
                                          Treasury    Stockholders'
                                            Stock         Equity
                                                        (Deficit)
                                         -----------  ----------------
     Issuance of five-year
      warrants to purchase up
      to an aggregate of 1,725,694
      shares of Common Stock
      under the Restructuring
      Agreement                              --          465,938

     Sale of 1,412,758 shares of
      Common Stock to Software
      Investments Limited ("SIL")            --        2,825,516

     Sale of five year warrants to
      purchase an aggregate of
      196,875 shares of Common Stock
      to SIL                                 --          196,875

     Issuance of 2,500,000 shares of
      Common Stock to Care
      Corporation Limited                    --        5,000,000

     Exercise of five-year warrants to
      purchase 862,847 shares of
      Common Stock                           --        1,553,124

                                             --       (6,001,194)
    Net loss                             ----------   ----------

                                      $(2,567,207)    $4,910,996
   BALANCE AT DECEMBER 31, 1996       ==========     ==========
  
    See accompanying notes.


                                         -20-

 <PAGE> 

                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS


                                     YEAR ENDED     YEAR ENDED     YEAR ENDED
                                    DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                        1996           1995           1994
                                     ----------     ----------     ----------
       Cash flows from operating
       activities:

        Net loss from continuing
         operations                $(5,608,322)   $(3,544,090)   $(7,466,445)


        Adjustments to reconcile
         net loss to net cash
         provided from (used for)
         operating activities:

        Depreciation and
         amortization                  341,798        365,129        538,751

        Amortization and write-off
         of capitalized software
         and software license        2,101,576        489,227      3,313,023

        Loss on disposal of
         securities                       -            86,223        465,195


        Accounts receivable            178,492     (1,374,169)      (129,603)

        Income taxes receivable      2,300,000       (163,972)    (2,136,028)

        Deferred income taxes          (20,000)     2,800,000     (3,180,000)

        Prepaid expenses                (1,806)        (2,646)           410

        Other assets                   420,545         (3,776)       (60,506)


        Accounts payable              (418,888)       161,561        733,471

        Accrued liabilities         (2,449,304)     3,123,208        540,671

        Unearned revenue               546,011        513,447        590,338
                                    ----------     ----------     ----------

       Net cash (used for)
        provided from continuing
        operating activities        (2,609,898)     2,450,142     (6,790,723)
                                    ----------     ----------     ----------


       Loss from discontinued
        operations                        -        (7,107,987)    (6,753,637)

       Loss on disposal of
        discontinued operations       (392,872)      (749,758)          -   

       Decrease (increase) in
        net assets of discontinued
        operations                  (1,670,028)       (82,238)    11,208,695
                                    ----------     ----------     ----------

       Net cash (used for)
        provided from
        discontinued activities     (2,062,900)    (7,939,983)     4,455,058
                                    ----------     ----------     ----------


					-21-

   <PAGE>

                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)



                                     YEAR ENDED     YEAR ENDED     YEAR ENDED
                                    DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                        1996           1995           1994
                                     ----------     ----------     ----------

       Cash flows from
        investing activities:

        Proceeds from sale of
         fixed maturity
         investments                      -      $  3,786,277   $ 18,271,905

        Purchase of fixed
         maturity investments             -              -       (12,661,482)


        Capital expenditures           (85,860)      (139,818)      (269,345)

        Capitalized software
         expenditures               (1,318,744)    (1,000,009)    (3,350,981)
                                    ----------     ----------     ----------

       Net cash (used for)
        provided from investing
        activities                  (1,404,604)     2,646,450      1,990,097
                                    ----------     ----------     ----------

       Cash flows from
       financing activities:

        Credit line borrowings            -              -         4,500,000


        Payments on credit lines          -        (2,000,000)    (2,500,000)

        Dividends to
         stockholders                     -              -          (176,857)

        Net proceeds from
         issuance of common
         stock                       4,947,329         12,335        172,942

        Payment for purchase of
         treasury shares                  -              -          (974,414)
                                    ----------     ----------     ----------


        Net cash provided from
         (used for) financing
         activities                  4,947,329     (1,987,665)     1,021,671
                                    ----------     ----------     ----------

        Change in cash and
         cash equivalents           (1,130,073)    (4,831,056)       676,103

        Cash and cash equivalents
         beginning of year           1,576,745      6,407,801      5,731,698
                                    ----------     ----------     ----------

        Cash and cash equivalents
         end of year               $   446,672   $  1,576,745   $  6,407,801
                                    ==========     ==========     ==========


                                         -22-

 <PAGE> 



                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS -(CONTINUED)


      Supplemental disclosures of noncash investing and financing activities:

      Financing:
      ---------
      The Company in connection with the discontinuance of ISD issued Common
      Stock and Warrants for $6,978,340 as a result of the restructuring
      agreement.  (See Note 2.)

      Investing:
      ---------
      The Company acquired a software license from Care by issuing Common Stock
      valued at $5,000,000.  (See Note 9.)


      See accompanying notes.

                                         -23-

 <PAGE> 



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

      NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      --------------------------------------------------

           DESCRIPTION OF BUSINESS
           -----------------------

           COVER-ALL Technologies Inc. (formerly Warner Insurance Services,
      Inc.), through its wholly-owned subsidiary, COVER-ALL Systems, Inc.
      ("COVER-ALL"), licenses and maintains its software products to the
      property/casualty insurance industry throughout the United States, Puerto
      Rico and the United Kingdom.  COVER-ALL also provides professional
      consulting services to its customers interested in customizing their
      software.  In 1996, COVER-ALL was granted by Care Corporation Limited
      ("Care") the exclusive license for the Care software systems for use in
      the workers' compensation and group health claims administration markets
      in Canada, Mexico and Central and South America.

           PRINCIPLES OF CONSOLIDATION
           ---------------------------

           The consolidated financial statements are prepared on the basis of
      generally accepted accounting principles and include the accounts of
      Cover-All Technologies Inc. and its wholly-owned subsidiary (the
      "Company").  All material intercompany balances and transactions have
      been eliminated.  

           USE OF ESTIMATES
           ----------------

           Preparation of the financial statements in conformity with generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the 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
           -------------------

           Revenue from the sale of software licenses is recognized as modules
      and modifications are provided and accepted by the customer.  Revenue
      from software maintenance contracts is recognized ratably over the life
      of the contract.  Revenue from professional consulting services is
      recognized when the service is provided.

           CONCENTRATIONS OF CREDIT RISK
           -----------------------------

           Financial instruments which potentially subject the Company to
      concentrations of credit risk consist principally of cash and trade
      accounts receivable.

           The Company places its temporary cash investments with high credit
      quality institutions to limit its credit exposure.  The Company believes
      no significant concentration of credit risk exists with respect to these
      investments.  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.  Three major customers accounted for a significant
      portion of the Company's trade accounts receivable portfolio.  The
      Company performs ongoing credit evaluations of its customers but does not
      require collateral.  The Company maintains allowances for potential
      credit losses.

           INSURANCE COMPANY
           -----------------

           In late 1993, the Company obtained approval from the New Jersey
      Department of Insurance to form Alerion Insurance Company of New Jersey
      ("Alerion").  Alerion entered into a reinsurance agreement with Clarendon
      National Insurance Company ("Clarendon") to assume a portion of
      Clarendon's risk in the New Jersey Assigned Risk Program.  The subsidiary
      was initially capitalized with $10 million.  During the fourth quarter of

                                         -24-

 <PAGE> 

                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

      1994, the Company decided to discontinue assuming any underlying
      insurance risk.  This was accomplished by Alerion commuting all its
      rights and obligations under the reinsurance contract back to Clarendon
      and paying to Clarendon all amounts received in excess of payments made
      since the inception of the reinsurance contract in January 1994.  In
      1996, Alerion surrendered its Certificate of Authority to transact
      insurance business in New Jersey.

