UNITED STATES
                       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, 1998

                         Commission file number 0-13124

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

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

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

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

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

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

           Securities registered pursuant to Section 12(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 29, 1999 was $32,052,000.

Number of shares outstanding at March 29, 1998:

          16,993,672 shares of Common Stock, par value $.01 per share.

                       Documents Incorporated by Reference

The definitive Proxy Statement for the Annual Meeting of Stockholders to be held
June 17, 1999, 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, 1998
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 services, which were 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, as part of a
settlement of two lawsuits between the Company and The Robert Plan Corporation.
This settlement included the release of the Company from its obligations under
long-term processing contracts with the customers of ISD. Because of this
settlement and release, 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 business strategy. Mr. Brian Magowan became Chairman of the Board
and Chief Executive Officer and Mr. Mark Johnston became Chief Financial Officer
on an interim basis. 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 (the "Debentures"), due March 2002. The Debentures are
convertible into shares of common stock at $1.25 per share and carry certain
restrictive covenants. Mr. Johnston served as Chief Financial Officer until
January 1998, when Mr. John R. Nobel joined the Company and replaced Mr.
Johnston as Chief Financial Officer. 

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.

     In December 1989, the Company purchased, through its 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. The
Company then enhanced this acquired software and it is known as 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



<PAGE>



Classic product is in use in over 60 companies. Total Classic revenues were
$6,708,000 for 1998 as compared to $6,593,000 and $3,655,000 for 1997 and 1996,
respectively.

     Since 1993, COVER-ALL has been developing its second product line entitled
the Total Administrative Solution ("TAS 2000") and, as of December 31, 1998,
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 $5,560,000 for 1998, $1,345,000 for
1997 and $1,814,000 for 1996.

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

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.

     Recently, COVER-ALL has upgraded the Classic product line to utilize a
graphical user interface, or GUI, and modified the system to run as a 32-bit
application. This enhancement

                                        2


<PAGE>



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
---------------------

     This latest COVER-ALL product line brings new technology and functional
capability to the property and casualty insurance industry. All products were
developed as Client/Server applications using the Oracle Designer 2000 and
Developer 2000 tool sets. The Client/Server architectural concept allows
companies to take advantage of the power of distributed processing. Companies
currently relying on expensive mainframe technology can "rightsize" their
hardware and software while companies in need of greater power can migrate to
more powerful equipment without affecting applications. Whether experiencing
growth or reductions, all customers are free to scale their equipment in
accordance with the changing demands of their organizations.

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    
     o    Workers Compensation     
     o    Billing, Cash & Commissions
     o    Statistical Reporting

     TAS 2000 has a Windows compliant graphical user interface 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 (wide area network)-based modules possessing varying elements of
interdependence.

     COVER-ALL created the TAS 2000 product line to better position itself for
penetration within the larger insurance carrier market segment. In that segment
of the market, the demand for advanced processing platforms and architectural
design advantages, together with more comprehensive administrative function,
provide COVER-ALL the opportunity to achieve success.

     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

                                             3             

<PAGE>



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 the Oracle database. 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 with a growing number
of vertical market 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. In 1998, however, the Company's financial position improved, and the
Company incurred approximately $1.2 million in research and development
expenses. The Company believes that research and development expenditures will
continue in the coming year.

     Research and development expenses for COVER-ALL were $1,186,000, $-0- and
$1,846,000 for the years ended December 31, 1998, 1997 and 1996, respectively.

Backlog
-------

     The Company has a license, professional services and maintenance backlog of
approximately $2,537,000, $3,531,000 and $4,500,000, respectively.


                                        4


<PAGE>



Major Customers
---------------

     The Classic product line is in use in over 60 companies while the TAS 2000
product line is currently in use in four property/casualty insurance companies.
The Company's revenues from major customers (more than 10 percent of total
revenues) for the years ended December 31, 1998, 1997 and 1996 as a percentage
of total revenue were as follows:


<TABLE>
<CAPTION>

                                   Year Ended      Year Ended      Year Ended
                                  December 31,     December 31,    December 31,
        Customer                     1998             1997            1996
-----------------------------    --------------  --------------  --------------
<S>                               <C>            <C>            <C>
Inspire Insurance Solutions                             20%
Sun Alliance Management Svcs                                          27%
Glatfelter Insurance Group                                            13%
Millers Insurance Company                                             13%
Cornhill Insurance Co.                15%
Employers Reinsurance Corp.           15%
Accident Fund                         13%
</TABLE>


     In 1998, 1997 and 1996, export sales were made to a U.K. customer of
approximately $1,900,000, $500,000 and $1,465,000, respectively.

Employees
---------

     The Company had on average 45 employees during 1998. 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
     ---------------------------

     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 in March 1996 (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 contractual obligations to provide insurance services 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 (the "Restructuring Warrants") to
purchase up to an additional 1,553,125 shares of the Company's common stock at
$2.00 per share, and (c) cash of $2.5 million.

                                        5
                                                         

<PAGE>




     Atlantic Employers Insurance Company, a CIGNA Property and Casualty company
and ISD customer, initially acquired 2,476,547 shares of the Company's common
stock, Restructuring Warrants to purchase 1,181,250 shares and received $675,000
in cash as part of the Restructuring. Mr. James R. Stallard, Vice President of
CIGNA Property and Casualty, was designated as a director of the Company under
the terms of the Restructuring.

     As part of the Restructuring, the Company had the option, exercisable for a
period of six months (from March 1, 1996), to (i) purchase 50% of the 3,256,201
shares for a certain calculated cash price and (ii) acquire 50% of the 1,553,125
Restructuring Warrants at a cash price equal to $1.00 per warrant. On March 31,
1996, the Company assigned this repurchase option to Software Investments
Limited ("SIL"), which SIL subsequently exercised. See Note 2 to the
Consolidated Financial Statements. As a result of the issuance of shares
described in Note 2, 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.

     Also in March 1996, the Company entered into a series of transactions with
SIL and Care Corporation Limited 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 (the "SIL 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 SIL Warrant ($196,875), and (B) assigned to SIL the
rights it retained in the Restructuring to repurchase within six months shares
of the Company's common stock and its rights to purchase from the warrantholders
Restructuring Warrants to acquire 776,562 shares of the Company's common stock.
As a result of the issuance of these shares, the antidilution provisions of the
warrants required an adjustment from 776,562 at $2.00 per share to 862,847
shares at $1.80 per share. SIL exercised these warrants in May 1996, and the
Company received approximately $1.6 million in proceeds from this exercise.

     On March 31, 1996, the Company was granted by Care the exclusive license
for the Care software systems for use in the worker's compensation claims
administration markets in Canada, Mexico and Central and South America (the
"Care Software License"). In exchange for this license, the Company issued to
Care 2,500,000 shares of the Company's common stock at $2.00 per share to value
the license at $5,000,000 at March 31, 1996. The license agreement was revised
on March 14, 1997 to provide for the engagement of Care as the Company's
exclusive sales agent for a monthly fee of $10,000 against commissions of 20%.

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 at May 31,
2000 at a current annual rental expense of approximately $400,000. This facility
is currently fully utilized by the Company.

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

Item 3. Legal Proceedings
------  -----------------

     None.


                                        6


<PAGE>



Item 4. Submission of Matters to a Vote of Security Holders
------  ---------------------------------------------------

     No matters were submitted to a vote of the Company's security holders
through the solicitation of proxies or otherwise during the fourth quarter ended
December 31, 1998.

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

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

     The quotations below reflect the high and low closing sales prices for the
Company's common stock since January 1, 1997.


1998:                                                  High             Low
                                                       ----             ---
1st Quarter                                           $4.625           $3.125
2nd Quarter                                            4.000            2.500
3rd Quarter                                            3.250            1.250
4th Quarter                                            2.500            0.938

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


     As of March 30, 1999, there were 658 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 29, 1999 was $2.69, as reported by the Nasdaq SmallCap Market.

     The Company has not paid any dividend on its common stock and does not
anticipate paying any dividends in the foreseeable future. In addition, the
purchase agreement governing the Debentures currently prohibits the payment of
dividends without the prior written consent of Tandem, the purchaser of the
Debentures.

     In March 1996, as part of 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 contractual obligations to
provide insurance services 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 (the
"Restructuring Warrants") to purchase up to an additional 1,553,125 shares of
the Company's common stock at $2.00 per share, and (c) cash of $2.5 million.


                                        7
                                                         

<PAGE>



     As part of the Restructuring, the Company had the option, exercisable for a
period of six months (from March 1, 1996), to (i) purchase 50% of the 3,256,201
shares for a certain calculated cash price and (ii) acquire 50% of the 1,553,125
Restructuring Warrants at a cash price equal to $1.00 per warrant. On March 31,
1996, the Company assigned this repurchase option to SIL, which SIL subsequently
exercised.

     Also in March 1996, the Company entered into a series of transactions with
SIL and Care Corporation Limited 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 (the "SIL 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 SIL Warrant ($196,875), and (B) assigned to SIL the
rights it retained in the Restructuring to repurchase within six months shares
of the Company's common stock and its rights to purchase from the warrantholders
Restructuring Warrants to acquire 776,562 shares of the Company's common stock,
which was subsequently exercised by SIL. SIL exercised these warrants in May
1996, and the Company received approximately $1.6 million in proceeds from this
exercise. These proceeds were used for general corporate purposes.

