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, 1997

                         Commission file number 0-13124

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

                  Delaware                                  13-2698053
                  (State(I.R.S. Employer Identification No.)ion or organization)

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

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

Securities registered pursuant to Section 12(b) of the Act:

      Title of Each Class              Name of Each Exchange on Which Registered
                                                  NASDAQ SmallCap Market
Common Stock, par value $.01 per share            Philadelphia Stock Exchange

Securities registered pursuant to Section (g) of the Act:
                                      None

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 March 27, 1998 was $45,970,000.

                Number of shares outstanding at March 27, 1998:

          16,907,522 shares of Common Stock, par value $.01 per share.

The definitive Proxy Statement for the Annual Meeting of Stockholders to be held
June 18, 1998, 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, 1997
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 50  property/casualty  insurance
companies.  Total Classic  revenues were  $6,593,000 for the year ended December
31, 1997 as compared to $3,655,000  and  $2,752,000 for the years ended December
31, 1996 and 1995, respectively.

      Since 1993, COVER-ALL has been developing its second product line entitled
the Total  Administrative  Solution  ("TAS  2000") and, as of December 31, 1997,
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 $1,345,000 for the year ended December
31, 1997,  $1,814,000  for the year ended  December 31, 1996, and $1,367,000 for
the year ended December 31, 1995.

      Regarding its software  products held for sale,  the Company's TAS product
line  already  conforms to "Year 2000" as of December  31,  1997.  In 1997,  the
Classic product line was modified to support the "Year 2000."

                                      2

<PAGE>



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 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:

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

     In 1997, the Classic  product line was modified to support the "Year 2000."
Further,  COVER-ALL has upgraded the Classic product line for use in the Windows
95 operating system.  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:

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

      TAS 2000 has Windows compliant GUI to enhance its user  friendliness.  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.  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

                                      3

<PAGE>



reach into the billions of dollars to affect proper change. The TAS 2000 product
line from its  inception  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.  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.

      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.  TAS 2000 competes  primarily with two
other systems suppliers.

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.

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. Due to the
Company's financial position, it did not incur research and development expenses
in 1997. The Company  believes that research and development  expenditures  will
constitute a  significant  percentage of revenues in the coming year as a result
of new contracts.

      Research and development expenses for COVER-ALL were $-0-,  $1,846,000 and
$1,933,000 for the years ended December 31, 1997, 1996 and 1995, respectively.

Backlog

      Backlog is not applicable to the business of the Company.



                                      4

<PAGE>



Major Customers

      The  Classic  product  line  is in use  in  over  fifty  property/casualty
insurance  companies  while the TAS 2000 product line is currently in use in two
property/casualty   insurance  companies.  The  Company's  revenues  from  major
customers  (more than 10 percent of total revenues) for the years ended December
31, 1997, 1996 and 1995 as a percentage of total revenue were as follows:

               Customer              Year Ended     Year Ended    Year Ended
                                    December 31,   December 31,  December 31,
                                        1997           1996          1995
                                        ----           ----          ----

Inspire Insurance Solutions               20%
Sun Alliance Management Services                         27%           16%
Glatfelter Insurance Group                               13%
Millers Insurance Group                                  13%
New Jersey State Medical Underwriters                                  18%
Secura, Inc.                                                           11%

       In 1997,  1996 and 1995  export  sales  were made to a U.K.  customer  of
approximately $500,000, $1,465,000 and $640,000, respectively.

Employees

       The Company had  approximately  40  employees  during  1997.  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  pending
lawsuits with certain affiliates of The Robert Plan Corporation.  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 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

                                      5

<PAGE>



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  were  adjusted  to the  number  of shares
purchasable and the exercise price.


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 $371,000.  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.

Item 3.      Legal Proceedings

       The Company is not currently named as a defendant in any lawsuit.

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, 1997.

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters

       Since May 23,  1996,  the  Company's  Common Stock had 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
"COVR." 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, 1995 on the  principal  trading  market on
which the Common Stock traded during such period.


                                            High           Low

       CALENDAR 1997:
       1st Quarter                         $2.375        $1.000
       2nd Quarter                          2.000         1.125
       3rd Quarter                          2.875         1.438
       4th Quarter                          4.875         2.625


                                      6

<PAGE>




       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

       As of March 27, 1998, 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 March 27, 1998 was $4.125,  as reported by the Nasdaq  SmallCap
Market.

       The Company does not currently anticipate paying any dividends.

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.

<TABLE>

                                                              (Dollar amounts in thousands except per share data)
                                                                                          Two Months      
                                                                                              Ended     Year Ended
                                                            Years Ended December 31,       December 31, October 31,
                                                       1997     1996     1995     1994         1993       1993
                                                       ----     ----     ----     ----         ----       ----
Statements of Operations Data:
<S>                                                   <C>      <C>      <C>      <C>         <C>        <C>    
Revenues:                                             $7,938   $5,469   $4,119   $1,927      $ 224      $ 1,740
Loss from continuing operations(1                     (2,640)  (5,608)  (3,544)  (7,466)      (781)      (1,943)
(Loss) income from discontinued operations less
  applicable income taxes/(benefit) of $-0-, $-0-,
  $-0-, ($924), $670 and $3,633, respectively             --       --   (7,108)  (6,754)     1,158        5,653
Loss on disposal of discontinued operations,
  no tax benefit provided                                 --     (393)    (750)      --         --           --
Net (loss) income                                     (2,640)  (6,001) (11,402) (14,220)       377        3,710
Loss per share from continuing operations               (.16)    (.38)    (.41)    (.84)      (.09)        (.21)
Net (loss) income per share(2)                          (.16)    (.40)   (1.33)   (1.60)       .04          .40
Cash dividends per share                               $  --    $  --    $  --   $  .02      $ .01      $   .03

Balance Sheet Data:
Working capital (deficiency)                          $1,647   $(1,293)  $(8,717)$ 3,110     $12,475    $12,843
Total assets                                           8,484     8,243     8,369  18,795      22,748     22,443
Short-Term Debt                                           --        --        --   2,000          --         --
Stockholders' equity (deficit)                         2,847     4,911    (6,013)  5,376      20,574     20,541
</TABLE>

(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) Revenues of the  discontinued  operations  (ISD) were $-0-,  $-0-,  $20,228,
    $32,893, $8,589 and $68,515, respectively, for each of the periods above.

  

Item 7.   Management's Discussion and Analysis of Financial Condition and 
          Results of Operations

    The  following  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

                                      7

<PAGE>



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.

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.

    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.


                                      8

<PAGE>



    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, 1997 Compared with Year Ended December 31, 1996

    Total  revenues  were  $7,938,000  for the year ended  December  31, 1997 as
compared to $5,469,000 for the year ended December 31, 1996, an increase of 45%.
License fees were  $3,940,000  for the year ended  December 31, 1997 compared to
$1,044,000 in the same period in 1996 due to the sale of additional contracts in
1997. For the year ended December 31, 1997, maintenance revenues were $2,722,000
compared to  $2,252,000 in the same period of the prior year due to an increased
customer base. Professional services revenue contributed $1,276,000 for the year
ended  December 31, 1997 compared to $2,172,000  for the year 1996. The decrease
was due to approximately  $1,000,000 less TAS 2000 fees for custom  enhancements
in 1997  compared  to 1996.  A new TAS 2000  contract  was  signed in the fourth
quarter of 1997 and work on custom enhancements was started in December of 1997.

    Cost of revenues  increased to  $5,426,000  for the year ended  December 31,
1997 as compared to $4,586,000 for 1996.  Increases in capitalized  software and
license fees amortization accounted for the bulk of the increase.

    Research and  development  expenses in 1997 were $-0- compared to $1,846,000
for the year ended December 31, 1996 due to the Company's  restructuring and the
decision to focus the Company's  resources on selling TAS 2000  modules.  In the
future,  the Company  plans to dedicate  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  $1,900,000 in 1997 compared to
$1,125,000  as of  December  31,  1996 due mostly to  increased  sales force and
associated  benefit costs.  The Company  allocated  additional  resources to its
sales and marketing group to work on proposals for new contracts.

    General and  administrative  expenses  decreased to  $2,989,000 in 1997 from
$3,627,000  for the year ended  December 31, 1996 due to the  Company's  ongoing
efforts to reduce overhead costs.

    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.