           MARKETABLE SECURITIES
           ---------------------

           As of January 1, 1994, the Company adopted the provisions of the
      Statement of Financial Accounting Standards 115, "Accounting for Certain
      Investments in Debt and Equity Securities" ("SFAS No. 115").  SFAS No.
      115 requires that investments in fixed maturity securities and those
      equity securities with readily determinable market values be classified
      into one of three categories:  held-to-maturity, trading or available-
      for-sale.  Classification of investments is based upon management's
      current intent.  The impact of adoption was not material to the Company. 
      All of the Company's fixed maturity securities, which consist of
      municipal, state, and mortgage-backed securities with original maturities
      in excess of three months, have been categorized as available-for-sale
      and recorded at their fair value at December 31, 1994.  Unrealized
      depreciation of the securities available for sale at December 31, 1994
      ($237,737) was recorded as a realized loss in 1994 because the
      securities, which were held by the Company's insurance subsidiary, were
      either sold, or expected to be sold in early 1995 in connection with the
      liquidation or sale of the insurance subsidiary.

           CASH AND CASH EQUIVALENTS
           -------------------------

           The Company considers all highly liquid investments, with a maturity
      of three months or less when purchased, to be cash equivalents.

           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.

           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 as income or expense.

           CAPITALIZED SOFTWARE
           --------------------

           Certain software development costs are being capitalized and
      amortized over a three-year period.  The software license (see Note 9) is
      being amortized over a five-year period.  In the fourth quarter of 1994,
      the Company wrote down the unamortized capitalized software costs by
      approximately $2.7 million (see Note 3).  In addition, during the fourth
      quarter of 1996, the Company wrote off approximately $500,000 of
      unamortized software development costs representing certain modules of
      the TAS 2000 product line not expected to be completed in the near future
      due to reprioritizing of marketing and development efforts.  This write
      off is reflected in cost of sales in 1996.

                                         -25-

 <PAGE> 



                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


           INCOME TAXES
           ------------

           Deferred income tax assets and liabilities are recognized for the
      expected future tax effects attributable to temporary differences between
      the financial reporting and tax basis of assets and liabilities.  Such
      differences relate primarily to: the application of different
      depreciation methods for tax versus financial reporting purposes; the
      amortization of capitalized software costs for financial statement
      purposes and the current write-off for tax purposes; revenue recognition
      and the alternative minimum tax credit carryover.  Cash (received) paid
      for income taxes was:  1996 -($2,375,000), 1995 -($2,600,000), and 1994 -
      $1,375,000.

           RESEARCH AND DEVELOPMENT
           ------------------------

           For the years ended December 31, 1996, 1995 and 1994, $1,846,410,
      $1,932,920 and $2,499,436, respectively, was expensed for research and
      development of new software products.  These expenses are in addition to
      software development costs which are capitalized and then amortized over
      their expected useful lives.

           NET LOSS PER SHARE
           ------------------

           Net loss per share is based on the weighted average number of common
      shares and, where applicable, common share equivalents outstanding during
      the periods.

           STOCK-BASED COMPENSATION
           ------------------------

           The Company follows Accounting Principles Board Opinion No. 25. 
      "Accounting for Stock Issued to Employees" ("APB No. 25") with regard to
      the accounting for its employee stock options.  Under APB No. 25,
      compensation expense is recognized only when the exercise price of
      options is below the market price of the underlying stock on the date of
      grant.

           RECLASSIFICATIONS
           -----------------

           Certain amounts in the 1995 and 1994 Consolidated Financial
      Statements have been reclassified to conform with the 1996 presentation.

      NOTE 2--DISCONTINUED OPERATIONS
      -------------------------------

           Insurance Services Division ("ISD") revenues decreased substantially
      in 1994 and 1995 because of lower fees attributable to the reduced number
      of policies and claims being handled on contracts that were winding down
      or were completed.  As a result, ISD had been suffering losses and
      operating under considerable uncertainty as a result of the pendency of
      lawsuits with certain affiliates of The Robert Plan Corporation ("The
      Robert Plan Corporation") as described in Note 4.  In March 1996, the
      Company entered into a series of agreements which provided for the
      transfer and discontinuance of its ISD operations and the issuance of the
      Company's Common Stock and Warrants to certain customers of the ISD
      business in exchange for the release of the Company from its obligations
      to provide insurance services to ISD customers and to The Robert Plan
      Corporation in exchange for the settlement and dismissal of lawsuits with
      The Robert Plan Corporation.  Effective March 1, 1996 the Company has
      discontinued providing insurance processing services to the automobile
      insurance industry and has reflected those activities as discontinued
      operations in its Financial Statements.

                                         -26-

 <PAGE> 



                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

           As part of the restructuring transactions (the "Restructuring"), the
      Company transferred certain assets, employees, contracts and leased
      premises relating to its ISD business to a subsidiary of The Robert Plan
      Corporation, which has replaced the Company as the provider of insurance
      services to the ISD customers.  In exchange for settling the lawsuits,
      releasing the Company's obligations to provide insurance services under
      its contracts and executing the mutual releases, the Company issued to
      certain of the ISD customers and certain parties to the litigation:  (a)
      a total of 3,256,201 shares of the Company's Common Stock, (b) five-year
      Warrants to purchase up to an additional aggregate of 1,553,125 shares of
      the Company's Common Stock at $2.00 per share and (c) cash of $2.5
      million.  The holders of these securities can request the Company to
      register these securities with such registration costs to be paid by the
      Company.  The Company had the option, exercisable for a period of six
      months (from March 1, 1996), to (i) purchase 50% of the aforementioned
      3,256,201 shares at a cash price equal to the greater of $3.00 or 50% of
      the then market price of a share of the Company's Common Stock and (ii)
      acquire 50% of the 1,553,125 Warrants at a cash price equal to $1.00 per
      Warrant.  On March 31, 1996, the Company assigned its aforementioned
      repurchase option applicable to the Company's Common Stock and Warrants
      to Software Investment Limited ("SIL"), which SIL subsequently exercised,
      as discussed in Note 9.  As a result of the issuance of shares described
      in Note 9, the antidilution provisions of the Warrants required an
      adjustment of shares to 1,725,694 from 1,553,125 and a price adjustment
      to $1.80 from $2.00 per share.

           Assets and liabilities of the discontinued ISD operations,
      classified separately in the Consolidated Balance Sheets, are summarized
      as follows:

                                                December 31,
                                                    1995
                                                 ----------
       Cash                                    $  2,487,500
       Accounts receivable                       18,722,178
       Other current assets                         155,370
       Property and equipment, net                1,674,639
       Capitalized software, net                     81,494
       Other assets                                  21,017
       Accounts payable                            (459,111)
       Accrued expenses                         (10,771,406)
       Unearned contract revenue                (20,560,049)
                                                 ----------
       Net liabilities                         $ (8,648,368)
                                                 ==========

           The discontinuance of ISD resulted in a $392,872 loss in 1996 and a
      $749,758 loss in 1995.