     On March 31, 1996, the Company was granted by Care the exclusive license
for the Care software systems for use in the worker's compensation claims
administration markets in Canada, Mexico and Central and South America (the
"Care Software License"). In exchange for this license, the Company issued to
Care 2,500,000 shares of the Company's common stock at $2.00 per share to value
the license at $5,000,000 at March 31, 1996. The license agreement was revised
on March 14, 1997 to provide for the engagement of Care as the Company's
exclusive sales agent for a monthly fee of $10,000 against commissions of 20%.

     Each of the foregoing offerings were exempt from registration pursuant to
Section 4(2) of the Securities Act because the offers and sales were made to a
limited number of investors in a private transaction.

     During the year ended December 31, 1998, the Company did not issue any
securities which were not registered under the Securities Act of 1933.


                                        8                                   

<PAGE>

Item 6.  Selected Financial Data
------   ----------------------- 

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


<TABLE>
<CAPTION>
                                             (Dollar amounts in thousands except per share data)
                                                          Years Ended December 31,
                                         ----------------------------------------------------------
                                              1998      1997        1996        1995        1994
                                         ----------  ----------  ----------  ----------  ----------
<S>                                        <C>        <C>         <C>         <C>         <C>     
Statement of Operations Data:
Revenues: ..............................   $ 12,268   $  7,938    $  5,469    $  4,119    $  1,927
Income (loss) from continuing
   operations(1) .......................        548     (2,640)     (5,608)     (3,544)     (7,466)
Income (loss) from discontinued
   operations less applicable income
   taxes/(benefit) of $-0-, $-0-, $-0-,
   $-0- and ($924), respectively .......         --         --          --      (7,108)     (6,754)
Income (loss) on disposal of discontinued
   operations, no tax benefit provided .         --         --        (393)       (750)         --
Net income (loss) ......................        918     (2,640)     (6,001)    (11,402)    (14,220)
Income (loss) per share from continuing
   operations ..........................        .05       (.16)       (.38)       (.41)       (.84)
Net income (loss) per share ............        .05       (.16)       (.40)      (1.33)      (1.60)
Cash dividends per share ...............   $     --   $     --    $     --    $     --    $     --

Balance Sheet Data:
Working capital (deficiency) ...........   $  4,203   $  1,647    $ (1,293)   $ (8,717)   $  3,110
Total assets ...........................     11,425      8,484       8,243       8,369      18,795
Short-term debt ........................         --         --          --          --       2,000
Stockholders' equity (deficit) .........      5,217      2,847       4,911      (6,013)      5,376
</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.


                                       9
<PAGE>

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
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,

                                       10                                    

<PAGE>

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.

     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 of $392,872. The net
loss for 1996 relates to loss adjustment expenses (mostly legal fees) pertaining
to the discontinued operations.

Continuing Operations
---------------------

Year Ended December 31, 1998 Compared with Year Ended December 31, 1997
-----------------------------------------------------------------------

     Total revenues were $12,268,000 for the year ended December 31, 1998
compared to $7,938,000 for the year ended December 31, 1997, an increase of 55%.
License fees were $5,875,000 for the year ended December 31, 1998 compared to
$3,940,000 in the same period in 1997 as a result of sales of TAS 2000 product
modules. For the year ended December 31, 1998, maintenance revenues were
$3,722,000 compared to $2,722,000 in the same period for the prior year due to
an increased customer base. Professional services revenue contributed $2,671,000
for the year ended December 31, 1998 compared to $1,276,000 for the year 1997 as
a result of additional TAS 2000 work.


                                       11                                   

<PAGE>

     Cost of revenues increased to $6,462,000 for the year ended December 31,
1998 as compared to $5,426,000 for 1997 as a result of higher sales volume.

     Research and development expenses in 1998 were $1,186,000 compared to $-0-
for the year ended December 31, 1997 as a result of development expenses for
billing and statistics modules related to the TAS 2000 product line.

     Sales and marketing expenses increased to $2,024,000 in 1998 compared to
$1,900,000 as of December 31, 1997 due to an increased marketing and sales
effort to improve the market share of both of the Company's product lines.

     General and administrative expenses decreased to $1,905,000 in 1998 from
$2,989,000 for the year ended December 31, 1997 due to the Company's continued
efforts to reduce overhead costs.

     The TAS 2000 product line offers a complete policy and claims
administrative system to property and casualty insurance companies. The newly
developed billing module was released to two customers in June 1998. The TAS
2000 products are being marketed in both the domestic marketplace and in the
United Kingdom.

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
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 development resources on selling TAS 2000
modules.

     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.


                                       12                                    

<PAGE>

     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.

     COVER-ALL 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 TAS 2000 modules including Policy
Administration, Client Management, Agency Management, Billing Cash &
Commissions, Statistical Reporting and Pyramid Services' Claims Administration.

Liquidity and Capital Resources
-------------------------------

     At December 31, 1998, the Company had working capital of $4,203,000
compared to a working capital of $1,647,000 in 1997. The improvement in working
capital was due primarily to the payments received on new contracts signed and
the receipt of $1,000,000 as a result of the buyback of the Care Software
License by Care.

     On March 31, 1996, the Company was granted by Care the Care Software
License. In exchange for this license, the Company issued to Care 2,500,000
shares of the Company's common stock and the Company recorded a software license
for $5,000,000. The agreement was revised on March 14, 1997 and the Company
engaged Care as its exclusive sales agent for a monthly fee of $10,000 against
commissions of 20%. Depending upon the level of revenue reached, or not reached,
the Company had the right to repurchase all or a portion 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 2000 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 and consummated a buy back by Care of the
Care Software License.

     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 non-recourse
(except as to collateral) note payable in semi-annual installments of $500,000
which, when discounted, results in a principal amount of the note of $3,893,054.
Due to the related party nature of the Care Software License buy back agreement,
the Company recorded the $1,143,000 difference between the carrying value of the
Care Software License and the discounted $4,393,000 buy back agreement to
capital in excess of par value at March 31, 1998. Upon receipt of the first
$500,000 payment under the agreement on March 31, 1998, the Company lifted the
aforementioned $.01 per share repurchase restriction on the 2,500,000 shares.

     The discounted note is collateralized by unencumbered Cover-All common
stock owned by Care and Software Investments Limited (a party related to 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 of the note. 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 such date. Based on the market price of the
Company's common stock on March 30, 1998, approximately 1,700,000 shares were
pledged as collateral. Upon receiving the second installment of $500,000 on
September 30, 1998, the number of shares required as collateral was
recalculated. An additional 2,000,000 shares were required as collateral
bringing the total number of shares pledged to approximately 3,700,000.
The carrying value of the note at December 31, 1998 is $3,511,000, without
accrued interest.


                                      13
<PAGE>


     On March 31, 1997, the Company sold $3,000,000 of 12 1/2% Convertible
Debentures due March 2002 (the "Debentures") to an institutional investor. The
Debentures were sold at face value, pay interest quarterly and are convertible,
in whole or in part, into shares of common stock of the Company at $1.25 per
share, subject to adjustment. The Debentures contain certain covenants which
restrict the Company's ability to incur indebtedness, grant liens, pay dividends
or other defined restricted payments and make investments and acquisitions. The
Company cannot redeem the Debentures for two years (from March 31, 1997) 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 were used for working capital
purposes.

     At December 31, 1998, the Company had approximately $2,700,000, $10,000,000
and $8,000,000 of net operating tax loss carryforwards expiring in 2012, 2011
and 2010, respectively.

     The Company believes that its current cash balances and anticipated cash
flows from operations will be sufficient to meet normal operating needs for the
Company in 1999.

New Authoritative Accounting Pronouncements
-------------------------------------------

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. SFAS No. 133
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and how it is designated, for
example, gains or losses related to changes in the fair value of a derivative
not designated as a hedging instrument is recognized in earnings in the period
of the change, while certain types of hedges may be initially reported as a
component of other comprehensive income (outside earnings) until the
consummation of the underlying transaction.

     SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. Initial application of SFAS No. 133 should be as of the
beginning of a fiscal quarter; on that date, hedging relationships must be
designated anew and documented pursuant to the provisions of SFAS No. 133.
Earlier application of all of the provisions of SFAS No. 133 is encouraged, but
it is permitted only as of the beginning of any fiscal quarter. SFAS No. 133 is
not to be applied retroactively to financial statements of prior periods. The
Company does not currently have any derivative instruments and is not currently
engaged in any hedging activities.

     The Financial Accounting Standards Board ("FASB") has had on its agenda a
project to address certain practice issues regarding Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." The FASB
plans on issuing various interpretations of APB Opinion No. 25 to address these
practice issues. The proposed effective date of these interpretations would be
the issuance date of the final Interpretation, which is expected to be in
September 1999. If adopted, the Interpretation would be applied prospectively
but would be applied to plan modification and grants that occur after December
15, 1998. The FASB's tentative interpretations are as follows:


                                       14                                     
<PAGE>


*    APB Opinion No. 25 has been applied in practice to include in its
     definition of employees, outside members of the board or directors and
     independent contractors. The FASB's interpretation of APB Opinion No. 25
     will limit the definition of an employee to individuals who meet the common
     law definition of an employee (which also is the basis for the distinction
     between employees and nonemployees in the current U.S. tax code). Outside
     members of the board of directors and independent contractors would be
     excluded from the scope of APB Opinion No. 25 unless they qualify as
     employees under common law. Accordingly, the cost of issuing stock options
     to board members and independent contractors not meeting the common law
     definition of an employee will have to be determined in accordance with
     FASB Statement No. 123, "Accounting for Stock-Based Compensation," and
     usually recorded as an expense in the period of the grant (the service
     period could be prospective, however, depending on the terms of the
     options).