                                      9

<PAGE>



    COVER-ALL has commenced  marketing efforts in the United Kingdom. A contract
for the TAS 2000 product was announced on March 25, 1998 with Cornhill Insurance
PLC,  a  wholly-owned  subsidiary  of  Allianz  (one  of the  largest  insurance
companies  in the  world).  This  licensing  and  services  agreement  valued at
$4,500,000  encompasses  Cover-All's new Total Administrative  System (TAS 2000)
modules including Policy Administration,  Client Management,  Agency Management,
Billing Cash & Commissions,  Statistical  Reporting and Pyramid Services' Claims
Administration.

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

    Total  revenues  were  $5,469,000  for the year ended  December  31, 1996 as
compared to $4,119,000 for the year ended December 31, 1995, an increase of 33%.
License fees were  $1,045,000  for the year ended  December 31, 1996 compared to
$1,422,000 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
$2,252,000 compared to $1,174,000 in the same period of the prior year due to an
increased customer base and renegotiations of all contracts  resulting in higher
fees from customers.  Professional  services revenue contributed  $2,172,000 for
the year ended  December 31, 1996 compared to $1,523,000  for the year 1995 as a
result of new contracts signed and customers requesting additional modifications
to existing systems.

    Cost of sales  increased to $4,586,000  for the year ended December 31, 1996
as  compared  to  $1,330,000  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 $1,846,000
compared to  $1,933,000  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  $1,125,000 in 1996 compared to
$465,000  as of  December  31,  1995 due  mostly to  increased  sales  force and
associated  benefit costs.  The Company  allocated  additional  resources to its
sales and marketing group to work on a proposal for a major contract.

    General  and  administrative   expenses   increased   approximately  31%  to
$3,627,000 in 1996 from  $2,760,000  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.

Liquidity and Capital Resources

    At December 31, 1997, the Company had working capital of $1,647,000 compared
to a working  capital  deficit of $1,293,000 in 1996. The improvement in working
capital was primarily due to the Company's receiving $3,000,000 from the sale of
12 1/2% convertible debentures to an institutional investor.

    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

                                      10

<PAGE>



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.

    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  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
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.  In
the fourth  quarter of 1997,  the Company made a strategic  decision to allocate
its future  resources  to its TAS and  Classic  product  lines  rather  than the
product line obtained via the Care Software  License.  In this regard,  on March
31,  1998,  the  Company  negotiated  a buy  back by Care of the  Care  Software
License,  while acquiring  worldwide reseller rights (excluding  Australia,  New
Zealand, and the United States).

    In consideration  for the buy back of the Care Software License by Care, the
Company  received  $500,000 on March 31,  1998,  and a  $4,500,000  non-interest
bearing  note,  payable in  semi-annual  installments  of $500,000  which,  when
discounted,  results  in a  principal  amount  of the  note of  $3,893,054.  The
discounted note is collateralized by unencumbered Cover-All stock owned by Care.
The number of shares  required  as  collateral  will vary,  such that the market
value of the  shares  held as  collateral  must  equal  150% of the  outstanding
balance.  The number of shares  required as collateral  will be adjusted at each
payment date based on the market price of the  Company's  shares and the balance
outstanding  on the date.  Based on the market price of the  Company's  stock on
March 30, 1998, approximately 1,700,000 shares were pledged as collateral.

    Based on the above, and due to the related party nature of the Care Software
License buy back  agreement,  the Company will record the $1,143,054  difference
between  the  carrying  value of the Care  Software  License  of  $3,250,000  at
December 31, 1997, and the  discounted  $4,393,054 buy back agreement to capital
in excess of par value in the first quarter of 1998.

    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.

    At December 31, 1997, the Company had approximately $3,000,000,  $14,000,000
and $7,000,000 of operating tax loss  carryforwards  expiring in 2012, 2011, and
2010, respectively.

    The Company believes that the proceeds from the sale of the Debentures,  its
current  cash  balances,  the Care buy back,  and  anticipated  cash  flows from
continuing  operations will be sufficient to meet normal operating needs for the
continuing COVER-ALL business in 1998.

New Authoritative Accounting Pronouncements

     In June 1997, the Financial Accounting Standards Board ["FASB"] issued SFAS
No. 130, "Reporting  Comprehensive  Income." SFAS No. 130 establishes  standards
for  reporting  and display of  comprehensive  income and its  components in the
financial statements. SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997.  Reclassification of financial statements for earlier periods
provided for comparative purposes is required.  The Company is in the process of
determining  its  preferred  format.  The  adoption of SFAS No. 130 will have no
impact on the Company's  consolidated results of operations,  financial position
or cash flows.

    In June 1997, the FASB has issued SFAS No. 131,  "Disclosures About Segments
of an Enterprise and Related  Information."  SFAS No. 131 establishes  standards
for the way that public business  enterprises report information about operating
segments in annual  financial  statements  and requires  that those  enterprises
report selected information about operating segments in interim

                                      11

<PAGE>



financial  reports  issued  to  shareholders.  SFAS  No.  131 is  effective  for
financial  statements  for fiscal  years  beginning  after  December  15,  1997.
Financial  statement  disclosures for prior periods are required to be restated.
The Company is in the process of evaluating  the  disclosure  requirements.  The
adoption  of SFAS No.  131 will  have no impact  on the  Company's  consolidated
results of operations; financial position or cash flows.

    In  October  1997,  the  Accounting  Standards  Executive  Committee  of the
American Institute of Certified Public Accountants, after clearance by the FASB,
issued Statement of Position (SOP) 97-2, Software Revenue Recognition.  This SOP
supersedes  SOP 91-1 of the same name and provides  the most recent  guidance on
applying  generally  accepted  accounting  principles in recognizing  revenue on
software  transactions.  SOP 97-2 is effective for transactions  entered into in
fiscal years beginning after December 15, 1997.

    SOP 97-2 requires  that in  arrangements  to deliver  software or a software
system  that  does  not  require  significant   production,   modification,   or
customization,  revenue should be recognized  when there is persuasive  evidence
that an arrangement does in fact exist; delivery has occurred;  the fee is fixed
or determinable;  and  collectibility  is probable.  If the software or software
system  selling  contract  arrangement,  either  alone or  together  with  other
products  or  services,   requires  significant   production,   modification  or
customization  construction  type/production  type contract accounting should be
used for the entire  arrangement.  Such accounting would recognize  revenues and
costs on a contract arrangement as it progresses toward completion,  rather than
deferred  recognition of these items until  persuasive  evidence of delivery has
occurred.  In software or software system selling  arrangements  that consist of
multiple elements (that is, additional software products, upgrades/enhancements,
rights to  exchange  or  return  software,  postcontract  customer  support,  or
services),  and contract accounting does not apply, the fee must be allocated to
the various elements based on vendor-specific objective evidence of fair values.
In general, if sufficient vendor-specific objective evidence of fair values does
not exist,  all  revenue  from the  arrangement  should be  deferred  until such
sufficient  evidence  exists,  or until all elements  have been  delivered.  The
principle  difference  between SOP 97-2 and its  predecessor  SOP 91-1 is in the
accounting for multiple-element  arrangements based on vendor-specific objective
evidence of fair values.

    Cover-All  generally  does not sell its  products,  Classic  and TAS,  under
multiple-element  arrangements.  Classic  and TAS are  standard  "off the shelf"
application  program packages,  and while these packages may be tailored to meet
customer requirements, the core package is the standard product sold. Management
does not  believe  that SOP 97-2  will  materially  affect  the way the  Company
recognizes revenue.

    There is a proposed SOP dated  February 11, 1998,  which would defer for one
year the provision of SOP 97-2 with respect to what constitutes  vendor-specific
objective  evidence of fair value for  multiple-element  arrangements in which a
software element is sold only in combination with postcontract  customer support
or  other   service   elements.   For   those   multiple-element   arrangements,
determination  of the  portion  of the sales  price  allocable  to the  software
element may be based on a reasonable method.

Year 2000 Readiness

    The Company is aware of the issues  associated  with the programing  code in
existing  computer systems as the millennium (Year 2000)  approaches.  The "Year
2000" problem is pervasive  and complex as virtually  every  computer  operation
will be  affected  in some way by the  rollover  of the two digit  year value to
"00." The  issue is  whether  computer  systems  will  properly  recognize  date
sensitive  information  when  the year  changes  to  2000.  Systems  that do not
properly  recognize such  information  could generate  erroneous data or cause a
system to fail.  The "Year  2000"  problem  creates  risk for the  Company  from
unforeseen problems in its own computer systems and from third parties with whom
the Company deals on financial transactions. Such failures of the Company and/or
third parties'  computer  systems could have a material  impact on the Company's
ability to conduct its business,  and  especially to process and account for the
transfer of funds electronically.