           The Consolidated Statements of Operations have been restated for all
      periods to report the net results of the ISD operations as loss from
      discontinued operations.  The results of ISD are summarized as follows:


                                         -27-

 <PAGE> 


                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


                                      YEAR ENDED              YEAR ENDED
                                     DECEMBER 31,            DECEMBER 31,
                                         1995                    1994
                                      ----------              ----------
       NET REVENUES                 $20,228,212             $32,892,898

       Loss from
        operations before
        income taxes                 (7,107,987)             (7,677,286)

       Income taxes/(benefit)              -                   (923,649)
                                     ----------              ----------
       Loss from
        discontinued                $(7,107,987)            $(6,753,637)
       operations                    ==========              ==========


      NOTE 3--SPECIAL CHARGES

           In March 1994, the Company adopted a plan to implement a tax-free
      spin-off of 100% of the stock of COVER-ALL on a pro rata basis to the
      Company's stockholders.  On November 11, 1994, the Company announced that
      its Board of Directors had voted to retain COVER-ALL, thereby canceling
      the spin-off plan.  Prior to 1995 COVER-ALL revenues came from licensing
      of its Classic software product line and services.  Since 1993 COVER-ALL
      has been developing a suite of computer applications for property and
      casualty insurers entitled the Total Administration Solution ("TAS
      2000").  TAS 2000 is designed to enable a client-driven re-engineering of
      the insurer's business programs.  TAS  2000 applications run on commodity
      priced open computer systems and use state-of-the-art client/server
      technology provided by Oracle Corporation.

           In December 1994, management instituted a plan to down-size the
      COVER-ALL organization and reduce the rate of product development to a
      level consistent with the reduced level of customer installations planned
      for 1995.  As a result, unamortized software development costs related to
      modules of the TAS 2000 application for which the development process had
      been curtailed were written down by $2,733,000 and provision of $640,000
      was made at December 31, 1994 for excess facilities and equipment
      appropriate for the smaller organization.  Costs of $1,165,000 were
      incurred and written off in the first quarter of 1995 for executive and
      other severance costs as well as additional software development costs.

           These write-offs and provisions were reflected as special charges in
      the 1995 and 1994 Statements of Operations.

      NOTE 4--LITIGATION

           In March 1994, Material Damage Adjustment Corporation ("MDA"), a
      subsidiary of The Robert Plan Corporation and a subcontractor for the
      Company performing claims processing work, instituted an action in the
      Superior Court of New Jersey seeking injunctive relief requiring that the
      Company turn over to MDA in excess of $1 million that the Company had
      withheld from certain claims fees allegedly owed to MDA.  This action
      arose out of the Company's servicing contract with the Market Transition
      Facility of New Jersey ("MTF").  The Company had withheld the funds as a
      set off to cover unpaid invoices for data processing services rendered by
      the Company for MDA.  MDA also added a claim for approximately $2.5
      million of surcharge fees paid to the Company by the MTF.  The MTF was
      brought into the case to resolve disputes between MTF and MDA over
      refunds of claims fees paid on claims later closed without payment
      ("CWP's").  The Company vigorously contested MDA's claims and asserted
      counterclaims against MDA to establish the Company's entitlement to the
      disputed sums.


                                         -28-

 <PAGE> 
                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)



           In May 1994, the Company filed an action in the Superior Court of
      New Jersey against Lion Insurance Company, National Consumer Insurance
      Corporation, and The Robert Plan Corporation seeking payment of
      unsatisfied invoices under an April 1991 agreement totalling
      approximately $2.7 million.  Under the agreement, the Company agreed to
      provide data processing services for a three-year term in support of Lion
      Insurance Company's "depopulation pool" automobile insurance business in
      New Jersey.  Lion Insurance Company is a subsidiary of The Robert Plan
      Corporation whose affiliate, National Consumer Insurance Corporation, has
      taken over the "depopulation pool" business.  The Robert Plan Corporation
      guaranteed Lion's performance and payment.


           On March 1, 1996, the two lawsuits described above were settled as
      part of the overall settlement with certain of the Company's insurance
      services customers.  The settlement and restructuring transactions are
      described in Note 2.  

           On February 2, 1995, Sol M. Seltzer commenced an action in the
      Supreme Court of New York against Mr. Krieger, the then Chairman of the
      Board and former President of the Company, and each of the other then
      members of the Board of Directors.  The plaintiff, Sol M. Seltzer, who
      purported to sue derivatively on behalf of the Company and COVER-ALL,
      sought among other things, compensatory damages in an amount to be
      determined at trial and punitive damages in an aggregate amount of $12
      million.  Sol M. Seltzer was a vice president of the Company and a
      director of COVER-ALL until he resigned from such positions in late 1994. 
      The plaintiff alleged, among other things, breach of fiduciary duty,
      waste and mismanagement, as well as alleged wrongful acts by the Board
      and the former President, including among other things, self-dealing and
      misuse of corporate funds by the former President.  The Company, and the
      other defendants, contested Mr. Seltzer's claims and on July 23, 1996 won
      a motion to dismiss the case.  Mr. Seltzer attempted to file a notice of
      appeal from the order of dismissal, but failed to do so in a timely
      manner.  He has since motioned the court to recognize his notice of
      appeal and it is anticipated that the court will rule on such motion in
      the near future.

           On February 6, 1995, the Company commenced an action in the Superior
      Court of New Jersey against Sol M. Seltzer, a former vice president of
      the Company and a director of COVER-ALL, alleging fraud, mismanagement,
      negligence, misrepresentation, and breach of fiduciary duty with respect
      to the development and implementation of COVER-ALL's TAS 2000 software
      product.  The Company claimed compensatory and punitive damages in an
      amount to be determined at trial.  The case was largely inactive pending
      the motion to dismiss Seltzer's New York action.  After the dismissal of
      the New York case brought by Seltzer, the Company voluntarily dismissed
      the New Jersey case without prejudice.

           In addition to the above lawsuits, the Company is named as defendant
      in a number of legal actions arising from its operations.  All of these
      actions have been considered in establishing liabilities.  Management and
      its legal counsel are of the opinion that these actions will not have a
      material adverse effect on the financial position or results of
      operations.

      NOTE 5--COMMITMENTS, CONTINGENCIES AND OTHER

           OPERATING LEASES

           The Company leases office space in Fair Lawn, NJ, where it occupies
      approximately 36,000 square feet, under a lease which expires in 2000. 
      The current annual rental expense is approximately $400,000.  The lease
      includes escalation clauses for increased real estate taxes, insurance
      and maintenance expenses.  The lease provides for a renewal period of
      five years.


                                         -29-

 <PAGE> 

                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)



           Rent expense for COVER-ALL office space was $334,170, $174,710, and
      $265,363, for the years ended December 31, 1996, 1995 and 1994,
      respectively.

           The Company's future minimum rental commitments under its
      noncancellable operating lease in effect at December 31, 1996 follows:
      years ending December 31, 1997 -$400,000; 1998 -$400,000; 1999 -$400,000;
      2000 -$170,000; thereafter -NONE.  

           EMPLOYMENT CONTRACTS

           The Company has employment contracts with certain of its executives
      with various dates of expiration through the year ending December 31,
      1998.  Certain of the contracts are automatically renewable from year to
      year.  The aggregate annual commitment for future salaries at December
      31, 1996 was approximately $675,000.

           RELATED PARTY TRANSACTIONS

           A director of the Company is a partner in a law firm with which the
      Company incurred legal expenses of approximately $600,000, $360,000 and
      $500,000 in 1996, 1995 and 1994, respectively.