*    Options (or other equity instruments) of a parent company issued to
     employees of a subsidiary should be considered options, etc. issued by the
     employer corporation in the consolidated financial statements and
     accordingly, APB Opinion No. 25 should continue to be applied in such
     situations. This interpretation would apply to subsidiary companies only;
     it would not apply to equity method investees or joint ventures.

*    If the terms of an option (originally accounted for as a fixed option) are
     modified during the option term to directly change the exercise price, the
     modified option should be accounted for as a variable option. Variable
     grant accounting should be applied to the modified option from the date of
     the modification until the date of exercise. Consequently, the final
     measurement of compensation expense would occur at the date of exercise.
     The cancellation of an option and the issuance of a new option with a lower
     exercise price shortly thereafter (for example, within six months) to the
     same individual should be considered in substance a modified (variable)
     option.

*    Additional interpretations will address how to measure compensation expense
     when a new measurement date is required.


Year 2000 Readiness
-------------------

     The Year 2000 issue ("Y2K") is the result of computer programs that were
written using two digits rather than four to define the applicable year. As a
result, software may recognize a date using the two digits "00" as 1900 rather
than the year 2000. Computer programs that do not recognize the proper date
could generate erroneous data or cause systems to fail. In addition, the Year
2000 problem also affects non-information technologies such as machines,
equipment and other systems that contain embedded microprocessors. The Year 2000
problem could affect the Company's computers, software programs, equipment and
other systems used by the Company as well as such technologies of other
companies with which the Company does business.

     The Company has identified four major areas determined to be critical for
successful Y2K readiness: (1) financial applications, (2) software products held
for sale, (3) customers and (4) third-party relationships.

     In the first area, the Company has installed a managerial and financial
reporting system which is warranted to be Y2K ready by the vendor. The cost of
this system was approximately $40,000.

                                       15                                    
<PAGE>

Therefore, the Company believes that its financial applications currently are
capable of functioning without substantial Year 2000 readiness problems. The
Company has also completed an assessment of its non-information technology
systems and does not believe it will incur significant costs remediating those
systems for Y2K readiness.

     In the second area, software products held for sale, the Company has two
product lines, TAS 2000 and Classic. TAS 2000, a recently developed product, has
been tested and is Y2K ready. Costs incurred in readying this product for the
Year 2000 were treated as normal development expenses. For the Classic product
line Y2K upgrade, the Company spent approximately $192,000 in order to make the
product line Y2K ready and the Company believes that the modifications to the
Classic product line will achieve Y2K readiness. Moreover, the Company's
products are often used by its customers in systems that also contain third
party products. Therefore, even though the Company's current products may be
Year 2000 ready, the failure of such third party products to be Year 2000 ready,
or to properly interface with the Company's current products, may result in
customer system failure.

     In the third area, the Company is currently having discussions with its
customers concerning Year 2000 readiness. The Company, however, has little or no
control over the actions of these customers, and thus, there can be no assurance
that these customers will resolve any or all Year 2000 problems with their own
systems (and with their other suppliers and vendors) before the occurrence of a
material disruption or slowdown in their business which could, in turn, have a
material adverse effect on their demand for the Company's products. In the event
that any of the Company's significant customers do not successfully and timely
achieve Year 2000 readiness, there could be a material adverse effect on the
Company's business, financial condition and results of operation.

     In the fourth area, the Y2K problem creates risk for the Company from
unforeseen problems from third party suppliers, vendors and service providers.
The Company is currently in the process of identifying those suppliers, vendors
and service providers that are believed to be critical to the Company's business
operations. The Company has identified several major vendors that are important
to its operations. The Company has been verbally advised by, and continues to
obtain written confirmation from, these vendors regarding its Y2K readiness. The
Company does not have extensive electronic interaction with third parties. To
the extent that the Company ascertains that its suppliers, vendor and/or service
providers will be not Y2K ready, the Company expects to take remedial action
such as procuring new suppliers, vendors or service providers whose systems are
Y2K ready. There can be no assurance, however, that the Company will be
successful in finding such alternative suppliers, vendors or service providers.
Such failures of these third parties' computer systems could have a material
impact on the Company's ability to conduct its business.

     At this time, the Company does not expect to incur any significant
additional expense relating to the Y2K problem and the Company has not budgeted
any expenditures accordingly. Since the Company believes that its products are
Y2K ready, we do not expect any delays in deliveries of product concerning the
Y2K problem.

     The Company has not developed a "worst case" scenario with respect to Year
2000 issues, but instead has focused its resources on identifying material,
remediable problems and reducing uncertainties generally, through the Year 2000
assessment described above. The Company is not actively engaged in preparing any
formal Year 2000 contingency plan, and does not intend to do so unless the
Company believes such plans are merited by the results of its continuing Year
2000 review.

                                       16
<PAGE>

     Based on the results to date of its assessment of the Year 2000 issues of
which the Company is aware at this time, the Company does not believe Year 2000
problems will have a material adverse effect on the Company or its operations.
No assurance can be given, however, that the Company has been able to identify
all potential Year 2000 problems or that if Year 2000 problems are discovered by
the Company in the future, it will be able to resolve them satisfactorily and at
an affordable cost.

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

     The Company is exposed to the impact of interest rate changes, foreign
currency fluctuations and changes in the market value of its investments.

     Interest Rate Risk. The Company's exposure to market rate risk for changes
     ------------------
in interest rates relates primarily to the Company's investment portfolio. The
Company has not used derivative financial instruments in its investment
portfolio. The Company invests its excess cash in a major bank money market
account. The Company protects and preserves its invested funds by limiting
default, market and reinvestment risk.

     Investments in this account carry a degree of interest rate risk. Fixed
rate securities may have their fair market value adversely impacted due to a
rise in interest rates, while floating rate securities may produce less income
than expected if interest rates fall. Due in part to these factors, the
Company's future investment income may fall short of expectations due to changes
in interest rates or the Company may suffer losses in principal if forced to
sell securities which have declined in market value due to changes in interest
rates.

     Foreign Currency Risk. The Company earned revenues in the U.K.  The 
     ---------------------
Company's international business is subject to risks typical of an
international business, including, but not limited to differing economic 
conditions, changes in political climate, differing tax structures, other
regulations and restrictions, and foreign exchange rate volatility.
Accordingly, the Company's future results could be materially adversely 
impacted by changes in these or other factors.

     The Company's exposure to foreign exchange rate fluctuations arises from
sales made to a U.K. customer. As exchange rates vary, these results, when
translated, may vary from expectations and adversely impact overall expected
profitability. The effect of foreign exchange rate fluctuations on the Company
in 1998 was not material.

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 27.

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

                                       17                                   
<PAGE>

disputes between the Company and Ernst & Young LLP. The reports of Ernst & Young
LLP on the Company's financial statements for the two fiscal years prior to such
dismissal did not contain an adverse opinion or a disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope, or accounting
principles.

     In connection with the audit of the Company's financial statements for the
year ended December 31, 1996, and in the subsequent interim period, there were
no disagreements with Ernst & Young LLP on any matters of accounting principles
or practices, financial statement disclosure, or auditing scope and procedures
which, if not resolved to the satisfaction of Ernst & Young LLP, would have
caused Ernst & Young LLP to make reference to the matter in their report.


                                       18                  
<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 Exchange
Act of 1934 in connection with the election of directors at the 1999 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, 1998.


                                     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 ................................... 27

          Report of Predecessor Independent Auditors ....................... 28

          Consolidated Balance Sheets - December 31, 1998 and 1997 ......... 29

          Consolidated Statements of Operations - Years ended 
          December 31, 1998, 1997 and 1996 ................................. 31

          Consolidated Statements of Changes in Stockholders' 
          Equity (Deficit) - Years ended December 31, 1998, 
          1997 and 1996 .................................................... 32

          Consolidated Statements of Cash Flows - Years ended 
          December 31, 1998, 1997 and 1996 ................................. 33

          Notes to Consolidated Financial Statements ....................... 35

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

          II - Valuation and qualifying accounts ........................... 52

          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.


                                       19               

<PAGE>

     (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].

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].


                                       20            

<PAGE>


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 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].

                                       21           

<PAGE>


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].

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. 0-13124) 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. 0-13124) filed on April 17, 1995].


                                       22              

<PAGE>


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 [incorporated by reference
              to Exhibit 10(o)(4) to the Registrant's Annual Report on Form 10-K
              (Commission File No. 0-13124) filed on March 31, 1998].

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].


                                       23          

<PAGE>


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 [incorporated by reference to Exhibit
              10(x) to the Registrant's Form 10-K (Commission File No. 0-13124)
              filed on April 15, 1997].

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. [incorporated by reference to Exhibit 10(y) to
              the Registrant's Form 10-K (Commission File No. 0-13124) filed on
              April 15, 1997].

10(z)(i)      Convertible Note Purchase Agreement, dated as March 14, 1997,
              between the Registrant, Software Investments Limited, Atlantic
              Employers Insurance Company and


                                       24          

<PAGE>


              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 [incorporated by reference to Exhibit 10(z)(ii) to the
              Registrant's Form 10-K (Commission File No. 0-13124) filed on
              April 15, 1997].

