| Delaware(State      or other jurisdiction of incorporation or organization) | 94-2790442(I.R.S.      Employer Identification No.) |
|-----------------------------------------------------------------------------|-----------------------------------------------------|

| 275 Shoreline Drive, Suite 500 Redwood Shores,      California(Address      of principal executive offices) |   | 94065(Zip      Code) |
|-------------------------------------------------------------------------------------------------------------|--------|----------------------|

|                                                                                                              | Page   |
|-------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                              |   |
| PART      I                                                                                                       | 3      |
| Item      1. Business                                                                                             | 3      |
| Item      1A. Risk Factors                                                                                        | 8      |
| Item      1B.  Unresolved Staff Comments                                                                | 10     |
| Item      2. Properties                                                                                           | 10     |
| Item      3. Legal Proceedings                                                                                    | 10     |
| Item      4. Submission of Matters to a Vote of Security Holders                                                  | 10     |
| PART      II                                                                                                      | 10     |
| Item      5. Market For Registrant's Common Equity and Related Stockholder      Matters                           | 10     |
| Item      6. Selected Financial Data                                                                              | 12     |
| Item      7. Management's Discussion and Analysis of FinancialConditionand      Results of Operations             | 12     |
| Item      7A. Quantitative and Qualitative Disclosures About Market    Risk                                       | 25     |
| Item      8. Consolidated Financial Statements and SupplementaryData                                              | 26     |
| Item      9. Changes in and Disagreements with Accountants onAccountingand      Financial Disclosures             | 26     |
| Item      9A. Controls and Procedures                                                                             | 26     |
| Item      9B.  Other Information                                                                        | 27     |
| PART      III                                                                                                     | 28     |
| Item      10. Directors and Executive Officers of the Registrant                                                  | 28     |
| Item      11. Executive Compensation                                                                              | 30     |
| Item      12. Security Ownership of Certain Beneficial Owners and Management and      Related Stockholder Matters | 38     |
| Item      13. Certain Relationships and Related Transactions                                                      | 40     |
| Item      14. Principal Accountant Fees and Services                                                              | 41     |
| PART      IV                                                                                                      | 43     |
| Item      15. Exhibits, Financial Statement Schedules, and Reports on Form      8-K                               | 43     |

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|   | SignatureOne | SignatureOne      Profile Server is the server compliment to CIC's Sign-it software, which      enables the real-time capture of electronic and digital signatures in      various application environments. All user enrollment, authentication and      transaction tracking in SignatureOne are based on data from the Sign-it      client software.  |   |
|--------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   | iSign        | A      suite of application development tools for electronic signatures,      biometric signature verification and cryptography for custom developed      applications and web based development.                                                                                                                                                        |   |
|   | Sign-it      | Multi-modal      electronic signature software for common applications including; Microsoft      Word, Adobe Acrobat, AutoDesk AutoCAD, web based applications using HTML,      XML, & XHTML, and custom applications for .NET, C# and similar      development environments for the enterprise market.                                              |   |
|   | Jot          | Multi-lingual      handwriting recognition software.                                                                                                                                                                                                                                                                                                          |   |

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| SignatureOne™      Sign-it® v6.2 for Acrobat®          |
|------------------------------------------------------------------------|
| SignatureOne™      Sign-it® v6.2 for Acrobat® (Viewer) |
| SignatureOne™      Sign-it® v6.04 for Word                  |
| SignatureOne™      Sign-it® Tools v3.03 for Word            |
| SignatureOne™      Sign-it® v3.1.0.1 for AutoCAD®      |
| SignatureOne™      Sign-it® v3.1.0.2 for AutoCAD®      |
| SignatureOne™      Sign-it® v4.0 for AutoCAD®          |
| SignatureOne™      Sign-it® Tools v 4.0 for AutoCAD®   |
| iSign®      v4.3                                                  |
| SignatureOne™      Sign-it® XF v1.2                         |
| SignatureOne™      Sign-it® XF v1.3                         |
| SignatureOne™      Profile Server v2.01. SQL (WebSphere)         |
| SignatureOne™      Sign-it® XF Runtime License              |