           LETTER OF CREDIT

           At December 31, 1994, the Company had an outstanding letter of
      credit for $1,000,000 with First Fidelity Bank, N.A., NJ, which
      guaranteed a performance bond issued in connection with the Company's
      contract with the JUA/MTF, an ISD customer.  In February 1995, this
      letter of credit was replaced by a $1,000,000 letter of credit issued by
      Chase Manhattan Bank N.A. which was collateralized by $1,000,000 that was
      placed in a restricted account.  The letter of credit expired in February
      1996 and the $1,000,000 of cash collateral was returned to the Company.

           MAJOR CUSTOMERS

           COVER-ALL had a substantial portion of its revenues from three
      customers in 1996 and 1995 and two customers in 1994 as follows:

                                          YEAR ENDED   YEAR ENDED   YEAR ENDED
                                         DECEMBER 31, DECEMBER 31, DECEMBER 31,
                   CUSTOMER                   1996         1995         1994
                  ----------               ----------   ----------   ----------
      Sun Alliance Management Services          27%         16%
      Glatfelter Insurance Group                13%
      Millers Insurance Group                   13%                      13%
      New Jersey State Medical
      Underwriters                                          18%
      Secura, Inc.                                          11%
      Empire Insurance Company                                           17%

           In 1996 and 1995 export sales were made to a U.K. customer of
      approximately $1,465,000 and $640,000, respectively. 


                                         -30-

 <PAGE> 


                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)




           CREDIT LINES

           At December 31, 1994, the Company had outstanding $2 million in
      short-term borrowings against its $4 million secured credit line with a
      bank.  In 1995 the Company repaid the $2 million and the credit line was
      withdrawn.  Cash paid during the periods for interest was: 1996 -none,
      1995 -none, and 1994 -$199,120.


      NOTE 6--INCOME TAXES

           An analysis of the components of the income tax provision and the
      classification between continuing and discontinued operations is as
      follows:

                                   YEAR ENDED    YEAR ENDED    YEAR ENDED
                                  DECEMBER 31,  DECEMBER 31,  DECEMBER 31,
                                      1996          1995          1994
                                   ----------    ----------    ----------

      Current:
       Federal                      $     --  $(2,800,000)   $(2,050,000)

                                          --           --        460,000
        State                     ----------   ----------     ----------

                                          --   (2,800,000)    (1,590,000)
                                  ----------   ----------     ----------
      Deferred:

       Federal                            --    2,800,000     (3,110,000)
                                          --     $     --     (   70,000)
       State                      ----------   ----------     ----------

                                          --    2,800,000     (3,180,000)
                                  ----------   ----------     ----------

                                    $     --     $     --    $(4,770,000)
        Total                     ==========   ==========     ==========
      Income taxes (benefit):

        Continuing operations       $     --     $     --    $(3,846,351)
                                          --     $     --       (923,649)
        Discontinued operations   ----------   ----------     ----------


      Total income taxes            $     --     $     --    $(4,770,000)
      (benefit)                   ==========   ==========     ==========


                                        -31-

 <PAGE>
                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)



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



                                     YEAR ENDED     YEAR ENDED      YEAR ENDED
                                    DECEMBER 31,   DECEMBER 31,    DECEMBER 31,
                                        1996           1995            1994
                                     ----------     ----------      ----------
       Computed federal
        statutory tax (benefit) $(1,781,000)    $(1,204,991)    $(3,846,351)

       Valuation allowance to
        reduce deferred tax asset 1,781,000       1,204,991              --
                                 ----------      ----------      ----------

          Total                    $     --        $     --     $(3,846,351)
                                 ==========      ==========      ==========

           The components of the net deferred tax asset and liability were as
      follows:
                                         DECEMBER 31, DECEMBER 31, DECEMBER 31,
                                              1996         1995         1994
                                           ----------   ----------   ----------

      Deferred tax assets current:
        Deferred revenue                     $     -- $(1,185,000  $(4,000,000

        Reserve for contract adjustments           --   2,075,000    1,300,000

        Bad debts                              18,000     186,000      188,000
        Reserve for loss on disposal          414,000     300,000           --

        Other net                              36,000      31,000      112,000
                                             (468,000) (3,777,000)  (2,350,000)
        Valuation allowance                ----------  ----------   ----------

                                             $     --    $     --  $(3,250,000
          Current deferred tax asset       ==========  ==========   ==========

      Deferred tax asset (liability) -
        long-term:
        Net operating loss carryforward    $8,421,000  $2,790,000     $     --

        Capitalized software                 (590,000)   (600,000)    (460,000)

        Depreciation and amortization         200,000     200,000      (10,000)

                                           (8,031,000) (2,410,000)          --
        Valuation allowance                ----------  ----------   ----------
                                             $     -- $   (20,000) $  (470,000)
          Long-term deferred tax liability ==========  ==========   ==========


                                         -32-

 <PAGE>


                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

           At December 31, 1996 and 1995 the Company had approximately
      $14,000,000 and $7,000,000 of operating  tax loss carryforwards expiring
      in 2011 and 2010, respectively.  The Tax Reform Act of 1986 enacted a
      complex set of rules which limit 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 issued relative to the Restructuring and other stock
      which may be issued related to the Debentures (see Note 12) the Company
      may experience an ownership change and consequently the Company's
      utilization of its net operating losses could be significantly limited.

      NOTE 7--STOCK OPTION AND STOCK PURCHASE PLANS

           In March 1995, the Company adopted the 1995 Employee Stock Option
      Plan.  Options for the purchase of up to 600,000 shares may be granted by
      of the Board of Directors to employees of the Company at an exercise
      price determined by the Board of Directors or the date of grant.  Options
      may be granted as incentive or non-qualified stock options with a term of
      not more than ten years.  At December 31, 1996 and 1995, 210,175 and
      482,325 shares, respectively, were available for grant.

           On November 15, 1994 the Company adopted the 1994 Stock Option Plan
      for Independent Directors.  Options for the purchase of up to 300,000
      shares may be granted to directors of the Company who are not employees
      ("non-employee director").  Each non-employee director who is serving on
      "Date of Grant" shall automatically be granted an option to purchase
      10,000 shares of Common Stock at the fair market value of Common Stock on
      the date the option is granted.  Dates of Grant are November 15, 1994,
      1999, 2004, and 2009 for non-employee directors serving on November 15,
      1994.  For individuals who become non-employee directors after November
      15, 1994, such directors' Dates of Grant will be the date such individual
      becomes a director and the fifth, tenth and fifteenth anniversaries of
      such date.  Options are exercisable in full 6 months after the applicable
      date of grant and expire 5 years after the date of grant.  At December
      31, 1996, and 1995, 240,000 and 260,000 shares, respectively, were
      available for grant.

           In October 1994, the Company adopted the 1994 Non-Qualified Stock
      Option Plan for Consultants.  Options for the purchase of up to 200,000
      shares may be granted by the Board of Directors to any individual who has
      entered into a written consulting contract with the Company.  The non-
      qualified stock options will have a 5 year term from date of grant and
      will be exercisable at a price and time as determined by the Board of
      Directors on the date of grant.  At December 31, 1996 and 1995, 105,000
      shares were available for grant.