    The Company presently  believes that, with modification to existing software
and  converting to new  software,  which it has done by purchasing a "Year 2000"
ready  managerial  and financial  reporting  system (total cost  estimated to be
approximately $32,000), the "Year 2000" problem will

                                      12

<PAGE>



not pose significant  operational  problems for the company's  computer systems.
However,  if such  modifications and conversions are not completed  timely,  the
"Year 2000" problem may have a material impact on the operations of the Company.

    Regarding  its software  products  held for sale,  the Company's TAS product
line already  conforms to the "Year 2000" as of December 31, 1997. In 1997,  the
Classic product was modified to support the "Year 2000."

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 20.

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

    At a meeting  held on August 4, 1997,  the Board of Directors of the Company
approved the engagement of Moore Stephens,  P.C. as its independent auditors for
the fiscal year ending  December 31, 1997,  to replace  Ernst & Young,  LLP, who
were  dismissed  as  auditors  of the  Company  effective  August 4,  1997.  The
dismissal  of Ernst & Young,  LLP,  was not the result of any  disagreements  or
disputes  between the Company and Ernst & Young,  LLP. A detailed  discussion of
the change is included in the Company's Form 8-K filed August 11, 1997.




                                      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 1998 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, 1997.

                                    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                                              20

Report of Predecessor Independent Auditors                                  21

Consolidated Balance Sheets - December 31, 1997 and 1996                    22

Consolidated Statements of Operations - Years ended December 31, 1997, 
1996 and 1995                                                               24

Consolidated Statements of Changes in Stockholders' Equity -
  Years ended December 31, 1997, 1996 and 1995                              25

Consolidated  Statements of Cash Flows - Years ended December 31, 1997, 
1996 and 1995                                                               26

Notes to Consolidated Financial Statements                                  28

      (2)   Financial Statement Schedule

II - Valuation and qualifying accounts                                      43

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

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].


                                      14

<PAGE>



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.

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

                                      15

<PAGE>



           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].

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].

                                      16

<PAGE>



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(o)(4)   The 1995 Employee Stock Option Plan, as amended on April 29, 1997 by
           the stockholders of the Registrant.
 
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].

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].

                                      17

<PAGE>



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.

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)(iiiAmendment 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.




                                      18

<PAGE>

 10(bb)(i)  Exclusive  Software License  Repurchase  Agreement,  dated March 31,
            1998, by and among the  Registrant,  COVER-ALL  Systems,  Inc., Care
            Corporation Limited and Software Investments Limited.

 10(bb)(ii) Secured  Promissory  Note,  dated March 31, 1998, by and between the
            Registrant, as Holder, and Care Corporation Limited, as Payor.

 10(bb)(iii)Pledge  Agreement,   dated  March  31,  1998,  by  and  between  the
            Registrant,  as Secured  Party,  and Care  Corporation  Limited,  as
            Pledgor.

10(bb)(iv)  Reseller Agreement, dated March 31, 1998, by and between Cover-All 
            Systems, Inc. and Care Corporation Limited.

10(bb)(v)   Reseller Agreement, dated March 31, 1998, by and between Cover-All 
            Systems, Inc. and Care Corporation Limited.


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].

*23A       Consent of Ernst & Young LLP.

*23B       Consent of Moore Stephens, P.C.

*27        Financial Data Schedule.






 ------------------------------
 * Filed herewith


      (b)  Reports on Form 8-K

           The  Company  filed a Form 8-K on  January  7, 1997  under  Item 5 to
reflect the resignation of Harvey Krieger as a director of the Company effective
as of December  31, 1996.  The Company  filed a Form 8-K on March 24, 1997 under
Item  5 to  reflect  the  announcement  of  the  closing  of a  $750,000  bridge
financing, the appointment of a new Chief Executive Officer, the election of two
new directors and the amendment of the terms of certain  software  licensing and
related  agreements.  The Company  also filed a Form 8-K on April 14, 1997 under
Item 5 to reflect the closing of $3 million of permanent  financing  through the
sale of its 12  1/2%  Convertible  Debentures,  due  March  31,  2002 to  Tandem
Capital,  Inc. and the  resignation of four directors and the appointment of one
new director.

           The  Company  filed a Form 8-K on August  11,  1997  under  Item 4 to
reflect the  engagement of Moore  Stephens,  P.C. as the  Company's  auditors to
replace Ernst & Young,  LLP effective August 4, 1997 and under Item 5 to reflect
the events of the annual meeting of stockholders.



                                      19
<PAGE>



                        REPORT OF INDEPENDENT AUDITORS

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

            We have  audited  the  accompanying  consolidated  balance  sheet of
Cover-All  Technologies  Inc. and its  subsidiaries as of December 31, 1997, and
the related  consolidated  statements of  operations,  changes in  stockholders'
equity  [deficit],  and cash  flows for the year  then  ended.  Our  audit  also
included the financial statement schedule listed in Item 14(a) of this Form 10-K
for the year ended December 31, 1997. These  consolidated  financial  statements
and  financial  statement  schedule  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements and financial statement schedule based on our audit.

            We  conducted  our  audit  in  accordance  with  generally  accepted
auditing  standards.  Those standards require that we plan and perform the audit
to  obtain  reasonable  assurance  about  whether  the  consolidated   financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and  significant  estimates made by  management,  as well as evaluating the
overall consolidated financial statement presentation. We believe that our audit
provides 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. and its subsidiaries as of December 31,
1997, and the consolidated  results of their operations and their cash flows for
the year then ended in conformity with generally accepted accounting principles.
In addition, in our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial  statements taken as a whole,
presents  fairly,  in all  material  respects,  the  information  required to be
included therein for the year ended December 31, 1997.





                                          MOORE STEPHENS, P. C.
                                          Certified Public Accountants.

Cranford, New Jersey
March 31, 1998


                                      16

<PAGE>



                         REPORT OF INDEPENDENT AUDITORS


The Board of Directors
Cover-All Technologies Inc.

We have  audited  the  accompanying  consolidated  balance  sheet  of  Cover-All
Technologies  Inc. and its subsidiaries as of December 31, 1996, and the related
consolidated   statements  of  operations,   changes  in  stockholders'   equity
(deficit),  and cash flows for the years ended  December 31, 1996 and 1995.  Our
audits  also  included  the  financial  statement  schedule  for the years ended
December  31, 1996 and 1995 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 the consolidated results of
their  operations and their cash flows for the years ended December 31, 1996 and
1995 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.





                                          ERNST & YOUNG LLP



Hackensack, New Jersey
April 11, 1997

                                       17

<PAGE>



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
------------------------------------------------------------------------------


CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------------
<TABLE>



                                                                 December 31,
                                                            1 9 9 7        1 9 9 6
Assets:
Current Assets:
<S>                                                        <C>          <C>        
  Cash and Cash Equivalents                                $2,908,167   $   446,672
  Accounts Receivable [Less Allowance for Doubtful Accounts
   of $185,610 and $43,870]                                 1,234,706     1,585,398
  Prepaid Expenses                                            140,783         7,161
                                                           ----------   -----------

  Total Current Assets                                      4,283,656     2,039,231
                                                           ----------   -----------

Property and Equipment - At Cost:
  Furniture, Fixtures and Equipment                         2,625,678     3,072,706
  Less: Accumulated Depreciation                           (2,397,704)   (2,662,713)
                                                           ----------   -----------

  Property and Equipment - Net                                227,974       409,993
                                                           ----------   -----------

Software License Held for Sale at December 31, 1997
  [Less Accumulated Amortization of $1,750,000 and $750,000]3,250,000     4,250,000
                                                            ---------   -----------

Capitalized Software [Less Accumulated Amortization of $1,820,857
  and $1,005,964]                                             663,057     1,477,950

Other Assets                                                   59,335        66,181
                                                           ----------   -----------

  Total Assets                                             $8,484,022   $ 8,243,355
                                                           ==========   ===========


The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.
</TABLE>

                                         18

<PAGE>



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
------------------------------------------------------------------------------


CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------------
<TABLE>



                                                                 December 31,
                                                            1 9 9 7        1 9 9 6
Liabilities and Stockholders' Equity:
Current Liabilities:
<S>                                                        <C>          <C>        
  Accounts Payable                                         $  571,309   $   536,172
  Accrued Liabilities                                       1,618,676     1,614,612
  Unearned Revenue                                            447,133     1,181,575
                                                           ----------   -----------

  Total Current Liabilities                                 2,637,118     3,332,359
                                                           ----------   -----------

Convertible Debentures                                      3,000,000            --
                                                           ----------   -----------

  Total Liabilities                                         5,637,118     3,332,359
                                                           ----------   -----------

Commitments and Contingencies                                      --            --

Stockholders' Equity:
  Common Stock, $.01 Par Value, Authorized 30,000,000 
  Shares,  Issued 16,791,122 and 17,351,883 Shares, 
  1997 and 1996, respectively                                 167,911       173,519

  Capital In Excess of Par Value                           25,273,031    27,258,352

  Accumulated Deficit                                      (22,594,038) (19,953,668)

  Treasury Stock - At Cost - 633,986 Shares                        --    (2,567,207)
                                                           ----------   -----------

  Total Stockholders' Equity                                2,846,904     4,910,996
                                                           ----------   -----------

  Total Liabilities and Stockholders' Equity               $8,484,022   $ 8,243,355
                                                           ==========   ===========




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

</TABLE>


                                         19

<PAGE>



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
------------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF OPERATIONS
------------------------------------------------------------------------------
<TABLE>


                                                        Y e a r s  e n d e d
                                                        D e c e m b e r  31,
                                                 1 9 9 7       1 9 9 6     1 9 9 5
                                                 -------       -------     -------

Revenues:
<S>                                            <C>          <C>         <C>        
  Licenses                                     $3,940,000   $ 1,044,460 $ 1,421,866
  Maintenance                                   2,722,000     2,252,378   1,174,150
  Professional Services                         1,275,573     2,171,834   1,522,738
                                               ----------   ----------- -----------

  Total Revenues                                7,937,573     5,468,672   4,118,754
                                               ----------   ----------- -----------

Costs and Expenses:
  Cost of Revenues                              5,426,000     4,585,727   1,329,693
  Research and Development                             --     1,846,410   1,932,920
  Sales and Marketing                           1,900,000     1,124,884     465,045
  General and Administrative                    2,988,919     3,627,351   2,760,298
  Special Charges                                      --            --   1,165,000
                                               ----------   ----------- -----------

  Total Costs and Expenses                     10,314,919    11,184,372   7,652,956
                                               ----------   ----------- -----------

  Operating Loss                               (2,377,346)   (5,715,700) (3,534,202)
                                               ----------   ----------- -----------

Interest Expense [Income]:
  Interest Expense                                300,593         1,924      15,220
  Interest Income                                 (37,569)     (109,302)     (5,332)
                                               ----------   ----------- -----------

  Interest Expense [Income]                       263,024      (107,378)      9,888
                                               ----------   ----------- -----------

  Loss from Continuing Operations              (2,640,370)   (5,608,322) (3,544,090)

Loss from Discontinued Operations, Without Tax
  Benefit                                              --            --  (7,107,987)

Loss on Disposal of Discontinued Operations,
  Without Tax Benefit                                  --      (392,872)   (749,758)
                                               ----------   ----------- -----------

  Net Loss                                     $(2,640,370) $(6,001,194)$(11,401,835)
                                               ===========  =========== ============

  Loss Per Common Share from Continuing
   Operations                                  $    (0.16)  $     (0.38)$     (0.41)
                                               ==========   =========== ===========

  Net Loss Per Common Share                    $    (0.16)  $     (0.40)$     (1.33)
                                               ==========   =========== ===========

Weighted Average Number of Common Shares
  Outstanding                                  16,794,000    14,866,000   8,559,000
                                               ==========   =========== ===========

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.
</TABLE>

                                         20

<PAGE>



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
------------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY [DEFICIT]
------------------------------------------------------------------------------
<TABLE>

                                                                Retained                        Total
                                                    Capital     Earnings                    Stockholders'
                                                   in Excess  [Accumulated      Treasury       Equity
                                    Common Stock of Par Value   Deficit]         Stock        [Deficit]
                                    ------------ ------------  ------------   -----------   -------------
<S>                                   <C>        <C>           <C>            <C>            <C>        
Balance at December 31, 1994          $ 91,873   $10,401,994   $(2,550,639)   $(2,567,207)   $ 5,376,021

  Sale of 7,567 Shares of Common
   Stock under Employee Stock
   Purchase Plan                            76        12,259            --             --         12,335

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

Balance at December 31, 1995            91,949    10,414,253   (13,952,474)    (2,567,207)    (6,013,479)

  Sale of 125,187 Shares of Common
   Stock under Stock Option Plans        1,252       370,562            --             --        371,814

  Issuance of 3,256,201 Shares of
   Common Stock under the
   Restructuring Agreement              32,562     6,479,840            --             --      6,512,402

  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            --             --        465,938

  Sale of 1,412,758 Shares of Common
   Stock to Software Investments
   Limited ["SIL"]                       14,128    2,811,388            --             --      2,825,516

  Sale of Five Year Warrants to
   Purchase an Aggregate of 196,875
   Shares of Common Stock to SIL             --      196,875            --             --        196,875

  Issuance of 2,500,000 Shares of
   Common Stock to Care
   Corporation Limited                   25,000    4,975,000            --             --      5,000,000

  Exercise of Five-year Warrants to
   Purchase 862,847 Shares of
   Common Stock                           8,628    1,544,496            --             --      1,553,124

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

Balance at December 31, 1996            173,519   27,258,352   (19,953,668)    (2,567,207)     4,910,996

  Exercise of 73,225 Stock Options          732      140,233            --             --        140,965

  Retirement of  633,986 Shares of
   Treasury Shares                       (6,340)  (2,560,867)           --      2,567,207             --

  Compensation Expense for Stock
   Options Issued Below Fair Value           --      435,313            --             --        435,313

  Net Loss                                   --           --    (2,640,370)            --     (2,640,370)
                                       --------  -----------   -----------     ----------    -----------

Balance at December 31, 1997           $167,911  $25,273,031  $(22,594,038)    $       --    $ 2,846,904
                                       ========  ===========  =============    ==========    ===========

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

                                         21
</TABLE>

<PAGE>



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
------------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------
<TABLE>


                                                                 Y e a r s  e n d e d
                                                                  D e c e m b e r  31,
                                                          1 9 9 7        1 9 9 6       1 9 9 5
                                                          -------        -------       -------
Cash Flows from Operating Activities:
<S>                                                    <C>            <C>            <C>         
  Loss from Continuing Operations                      $(2,640,370)   $(5,608,322)   $(3,544,090)
  Adjustments to Reconcile Net Loss to Net Cash
   Provided from [Used for] Operating Activities:
   Depreciation                                            182,374        341,798        365,129
   Amortization of Capitalized Software and Software
     License                                             1,814,893      2,101,576        489,227
   Provision for Uncollectible Accounts                    172,190         43,870             --
   Noncash Compensation Expense on Granting
     of Stock Options                                      435,313             --             --
   Loss on Disposal of Securities                               --             --         86,223

  Changes in Assets and Liabilities:
   [Increase] Decrease in:
     Accounts Receivable                                   178,502        134,622     (1,374,169)
     Income Taxes Receivable                                    --      2,300,000       (163,972)
     Deferred Income Taxes                                      --        (20,000)     2,800,000
     Prepaid Expenses                                     (133,622)        (1,806)        (2,646)
     Other Assets                                            6,846        420,545         (3,776)

   Increase [Decrease] in:
     Accounts Payable                                      116,429       (418,888)       161,561
     Accrued Liabilities                                   (77,228)    (2,449,304)     3,123,208
     Unearned Revenue                                     (734,442)       546,011        513,447
                                                        ----------    -----------    -----------

  Net Cash [Used For] Provided from Continuing
   Operating Activities - Forward                         (679,115)    (2,609,898)     2,450,142
                                                        ----------    -----------    -----------

  Loss from Discontinued Operations                             --             --     (7,107,987)
  Loss on Disposal of Discontinued Operations                   --       (392,872)      (749,758)
  Decrease [Increase] in Net Assets of Discontinued
   Operations                                                   --     (1,670,028)       (82,238)
                                                        ----------    -----------    -----------