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|   | Patent      No. | Expiration |   |
|--------|-----------------|------------|--------|
|   | 5049862         | 2008       |   |
|   | 5544255         | 2013       |   |
|   | 5647017         | 2014       |   |
|   | 5818955         | 2015       |   |
|   | 5933514         | 2016       |   |
|   | 6064751         | 2017       |   |
|   | 6091835         | 2017       |   |
|   | 6212295         | 2018       |   |
|   | 6381344         | 2019       |   |
|   | 6487310         | 2019       |   |

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| Item      5. | Market for Registrant's Common      Equity and Related StockholderMatters |
|--------------|---------------------------------------------------------------------------|

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Sale      PricePer Share |   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
| Year   | Period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | High                     |   |   | Low |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                     |   |   |   |   |
| 2006   | First      Quarter                                                                                                |   | $                        | 0.53   |   |   | $ | 0.40 |   |
|   | Second      Quarter                                                                                               |   | $                        | 0.50   |   |   | $ | 0.39 |   |
|   | Third      Quarter                                                                                                |   | $                        | 0.41   |   |   | $ | 0.24 |   |
|   | Fourth      Quarter                                                                                               |   | $                        | 0.30   |   |   | $ | 0.18 |   |
| 2007   | First    Quarter                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                        | 0.32   |   |   | $ | 0.20 |   |
|   | Second      Quarter                                                                                               |   | $                        | 0.27   |   |   | $ | 0.13 |   |
|   | Third      Quarter                                                                                                |   | $                        | 0.28   |   |   | $ | 0.15 |   |
|   | Fourth      Quarter                                                                                               |   | $                        | 0.42   |   |   | $ | 0.20 |   |

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| Total      Return to Shareholders                |   |
|--------------------------------------------------|--------|
| (Includes      reinvestment of dividends)        |   |
|                                             |   |   |   |   |   |   |
|                                             |   |   |   |   |   |   |
|                                             |   | ANNUAL      RETURN PERCENTAGE |
|                                             |   | Years      Ending |
|                                             |   |   |   |   |   |   |
| Company      / Index                             |        | 2003 | 2004 | 2005 | 2006 | 2007 |
| Communication      Intelligence Corporation      |   | 5.71 | 60.81 | -27.73 | -52.33 | 9.76 |
| Nasdaq      U.S. & Foreign Index             |   | 50.36 | 8.41 | 2.20 | 10.27 | 9.92 |
| Nasdaq      Computer & Data Processing Index |   | 28.15 | 12.45 | 7.52 | 12.73 | 20.69 |
|                                             |   |   |   |   |   |   |
|                                             |   |   |   |   |   |   |
|                                             |   | INDEXED      RETURNS |
|                                             | Base   | Years      Ending |
|                                             | Period |   |   |   |   |   |
| Company      / Index                             | 2002   | 2003 | 2004 | 2005 | 2006 | 2007 |
| Communication      Intelligence Corporation      | 100    | 105.71 | 170.00 | 122.86 | 58.57 | 64.29 |
| Nasdaq      U.S. & Foreign Index             | 100    | 150.36 | 163.00 | 166.58 | 183.68 | 201.91 |
| Nasdaq      Computer & Data Processing Index | 100    | 128.15 | 144.10 | 154.94 | 174.66 | 210.79 |