10(aa)(i)     Debenture Purchase Agreement, dated as of March 31, 1997, between
              the Registrant and Sirrom Capital Corporation [incorporated by
              reference to Exhibit 10(aa)(i) to the Registrant's Form 10-K
              (Commission File No. 0-13124) filed on April 15, 1997].

10(aa)(ii)    12 1/2% Convertible Debenture Due March 31, 2002, issued by
              Registrant to Sirrom Capital Corporation [incorporated by
              reference to Exhibit 10(aa)(ii) to the Registrant's Form 10-K
              (Commission File No. 0-13124) filed on April 15, 1997].

10(aa)(iii)   Amendment to Stock Purchase Agreement, dated as of March 14, 1997,
              among the Registrant, Software Investments Limited and Care
              Corporation Limited [incorporated by reference to Exhibit
              10(aa)(iii) to the Registrant's Form 10-K (Commission File No.
              0-13124) filed on April 15, 1997].

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. [incorporated
              by reference to Exhibit 10(aa)(iv) to the Registrant's Form 10-K
              (Commission File No. 0-13124) filed on April 15, 1997].

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 [incorporated
              by reference to Exhibit 10(bb)(i) to the Registrant's Form 10-K
              (Commission File No. 0-13124) filed on March 31, 1998].

10(bb)(ii)    Secured Promissory Note, dated March 31, 1998, by and between the
              Registrant, as Holder, and Care Corporation Limited, as Payor
              [incorporated by reference to Exhibit 10(bb)(ii) to the
              Registrant's Form 10-K (Commission File No. 0-13124) filed on
              March 31, 1998].

10(bb)(iii)   Pledge Agreement, dated March 31, 1998, by and between the
              Registrant, as Secured Party, and Care Corporation Limited, as
              Pledgor [incorporated by reference to Exhibit 10(bb)(iii) to the
              Registrant's Form 10-K (Commission File No. 0-13124) filed on
              March 31, 1998].

10(bb)(iv)    Reseller Agreement, dated March 31, 1998, by and between Cover-All
              Systems, Inc. and Care Corporation Limited [incorporated by
              reference to Exhibit 10(bb)(iv) to the Registrant's Form 10-K
              (Commission File No. 0-13124) filed on March 31, 1998].

10(bb)(v)     Reseller Agreement, dated March 31, 1998, by and between Cover-all
              Systems, Inc. and Care Corporation Limited [incorporated by
              reference to Exhibit 10(bb)(v) to the Registrant's Form 10-K
              (Commission File No. 0-13124) filed on March 31, 1998].


                                       25         

<PAGE>


10(cc)(i)     Employment Agreement, dated as of January 1, 1998, by and between
              the Registrant and Dalia Ophir [incorporated by reference to
              Exhibit 99.1 to the Registrant's Form 8-K (Commission File No.
              0-13124) filed on May 14, 1998].

10(cc)(ii)    Employment Agreement, dated as of March 1, 1998, by and between
              the Registrant and Peter C. Lynch [incorporated by reference to
              Exhibit 99.2 to the Registrant's Form 8-K (Commission File No.
              0-13124) filed on May 14, 1998].

10(cc)(iii)   Services Agreement, dated as of March 1, 1998, by and between the
              Registrant and Turnbury Associates [incorporated by reference to
              Exhibit 99.3 to the Registrant's Form 8-K (Commission File No.
              0-13124) filed on May 14, 1998].

*10(dd)(i)    Employment Agreement, dated as of March 1, 1999, by and between
              the Registrant and Peter C. Lynch.

*10(dd)(ii)   Employment Agreement, dated February 19, 1999, by and between the
              Registrant and John R. Nobel.

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 did not file any reports on Form 8-K during the fiscal
          quarter ended December 31, 1998.


                                       26          

<PAGE>



                        REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
Cover-All Technologies Inc.

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


                                      27
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS

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

     We have audited the accompanying consolidated balance sheets of Cover-All
Technologies Inc. and its subsidiaries as of December 31, 1998 and 1997, and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for the years then ended. Our audits also included the financial
statement schedule listed in Item 14(a) of this Form 10-K for each of the two
years ended December 31, 1998. 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 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 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 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. and its subsidiaries as of December 31, 1998 and
1997, and the consolidated results of their operations and their cash flows for
the years 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 years ended December 31, 1998 and 1997.



                                                 MOORE STEPHENS, P. C.
                                                 Certified Public Accountants.

Cranford, New Jersey
February 18, 1999,
  except for Note 8,
  for which the date is
  March 30, 1999



      
                                       28

<PAGE>


                  COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                 December 31,
                                                        ----------------------------
                                                            1998           1997
                                                        ------------    ------------
<S>                                                     <C>             <C>         
Assets:
Current Assets:
   Cash and Cash Equivalents ........................   $  2,286,610    $  2,908,167
   Accounts Receivable (Less Allowance
      for Doubtful Accounts of $476,000 and $185,610)      3,493,192       1,234,706
   Note Receivable -- Related Party .................        947,413              --
   Deferred Tax Asset ...............................        400,000              --
   Prepaid Expenses .................................        231,442         140,783
   Accrued Interest -- Related Party Receivable .....         52,587              --
                                                        ------------    ------------
   Total Current Assets .............................      7,411,244       4,283,656
                                                        ------------    ------------

Property and Equipment -- At Cost:
   Furniture, Fixtures and Equipment ................      2,760,070       2,625,678
   Less:  Accumulated Depreciation ..................     (2,557,313)     (2,397,704)
                                                        ------------    ------------

  Property and Equipment -- Net .....................        202,757         227,974
                                                        ------------    ------------

Note Receivable -- Related Party
   (Net of Unearned Interest of $436,853) ...........      2,563,147              --
                                                        ------------    ------------

Software License Held for Sale at December 31, 1997 .
   (Less Accumulated Amortization of $1,750,000) ....             --       3,250,000
                                                        ------------    ------------

Capitalized Software (Less Accumulated
   Amortization of $2,605,581 and $1,820,857) .......      1,187,378         663,057
                                                        ------------    ------------

Other Assets ........................................         60,910          59,335
                                                        ------------    ------------
   Total Assets .....................................   $ 11,425,436    $  8,484,022
                                                        ============    ============
</TABLE>



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

                                       29      

<PAGE>

                         COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES

                                  CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                         December 31,
                                                                ----------------------------
                                                                    1998             1997
                                                                ------------    ------------
<S>                                                             <C>             <C>         
Liabilities and Stockholders' Equity:
Current Liabilities:
   Accounts Payable .........................................   $    896,417    $    571,309
   Accrued Liabilities ......................................      1,447,025       1,618,676
   Unearned Revenue .........................................        865,094         447,133
                                                                ------------    ------------
   Total Current Liabilities ................................      3,208,536       2,637,118
                                                                ------------    ------------
Convertible Debentures ......................................      3,000,000       3,000,000
                                                                ------------    ------------
   Total Liabilities ........................................      6,208,536       5,637,118
                                                                ------------    ------------

Commitments and Contingencies ...............................             --              --

Stockholders' Equity:
   Common Stock, $.01 Par Value, Authorized 30,000,000 Shares
      Issued 16,983,672 and 16,791,122 Shares, 1998 and 1997,
      Respectively ..........................................        169,837         167,911

Capital In Excess of Par Value ..............................     26,723,397      25,273,031

Accumulated Deficit .........................................    (21,676,334)    (22,594,038)
                                                                ------------    ------------
Total Stockholders' Equity ..................................      5,216,900       2,846,904
                                                                ------------    ------------
Total Liabilities and Stockholders' Equity ..................   $ 11,425,436    $  8,484,022
                                                                ============    ============
</TABLE>



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



                                       30     

<PAGE>


                  COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                         Years ended December 31,
                                               --------------------------------------------
                                                   1998            1997            1996
                                               ------------    ------------    ------------ 
<S>                                            <C>             <C>             <C>         
Revenues:
   Licenses ................................   $  5,875,369    $  3,940,000    $  1,044,460
   Maintenance .............................      3,721,993       2,722,000       2,252,378
   Professional Services ...................      2,670,720       1,275,573       2,171,834
                                               ------------    ------------    ------------ 
   Total Revenues ..........................     12,268,082       7,937,573       5,468,672
                                               ------------    ------------    ------------ 

Costs and Expenses:
   Cost of Revenues ........................      6,461,609       5,426,000       4,585,727
   Research and Development ................      1,186,164              --       1,846,410
   Sales and Marketing .....................      2,024,186       1,900,000       1,124,884
   General and Administrative ..............      1,904,783       2,988,919       3,627,351
                                               ------------    ------------    ------------ 
   Total Costs and Expenses ................     11,576,742      10,314,919      11,184,372
                                               ------------    ------------    ------------ 

   Operating Income (Loss) .................        691,340      (2,377,346)     (5,715,700)
                                               ------------    ------------    ------------ 

Interest Expense (Income):
   Interest Expense ........................        377,924         300,593           1,924
   Interest Income - Related Party (Imputed)       (117,506)             --              --
   Interest Income .........................       (116,782)        (37,569)       (109,302)
                                               ------------    ------------    ------------ 

   Interest Expense (Income) ...............        143,636         263,024        (107,378)
                                               ------------    ------------    ------------ 

   Income (Loss) from Continuing
       Operations ..........................        547,704      (2,640,370)     (5,608,322)

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

   Income (Loss) Before Income Tax Benefit .        547,704      (2,640,370)     (6,001,194)