  Net Cash Used For Discontinued Activities -
   Forward                                                      --     (2,062,900)    (7,939,983)
                                                        ----------    -----------    -----------

Cash Flows from Investing Activities:
  Proceeds from Sale of Fixed Maturity Investments              --             --      3,786,277
  Proceeds from Sale of Equipment                            3,640             --             --
  Capital Expenditures                                      (3,995)       (85,860)      (139,818)
  Capitalized Software Expenditures                             --     (1,318,744)    (1,000,009)
                                                        ----------    -----------    -----------

  Net Cash [Used For] Provided from Investing
   Activities - Forward                                 $     (355)   $(1,404,604)   $ 2,646,450

</TABLE>


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

                                         22

<PAGE>



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
------------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------

<TABLE>

                                                                  Y e a r s  e n d e d
                                                                   D e c e m b e r  31,
                                                           1 9 9 7       1 9 9 6       1 9 9 5
                                                           -------       -------       -------

  Net Cash [Used For] Provided from Continuing
<S>                                                     <C>           <C>            <C>        
   Operating Activities - Forwarded                     $ (679,115)   $(2,609,898)   $ 2,450,142
                                                        ----------    -----------    -----------

  Net Cash Used For Discontinued Activities -
   Forwarded                                                    --     (2,062,900)    (7,939,983)
                                                        ----------    -----------    -----------

  Net Cash [Used For] Provided from Investing
   Activities - Forwarded                                     (355)    (1,404,604)     2,646,450
                                                        ----------    -----------    -----------

Cash Flows from Financing Activities:
  Proceeds from Bridge Financing                           750,000             --             --
  Payments on Bridge Financing                            (750,000)            --             --
  Proceeds from Convertible Debentures                   3,000,000             --             --
  Payments on Credit Lines                                      --             --     (2,000,000)
  Net Proceeds from  Issuance of Common Stock                   --      4,947,329         12,335
  Proceeds from Exercise of Stock Options                  140,965             --             --
                                                        ----------    -----------    -----------

  Net Cash Provided from [Used For] Financing
   Activities                                            3,140,965      4,947,329     (1,987,665)
                                                        ----------    -----------    -----------

  Change in Cash and Cash Equivalents                    2,461,495     (1,130,073)    (4,831,056)

Cash and Cash Equivalents - Beginning of Years             446,672      1,576,745      6,407,801
                                                        ----------    -----------    -----------

  Cash and Cash Equivalents - End of Years              $2,908,167    $   446,672    $ 1,576,745
                                                        ==========    ===========    ===========

Supplemental Disclosures of Cash Flow Information:
  Cash paid during the years for:
   Interest                                             $  206,843    $     1,924    $    15,220
   Income Taxes [Received]                              $       --    $(2,375,000)   $(2,600,000)
</TABLE>

Supplemental Disclosures of Noncash Investing and Financing Activities:
    Financing:
    In 1996,  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].

    In 1997, the Company retired  633,986 shares of its Common Stock  previously
held in the treasury.

    Investing:
    In 1996, the Company  acquired a software  license valued at $5,000,000 from
Care by issuing 2,500,000 of its Common Stock crediting Common Stock for $25,000
and capital in excess of par value for $4,975,000 [See Note 9].

    In 1997, the Company retired  property and equipment having a net book value
of $447,383.



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


                                         23

<PAGE>



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


[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.

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 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.

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  when modules are provided to 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.

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.

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

The  Company  places  its cash and cash  equivalents  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  approximately  53% 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.

Impairment - Long-lived  assets of the Company are reviewed at least annually as
to whether their  carrying  value has become  impaired  pursuant to Statement of
Financial  Accounting Standards ["SFAS"] No. 121, "Accounting for the Impairment
of Long-Lived  Assets and for Long-Lived  Assets to Be Disposed Of." SFAS No 121
requires  long-lived  assets,  if  impaired,  to be  remeasured  at fair  value,
whenever events or changes in circumstances indicate that the carrying amount of
the asset may not be  recoverable.  Management  also  reevaluates the periods of
amortization of long-lived  assets to determine whether events and circumstances
warrant revised estimates of useful lives.

                                       24

<PAGE>



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



[1] Summary of Significant Accounting Policies [Continued]

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 and Related License - Qualifying software development costs
are capitalized and amortized over a three-year  period.  There were no software
development  costs  capitalized  during 1997. 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 revenues in 1996.

As more fully  described  in Note 9, in March of 1996,  the  Company  acquired a
software  license [the "Care Software  License"] by issuing  2,500,000 shares of
its common stock and began amortizing such license over a five-year  period.  In
the fourth  quarter of 1997,  the Company made a strategic  decision to allocate
its future  resources  to its TAS and  Classic  product  lines  rather  than the
product line obtained via the Care Software  License.  In this regard,  on March
31, 1998, the Company negotiated the Care Software License back to the original 
seller of the license.  The Company also acquired the worldwide reseller rights
(excluding Australia, New Zealand, and the United States).


Advertising Expense - It is the Company's policy to expense advertising costs as
incurred.  Advertising expense in 1997, 1996 and 1995 was $56,361,  $128,803 and
$73,495, respectively.

Research and Development - No research and  development  costs were incurred for
the year ended  December  31,  1997.  For the years ended  December 31, 1996 and
1995,  $1,846,410 and  $1,932,920,  respectively,  was expensed for research and
development of new software products. These expenses are in addition to software
development costs in 1996 and 1995 which are capitalized and then amortized over
their expected useful lives. See capitalized software and related license above.

Income Taxes - Pursuant to SFAS No. 109,  "Accounting  for Income Taxes," income
tax expense  [or  benefit]  for the year is the sum of deferred  tax expense [or
benefit]  and income  taxes  currently  payable [or  refundable].  Deferred  tax
expense [or benefit] is the change  during the year in a company's  deferred tax
liabilities and assets. Deferred tax liabilities and assets are determined based
on  differences  between  financial  reporting  and  tax  basis  of  assets  and
liabilities,  and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.

Net Loss  Per  Share - The  Financial  Accounting  Standards  Board  has  issued
Statement  of Financial  Accounting  Standards  ["SFAS"]  No. 128,  Earnings per
Share,  which is effective for financial  statements  issued for periods  ending
after December 15, 1997.  Accordingly,  earnings per share data in the financial
statements  for the year  ended  December  31,  1997,  have been  calculated  in
accordance  with SFAS No.  128.  Prior  periods  loss per  share  data have been
recalculated and it was determined that no adjustment was necessary.

                                       25

<PAGE>



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


[1] Summary of Significant Accounting Policies [Continued]

Net Loss Per Share [Continued] - SFAS No. 128 supersedes  Accounting  Principles
Board Opinion No. 15, Earnings per Share,  and replaces its primary earnings per
share with a new basic  earnings per share  representing  the amount of earnings
for the period  available to each share of common stock  outstanding  during the
reporting period. Basic earnings [loss] per share is computed by dividing income
[loss] available to common stockholders by the weighted average number of common
shares  outstanding  during  the  period.  SFAS  No.  128 also  requires  a dual
presentation  of  basic  and  diluted  earnings  per  share  on the  face of the
statement of  operations  for all  companies  with complex  capital  structures.
Diluted  earnings  per share  reflects  the  amount of  earnings  for the period
available to each share of common stock outstanding during the reporting period,
while  giving  effect  to  all  dilutive   potential  common  shares  that  were
outstanding during the period,  such as common shares that could result from the
potential exercise or conversion of securities into common stock.

The  computation  of diluted  earnings  per share  does not  assume  conversion,
exercise,  or contingent  issuance of securities that would have an antidilutive
effect on per share  amounts  (i.e.,  increasing  earnings per share or reducing
loss per share).  The dilutive  effect of  outstanding  options and warrants and
their   equivalents  are  reflected  in  dilutive  earnings  per  share  by  the
application  of the treasury  stock method which  recognizes the use of proceeds
that could be  obtained  upon  exercise of options  and  warrants  in  computing
diluted  earnings  per share.  It  assumes  that any  proceeds  would be used to
purchase common stock at the average market price during the period. Options and
warrants will have a dilutive  effect only when the average  market price of the
common  stock  during the period  exceeds the  exercise  price of the options or
warrants.   The  Company's  options  and  warrants  were  not  included  in  the
computation of loss per share because to do so would have been  antidilutive for
the periods  presented,  however,  such options and warrants  could  potentially
dilute basic earnings per share in the future.