           In June 1991, the Company adopted the Key Employee Stock Option Plan
      (the "KESO Plan").  Options for the purchase of up to 721,875 shares may
      be granted by the Board of Directors to key employees of the Company at
      an exercise price determined by the type of option granted.  Options may
      be granted as incentive or non-qualified stock options with a term of not
      more than ten years from the date of grant.  At December 31, 1996 and
      1995, 279,938 and 229,938 shares, respectively, were available for grant.


                                         -33-

 <PAGE>


                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)



           A summary of the changes in outstanding Common Stock options for all
      outstanding plans is as follows:

                                                           WEIGHTED-
                                                            AVERAGE   WEIGHTED-
                                                           REMAINING   AVERAGE
                                                          CONTRACTUAL  EXERCISE
                                    SHARES    PER SHARE       LIFE      PRICE
                                    ------     --------       ----      -----
     Balance, December 31, 1993   567,739   $2.29 - 10.40      --       $4.71

       Granted                    222,000    2.63 - 4.38   2.9 years     3.53
       Exercised                 (021,875)       3.53          --        3.53

                                 (314,514)   2.29 - 10.40      --        4.59
       Canceled                ----------     ----------   ---------- --------
     Balance, December 31, 1994   453,350    2.63 - 10.00  2.9 years     4.17

       Granted                    462,225    1.13 - 3.75   2.1 years     1.80

                                 (225,608)   3.13 - 10.00      --        3.87
       Canceled                ----------     ----------   ---------- --------
     Balance, December 31, 1995   689,967    1.13 - 10.00  2.3 years     2.66

       Granted                    337,250    2.00 - 5.25   2.9 years     3.20
       Exercised                 (125,187)   1.75 - 3.53       --        2.97

                                 (233,205)   1.75 - 10.00      --        3.75
       Canceled                ----------     ----------   ---------- --------

      Balance, December 31, 1996   668,825    $1.13 - 5.25  2.6 years    $2.49

          At December 31, 1996 under the above plans, 351,909 shares were
     exercisable.

           In 1985, the Board of Directors authorized, and the stockholders
      approved, the adoption of an Employee Stock Purchase Plan (the "Purchase
      Plan").  An aggregate of 344,531 shares of the Company's Common Stock
      could be issued under the Purchase Plan.  As of December 31, 1995,
      207,681 shares were issued under the Purchase Plan which was terminated
      in March 1995.

           The Company applies Accounting Principles Board Opinion No. 25,
      Accounting for Stock Issued to Employees, and related interpretations,
      for stock options issued to employees in accounting for its stock option
      plans.  The exercise price for all stock options issued during 1996 and
      1995 was equal to the market price of the Company's stock at the date of
      grant.  Accordingly, no compensation expense has been recognized for the
      Company's stock-based compensation plans.

           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 the Company's 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 its employee stock options.  The weighted average fair
      value of stock options granted to employees used in determining pro forma
      amounts is estimated at $1.95 and $.94 during 1996 and 1995,
      respectively.


                                         -34-

 <PAGE>


                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)



           Pro forma information regarding net loss and net loss per share has
      been determined as if the Company had accounted for its employee stock
      options under the fair value method prescribed under Statement of
      Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock
      Based Compensation.  The fair value of these options was estimated at the
      date of grant using the Black-Scholes option-pricing model for the pro
      forma amounts with the following weighted average assumptions:


                                           December 31,     December 31,
                                               1996             1995
                                            ----------       ----------
            Risk-free interest rate . .        6.29%           6.74%
            Expected life . . . . . . .        3.3 years       3.6 years
            Expected volatility . . . .        89%             70%
            Expected dividends  . . . .        None            None

           The pro forma amounts are indicated below (in thousands, except per
      share amounts):

                                              Year Ended December 31,
                                              ----------------------
                                               1996             1995
                                               ----             ----  
            Net loss as reported  . . .   $( 6,001)       $(11,402)

            Pro forma net loss  . . . .   $( 6,166)       $(11,660)

            Loss per share as reported      $( .40)         $(1.33)

            Pro forma loss per share  .     $( .41)         $(1.36)

      NOTE 8--COMMON STOCK

           The Company made a series of loans in 1994, 1993 and 1992
      aggregating $635,757 at December 31, 1994, to its former President in
      exchange for a demand note receivable with interest at 1% over the bank's
      prime rate.  Effective January 6, 1995, the Board of Directors approved
      the receipt of 268,111 shares of the Company's Common Stock, which were
      added to treasury shares, in full satisfaction for the repayment of these
      loans by the former President.  The cost of $2.37 per common share for
      this treasury stock was $.37 per share less than the closing bid price of
      the Company's Common Stock on January 6, 1995.  This receivable at
      December 31, 1994 was reflected in treasury stock as a reduction of
      stockholders' equity.

           On November 17, 1989, the Company adopted a Stockholder Rights Plan
      and declared a dividend distribution of one Right for each outstanding
      share of Common Stock.   Under certain conditions, each Right shall
      initially entitle the registered holder thereof to purchase one-fifth of
      one share of Common Stock at a purchase price of $10.00, subject to
      adjustment.  The Rights will be exercisable only if (i) a person or group
      has acquired, or obtained the right to acquire 15% or more of the
      outstanding shares of Common Stock (other than a person that acquires the
      stock directly from the Company in a transaction that the Company's
      independent Directors determine to be in the best interests of the
      Company and its stockholders) or (ii) following the commencement of a
      tender offer or exchange offer for 15% or more of the then outstanding
      shares of Common Stock.  Each Right will entitle its holder to receive,
      upon exercise, Common Stock (or, in certain circumstances, cash,
      property, or other securities of the Company) having a value equal to two
      times the purchase price of the Right under certain circumstances,
      including the acquisition of 20% of the outstanding Common Stock.  All
      rights holders, except the acquiror, may purchase a number of shares of
      Common Stock equal to $10.00 (subject to adjustment under the terms of
      the Rights 
    
                                         -35-

  <PAGE> 

                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


      Plan) divided by 50% of the market price of the Company's Common Stock
      on the date which is ten days after a public announcement by the
      Company that a person or group has acquired, or obtained the right to
      acquire, 15% or more of the outstanding shares of Common Stock.  In the
      event that the Company is acquired in a merger or other business
      combination transaction in which the Company is not the surviving
      corporation, the rights holders may purchase the acquiror's shares at the
      similar discount.

           The Company may redeem the Rights at $.01 each until ten days
      following the date on which a person or group of affiliated persons has
      acquired, or obtained the right to acquire, the beneficial ownership of
      15% or more of the outstanding shares of Common Stock.  The Rights will
      expire on December 4, 1999 unless earlier redeemed by the Company.

      NOTE 9--SALE OF STOCK AND WARRANTS 

           On March 31, 1996, the Company entered into a series of transactions
      with Software Investments Limited ("SIL") and Care Corporation Limited
      ("Care") whereby the Company:

           (A)  sold to SIL for total proceeds of $3,022,391:  (i) 1,412,758
      shares of the Company's Common Stock for $2.00 per share and (ii) five-
      year warrants to purchase an aggregate of 196,875 shares of the Company's
      Common Stock exercisable at $2.00 per share for $1.00 per warrant
      ($196,875). 

           (B)  assigned to SIL the rights it retained in the Restructuring
      (see Note 2) to repurchase within six months 1,628,100 shares of the
      Company's Common Stock for the greater of $3.00 per share or 50 percent
      of the then market price of the Company's Common Stock and its rights to
      purchase from the warrant holders for $1.00 per share five-year warrants
      to acquire 776,562 shares of the Company's Common Stock at $2.00 per
      share.  As a result of the issuance of the above mentioned shares, the
      antidilution provisions of the Warrants required an adjustment from
      776,562 shares at $2.00 per share to 862,847 shares at $1.80 per share. 
      As a result of the issuance of the 12 1/2% Convertible Debentures
      discussed in Note 12, the Warrants may require a further adjustment to
      the number of shares purchasable and the exercise price.