----

|                                           |   | Years      Ended December 31,                 |   |
|------------------------------------------------|--------|-----------------------------------------------|--------|
|                                           |   | 2007                                          |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                           |   | (In      thousands, except per share amounts) |   |
| Statement      of Operations Data:             |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                       |   | $                                             | 2,145  |   |   | $ | 2,342 |   |   | $ | 3,121 |   |   | $ | 7,284 |   |   | $ | 3,034 |   |
| Research      and development expenses(1)      |   |                                          | 476    |   |   |   | 817 |   |   |   | 1,144 |   |   |   | 1,187 |   |   |   | 1,302 |   |
| Sales      and marketing expenses              |   |                                          | 1,276  |   |   |   | 1,658 |   |   |   | 1,240 |   |   |   | 1,306 |   |   |   | 905 |   |
| General      and administrative expenses       |   |                                          | 2,061  |   |   |   | 2,174 |   |   |   | 2,173 |   |   |   | 2,483 |   |   |   | 2,219 |   |
| Income      (loss) from operations             |   |                                          | (2,193 | ) |   |   | (2,557 | ) |   |   | (1,584 | ) |   |   | 2,255 |   |   |   | (2,157 | ) |
| Net      income (loss)                         |   | $                                             | (3,399 | ) |   | $ | (3,286 | ) |   | $ | (4,031 | ) |   | $ | 1,620 |   |   | $ | (2,345 | ) |
| Basic      and diluted income (loss) per share |   | $                                             | (0.03  | ) |   | $ | (0.03 | ) |   | $ | (0.04 | ) |   | $ | 0.02 |   |   | $ | (0.02 | ) |

|                                            |   |   |   |   | As      of December 31, |   |   |   |   |
|-------------------------------------------------|--------|--------|--------|--------|-------------------------|--------|--------|--------|--------|
|                                            |   | 2007   |   |   | 2006                    |   |   | 2005   |   |   | 2004 |   |   | 2003 |   |
|                                            |   |   |   |   | (In      thousands)     |   |   |   |   |
| Balance      Sheet Data:                        |   |   |   |   |                    |   |   |   |   |   |   |   |   |   |   |
| Cash,      cash equivalents and restricted cash |   | $      | 1,144  |   |                    | $      | 727    |   |   | $ | 2,849 |   |   | $ | 4,736 |   |   | $ | 1,039 |   |
| Working      capital(2)                         |   |   | (867   | )      |                    |   | (816   | )      |   |   | 2,258 |   |   |   | 4,068 |   |   |   | (2,895 | ) |
| Total      assets                               |   |   | 6,475  |   |                    |   | 6,126  |   |   |   | 8,466 |   |   |   | 10,819 |   |   |   | 7,215 |   |
| Deferred      revenue                           |   |   | 431    |   |                    |   | 404    |   |   |   | 557 |   |   |   | 458 |   |   |   | 165 |   |
| Long-term      obligations (3)                  |   |   | 96     |   |                    |   | 334    |   |   |   | 1,169 |   |   |   | 1,790 |   |   |   | 13 |   |
| Stockholders'      equity (4)                   |   |   | 3,781  |   |                    |   | 3,584  |   |   |   | 5,856 |   |   |   | 7,531 |   |   |   | 2,187 |   |

| (1)   | Excludes      software development costs capitalized in accordance with Statement of      Financial Accounting Standards No. 86 of $788 at December 31, 2007, $510      at December 31, 2006, $299 at December 31, 2005, and $32 at December 31,      2004, respectively. No software development costs were capitalized in the      year ended December 31, 2003. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Current      liabilities used to calculate working capital at December 31, 2007, 2006,      2005, 2004, and 2003 include deferred revenue of $431, $404, $557, $458,      and $165, respectively. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Long-term      debt is net of the unamortized fair value assigned to warrants of $21 at      December 31, 2007 and $266 for related-party debt at December 31,      2006.  Long-term debt is net of the unamortized debt discount      related to convertible debt of $674, and $2,410 at December 31, 2005 and      2004. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | The      Company has never paid dividends to the holders of its common      stock. |
|-----------------|------------------------------------------------------------------------------------|