The dilutive  effect of convertible  debt is reflected in dilutive  earnings per
share by the application of the if-converted method.  Convertible debt will have
a dilutive  effect only when the amount of interest  (net of tax) on a per share
basis is less than basic earnings per share. The Company's convertible debt does
not affect the loss per share  calculation  because it would be antidilutive for
the  year  ended  December  31,  1997,  however,  such  convertible  debt  could
potentially dilute basic earnings per share in the future.

     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. The Company
applies  the   provisions  of  SFAS  No.  123,   "Accounting   for   Stock-Based
Compensation"  to  non-employee  stock-based  compensation  and  the  pro  forma
disclosure provisions of SFAS No. 123 to employee stock-based compensation.

Presentation  - Certain  items  have been  reclassified  from the prior  year to
conform with the current year's presentation.

[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, Sheet #4
------------------------------------------------------------------------------


[2] Discontinued Operations [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.

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

The  Consolidated  Statement of Operations  for 1995 has been restated to report
the net results of the ISD operations as loss from discontinued operations.  The
results of ISD are summarized as follows:

                                                          Year ended
                                                       December 31, 1995

Net Revenues                                             $ 20,228,212
                                                         ============

Loss from Operations Before Income Taxes                 $ (7,107,987)
Income Taxes/[Benefit]                                             --
                                                         ------------

Loss from Discontinued Operations                        $ (7,107,987)
                                                         ============

[3] Special Charges

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.  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 and have been  reflected  as  special  charges  in the 1995  Statement  of
Operations.

[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.  The  Company  vigorously
contested MDA's claims and asserted  counterclaims  against MDA to establish the
Company's entitlement to the disputed sums.

                                       27

<PAGE>



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




[4] Litigation [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  totaling  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  filed a Notice of  Appeal;  however,  the  Notice of Appeal
initially  was  rejected  for  defects of form.  Subsequently,  Mr.  Seltzer was
granted  leave  to file a  corrected  Notice  of  Appeal  and did so on or about
November 26, 1996.  However,  Mr. Seltzer's time to "perfect" his appeal ran out
on or about August 26, 1997. Accordingly,  the appeal is dismissible for failure
to prosecute and the Company considers this matter resolved.

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.

The Company is not currently named as a defendent in any lawsuit.


                                       28

<PAGE>



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




[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 lease includes escalation clauses for increased real estate taxes, insurance
and maintenance expenses. The lease provides for a renewal period of five years.

Rent expense for COVER-ALL office space was $311,240, $334,170 and $174,710, for
the years ended December 31, 1997, 1996 and 1995, respectively.

The  Company's  future  minimum  rental  commitments  under  its  noncancellable
operating  lease in effect at December 31, 1997 follows:  years ending  December
31, 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, 1997 was
approximately $650,000.

Related Party  Transactions - A director of the Company in 1995 and 1996 and for
part of 1997 is a partner in a law firm with which the  Company  incurred  legal
expenses of  approximately  $290,000,  $600,000 and $360,000,  in 1997, 1996 and
1995,  respectively.  An attorney  associated  with the Chairman  provides legal
services to the Company.  The Company  incurred  approximately  $82,000 in legal
costs with this attorney in 1997.

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 - The Company had a portion of its revenues from one customer in
1997 and three customers in 1996 and 1995 as follows:

                                                     Y e a r s  e n d e d
                                                     D e c e m b e r  31,
              Customer                          1 9 9 7    1 9 9 6      1 9 9 5
              --------                          -------    -------      -------

Inspire Insurance Solutions                      20%         --          --
Sun Alliance Management Services                  --        27%         16%
Glatfelter Insurance Group                        --        13%          --
Millers Insurance Group                           --        13%          --
New Jersey State Medical Underwriters             --         --         18%
Secura, Inc.                                      --         --         11%

In  1997,  1996  and  1995  export  sales  were  made  to  a  U.K.  customer  of
approximately $500,000, $1,465,000 and $640,000, respectively.

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.



                                       29

<PAGE>



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


[6] Income Taxes

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

                                                     Y e a r s  e n d e d
                                                     D e c e m b e r  31,
                                                1 9 9 7    1 9 9 6      1 9 9 5
                                                -------    -------      -------
Current:
  Federal                                     $     --   $      --  $(2,800,000)
  State                                             --          --           --
                                              --------   ---------   ----------

  Totals                                             --          --  (2,800,000)
                                               --------   ---------  ----------

Deferred:
  Federal                                            --          --   2,800,000
  State                                              --          --          --
                                               --------   ---------  ----------

  Totals                                             --          --   2,800,000
                                               --------   ---------  ----------

  Totals                                       $     --   $      --  $       --
  ------                                       ========   =========  ==========

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

                                                     Y e a r s  e n d e d
                                                     D e c e m b e r  31,
                                                1 9 9 7    1 9 9 6      1 9 9 5
                                                -------    -------      -------

Computed Federal  Statutory Tax [Benefit]     $(900,000)$(1,781,000)$(1,204,991)
Valuation Allowance to Reduce Deferred Tax 
 Asset                                          900,000   1,781,000   1,204,991
                                               --------  ---------- -----------
  Actual Provision [Benefit]                  $      --  $       -- $       --
  --------------------------                   ========= ========== ===========

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

                                                     D e c e m b e r  31,
                                               --------------------------
                                                1 9 9 7    1 9 9 6      1 9 9 5
                                                -------    -------      -------
Deferred Tax Assets - Current:
  Deferred Revenue                             $      -- $       --  $1,185,000
  Reserve for Contract Adjustments                    --         --   2,075,000
  Bad Debts                                       74,000     18,000     186,000
  Reserve for Loss on Disposal                   185,000    414,000     300,000
  Other - Net                                     13,000     36,000      31,000
  Valuation Allowance                           (272,000)  (468,000) (3,777,000)
                                               --------- ----------  ----------

  Current Deferred Tax Asset                   $      -- $       --  $       --
  --------------------------                   ========= ==========  ==========

Deferred Tax Asset [Liability] - Long-Term:
  Net Operating Loss Carryforward             $9,500,000 $8,421,000  $2,790,000
  Capitalized Software                          (265,000)  (590,000)   (600,000)
  Depreciation and Amortization                   91,000    200,000     200,000
  Valuation Allowance                         (9,326,000)(8,031,000) (2,410,000)
                                              ---------- ---------- ----------

  Long-Term Deferred Tax Liability            $      --  $       --  $  (20,000)
  --------------------------------             ========= ==========  ==========

The net change during 1997 in the total valuation allowance is $1,099,000.

                                       30

<PAGE>



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




[6] Income Taxes [Continued]

At December 31, 1997, the Company had approximately $3,000,000,  $14,000,000 and
$7,000,000 of operating tax loss carryforwards expiring in 2012, 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.

[7] Stock Option and Stock Purchase Plans

     In March 1995,  the Company  adopted the 1995  Employee  Stock Option Plan,
which was  ammended in April 1997.  Options for the  purchase of up to 2,000,000
shares may be granted by the Board of  Directors  to employees of the Company at
an exercise  price  determined  by the Board of  Directors on 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,  1997,  1996 and 1995,  341,775,
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, 1997, 1996
and 1995, 240,000, 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, 1997,
1996 and 1995, 105,000, 105,000 and 105,000 shares, respectively, 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,  1997,  1996 and 1995,  319,938,  279,938 and 229,938
shares, respectively, were available for grant.