           On May 1, 1996, SIL acquired 1,628,100 shares of the Company's
      Common Stock at $3.00 per share, and at $1.00 per Warrant, 862,847
      Warrants to acquire 862,847 shares of the Company's Common Stock at $1.80
      per share.  SIL exercised these Warrants on May 6, 1996, resulting in the
      Company receiving $1,553,124 in additional equity.  

           In addition, on March 31, 1996, the Company was granted by Care the
      exclusive license for the Care software systems for use in the workers'
      compensation and group health claims administration markets in Canada,
      Mexico and Central and South America.  In exchange for this license, the
      Company issued to Care 2,500,000 shares of the Company's Common Stock. 
      The agreement was revised on March 14, 1997 and the Company engaged Care
      as its exclusive sales agent for a monthly fee of $10,000 against
      commissions of 20%.  Depending upon the level of revenue reached, the
      Company will have the right to repurchase portions of the shares issued
      to Care at $.01 per share based upon the level of revenues actually
      achieved.  Under certain circumstances, based upon aggregate net sales in
      excess of $10 million from a maximum of two separate sales during such
      three-year period, the Company may be required to grant Care five-year
      warrants to buy an additional 1,000,000 shares of the Company's Common
      Stock at $2.00 per share.

                                         -36-

 <PAGE>

                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


      NOTE 10--QUARTERLY FINANCIAL DATA (UNAUDITED)

           Summarized quarterly financial data is as follows:

                 (Dollar amounts in thousands except per share data)

                                                          QUARTER
                                                         --------
                                            FIRST    SECOND    THIRD     FOURTH
                                            -----    ------    -----     ------
      YEAR ENDED DECEMBER 31, 1996:
      Revenues                           $ 1,120   $ 1,897  $ 1,052    $ 1,400
      Loss from continuing operations(1)    (798)   (1,280)  (2,046)    (1,484)

      Loss on disposal of discontinued
        operations                            --        --     (393)        --
      Net loss                              (798)   (1,280)  (2,439)    (1,484)
      Loss per share from continuing
        operations                        ($0.07)   ($0.08)  ($0.12)    ($0.10)
      Net loss per share                  ($0.07)   ($0.08)  ($0.15)    ($0.10)
      YEAR ENDED DECEMBER 31, 1995:
      Revenues                             1,054       925    1,136      1,004
      Loss from continuing operations(1)  (2,158)     (280)    (388)      (718)

      Loss from discontinued operations   (1,330)   (3,103)  (1,128)    (1,547)
      Loss on disposal of discontinued
        operations                            --        --       --       (750)
      Net loss                            (3,488)   (3,383)  (1,516)    (3,015)
      Loss per share from continuing
        operations                        ($0.25)   ($0.03)  ($0.05)    ($0.08)
      Net loss per share                  ($0.41)   ($0.40)  ($0.18)    ($0.34)
      YEAR ENDED DECEMBER 31, 1994:

      Revenues                               484       630      155        658
      Loss from continuing operations(1)    (905)   (1,531)  (1,671)    (3,359)
      (Loss) income from discontinued
        operations                        (1,951)    1,252    1,911     (7,966)
      Net (loss) income                   (2,856)     (279)     240    (11,325)
      Loss per share from continuing
        operations                        ($0.10)   ($0.17)  ($0.19)    ($0.38)
      Net (loss) income per share         ($0.32)   ($0.03)   $0.03     ($1.28)

      (1)  The first quarter of 1995 and the fourth quarter of 1994 were
           adversely affected by the special charges as described in Note
           3.  


                                         -37-

 <PAGE>
                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


      NOTE 11--SUPPLEMENTAL DATA

           Accrued liabilities consist of the following:

                                                      DECEMBER 31,
                                                      ------------
                                                1996               1995
                                                ----               ----

       Accrued payroll, benefits
         temporary help, consulting
         and severance                   $  371,186         $  229,623
       Reserve for contract costs
         and adjustments                         --            200,000
       Reserve for loss on disposal
         of discontinued operations              --            749,758
       Accrued expenses of the
         discontinued operations not
         assumed by The Robert Plan
         Corporation                      1,036,736          2,839,702

                                            206,690            104,558
       Other                             ----------         ----------
                                         $1,614,612         $4,123,641
           Total                         ==========         ==========

      NOTE 12--SUBSEQUENT EVENTS 

           On March 14, 1997, the Company obtained $750,000 in bridge financing
      through the sale of 12 1/2% Convertible Notes to three major stockholders.
      The principal and accrued interest on the bridge financing was repaid in
      full on March 31, 1997 out of the proceeds from the financing discussed
      below. 

           On March 31, 1997, the Company sold $3,000,000 of 12 1/2% Convertible
      Debentures due March 2002 (the "Debentures") to an institutional
      investor.  The Debentures were sold at face value, pay interest quarterly
      and are convertible, in whole or in part, into shares of Common Stock of
      the Company at $1.25 per share, subject to adjustment.  The Debentures
      contain certain covenants which restrict the Company's ability to incur
      indebtedness, grant liens, pay dividends or other defined restricted
      payments and make investments and acquisitions.  The Company cannot
      redeem the Debentures for two years and thereafter may only call the
      Debentures if the closing price of the Company's Common Stock for the
      twenty business days preceding the redemption date exceeds $1.50.  The
      net proceeds from the permanent financing were used to repay the bridge
      financing and the remainder will be used for working capital purposes.

                                         -38-

 <PAGE>


                             COVER-ALL TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
                    SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS




                                 BALANCE AT                         BALANCE AT
                                  BEGINNING             DEDUCTIONS      END
                                  OF PERIOD ADDITIONS      (1)       OF PERIOD
                                  --------- --------- -------------   ------
      Accumulated amortization of
        capitalized software and
        software license:

      Year Ended December 31, 
       1996                    $  489,227  $2,101,576    $834,839   $1,755,964

      Year Ended December 31, 
       1995                      $     --  $  489,227    $  --      $  489,227

      Year Ended December 31, 
       1994                    $1,388,601   $3,313,023   $4,701,624  $   --

      (1)  Represents primarily a write-off of $506,000 of capitalized software
           costs in 1996 and reduction of fully amortized software in 1994.


                                         -39-

      <PAGE>

      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)        Bylaws 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].

       10(a)        Partnership Agreement, dated December 7, 1978, by and among
                    the Registrant, James R. Poole, Ira M. Cantor and Stanley
                    A. Rothenberg [incorporated by reference to Exhibit 10(a)
                    to the Registrant's Registration Statement on Form S-18
                    (Commission File No. 2-88695-NY) filed on December 30,
                    1983].

       10(b)        Employment Agreement, dated as of August 1, 1990, between
                    the Registrant and Bradley J. Hughes [incorporated by
                    reference to Exhibit 10(h) to the Registrant's Annual
                    Report on Form 10-K (Commission File No. 0-13124) filed on
                    January 24, 1991].

       10(c)        Employment Agreement, dated as of July 11, 1990, between
                    the Registrant and Theodore I. Botter [incorporated by
                    reference to Exhibit 10(j) to the Registrant's Annual
                    Report on Form 10-K (Commission File No. 0-13124) filed on
                    January 24, 1991].