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| ·   | whether      there are legal, regulatory or contractual provisions known to the Company      that limit the useful life of any patent to less than the assigned useful      life; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | whether      the Company needs to incur material costs or make modifications in order      for it to continue to be able to realize the protection afforded by the      patents; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | whether      any effects of obsolescence or significant competitive pressure on the      Company’s current or future products are expected to reduce the      anticipated cash flow from the products covered by the      patents; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | whether      demand for products utilizing the patented technology will diminish,      remain stable or increase; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| ·   | whether      the current markets for the products based on the patented technology will      remain constant or will change over the useful lives assigned to the      patents. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                    |   | Payments      due by period |   |
|-----------------------------------------|--------|-----------------------------|--------|
| Contractual      obligations            |   | Total                       |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |   | 2011 |   |   | 2012 |   |   | Thereafter |   |
| Short-term      debt related party (1)  |   | $                           | 1,720  |   |   | $ | 1,720 |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |
| Long-term      debt (2)                 |   |                        | 117    |   |   |   | – |   |   |   | 117 |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |
| Operating      lease commitments (3)    |   |                        | 1,056  |   |   |   | 264 |   |   |   | 272 |   |   |   | 280 |   |   |   | 240 |   |   |   | – |   |   |   | – |   |
| Total      contractual cash obligations |   | $                           | 2,893  |   |   | $ | 1,984 |   |   | $ | 389 |   |   | $ | 280 |   |   | $ | 240 |   |   | $ | – |   |   | $ | – |   |

| 1.   | Short-term      debt reported on the balance sheet is net of approximately $350 in      discounts representing the fair value of warrants issued in connection      with the Company’s debt financings. Short-term debt includes $1,170 due to      a related party. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 2.   | Long-term      debt reported on the balance sheet is net of approximately $21 in      discounts representing the fair value of warrants issued to the      investors. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | The      operating lease commenced on November 1, 2002. The lease was renegotiated      in December 2005 and extended for an additional 60 months. The base rent      will increase approximately 3% per annum over the term of the lease, which      expires on October 31, 2011. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item 7A. Quantitative and QualitativeDisclosures About Market Risk

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| Name                                     | Age    | Year      First Electedor Appointed |
|------------------------------------------|--------|-------------------------------------|
|                                     |   |                                |
| Guido      D. DiGregorio                 | 69     | 1997                                |
| Garry      Meyer (5)                     | 58     | 2007                                |
| Louis      P. Panetta (1), (2), (3), (4) | 58     | 2000                                |
| Chien-Bor      Sung (1), (2), (3), (4)   | 82     | 1986                                |
| David      E. Welch (1), (4)             | 61     | 2004                                |

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| Name                     | Age    | Positions Currently Held                                                |
|--------------------------|--------|-------------------------------------------------------------------------|
|                     |   |                                                                    |
| Guido      D. DiGregorio | 69     | Chairman      of the Board,Chief      Executive Officer and President   |
| Francis      V. Dane     | 56     | Chief      Legal Officer,Secretary      and Chief Financial Officer     |
| Russel      L. Davis     | 43     | Chief      Technology Officer & Vice President, Product Development |

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| Name      andPrincipalPosition                | Year                                                                                                                                     | Salary($)                                                                                                                                                                                                                                      | Bonus($)                                                 | StockAwards($)                                                                                                                                                               | OptionAwards($)      (2)     | Non-EquityIncentive      PlanCompensation($) | Change      inPension      ValueAndNonqualifiedDeferred      CompensationEarnings($)                                        | All      OtherCompensation($)                                                                                                                                                                                                                                                                                                                                                                                                | Total($)                                                                                                                                             |
|-----------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------|----------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
| Guido      DiGregorioPresident      & CEO |           2007          2006          2005          2004 |              200,000(1)             285,000(1)             322,875(1)             250,334(1)  |   −  −  −  − |            −           −           −           − | −−502,732− | −−−−                 | −−−−                                                                                                |                 9,486                9,072                8,885                9,037                                                                                                                                 |           209,486          294,072          834,492          259,371 |
| Frank      DaneCLO      & CFO             |           2007          2006          2005          2004 |              160,000             160,000             146,643             138,125              |   −  −  −  − |            −           −           −           − | 1,8757,40064,60413,295       | −−−−                 | −             −−−                                                |                      −                     −                     −                     − |           161,875          167,400          211,247          151,420 |
| Russel      DavisCTO                          |           2007          2006          2005(3)                                |              165,000             165,000               48,303                                                               |   −  −  −               |            −           −           −                                            | −−225,425        | −−−                        |  −                     −− |                      −                     −                     −                                                                                                        |           165,000          165,000          273,728                                      |