Income Tax Benefit .........................        370,000              --              --
                                               ------------    ------------    ------------ 
Net Income (Loss) ..........................   $    917,704    $ (2,640,370)   $ (6,001,194)
                                               ============    ============    ============ 
 
Basic and Diluted Earnings (Loss) Per
   Common Share from Continuing
   Operations ..............................   $       0.05    $      (0.16)   $      (0.38)
                                               ============    ============    ============ 

Basic and Diluted Earnings (Loss) Per
   Common Share ............................   $       0.05    $      (0.16)   $      (0.40)
                                               ============    ============    ============ 

Weighted Average Number of Common
   Shares Outstanding for Basic
   Earnings (Loss) Per Common
   Share (Note 14) .........................     16,940,000      16,731,000      14,866,000
                                               ============    ============    ============ 
</TABLE>



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

                                       31                

<PAGE>

                  COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                                                                    Retained                              Total 
                                                                  Capital in        Earnings                           Stockholders'
                                                                 Excess of Par    (Accumulated        Treasury           Equity 
                                               Common Stock         Value            Deficit)           Stock           (Deficit)
                                               -------------------------------------------------------------------------------------
<S>                                            <C>               <C>               <C>               <C>               <C>         
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 Stock ...................           (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
   Exercise of 192,550 Stock
     Options .............................            1,926           307,312                --                --           309,238
   Buy Back of Software License
     by Related Party (Note 8) ...........               --         1,143,054                --                --         1,143,054
   Net Income ............................               --                --           917,704                --           917,704
                                               ------------      ------------      ------------      ------------      ------------
Balance at December 31, 1998 .............     $    169,837      $ 26,723,397      $(21,676,334)     $         --      $  5,216,900
                                               ============      ============      ============      ============      ============
</TABLE>


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

                                       32
<PAGE>

                  COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                        Years ended December 31, 1997
                                                                           ---------------------------------------------------

                                                                               1998                1997                1996
                                                                            -----------         -----------         -----------
<S>                                                                        <C>                 <C>                 <C>         
Cash Flows from Operating Activities:
     Income (Loss) from Continuing Operations ..........................   $   917,704         $(2,640,370)        $(5,608,322)
     Adjustments to Reconcile Net Loss to Net Cash
         Provided from (Used for) Operating Activities:
         Depreciation ..................................................       159,609             182,374             341,798
         Amortization of Capitalized Software and
             Software License ..........................................       784,724           1,814,893           2,101,576
         Provision for Uncollectible Accounts ..........................       425,246             172,190              43,870
         Noncash Compensation Expense on Granting of
             Stock Options .............................................            --             435,313                  --
         Imputed Interest Income .......................................      (117,506)                 --                  --
         Deferred Tax Asset ............................................      (400,000)                 --                  --

     Changes in Assets and Liabilities:
         (Increase) Decrease in:
         Accounts Receivable ...........................................    (2,683,732)            178,502             134,622
         Income Taxes Receivable .......................................            --                  --           2,300,000
         Deferred Income Taxes .........................................            --                  --             (20,000)
         Prepaid Expenses ..............................................       (90,659)           (133,622)             (1,806)
         Accrued Interest -- Related Party Note Receivable .............       (52,587)                 --                  --
         Other Assets ..................................................        (1,575)              6,846             420,545
     Increase (Decrease) in:
         Accounts Payable ..............................................       325,108             116,429            (418,888)
         Accrued Liabilities ...........................................      (171,651)            (77,228)         (2,449,304)
         Unearned Revenue ..............................................       417,961            (734,442)            546,011
                                                                           -----------         -----------         -----------
   Net Cash (Used For) Continuing
         Operation Activities -- Forward ...............................      (487,358)           (679,115)         (2,609,898)
                                                                           -----------         -----------         -----------

   Loss on Disposal of Discontinued Operations .........................            --                  --            (392,872)
   Decrease (Increase) in Net Assets of Discontinued
      Operations .......................................................            --                  --          (1,670,028)
                                                                           -----------         -----------         -----------
     Net Cash Used For Discontinued
         Activities -- Forward .........................................            --                  --          (2,062,900)
                                                                           -----------         -----------         -----------

Cash Flows from Investing Activities:
     Repayment of Note Receivable -- Related Party .....................     1,000,000                  --                  --
     Proceeds from Sale of Equipment ...................................            --               3,640                  --
     Capital Expenditures ..............................................      (134,392)             (3,995)            (85,860)
     Capitalized Software Expenditures .................................    (1,309,045)                 --          (1,318,744)
                                                                           -----------         -----------         -----------
   Net Cash (Used for) Investing Activities--
      Forward ..........................................................   $  (443,437)        $      (355)        $(1,404,604)
</TABLE>


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

                                       33
<PAGE>

                 COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                       Years ended December 31, 1997
                                                                             ---------------------------------------------------
                                                                                1998                1997                1996
                                                                             -----------         -----------         -----------
<S>                                                                          <C>                 <C>                 <C>         
     Net Cash (Used For) Continuing Operating
         Activities-- Forward ..........................................     $  (487,358)        $  (679,115)        $(2,609,898)
                                                                             -----------         -----------         -----------

     Net Cash Used For Discontinued Activities--
         Forward .......................................................              --                  --          (2,062,900)
                                                                             -----------         -----------         -----------
     Net Cash (Used For) Investing Activities-- 
         Forward .......................................................        (443,437)               (355)         (1,404,604)
                                                                             -----------         -----------         -----------

Cash Flows from Financing Activities:
     Proceeds from Bridge Financing ....................................              --             750,000                  --
     Payments on Bridge Financing ......................................              --            (750,000)                 --
     Proceeds from Convertible Debentures ..............................              --           3,000,000                  --
     Net Proceeds from Issuance of Common Stock ........................              --                  --           4,947,329
     Proceeds from Exercise of Stock Options ...........................         309,238             140,965                  --
                                                                             -----------         -----------         -----------

     Net Cash Provided from (Used For) Financing Activities ............         309,238           3,140,965           4,947,329
                                                                             -----------         -----------         -----------
Change in Cash and Cash Equivalents ....................................        (621,557)          2,461,495          (1,130,073)
Cash and Cash Equivalents -- Beginning of Years ........................       2,908,167             446,672           1,576,745
                                                                             -----------         -----------         -----------

   Cash and Cash Equivalents -- End of Years ...........................     $ 2,286,610         $ 2,908,167         $   446,672
                                                                             ===========         ===========         ===========

Supplemental Disclosures of Cash Flow Information:
   Cash paid during the years for:
      Interest .........................................................     $   377,924         $   206,843         $     1,924
      Income Taxes (Received) ..........................................     $        --         $        --         $(2,375,000)
</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.

     In 1998, the Company negotiated a buyback by Care of the Care Software
License for $500,000 and a $4,500,000 non-interest bearing note which, when
discounted, results in a principal amount of the note of $3,893,054. The
difference between the carrying value of the Care Software License at the time
of the transaction ($3,250,000) and the present value of the note and the cash
received ($4,393,054) was charged to additional paid in capital (See Note 8).

    Investing:
    ---------

     In 1996, the Company acquired a software license valued at $5,000,000 from
Care by issuing 2,500,000 shares of its common stock, crediting common stock for
$25,000 and capital in excess of par value for $4,975,000 (See Note 8).


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


                                       34
<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.

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
predominantly from standardized software and is recognized when modules are
delivered and accepted by the customer, the fee is fixed and determinable, and
collectibility is probable. 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.

The Company has $915,000 of reverse repurchase agreements at December 31, 1998,
with First Union National Bank. The Company requires that reverse repurchase
agreements be collateralized by at least an equal amount of U.S. Treasury
securities or U.S. Government agency securities. These agreements are usually
placed on an overnight basis.

Risk Concentrations -- Financial instruments which potentially subject
the Company to concentrations of credit risk consist principally of cash and
cash equivalents and trade accounts receivable. The amount of cash at risk at
December 31, 1998, was approximately $1,115,600. The Company generally does not
require collateral for its financial instruments.

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.

The Company has exposure to foreign currency exchange rate fluctuations
arising from sales made to a U.K. customer.  The Company has approximately
$150,000 subject to such risk at December 31, 1998.

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.


                                       35      

<PAGE>


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

[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. Depreciation
expense in 1998, 1997 and 1996 was $159,609, $182,374 and $341,798,
respectively.

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

Capitalized Software and Related License -- During 1998, qualifying software
development costs of $1,309,045 were capitalized and are amortized over a
three-year period at the greater of the ratio that current gross revenues for
product bear to the total of current and anticipated future gross revenues for
that product or the straight-line method over the remaining estimated economic
life of the product. 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 8, 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 sale of 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) to the
Care software.

Advertising Expense -- It is the Company's policy to expense advertising costs
as incurred. Advertising expense in 1998, 1997 and 1996 was $168,209, $56,361
and $128,803, respectively.

Research and Development -- Research and development costs are charged to
operations when incurred. The amounts charged in 1998, 1997 and 1996,
$1,186,164, $-0- and $1,846,410, were expensed for these software products,
respectively.

Income Taxes -- Pursuant to Statement of Financial Accounting Standards (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.

Income (Loss) Per Share -- The Financial Accounting Standards Board has issued
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 years ended December 31, 1998 and
1997, have been calculated in accordance with SFAS No. 128. Prior period loss
per share data have been recalculated and it was determined that no adjustment
was necessary.