       10(e)(1)     Employment Agreement, dated as of November 1, 1992, between
                    the Registrant and Harvey Krieger [incorporated by
                    reference to Exhibit 10(h) to the Registrant's Annual
                    Report on Form 10-K (Commission File No. 0-13124) filed on
                    January 28, 1993].

       10(e)(2)     Amendment to Employment Agreement, dated June 7, 1995,
                    between the Registrant and Harvey Krieger.


                                         -40-

 <PAGE>


       10(e)(3)     Consulting Agreement, dated as of June 1, 1996, between the
                    Registrant and Harvey Krieger [incorporated by reference to
                    Exhibit 10(e)(3) to the Registrant's Registration Statement
                    on Form S-3 (Commission File No. 0-1324) filed on June 17,
                    1996].

       10(f)(1)     Employment Agreement, dated as of March 22, 1994, among
                    COVER-ALL Systems, Inc., Michael G. Repoli and the
                    Registrant [incorporated by reference to Exhibit 10(f)(1)
                    to the Registrant's Annual Report on Form 10-K (Commission
                    File No. 0-13124) filed on April 17, 1995].

       10(f)(2)     Amendment to Employment Agreement, dated August 10, 1994,
                    among COVER-ALL Systems, Inc., Michael G. Repoli and the
                    Registrant [incorporated by reference to Exhibit 10(f)(2)
                    to the Registrant's Annual Report on Form 10-K (Commission
                    File No. 0-13124) filed on April 17, 1995].

       10(f)(3)     Amendment to Employment Agreement, dated January 11, 1995,
                    among COVER-ALL Systems, Inc., Michael G. Repoli and the
                    Registrant [incorporated by reference to Exhibit 10(f)(3)
                    to the Registrant's Annual Report on Form 10-K (Commission
                    File No. 0-13124) filed on April 17, 1995].

       10(g)        Employment Agreement, dated as of January 24, 1996, among
                    COVER-ALL Systems, Inc., the Registrant and Peter C. Lynch
                    [incorporated by reference to Exhibit 10(g) to the
                    Registrant's Annual Report on Form 10-K (Commission File
                    No. 0-13124) filed on April 11, 1996].

       10(h)        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(i)        Incentive Stock Option Plan adopted by the Board of
                    Directors of the Registrant on February 22, 1982, and
                    approved by the stockholders in February 1983 as amended on
                    December 16, 1983 and March 31, 1988 [incorporated by
                    reference to Exhibit 10(b) to the Registrant's Annual
                    Report on Form 10-K (Commission File No. 0-13124) filed on
                    January 24, 1989].

       10(j)        Stock Option Agreement, dated March 22, 1990, between the
                    Registrant and Harvey Krieger [incorporated by reference to
                    Exhibit 10(q) to the Registrant's Annual Report on Form 10-
                    K (Commission File No. 0-13124) filed on January 24, 1991].

       10(k)        Stock Option Agreement, dated August 15, 1990, between the
                    Registrant and Bradley J. Hughes [incorporated by reference
                    to Exhibit 10(t) to the Registrant's Annual Report on Form
                    10-K (Commission File No. 0-13124) filed on January 24,
                    1991].

       10(l)        Stock Option Agreement, dated August 15, 1990, between the
                    Registrant and Theodore I. Botter [incorporated by
                    reference to Exhibit 10(u) to the Registrant's Annual
                    Report on Form 10-K (Commission File No. 0-13124) filed on
                    January 24, 1991].

       10(m)(1)     The 1991 Key Employee Stock Option Plan, adopted by the
                    Board of Directors of the Registrant on June 18, 1991, as
                    amended on September 6, 1991 and November 19, 1991 and
                    approved by stockholders on March 18, 1992 [incorporated by
                    reference to Exhibit 4(a) to the Registrant's Registration
                    Statement on Form S-8 (Commission File No. 33-44270) filed
                    on November 26, 1991].

       10(m)(2)     Form of Incentive Stock Option Agreement under the 1991 Key
                    Employee Stock Plan [incorporated by reference to Exhibit
                    4(b) to the Registrant's Registration Statement on Form S-8
                    (Commission File No. 33-44270) filed on November 26, 1991].

                                         -41-

 <PAGE>



       10(m)(3)     Form of Non-Qualified Stock Option Agreement under the 1991
                    Key Employee Stock Option Plan [incorporated by reference
                    to Exhibit 4(c) to the Registrant's Registration Statement
                    on Form S-8 (Commission File No. 33-44270) filed on
                    November 26, 1991].

       10(m)(4)     Form of Stock Option Agreement under the 1991 Key Employee
                    Stock Option Plan dated as of June 21, 1991, between the
                    Registrant and each of Theodore I. Botter, Thomas F.
                    Rocchio, and Harvey Krieger [incorporated by reference to
                    Exhibit 4(d) to the Registrant's Registration Statement on
                    Form S-8 (Commission File No. 33-44270) filed on November
                    26, 1991].

       10(m)(5)     Stock Option Agreement, dated as of November 20, 1992,
                    between the Registrant and Bradley J. Hughes [incorporated
                    by reference to Exhibit 10(x)(vi) to the Registrant's
                    Annual Report on Form 10-K (Commission File No. 0-13124)
                    filed on January 28, 1993].

       10(n)(1)     1994 Stock Option Plan for Independent Directors adopted by
                    the Board of Directors of the Registrant on November 10,
                    1994 [incorporated by reference to Exhibit 10(n)(1) to the
                    Registrant's Annual Report on Form 10-K (Commission File
                    No. 0-13124) filed on April 17, 1995].

       10(n)(2)     Form of Stock Option Agreement under the 1994 Stock Option
                    Plan for Independent Directors [incorporated by reference
                    to Exhibit 10(n)(2) to the Registrant's Annual Report on
                    Form 10-K (Commission File No. O-13124) filed on April 17,
                    1995].

       10(o)(1)     The 1995 Employee Stock Option Plan, adopted by the Board
                    of Directors of the Registrant on March 22, 1995
                    [incorporated by reference to Exhibit 10(o)(1) to the
                    Registrant's Annual Report on Form 10-K (Commission File
                    No. O-13124) filed on April 17, 1995].

       10(o)(2)     Form of Incentive Stock Option Agreement under the 1995
                    Employee Stock Option Plan [incorporated by reference to
                    Exhibit 10(o)(2) to the Registrant's Annual Report on Form
                    10-K (Commission File No. 0-13124) filed on April 17,
                    1995].

       10(o)(3)     Form of Non-Qualified Stock Option Agreement under the 1995
                    Employee Stock Option Plan [incorporated by reference to
                    Exhibit 10(o)(3) to the Registrant's Annual Report on Form
                    10-K (Commission File No. 0-13124) filed on April 17,
                    1995].

       10(p)(1)     Indenture of Lease, dated as of July 1, 1994, between Fair
                    Lawn Industrial Park, Inc. and the Registrant for premises
                    located at 17-01 Pollitt Drive, Fair Lawn, New Jersey
                    [incorporated by reference to Exhibit 10(p)(1) to the
                    Registrant's Annual Report on Form 10-K (Commission File
                    No. 0-13124) filed on April 17, 1995].