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|   | Name      andPrincipalPosition                      | Number      ofSecuritiesUnderlyingUnexercisedOptions(#)Exercisable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Number      ofSecuritiesUnderlyingUnexercisedOptions(#)Unexercisable                                                                                                                                                                                                                                         | OptionExercisePrice      ($) (4)                                                                                                                                                                                                                                                                                                                                                                  | OptionExpirationDate      (5)                                                                |
|--------|-----------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------|
|   | Guido      DiGregorio, President      & CEO (1) |                        250,000                       425,000                    1,275,000                                                                                                                                                                                                                                    |               −              −              −                                                                                                                      |                  $0.79                 $0.39                 $0.75                                                                                                                                                           |           2009          2012          2012 |
|   | Frank      Dane, CLO & CFO      (2)             |                       100,000                      100,000                      100,000                        35,985                      107,958 |               −              −              −              −              − |                  $0.79                 $0.33                 $0.55                 $0.39                 $0.75 | 20092010201120122012                                                                         |
|   | Russel      Davis, CIO      (3)                     |                       125,000                      375,000                                                                                                                                                                                                                                                                                                                                                   |               −              −                                                                                                                                                                                   |                  $0.57                 $0.75                                                                                                                                                                                                                                        | 20122012                                                                                     |

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| Name                      |   | Fees      EarnedOr      Paid inCash($) |   |   | StockAwards($) |   |    | OptionAwards($) |   |   | Non-EquityIncentivePlanCompensation($) |   |   | Change      in PensionValue      andNonqualified      DeferredCompensationEarnings($) |    |   | All      OtherCompensation($) |   |    | Total($) |   |
|---------------------------|--------|----------------------------------------|--------|--------|----------------|--------|---------|-----------------|--------|--------|----------------------------------------|--------|--------|---------------------------------------------------------------------------------------|---------|--------|-------------------------------|--------|---------|----------|--------|
| Garry      Meyer (1)      |   | $                                      | 1,000  |   |           | $      | − |            |   | $      | 8,170                                  |   |   | $                                                                                     | − |   |                          | $      | − |     |   | $ | − |   |   | $ | 9,170 |   |
| Louis      P. Panetta (2) |   | $                                      | 3,000  |   |           | $      | − |            |   | $      | 10,173                                 |   |   | $                                                                                     | − |   |                          | $      | − |     |   | $ | − |   |   | $ | 13,173 |   |
| C.      B. Sung (3)       |   | $                                      | 3,000  |   |           | $      | − |            |   | $      | 2,898                                  |   |   | $                                                                                     | − |   |                          | $      | − |     |   | $ | − |   |   | $ | 5,898 |   |
| David      E. Welch (4)   |   | $                                      | 3,000  |   |           | $      | − |            |   | $      | 2,898                                  |   |   | $                                                                                     | − |   |                          | $      | − |     |   | $ | − |   |   | $ | 5,898 |   |

|   |                                                                                                                               |
|--------|------------------------------------------------------------------------------------------------------------------------------------|
|   | 1.        Mr. Meyer holds options to acquire 50,000 shares of stock at December 31,      2007, all of which were vested. |