SFAS No. 128 supersedes Accounting Principles Board Opinion ("APB") 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

                                       36           

<PAGE>


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

[1]  Summary of Significant Accounting Policies (Continued)

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 for 1997 and 1996 because to do so would have been
antidilutive for these years, however, some of the Company's options and
warrants did dilute basic earnings per share in 1998 (see Note 14).

The dilutive effect of convertible debt is reflected in dilutive earnings per
share by the application of the if-converted method. The convertible debt did
not have a dilutive effect in 1998 because the amount of interest (net of tax)
on a per share basis exceeds basic earnings per share. The Company's convertible
debt does not affect the loss per share calculation for 1997 and 1996 because it
would be antidilutive for these years (see Note 14). The 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.

[2]  Discontinued Operations

In March 1996, the Company entered into a series of agreements which provided
for the transfer and discontinuance of its Insurance Services Division ("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.

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 8. As a result of the
issuance of shares described in Note 8,


                                       37        
<PAGE>


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

[2]  Discontinued Operations (Continued)

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.

[3]  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.

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 Harvey 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 defendant in any lawsuit.


                                       38          
<PAGE>


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


[4]  Commitments, Contingencies and Related Party Transactions

Operating Leases -- The Company leases approximately 36,000 square feet of
office space 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's office space was $296,014, $311,240 and $334,170
for the years ended December 31, 1998, 1997 and 1996, respectively.

The Company's future minimum rental commitments under its noncancellable
operating lease in effect at December 31, 1998 follows: years ending December
31, 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, 1998 was
approximately $690,000.

Related Party Transactions -- A director of the Company in 1996 and for part of
1997 is a partner in a law firm with which the Company incurred legal expenses
of approximately $290,000 and $600,000, in 1997 and 1996, respectively. An
attorney associated with the Chairman provides legal services to the Company.
The Company incurred approximately $84,000 and $82,000 in legal costs with this
attorney during 1998 and 1997, respectively.

In 1998, the Company renewed its agreement with the consulting firm discussed in
the following paragraph pursuant to which the Company will pay the consulting
firm for the services of the Chairman and Chief Executive Officer $12,500 per
month, plus expenses and a bonus payment of $50,000.

In 1997, the Company entered into (i) an agreement with a consulting firm, in
which the Chairman is a managing partner, to engage the Chairman and Chief
Executive Officer of the Company, pursuant to which, the Company will pay the
consulting firm $12,500 per month, plus expenses, five-year options to purchase
400,000 shares of Common Stock, exercisable at $1.25 per share and a bonus
payment of $100,000, (ii) an agreement to engage a director of the Company as
Chief Financial Officer of the Company on an interim basis by granting him
five-year options to purchase 195,000 shares of Common Stock, exercisable at
$2.00 per share, representing 30,000 shares for each month during which he was
engaged to act as Chief Financial Officer through the end of his contract term
of September 30, 1997, and paid him $37,500 through the end of the fiscal year
for continuation of his services as interim Chief Financial Officer, and (iii) a
consulting agreement with a director of the Company, with a term engagement
through January 15, 1998, and providing compensation consisting of a five-year
option to purchase 25,000 shares of Common Stock, exercisable at $1.25 per
share, with respect to each month during which he performs consulting services
and an additional 250,000 shares of Common Stock, exercisable at $1.25 per
share, as a result of the Company achieving certain sales goals in the 1997
fiscal year.


                                       39      
<PAGE>


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

[5]  Income Taxes

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

<TABLE>
<CAPTION>
                                               Years ended December 31,
                                         -----------------------------------
                                            1998         1997         1996
                                         ---------     --------      -------
<S>                                    <C>            <C>          <C>
Current:
   Federal ............................  $ 545,400      $    --      $     --
   State ..............................     91,000           --            --
   Utilization of Net
    Operating Loss Carryforward .......   (606,400)          --            --
                                         ---------      -------      --------
   Totals                                   30,000           --            --
                                         ---------      -------      --------

Deferred:
   Federal ...........................    (340,000)          --            --
   State .............................     (60,000)          --            --
                                         ---------      -------      --------

   Totals ............................    (400,000)          --            --
                                         ---------      -------      --------

   Net (Benefit) .....................   $ 370,000      $    --      $     --
        -------                          =========      =======      ========
</TABLE>

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

<TABLE>
<CAPTION>
                                                              Years ended December 31,
                                                    ----------------------------------------

                                                       1998           1997           1996
                                                   -----------    -----------    -----------

<S>                                                <C>            <C>            <C>         
Computed Federal Statutory Tax (Benefit) ......... $   186,000    $  (900,000)   $(1,781,000)
Valuation Allowance to Reduce Deferred Tax Asset            --        900,000      1,781,000
Related Party Gain Charged to Paid-In-Capital ....     388,638             --             --
Alternative Minimum Tax Liability ................      30,000             --             --
Utilization of Net Operating Loss Carryforward ...    (574,638)            --             --
Reduction in Deferred Tax Valuation Allowance.....    (400,000)            --             --
                                                   -----------    -----------    -----------

   Actual Provision (Benefit) .................... $  (370,000)   $        --    $        --
   --------------------------                      ===========    ===========    ===========
</TABLE>


                                       40
                                                         

<PAGE>

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


[5]  Income Taxes (continued)

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

<TABLE>
<CAPTION>
                                                                                    Years ended December 31,
                                                                     ---------------------------------------------------------
                                                                        1998                   1997                   1996
                                                                     -----------            -----------            -----------

<S>                                                                  <C>                    <C>                    <C>        
Deferred Tax Assets -- Current:
   Net Operating Loss Carryforward ............................      $   154,000            $        --            $        --
   Accounts Receivable Allowance ..............................          157,000                 74,000                 18,000
   Reserve for Loss on Disposal ...............................          108,000                185,000                414,000
   Vacation Accrual ...........................................           21,000                 13,000                 36,000
   Related Party Gain .........................................          (40,000)                    --                     --
   Valuation Allowance ........................................               --               (272,000)              (468,000)
                                                                     -----------            -----------            -----------

   Current Deferred Tax Asset .................................      $   400,000            $        --            $        --
   --------------------------                                        ===========            ===========            ===========

Deferred Tax Asset (Liability) -- Long-Term:
   Net Operating Loss Carryforward ............................      $ 8,000,000            $ 9,000,000            $ 8,421,000
   Stock Options ..............................................          128,000                174,000                     --
   Capitalized Software .......................................         (475,000)              (265,000)              (590,000)
   Depreciation and Amortization ..............................           81,000                 91,000                200,000
   Related Party Gain .........................................         (156,000)                    --                     --
   Valuation Allowance
                                                                      (7,578,000)            (9,000,000)            (8,031,000)
                                                                     -----------            -----------            -----------

   Long-Term Deferred Tax Liability ...........................      $        --            $        --            $        --
   --------------------------------                                  ===========            ===========            ===========

</TABLE>


The net change (decrease) during 1998 in the total valuation allowance is
$1,694,000.

At December 31, 1998, the Company had approximately $2,700,000, $10,000,000 and
$8,000,000 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 10) the Company
may experience an ownership change and consequently the Company's utilization of
its net operating loss carryforwards could be significantly limited.

[6]  Stock Option and Stock Purchase Plans

In March 1995, the Company adopted the 1995 Employee Stock Option Plan, which
was amended 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, 1998, 1997 and 1996, 201,775,
341,775 and 210,175 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

                                       41
                                                         

<PAGE>


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


[6]  Stock Option and Stock Purchase Plan (Continued)

5 years after the date of grant. At December 31, 1998, 1997 and 1996, 240,000,
240,000 and 240,000 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
up to 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, 1998, 1997 and 1996, 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. The Plan was canceled in April 1997. At December 31, 1997 and 1996,
-0-, and 279,938 shares, respectively, were available for grant.

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

<TABLE>
<CAPTION>
                                                                   Weighted-Average                         
                                                                      Remaining          Weighted-Average
                                    Shares         Per Share       Contractual Life       Exercise Price
                                 ------------  ----------------  --------------------  --------------------

<S>                                 <C>           <C>                 <C>                       <C>  
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

   Granted......................      315,000     2.50 -  4.00        1.4 years                  3.27
   Exercised....................     (192,550)    1.25 -  2.25                                   1.61
   Canceled.....................     (175,000)    4.00 -  5.00                                   4.14
   Expired......................     (189,950)    1.13 -  2.00                                   1.54

Balance, December 31, 1998......    1,576,500     1.13 -  5.00        2.8 years                 $1.77
</TABLE>


                                       42
                                                         

<PAGE>


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


[6]  Stock Option and Stock Purchase Plan (Continued)

The options granted during 1998 are distributed as follows, relative to the
difference between the exercise price and the stock price at grant date:


<TABLE>
<CAPTION>
                                                                     Weighted-      Weighted-
                                                                      Average        Average
                                                    Number Granted Exercise Price   Fair Value
                                                    -------------  -------------  -------------
<S>                                                      <C>             <C>            <C>  
Exercise Price Above Stock Price...................      150,000         $4.00          $1.88
Exercise Price at Stock Price......................      165,000          2.61           1.31
                                                         -------         -----          -----

   Totals..........................................      315,000         $3.27          $1.58
   ------                                                =======         =====          =====

</TABLE>

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

<TABLE>
<CAPTION>
                                                                      Weighted-     Weighted-
                                                                       Average       Average
                                                    Number Granted  Exercise Price  Fair Value
                                                    --------------  --------------  ---------- 
<S>                                                      <C>              <C>          <C>   
Exercise Price Above Stock Price...................      100,000          $2.00        $0,.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
   ------                                              =========          =====         =====