       10(p)(2)     Termination Agreement, dated as of June 30, 1994, among
                    Fair Lawn Industrial Park, Inc., Symtron Systems, Inc., and
                    the Registrant [incorporated by reference to Exhibit
                    10(p)(2) to the Registrant's Annual Report on Form 10-K
                    (Commission File No. 0-13124) filed on April 17, 1995].

       10(q)        Lease Agreement, dated as of March 2, 1990, between the
                    Registrant and Polevoy Associates for premises located at
                    18-01 Pollitt Drive, Fair Lawn, New Jersey [incorporated by
                    reference to Exhibit 10(z) to the Registrant's Annual
                    Report on Form 10-K (Commission File No. 0-13124) filed on
                    January 24, 1991].

       10(r)        Lease Agreement, dated as of December 11, 1991, between the
                    Registrant and Aetna Life Insurance Company for premises
                    located at 125 Belmont Drive, Somerset, New Jersey
                    [incorporated by reference to Exhibit 10(ee) to the
                    Registrant's Annual Report on Form 10-K (Commission File
                    No. 0-13124) filed on January 24, 1992].

                                         -42-

 <PAGE> 


       10(s)        Rights Agreement, dated November 17, 1989, between the
                    Registrant and First Fidelity Bank, N.A., as Rights Agent
                    [incorporated by reference to Exhibit 1 to the Registrant's
                    Registration Statement on Form 8-A (Commission File No. 13-
                    2698053) filed on October 20, 1989].

       10(t)(i)     Severance Agreement, dated as of November 28, 1989, between
                    the Registrant and Harvey Krieger [incorporated by
                    reference to Exhibit 1 to the Registrant's Form 8-K
                    (Commission File No. 0-13124) filed on December 6, 1989].

       10(t)(ii)    Severance Agreement, dated August 15, 1990, between the
                    Registrant and Bradley J. Hughes [incorporated by reference
                    to Exhibit 10(o)(i) to the Registrant's Annual Report on
                    Form 10-K (Commission File No. 0-13124) filed on January
                    24, 1991].

       10(t)(iii)   Severance Agreement, dated August 15, 1990, between the
                    Registrant and Theodore I. Botter [incorporated by
                    reference to Exhibit 10(t)(i) to the Registrant's Annual
                    Report on Form 10-K (Commission File No. 0-13124) filed on
                    January 24, 1991].

       10(u)(i)     Restructuring Agreement, dated as of March 1, 1996, by and
                    among the Registrant, Atlantic Employers Insurance Company,
                    Pacific Employers Insurance Company, Electric Insurance
                    Company, The Robert Plan Corporation, Material Damage
                    Adjustment Corporation, Lion Insurance Company, and
                    National Consumer Insurance Company [incorporated by
                    reference to Exhibit 10.1 to the Registrant's Form 8-K
                    (Commission File No. 0-13124) filed on March 7, 1996].

       10(u)(ii)    Form of Warrant issued by the Registrant pursuant to the
                    Restructuring Agreement listed as Exhibit 10(u)(i) above
                    [incorporated by reference to Exhibit 10.2 to the
                    Registrant's Form 8-K (Commission File No. 0-13124) filed
                    on March 7, 1996].

       10(u)(iii)   Asset Purchase Agreement, dated as of March 1, 1996, by and
                    among the Registrant, MDA Services, Inc. and The Robert
                    Plan Corporation [incorporated by reference to Exhibit 10.3
                    to the Registrant's Form 8-K (Commission File No. 0-13124)
                    filed on March 7, 1996].

       10(v)(i)     Stock Purchase Agreement, dated as of March 31, 1996, by
                    and among the Registrant, Software Investments Limited and
                    Care Corporation Limited [incorporated by reference to
                    Exhibit 10.1 to the Registrant's Form 8-K (Commission File
                    No. 0-13124) filed on April 8, 1996].

       10(v)(ii)    Repurchase Rights Assignment, dated as of March 31, 1996,
                    between the Registrant and Software Investments Limited
                    [incorporated by reference to Exhibit 10.2 to the
                    Registrant's Form 8-K (Commission File No. 0-13124) filed
                    on April 8, 1996].

       10(v)(iii)   Warrant, dated as of March 31, 1996, issued by the
                    Registrant to Software Investments Limited [incorporated by
                    reference to Exhibit 10.3 to the Registrant's Form 8-K
                    (Commission File No. 0-13124) filed on April 8, 1996].

       10(v)(iv)    Exclusive Software License Agreement, dated as of March 31,
                    1996, by and among the Registrant, Care Corporation Limited
                    and COVER-ALL Systems, Inc. [incorporated by reference to
                    Exhibit 10.4 to the Registrant's Form 8-K (Commission File
                    No. 0-13124) filed on April 8, 1996].

       10(w)        Settlement Agreement dated April 1, 1996 between the
                    Registrant and Clarendon National Insurance Company
                    [incorporated by reference to Exhibit 10.5 to the
                    Registrant's Form 8-K (Commission File No. 0-13124) filed
                    on April 8, 1996].

      *10(x)        Employment Agreement, dated as of April 1, 1996, between
                    the Registrant and Raul F. Calvo.

                                         -43-



 <PAGE> 


      *10(y)        General Release and Termination of Lease Agreement, dated
                    as of December 4, 1996, between the Registrant and Somerset
                    Realty Associates, L.L.C.

       10(z)(i)     Convertible Note Purchase Agreement, dated as March 14,
                    1997, between the Registrant, Software Investments Limited,
                    Atlantic Employers Insurance Company and Roger D. Bensen
                    [incorporated by reference to Registrant's Current Report
                    on Form 8-K (Commission File No. 0-13124) filed on March
                    24, 1997.

      *10(z)(ii)    Form of 12 1/2% Convertible Note issued by Registrant
                    pursuant to the Convertible Note Purchase Agreement listed
                    as Exhibit 10(z)(i) above.

      *10(aa)(i)    Debenture Purchase Agreement, dated as of March 31, 1997,
                    between the Registrant and Sirrom Capital Corporation.

      *10(aa)(ii)   12 1/2% Convertible Debenture Due March 31, 2002, issued by
                    Registrant to Sirrom Capital Corporation.

      *10(aa)(iii)  Amendment to Stock Purchase Agreement, dated as of March
                    14, 1997, among the Registrant, Software Investments
                    Limited and Care Corporation Limited.

      *10(aa)(iv)   Amendment to Exclusive Software License Agreement, dated as
                    of March 14, 1997, among the Registrant, Care Corporation
                    Limited and, for certain purposes, Cover-All Systems, Inc.

       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           Consent of Ernst & Young LLP.

      *27           Financial Data Schedule.



       ______________________________
       * Filed herewith


                                         -44-

 <PAGE> 


                                      SIGNATURES

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

                                                   COVER-ALL TECHNOLOGIES INC.



      Date:  April 15, 1997                        By: /s/ Brian Magowan 
                                                       -----------------
                                                   Brian Magowan
                                                   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/ Brian Magowan       Chairman of the Board       April 15, 1997
       --------------------    of Directors and Chief
       Brian Magowan           Executive Officer and
                               Director (Principal
                               Executive Officer)

       /s/ Mark D. Johnston    Chief Financial             April 15, 1997
       --------------------    Officer and
       Mark D. Johnston        Director

       /s/ Earl Gallegos       Director                    April 15, 1997
       --------------------
       Earl Gallegos

       /s/ Ian Meredith        Director                    April 15, 1997
       --------------------
       Ian Meredith

       /s/ James R. Stallard   Director                    April 15, 1997
       --------------------
       James R. Stallard


					-45-