|   | 2.        Mr. Panetta holds options to acquire 253,125 shares of stock at December      31, 2007, all of which were vested. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.        Mr. Sung holds options to acquire 226,190 shares of stock at December 31,      2007, all of which were vested. |
|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.        Mr. Welch holds options to acquire 125,000 shares of stock at December 31,      2006, all of which were vested. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Common      Stock                                                      |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------|
|   | Name of Beneficial Owner                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Numberof Shares**                                                      | Percentof Class** |
|   | Guido      DiGregorio (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |     2,093,900                                      |     1.62% |
|   | C.      B. Sung (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |     1,860,610                                      |     1.44% |
|   | Louis      P. Panetta      (3)                                                                            |             253,125                      |       * |
|   | David      E. Welch, (4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |             150,000                      |       * |
|   | Garry      Meyer (5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |               50,000           |       * |
|   | Francis      V. Dane (6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |             444,155                      |       * |
|   | Russel      L. Davis (7)                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |             500,000                      |       * |
|   | All      directors and executive officers as a group (6 persons)                                                                                                                                                                                                                                                                                                                                                                                                                                 |     5,351,790                                      |     4.15% |
|   | 5%      Shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                   |   |
|   | Phoenix      Venture Fund LLC (8)                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                21,500,000 |       16.66% |
|   | Michael      W. Engmann (9)                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |     7,178,098                                      |     5.56% |

| (1)   | Represents      (a) 143,900 shares held by Mr. DiGregorio and (b) 1,950,000 shares,      issuable upon the exercise of stock options exercisable within 60 days      hereof. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Includes      (a) 1,631,051 shares held by the Sung Family Trust, of which Mr. Sung      is a trustee, (b) 3,369 shares held by the Sung-Kwok Foundation, of which      Mr. Sung is the Chairman, and (c) 226,190 shares of common stock issuable      upon the exercise of stock options, exercisable within 60 days      hereof.  Mr. Sung may be deemed to beneficially own the shares      held by the Sung Family Trust and the Sung-Kwok Foundation. The business      address of Mr. Sung is, UNISON Group, 1001 Bayhill Dr., 2nd      Floor, San Bruno, California 94066.  See “Certain Relationships      and Related Transactions.” |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Represents      253,125 shares issuable upon the exercise of options exercisable within 60      days hereof.  Mr. Panetta’s business address is 827 Via Mirada,      Monterey, California 93940.  See “Certain Relationships and      Related Transactions.” |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | Represents      150,000 shares issuable upon the exercise of stock options exercisable      within 60 days hereof.  The business address of Mr. Welch is      1729 East Otero Avenue, Littleton, CO 80122.  See “Certain      Relationships and RelatedTransactions.” |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (5)   | Represents      50,000 shares issuable upon the exercise of stock options exercisable      within 60 days hereof. The business address of Mr. Meyer is 4 Nersesian      Way, Hampton, NH 03842. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6)   | Represents      (a) 212 shares held by Mr. Dane and (b) 443,943 shares issuable upon the      exercise of stock options exercisable within 60 days    hereof. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7)   | Represents      500,000 shares issuable upon the exercise of stock options within 60 days      hereof. |
|-----------------|--------------------------------------------------------------------------------------------------------|