                                       31

<PAGE>



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




[7] Stock Option and Stock Purchase Plans [Continued]

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

                                Weighted-Average
                                                   Remaining    Weighted-Average
                           Shares    Per Share Contractual Life  Exercise Price

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
  Canceled                (225,608)    3.13 - 10.00                      3.87

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
  Canceled                (233,205)    1.75 - 10.00                      3.75

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

  Granted                 1,410,000    1.25 -  3.81  3.9 years           1.48
  Exercised                 (73,225)   1.75 -  2.00                      1.93
  Canceled                 (186,600)   1.38 -  5.25                      2.08

Balance, December 31 1997 1,819,000    1.13 -  5.00  3.4 years        $  1.70

The options  granted  during 1997 are  distributed  as follows,  relative to the
difference between the exercise price and the stock price at grant date:

                                       Number  Weighted-AverageWeighted-Average
                                       Granted  Exercise Price    Fair Value

Exercise Price Above Stock Price        100,000    $    2.00        $   .74
Exercise Price at Stock Price           215,000         1.72           1.10
Exercise Price Below Stock Price      1,095,000         1.38           1.38
                                    -----------    ---------        -------

  Totals                              1,410,000    $    1.48        $  1.29
  ------                            ===========    =========        =======

Exercisable options at December 31, 1997, 1996 and 1995 were as follows:

                                Number of           Weighted-Average
December 31,               Exercisable Options       Exercise Price

    1997                       1,582,334               $    1.69
    1996                         351,909               $    2.29
    1995                         302,675               $    1.69



                                       32

<PAGE>



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


[7] Stock Option and Stock Purchase Plans [Continued]

The following table summarizes  information  about stock options at December 31,
1997:
<TABLE>

                                                                   Exercisable
                            Outstanding Stock Options             Stock Options
                         Weighted-Average
   Range of                  Remaining     Weighted-Average       Weighted-Average
Exercise Prices  Shares  Contractual Life   Exercise Price  Shares Exercise Price

<S>     <C>    <C>            <C>              <C>         <C>         <C>    
$1.13 - $1.25  1,000,000      3.9 Years        $  1.24     800,000     $  1.23
$1.38 - $1.94    260,150      3.2 Years        $  1.61     255,150     $  1.61
$2.00 - $2.25    448,850      2.8 Years        $  2.02     448,850     $  2.02
$3.81 - $5.00    110,000      2.6 Years        $  4.76      78,334     $  4.81
               ---------      ------------------------   ---------     -------

               1,819,000      3.4 Years        $  1.70   1,582,334     $  1.69
               =========      =========        =======   =========     =======
</TABLE>

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 of
certain  options  issued  during 1997 was below the market  price at the date of
grant.  Accordingly,  compensation expense of $435,313 was recorded in 1997. 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 for fiscal years 1996 and 1995.

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 $1.29,  $1.95 and $.94  during  1997,  1996 and 1995,
respectively.

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 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:

                                                  D e c e m b e r  3 1,
                                           ------------------------------------
                                           1 9 9 7     1 9 9 6       1 9 9 5
                                           -------     -------       -------

Risk-Free Interest Rate                     6.70%        6.29%       6.74%
Expected Life                               3.8 Years    3.3 Years   3.6 Years
Expected Volatility                         88%          89%         70%
Expected Dividends                          None         None        None




                                       33

<PAGE>



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


[7] Stock Option and Stock Purchase Plans [Continued]

The pro forma  amounts  are  indicated  below [in  thousands,  except  per share
amounts]:
<TABLE>

                                                       Y e a r s  e n d e d
                                                       D e c e m b e r  31,
                                                   1 9 9 7    1 9 9 6   1 9 9 5
                                                   -------    -------   -------


<S>                                              <C>        <C>         <C>       
Net Loss as Reported                             $    2,640 $  (6,001)  $ (11,402)
Pro Forma Net Loss                               $    3,787 $  (6,166)  $ (11,660)
Loss Per Share as Reported                       $     (.16)$    (.40)  $   (1.33)
Pro Forma Loss Per Share                         $     (.23)$    (.41)  $   (1.36)
</TABLE>

[8] Common Stock

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 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.

[9] Sale of Stock and Warrants, and Purchase and Sale of Care Software License

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).  As a result of
the  issuance of the 12 1/2%  Convertible  Debentures  discussed in Note 12, the
warrants  required an adjustment of shares to 206,152 and a price  adjustment to
$1.91 per share.  As of December 31, 1997, no warrants had been exercised.








                                       34

<PAGE>



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


[9] Sale of Stock and Warrants, and Purchase and Sale of Care Software License 
[Continued]

  [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
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 using the $2.00 per share price in [A] above to value the
license as  $5,000,000 at March 31, 1996.  The license  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,  or not reached,  under the license agreement,  the Company has
the right to repurchase all or portions of the shares issued to Care at $.01 per
share.

In the fourth quarter of 1997, the Company made a strategic decision to allocate
its future  resources  to its TAS and  Classic  product  lines  rather  than the
product line obtained via the Care Software  License.  In this regard,  on March
31,  1998,  the  Company  negotiated  a buy  back by Care of the  Care  Software
License.

     For the buy back of Care  Software  License by Care,  the Company  received
$500,000 on March 31, 1998, and a $4,500,000  non-interest bearing note, payable
in semi-annual  installments of $500,000 which,  when  discounted,  results in a
principal   amount  of  the  note  of  $3,893,054.   The   discounted   note  is
collateralized  by  unencumbered  Cover-All  stock owned by Care.  The number of
shares  required  as  collateral  will vary,  such that the market  value of the
shares held as collateral must equal 150% of the outstanding balance. The number
of shares  required as collateral will be adjusted at each payment date based on
the market  price of the  Company's  shares and the balance  outstanding  on the
date.  Based on the  market  price of the  Company's  stock on March  30,  1998,
approximately  1,700,000 shares were pledged as collateral.  Upon receipt of the
first $500,000 payment under the agreement on March 31, 1998, the Company lifted
the aforementioned $.01 per share stock repurchase  restriction on the 2,500,000
shares.   The  Company  also  acquired   worldwide  reseller  rights  (excluding
Australia, New Zealand, and the United States.

In separate but related agreements,  Care agreed to grant to the Company certain
non-exclusive  re-seller rights to the Care software,  and the Company agreed to
grant to Care certain non-exclusive re-seller rights to the Classic and TAS 
software.

Based on the above,  and due to the related  party  nature of the Care  Software
License buy back  agreement,  the Company will record the $1,143,054  difference
between the  carrying  value of the Care  Software  License  and the  discounted
$4,393,054 buy back agreement to capital in excess of par value in the first 
quarter of 1998.


                                       35

<PAGE>



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



[10] Quarterly Financial Data [Unaudited]

Summarized quarterly financial data is as follows:

               [Dollar amounts in thousands except per share data]
<TABLE>

                                       Quarter
                                        First      Second        Third      Fourth
Year ended December 31, 1997:
<S>                                  <C>         <C>           <C>       <C>       
  Revenues                           $     883   $   1,338     $ 2,058   $    3,658
  (Loss)/Income from Continuing 
   Operations(1)                        (1,586)     (1,010)       (240)         196
  Loss on Disposal of Discontinued
   Operations                               --          --          --           --
  Net (Loss)/Income                     (1,586)     (1,010)       (240)         196
  (Loss)/Income Per Common Share 
   from Continuing Operations            (0.09)      (0.06)      (0.01)        0.01
  Net (Loss)/Income Per Common Share     (0.09)      (0.06)      (0.01)        0.01
  Income Per Common Share from Continuing
   Operations Assuming Dilution             --          --          --         0.01
  Net Income Per Common Stock Assuming
   Dilution                                 --          --          --         0.01

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 Common Share from Continuing
   Operations                            (0.07)      (0.08)      (0.12)       (0.10)
  Net Loss Per Common 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 Common Share from Continuing
   Operations                            (0.25)      (0.03)      (0.05)       (0.08)
  Net Loss Per Common Share              (0.41)      (0.40)      (0.18)       (0.34)

(1)The first  quarter of 1995 was adversely  affected by the special  charges as
described in Note 3.
</TABLE>



                                       36

<PAGE>



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



[11] Supplemental Data

Accrued liabilities consist of the following:
                                                          Years ended
                                                         December 31,
                                                     1 9 9 7        1 9 9 6
                                                     -------        -------
Accrued Payroll, Benefits, Temporary Help, Consulting
  and Severance                                    $  358,447     $   371,186
Accrued Expenses of the Discontinued Operations Not
  Assumed by The Robert Plan Corporation              461,506       1,036,736
Accrued Software Costs                                312,764              --
Accrued Interest Costs                                 93,750              --
Accrued Professional Fees                             150,000              --
Other                                                 242,209         206,690
                                                   ----------     -----------

  Totals                                           $1,618,676     $ 1,614,612
  ------                                           ==========     ===========

[12] Convertible Debentures

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 permanent 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.  Neither the  debentures nor the shares of Common Stock issuable
upon any conversion of such debentures have been registered under the Securities
Act of 1933 or any  applicable  state  securities  law. 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 permanent  financing were used to
repay the bridge  financing and the remainder is being used for working  capital
purposes.