</TABLE>                                                            
                                                                   
Exercisable options at December 31, 1998, 1997 and 1996 were as follows:

<TABLE>
<CAPTION>
                               Number of                 Weighted-Average
      December 31,         Exercisable Options             Exercise Price
--- ----------------    ---------------------------    ------------------------

<S>                      <C>                            <C>  
          1998                 1,566,500                        $1.76
          1997                 1,582,334                        $1.69
          1996                   351,909                        $2.29
</TABLE>                                                         
                                                            

The following table summarizes information about stock options at December 31,
1998:

<TABLE>
<CAPTION>
                                                                          Exercisable
                           Outstanding Stock Options                     Stock Options
  Range of     -------------------------------------------------  ---------------------------
   Average                 Weighted-Average                                                   
  Exercise                    Remaining       Weighted-Average                    Weighted-
   Prices         Shares   Contractual Life    Exercise Price        Shares    Exercise Price
-------------  -----------  --------------  --------------------  -----------  ---------------
<S>                 <C>        <C>                <C>                <C>           <C>  
$1.25 - $1.56       993,000    3.2 Years          $1.30              993,000       $1.30
$1.94 - $2.50       483,500    1.9 Years          $2.17              483,500       $2.17
$3.75 - $5.00       100,000    2.9 Years          $4.54               90,000       $4.63 
                  ---------    ---------          -----            ---------       -----
                  1,576,500    2.8 Years          $1.77            1,566,500       $1.76    
                  =========    =========          =====            =========       =====    
</TABLE>                                                        

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 1998 and 1996 was equal to on
greater than the market price of the Company's stock at the date of grant.


                                       43                

<PAGE>

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

[6]  Stock Option and Stock Purchase Plan (Continued)

Accordingly, no compensation expense has been recognized for the Company's
stock-based compensation plans for fiscal years 1998 and 1996.

As discussed in Notes 2 and 8, there are approximately 1,100,000 warrants
outstanding at December 31, 1998, at a weighted-average exercise price of $1.84.

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 $1.58, $1.29 and $1.95 during 1998, 1997 and 1996,
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:

                                                       December 31,
                                           -----------------------------------

                                             1998         1997         1996
                                           ---------    ---------    ---------


Risk-Free Interest Rate.................   5.60%        6.70%        6.29%
Expected Life...........................   2.0 Years    3.8 Years    3.3 Years
Expected Volatility.....................   85%          88%          89%
Expected Dividends......................   None         None         None

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

<TABLE>
<CAPTION>
                                                   Years ended December 31,
                                           -----------------------------------

                                               1998         1997         1996
                                            ---------    ---------    --------
<S>                                       <C>         <C>            <C>
Net Income (Loss) as Reported...........    $   918     $ (2,640)    $ (6,001)
Pro Forma Net Income (Loss).............    $   784     $ (3,787)    $ (6,166)
Income (Loss) Per Share as Reported.....    $   .05     $   (.16)    $   (.40)
Pro Forma Income (Loss) Per Share.......    $   .04     $   (.23)    $   (.41)
</TABLE>
                                                             
[7]  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

                                       44
                                                         

<PAGE>


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

[7]  Common Stock (Continued)

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.

[8]  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") (SIL
and Care are entities related by common ownership) 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 10, the
warrants required an adjustment of shares to 206,152 and a price adjustment to
$1.91 per share. As of December 31, 1998, no warrants had been exercised.

     [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 10, the Warrants were adjusted 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 had
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.

                                       45        
<PAGE>


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

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

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 (the "Care Note"),
payable in semi-annual installments of $500,000 which, when discounted at 6%,
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 and a Care
affiliate, SIL. 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 market price of the Company's common stock on
September 30, 1998, approximately 3,700,000 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) to the
Care software. The Company has received the subsequent payments due under the
Care Note, including the payment due by March 31, 1999. Based on the market
price of the Company's common stock on March 30, 1999, approximately 1,909,000
shares were pledged as collateral.

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 has recorded the $1,143,054 difference
between the carrying value of the Care Software License at December 31, 1997 of
$3,250,000 and the discounted $4,393,054 buy back agreement amount to capital in
excess of par value in the first quarter of 1998.

The balance of the undiscounted Care Note at December 31, 1998 is $4,000,000, of
which $1,000,000 is classified as currently due, including imputed interest
accrued of $52,587. The undiscounted long-term portion of the Care Note at
December 31, 1998 of $3,000,000 is shown at $2,563,147, net of unearned interest
of $436,853.

[9]  Supplemental Data

Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
                                                       Years ended December 31,
                                                     ----------------------------

                                                         1998        1997
                                                      ----------   ----------

<S>                                                 <C>           <C>       
Accrued Payroll, Benefits, Temporary Help and
  Consulting ......................................  $  751,907   $  358,447
Accrued Expenses of the Discontinued Operations
  Not Assumed by The Robert Plan Corporation.......     270,538      461,506
Accrued Software Costs.............................     103,959      312,764
Accrued Interest Costs.............................      93,750       93,750
Accrued Professional Fees..........................     124,800      150,000
Income Taxes Currently Payable.....................      30,000           --
Other..............................................      72,071      242,209
                                                      ----------  ----------

        Totals                                        $1,447,025  $1,618,676
                                                      ==========  ==========
</TABLE>


                                       46
<PAGE>


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

[10] 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.

[11] 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
1998, 1997 and 1996 were approximately $53,200, $47,900 and $21,100,
respectively.

[12] Fair Value of Financial Instruments

SFAS No. 107, "Disclosure about Fair Value of Financial Instruments," defines
the fair value of a financial instrument as the amount at which the instrument
could be exchanged in a current transaction between willing parties. In
assessing the fair value of its cash and cash equivalents, trade receivables and
accounts payables and accrued expenses, management concluded that the carrying
amount of these financial instruments approximates fair value because of their
short maturities. 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 $3,290,000 and $3,050,000 for the years
ended December 31, 1998 and 1997, respectively. The carrying amount of the Care
Note (see Note 8) was discounted at its inception (March 31, 1998) at 6% based
on the Company's assessment of alternative sources of investments and the risk
factors involved with the Care Note. The Company's assessment of these factors
at December 31, 1998, would not significantly change the interest rate used to
originally discount the Care Note, and therefore management believes the
carrying amount approximates its fair value at December 31, 1998.

[13] Segment Information

The following information is presented as a result of the Company adopting SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related Information."

At December 31, 1998, the Company's two business units have distinct management
teams and infrastructures that offer different products and services which are
evaluated separately in assessing performance and allocating resources. These
business units have been reported as two reportable segments, Classic and TAS.

Classic - The Classic product line is a self-contained rating, issuance and
transaction management application system utilized in the property/casualty
insurance industry.


                                       47        

<PAGE>


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

[13] Segment Information (Continued)

TAS - TAS 2000 comprises an architecture and suite of application development
tools for property/casualty insurers designed to enable a client-driven
re-engineering of an insurer's business processes.

Care - As more fully described in Note 8, in 1996, the Company was granted by
Care Corporation Limited the exclusive license for the Care software systems for
use in the worker's compensation and group health claims administration markets
in Canada, Mexico and Central and South America. The Care software is an
integrated suite of computer applications for the administration of claims and
processing of workers' compensation. In the fourth quarter of 1997, the Company
made a strategic decision to allocate its future resources to its TAS 2000 and
Classic product lines rather than the product line via the Care software
license. In this regard, on March 31, 1998, the Company negotiated and
consummated a buy back by Care of the Care software license.

The following financial information is reported on the basis that is used
internally for evaluating segment performance and deciding how to allocate
resources. Interest income, interest expense, deferred taxes and income tax
benefit are allocated based on revenues.

<TABLE>
<CAPTION>
                                                               (Dollars in Thousands)
                                                            Year ended December 31, 1998
                                          ------------------------------------------------------------

                                             Classic           TAS           Care         Consolidated
                                          -----------    ------------    -----------     -------------
<S>                                            <C>             <C>           <C>             <C>    
Revenues...............................        $6,708          $5,560        $  --           $12,268
Operating Profit (Loss)................         2,039          (1,096)        (252)              691
Interest Expense.......................           207             171           --               378
Interest Income........................           128             106           --               234
Depreciation and Amortization..........           113             831           --               944
Income Tax Benefit.....................           146             121           --               370
Deferred Tax Asset.....................           219             181           --               400
Capital Expenditures...................            61              73           --               134
Capitalized Software
 Expenditures..........................            --           1,309           --             1,309
Total Assets...........................         6,247           5,178           --            11,425

<CAPTION>
                                                               (Dollars in Thousands)
                                                            Year ended December 31, 1997
                                          ------------------------------------------------------------

                                             Classic          TAS            Care         Consolidated
                                          -----------    ------------    -----------     -------------
<S>                                            <C>            <C>            <C>               <C>    
Revenues...............................        $6,593         $ 1,345        $    --           $ 7,938
Operating Profit (Loss)................           335          (1,576)        (1,136)           (2,377)
Interest Expense.......................           250              51             --               301
Interest Income........................            32               6             --                38
Depreciation and Amortization..........           165             832          1,000             1,997
Capital Expenditures...................             4              --             --                 4
Total Assets...........................         4,347             887          3,250             8,484
</TABLE>


                                       48
                                                         

<PAGE>


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

[13] Segment Information (Continued)