| (8)   | SG      Phoenix Ventures LLC is the Managing Member of Phoenix Venture Fund LLC      (the “Phoenix Fund”), with the power to vote and dispose of the shares of      common stock held by the Phoenix Fund. Accordingly, SG Phoenix Ventures      LLC may be deemed to be the beneficial owner of such shares. Andrea Goren      is the co-manager of SG Phoenix Ventures LLC, has the shared power to vote      and dispose of the shares of common stock held by the Phoenix Fund and, as      such, may be deemed to be the beneficial owner of the common shares owned      by the Phoenix Fund. Philip Sassower is the co-manager of SG Phoenix      Ventures LLC, has the shared power to vote and dispose of the shares of      common stock held by the Phoenix Fund and, as such, may be deemed to be      the beneficial owner of the common shares owned by the Phoenix Fund. SG      Phoenix Ventures LLC, Mr. Goren and Mr. Sassower each disclaim beneficial      ownership of the shares owned by the Phoenix Fund, except to the extent of      their respective pecuniary interests therein. The address of such      stockholder is 110 East 59th Street, Suite 1901, New York, NY      10022. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9)   | Represents      (a) 17,750 shares held by Mr. Engmann and (b) 7,160,348 warrants      beneficially owned by Mr. Engmann, of which 1,187,962 are held by      MDNH      Partners, L.P. and 1,659,200 are held by KENDU Partners Company of which      Mr. Engmann is a partner. Mr. Engmann was issued warrants to      purchase 2,333,250 shares of the Company’s common stock at $0.51 per      share, and      warrants to purchase 1,979,936 shares of the Company’s common stock      at $0.25 per share. MDNH Partners, L.P.      was issued warrants to purchase 1,659,200      shares of the Company’s common stock at $0.51 per share, and MDNH Partners, L.P.      was issued warrants to purchase 1,187962      shares of the Company’s common stock at $0.25 per share. Such      warrants were issued in connection with a notes issued in 2006 and 2007      (See note 5 to the Consolidated Financial  Statements). |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                  | Number      of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants      and Rights | Weighted-Average      Exercise Price Of Outstanding Options, Warrants and Rights | Number      of Securities Remaining Available For Future Issuance Under Equity      Compensation Plans |
|-----------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|
| Equity      Compensation Plans Approved by Security Holders           |                                                                                                  |                                                                             |                                                                                                   |
|  1999      Stock Option Plan                                     |     3,747                                                                         | $        0.55                            | 72                                                                                                     |
|  Equity      Compensation Plans Not Approved by Security Holders |       2,289                                                             |   $        0.63                |   72                                                                                         |
|                                                                  |                                                                                                  |                                                                             |                                                                                                   |
| Total:                                                                |     6,036                                                                         | $        0.59                            | 72                                                                                                     |
|                                                                  |                                                                                                  |                                                                             |                                                                                                   |

----

----

----

|   |                                                                                                                           | Page   |
|--------|--------------------------------------------------------------------------------------------------------------------------------|--------|
| (a)(1) | Financial      Statements                                                                                                      |   |
|   | Report      of GHP Horwath, P.C., Independent Registered Public Accounting      Firm                                           | F-1    |
|   | Report      of Stonefield Josephson, Inc., Independent Registered Public Accounting      Firm                                  | F-2    |
|   | Consolidated      Balance Sheets at December 31, 2007 and 2006                                                            | F-3    |
|   | Consolidated      Statements of Operations for the years ended December 31, 2007, 2006,      and 2005                     | F-4    |
|   | Consolidated      Statements of Changes in Stockholders' Equity for the years ended      December 31, 2007, 2006 and 2005 | F-5    |
|   | Consolidated      Statements of Cash Flows for the years ended December 31, 2007, 2006      and 2005                      | F-6    |
|   | Notes      to Consolidated Financial Statements                                                                                | F-8    |
| (a)(2) | Financial      Statement Schedule                                                                                              |   |
|   | Schedule      II Valuation and Qualifying Accounts and Reserves                                                                | S-1    |