[13] 401(k) Plan

After completing a year of service and working 1,000 hours, employees age 21 and
over are  eligible to  participate  in the  Company's  Tax Saver  401(k)  Salary
Reduction  Plan.  Employees  can save 1% to 15% of pay on a  pre-tax  basis to a
current annual maximum of $9,500. The Company matches $.50 for each $1.00 of the
first 5% of pay employees elect to defer.  Expenses associated with this plan in
1997,  1996  and  1995  were   approximately   $47,900,   $21,100  and  $18,400,
respectively.

[14] Fair Value of Financial Instruments

In assessing the fair value of its cash and cash equivalents,  trade receivables
and  trade  payables  management  concluded  that the  carrying  amount of these
financial instruments approximates fair value because of their short maturities.
Management  estimates that the carrying  amount of its  convertible  debentures,
based on current  rates and terms at which the Company  could borrow  funds,  is
approximately $3,050,000.

                                       37

<PAGE>



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


[15] New Authoritative Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board ["FASB"] issued SFAS No.
130, "Reporting Comprehensive Income."  SFAS No. 130 establishes standards for 
reporting and display of comprehensive income and its components in the
financial statements.  SFAS No. 130 is effective for fiscal years beginning 
after December 15, 1997.  Reclassification of financial statements for earlier 
periods provided for comparative purposes is required.  The Company is in the 
process of determining its preferred format.  The adoption of SFAS No. 130 will 
have no impact on the Company's consolidated results of operations, financial 
position or cash flows.

In June 1997, the FASB has issued SFAS No. 131,  "Disclosures  About Segments of
an Enterprise and Related  Information." SFAS No. 131 establishes  standards for
the way that public  business  enterprises  report  information  about operating
segments in annual  financial  statements  and requires  that those  enterprises
report  selected  information  about  operating  segments  in interim  financial
reports  issued  to  shareholders.  SFAS  No.  131 is  effective  for  financial
statements  for fiscal  years  beginning  after  December  15,  1997.  Financial
statement disclosures for prior periods are required to be restated. The Company
is in the process of evaluating  the  disclosure  requirements.  The adoption of
SFAS No.  131 will have no  impact  on the  Company's  consolidated  results  of
operations; financial position or cash flows.

In October 1997, the Accounting  Standards  Executive  Committee of the American
Institute of Certified Public  Accountants,  after clearance by the FASB, issued
Statement  of  Position  (SOP)  97-2,  Software  Revenue  Recognition.  This SOP
supersedes  SOP 91-1 of the same name and provides  the most recent  guidance on
applying  generally  accepted  accounting  principles in recognizing  revenue on
software  transactions.  SOP 97-2 is effective for transactions  entered into in
fiscal years beginning after December 15, 1997.

SOP 97-2 requires that in arrangements to deliver  software or a software system
that does not require significant  production,  modification,  or customization,
revenue  should  be  recognized  when  there  is  persuasive  evidence  that  an
arrangement  does in fact  exist;  delivery  has  occurred;  the fee is fixed or
determinable; and collectibility is probable. If the software or software system
selling  contract  arrangement,  either alone or together with other products or
services,   requires  significant  production,   modification  or  customization
construction  type/production  type contract  accounting  should be used for the
entire  arrangement.  Such accounting  would  recognize  revenues and costs on a
contract  arrangement as it progresses toward  completion,  rather than deferred
recognition of these items until  persuasive  evidence of delivery has occurred.
In software or software  system  selling  arrangements  that consist of multiple
elements (that is, additional software products,  upgrades/enhancements,  rights
to exchange or return software, postcontract customer support, or services), and
contract  accounting  does not apply,  the fee must be  allocated to the various
elements based on vendor-specific objective evidence of fair values. In general,
if sufficient  vendor-specific objective evidence of fair values does not exist,
all  revenue  from the  arrangement  should be  deferred  until such  sufficient
evidence  exists,  or until all  elements  have been  delivered.  The  principle
difference  between SOP 97-2 and its  predecessor  SOP 91-1 is in the accounting
for multiple-element arrangements based on vendor-specific objective evidence of
fair values.

Cover-All  generally  does  not  sell  its  products,  Classic  and  TAS,  under
multiple-element  arrangements.  Classic  and TAS are  standard  "off the shelf"
application  program packages,  and while these packages may be tailored to meet
customer requirements, the core package is the standard product sold. Management
does not  believe  that SOP 97-2  will  materially  affect  the way the  Company
recognizes revenue.

There is a proposed SOP dated February 11, 1998,  which would defer for one year
the  provision  of SOP 97-2 with  respect  to what  constitutes  vendor-specific
objective  evidence of fair value for  multiple-element  arrangements in which a
software element is sold only in combination with postcontract  customer support
or  other   service   elements.   For   those   multiple-element   arrangements,
determination  of the  portion  of the sales  price  allocable  to the  software
element may be based on a reasonable method.

                      .   .   .   .   .   .   .   .   .   .

                                       38

<PAGE>



COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
------------------------------------------------------------------------------


SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
------------------------------------------------------------------------------
<TABLE>





                                 Balance at
                                  Beginning                              Balance at
                                  of Period   Additions   Deductions(1) End of Period
Accumulated amortization of 
capitalized software and software 
license:

<S>                               <C>         <C>          <C>            <C>         
  Year Ended December 31, 1997    $1,755,964   $1,814,893   $        --    $  3,570,857

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

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

(1)  Represents primarily a write-off of $506,000 of capitalized software 
      costs in 1996.
</TABLE>
<TABLE>

Allowance for Doubtful Accounts:

<S>                                  <C>       <C>          <C>            <C>         
  Year Ended December 31, 1997       43,870    $ 172,190    $    30,450    $    185,610

  Year Ended December 31, 1996           --    $  43,870    $        --    $     43,870

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

</TABLE>


                                       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(o)(4)   The 1995 Employee Stock Option Plan, as amended on April 29, 1997 by
           the stockholders of the Registrant.
 
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].

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

                                       42

<PAGE>



           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.

*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.


                                       43

<PAGE>



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)(iiiAmendment 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.
 10(bb)(i)  Exclusive  Software License  Repurchase  Agreement,  dated March 31,
            1998, by and among the  Registrant,  COVER-ALL  Systems,  Inc., Care
            Corporation Limited and Software Investments Limited.

 10(bb)(ii) Secured  Promissory  Note,  dated March 31, 1998, by and between the
            Registrant, as Holder, and Care Corporation Limited, as Payor.

 10(bb)(iii)Pledge  Agreement,   dated  March  31,  1998,  by  and  between  the
            Registrant,  as Secured  Party,  and Care  Corporation  Limited,  as
            Pledgor.

10(bb)(iv)  Reseller Agreement, dated March 31, 1998, by and between Cover-All 
            Systems, Inc. and Care Corporation Limited.

10(bb)(v)   Reseller Agreement, dated March 31, 1998, by and between Cover-All 
            Systems, Inc. and Care Corporation Limited.

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:  March 31, 1998                    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
---------------------------
Brian Magowan                 Chairman of the Board of Directors March 31, 1998
                              Chief Executive Officer and Director
                              (Principal Executive Officer)

/s/ John R. Nobel             Chief Financial Officer            March 31, 1998
---------------------------
John R. Nobel

/s/ Earl Gallegos
---------------------------
Earl Gallegos                 Director                           March 31, 1998

/s/ Ian Meredith
---------------------------
Ian Meredith                  Director                           March 31, 1998

/s/ James R. Stallard
---------------------------
James R. Stallard             Director                           March 31, 1998

/s/ Mark D. Johnston
---------------------------
Mark D. Johnston              Director                           March 31, 1998

/s/ Steven Hough
---------------------------
Steven Hough                  Director                           March 31, 1998


                                       45

<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:  March 31, 1998                        By:______________________________
                                             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


Brian Magowan                 Chairman of the Board of Directors March 31, 1998
                              Chief Executive Officer and Director
                              (Principal Executive Officer)

                              Chief Financial Officer            March 31, 1998
John R. Nobel


Earl Gallegos                 Director                           March 31, 1998


Ian Meredith                  Director                           March 31, 1998


James R. Stallard             Director                           March 31, 1998


Mark D. Johnston              Director                           March 31, 1998


Steven Hough                  Director                           March 31, 1998
 


                                       45