<TABLE>
<CAPTION>
                                                              (Dollars in Thousands)
                                                           Year ended December 31, 1996
                                          -----------------------------------------------------

                                             Classic          TAS            Care         Consolidated
                                          -----------    ------------    -----------     -------------

<S>                                           <C>             <C>            <C>               <C>    
Revenues...............................       $ 3,655         $ 1,814        $    --           $ 5,469
Operating Profit (Loss)................        (1,725)         (3,991)            --            (5,716)
Interest Expense.......................             1               1             --                 2
Interest Income........................            73              36             --               109
Depreciation and Amortization..........           245           1,448            750             2,443
Capital Expenditures...................             4              82             --                86
Capitalized Software
 Expenditures..........................            76           1,243             --             1,319
Total Assets...........................         2,669           1,324          4,250             8,243
</TABLE>

Major Customers -- The Company had a portion of its revenues from four customers
in 1998, one customer in 1997 and three customers in 1996:

<TABLE>
<CAPTION>
                                                                Years ended December 31,
                              ---------------------------------------------------------------------------------------
                                           1998                           1997                         1996  
                              --------------------------     ---------------------------     ------------------------

          Customer                Classic         TAS          Classic            TAS         Classic          TAS
---------------------------    ------------   ----------     -----------       ---------     ---------     ----------
<S>                             <C>           <C>            <C>               <C>           <C>           <C>

Inspire Insurance Solutions.    $      --     $       --     $ 1,583,332       $     --      $     --      $       --
Sun Alliance Management                                                                                               
   Services.................           --             --              --             --            --       1,464,560
Glatfelter Insurance Group..           --             --              --             --       727,954              --
Millers Insurance Group.....           --             --              --             --       720,294              --
Accident Fund...............           --      1,654,623              --             --            --              --
Cornhill Insurance Co.......           --      1,892,468              --             --            --              --
Employers Reinsurance Corp..    1,438,840        400,000              --             --            --              --
Sierra Insurance Co.........           --      1,001,420              --             --            --              --
</TABLE>                                                                      
                                                                             
The following table presents revenues by country based on the location of the
use of the product or service:

                                                  (Dollars in Thousands)
                                                   Years ended December 31,
                                         ---------------------------------------
                                           1998            1997           1996
                                         -------         -------         -------

United Kingdom .................         $ 1,900         $   500         $ 1,465
United States ..................          10,368           7,438           4,004
                                         -------         -------         -------
Total Sales ....................         $12,268         $ 7,938         $ 5,469
                                         =======         =======         =======


                                             49
                                                         

<PAGE>

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

[14] Earnings Per Share Disclosures

The following is a reconciliation of the numerator and denominator of the basic
and diluted earnings per share ("EPS") computations:

<TABLE>
<CAPTION>
                                                                For the year ended
                                                                 December 31, 1998
                                               -----------------------------------------------

                                                    Income            Shares           Per Share
                                                 (Numerator)       (Denominator)         Amount
                                               ---------------   ---------------    ---------------
<S>                                               <C>                 <C>              <C>        
Basic EPS:
 Income Available to Common
   Stockholders..............................     $   917,704         16,940,000       $      0.05
Effect of Dilutive Securities:
  Options....................................              --            689,625                --
  Warrants...................................              --            366,050                --
                                                  -----------         ----------       -----------

Diluted EPS:
  Income Available to Common Stockholders
    Plus Assumed Conversions.................     $   917,704         17,995,675       $      0.05
                                                  ===========         ==========       ===========
</TABLE>

Options to purchase 100,000 shares of common stock at prices ranging from
$3.50 to $5.00 per share were outstanding at December 31, 1998, but were
not included in the computation of diluted EPS because the options'
exercise price was greater than the average market price of the common
shares ($2.62).

[15] New Authoritative Accounting Pronouncements

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. SFAS No. 133
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and how it is designated, for
example, gains or losses related to changes in the fair value of a derivative
not designated as a hedging instrument is recognized in earnings in the period
of the change, while certain types of hedges may be initially reported as a
component of other comprehensive income (outside earnings) until the
consummation of the underlying transaction.

SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. Initial application of SFAS No. 133 should be as of the
beginning of a fiscal quarter; on that date, hedging relationships must be
designated anew and documented pursuant to the provisions of SFAS No. 133.
Earlier application of all of the provisions of SFAS No. 133 is encouraged, but
it is permitted only as of the beginning of any fiscal quarter. SFAS No. 133 is
not to be applied retroactively to financial statements of prior periods. The
Company does not currently have any derivative instruments and is not currently
engaged in any hedging activities.

The Financial Accounting Standards Board ("FASB") has had on its agenda a
project to address certain practice issues regarding Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." The FASB
plans on issuing various interpretations of APB Opinion No. 25 to address these
practice issues. The proposed effective date of these interpretations would be
the issuance date of the final Interpretation, which is expected to be in
September 1999. If adopted, the Interpretation would be applied prospectively
but would be applied to plan modification and grants that occur after December
15, 1998. The FASB's tentative interpretations are as follows:


                                       50
<PAGE>

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

[15]  New Authoritative Accounting Pronouncements (Continued)


*    APB Opinion No. 25 has been applied in practice to include in its
     definition of employees, outside members of the board or directors and
     independent contractors. The FASB's interpretation of APB Opinion No. 25
     will limit the definition of an employee to individuals who meet the common
     law definition of an employee (which also is the basis for the distinction
     between employees and nonemployees in the current U.S. tax code). Outside
     members of the board of directors and independent contractors would be
     excluded from the scope of APB Opinion No. 25 unless they qualify as
     employees under common law.  Accordingly, the cost of issuing stock
     options to board members and independent contractors not meeting the
     common law definition of an employee will have to be determined in
     accordance with FASB Statement No. 123, "Accounting for Stock-Based
     Compensation," and usually recorded as an expense in the period of
     the grant (the service period could be prospective, however, depending
     on the terms of the options).

*    Options (or other equity instruments) of a parent company issued to
     employees of a subsidiary should be considered options, etc. issued by the
     employer corporation in the consolidated financial statements and
     accordingly, APB Opinion No. 25 should continue to be applied in such
     situations. This interpretation would apply to subsidiary companies only;
     it would not apply to equity method investees or joint ventures.

*    If the terms of an option (originally accounted for as a fixed option) are
     modified during the option term to directly change the exercise price, the
     modified option should be accounted for as a variable option. Variable
     grant accounting should be applied to the modified option from the date of
     the modification until the date of exercise. Consequently, the final
     measurement of compensation expense would occur at the date of exercise.
     The cancellation of an option and the issuance of a new option with a lower
     exercise price shortly thereafter (for example, within six months) to the
     same individual should be considered in substance a modified (variable)
     option.

*    Additional interpretations will address how to measure compensation expense
     when a new measurement date is required.

                               . . . . . . . . . .

                                       51
                                                         

<PAGE>


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


SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                            Balance at                               
                                            Beginning                             Balance at
                                            of Period   Additions    Deductions   End of Period
                                            ----------   ----------  ------------  -----------
<S>                                       <C>          <C>         <C>            <C>       
Accumulated amortization of capitalized
software and software license:

Year Ended December 31, 1998 ...........    $3,570,857   $  784,724  $1,750,000     $2,605,581
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)  $1,755,964

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


Allowance for Doubtful Accounts:

 Year Ended December 31, 1998 ..........    $  185,610   $  425,246  $  134,856     $  476,000
 Year Ended December 31, 1997 ..........    $   43,870   $  172,190  $   30,450     $  185,610
 Year Ended December 31, 1996 ..........    $       --   $   43,870  $       --     $  043,870

Accrued Expenses of the Discontinued
 Operations:

Year Ended December 31, 1998 ...........    $  461,506   $       --  $  190,968(2)  $  270,538
Year Ended December 31, 1997 ...........    $1,036,736   $       --  $  575,230     $  461,506
Year Ended December 31, 1996 ...........    $2,839,702   $       --  $1,802,966     $1,036,736

</TABLE>

(2) Represents least expense written off in 1996.


                                             52
                                                         
                                      

<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, 1999               By: /s/Brian Magowan
                                      --------------------------------------
                                       Brian Magowan
                                       Chairman of the Board of Directors
                                       and Chief Executive Officer

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

Signatures                Title                                  Date
----------                -----                                  ----

/s/Brian Magowan
-------------------       Chairman of the Board of Directors     March 31, 1999
Brian Magowan             and Chief Executive Officer
                          (Principal Executive Officer)

/s/John R. Nobel
-------------------       Chief Financial Officer                March 31, 1999
John R. Nobel             (Principal Financial Officer)


/s/Earl Gallegos
-------------------       Director                               March 31, 1999
Earl Gallegos


/s/Ian J. Meredith
-------------------       Director                               March 31, 1999
Ian J. Meredith


-------------------       Director                               March   , 1999
James R. Stallard


-------------------       Director                               March   , 1999
Mark D. Johnston


/s/Steve Hough
-------------------       Director                               March 31, 1999
Steve Hough


<PAGE>



                                  EXHIBIT INDEX


10(dd)(i)   Employment Agreement, dated as of March 1, 1999, by and between the
            Registrant and Peter C. Lynch.

10(dd)(ii)  Employment Agreement, dated February 19, 1999, by and between the
            Registrant and John R. Nobel.

23A         Consent of Ernst & Young LLP.

23B         Consent of Moore Stephens, P.C.

27          Financial Data Schedule.