| 1.   | None |
|----------------|------|

| ExhibitNumber | Document                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 2.0           | Second      Amended Plan of Reorganization of the Company, incorporated herein by      reference to the Company's Form 8-K filed October 24,      1994.                                                                                                                                                                                                                                                                                                    |
| 2.1           | Orderly      Liquidation Valuation, Exhibit F to the Second Amended Plan of      Reorganization, incorporated herein by reference to the Company's      Form 8-K filed October 19, 1994.                                                                                                                                                                                                                                                                   |
| 2.2           | Order      Confirming Plan of Reorganization, incorporated herein by reference to the      Company's Form 8-K filed November 14, 1994.                                                                                                                                                                                                                                                                                                                     |
| 3.1           | Certificate      of Incorporation of the Company, as amended, incorporated herein by      reference to Exhibits 3.1, 3.2, 3.3 and 3.4 to the Company's Registration      Statement on Form 10 (File No. 0-19301).                                                                                                                                                                                                                                     |
| 3.2           | Certificate      of Amendment to the Company's Certificate of Incorporation (authorizing      the reclassification of the Class A Common Stock and Class B      Common Stock into one class of Common Stock) as filed with the Delaware      Secretary of State's office on November 1, 1991, incorporated herein      by reference to Exhibit 3 to Amendment 1 on Form 8 to the      Company's Form 8-A (File No. 0-19301). |
| 3.3           | Certificate      of Amendment to the Company’s Amended and Restated Certificate of      Incorporation dated June 12, 1998, incorporated herein by reference to      Exhibit 10.24 to the Company’s 1998 Form 10-K, filed April 6, 1999 (File      No. 0-19301).                                                                                                                                                                                          |
| 3.4           | By-laws      of the Company adopted on October 6, 1986, incorporated herein by      reference to Exhibit 3.5 to the Company's Registration Statement on      Form 10 (File No. 0-19301).                                                                                                                                                                                                                                                         |
| 3.5           | Certificate      of Amendment to the Company’s Amended and Restated Certificate of      Incorporation dated January 24, 2001, incorporated herein by reference to      Exhibit 3.5 to the Company’s Registration Statement on Form S/1, filed      December 28, 2007.                                                                                                                                                                                    |
| 3.6           | Certificate      of Elimination of the Company’s Certificate of Designation of the Series A      Preferred Stock dated August 17, 2001, incorporated herein by reference to      Exhibit 3.6 to the Company’s Registration Statement on Form S/1, filed      December 28, 2007.                                                                                                                                                                          |

----

| ExhibitNumber | Document                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.7           | Certificate      of Amendment to the Company’s Amended and Restated Certificate of      Incorporation dated August 17, 2007, incorporated herein by reference to      Exhibit 3.7 to the Company’s Registration Statement on Form S/1, filed      December 28, 2007.                                                                                                                                                                       |
| 4.1           | 1984      Stock Option Plan of the Company, as amended and restated as of      October 15, 1987 and as amended by resolutions of the stockholders of      the Company passed on August 15, 1989 and October 8, 1990 to      increase the aggregate shares covered thereby to 1,000,000, incorporated      herein by reference to Exhibit 4.4 to the Company's Registration      Statement on Form 10 (File No. 0-19301). |
| 4.2           | Form      of Stock Option Grant under 1984 Stock Option Plan, incorporated herein by      reference to Exhibit 4.5 to the Company's Registration Statement on      Form 10 (File No. 0-19301).                                                                                                                                                                                                                                     |
| 4.3           | 1991      Stock Option Plan of the Company, incorporated herein by reference to      Exhibit 4.5 of the Company's Form S-1 dated December 23,      1991 (Registration No. 33-43879).                                                                                                                                                                                                                                               |
| 4.4           | 1991      Non-Discretionary Stock Option Plan, incorporated herein by reference to      Exhibit 4.6 of the Company's Form S-1 dated December 23,      1991 (Registration No. 33-43879).                                                                                                                                                                                                                                            |
| 4.5           | Form      of Incentive Stock Option Grant under 1991 Stock Option Plan, incorporated      herein by reference to Exhibit 4.7 of the Company's Form S-1      dated December 23, 1991 (Registration    No. 33-43879).                                                                                                                                                                                                                |
| 4.6           | Form      of Non-Qualified Stock Option Grant under 1991 Stock Option Plan,      incorporated herein by reference to Exhibit 4.8 of the Company's      Form S-1 dated December 23, 1991 (Registration      No. 33-43879).                                                                                                                                                                                                          |
| 4.7           | Form      of Stock Option Grant under 1991 Non-Discretionary Stock Option Plan,      incorporated herein by reference to Exhibit 4.9 of the Company's      Form S-1 dated December 23, 1991 (Registration      No. 33-43879).                                                                                                                                                                                                      |
| 4.8           | 1994      Stock Option Plan, incorporated herein by reference to Exhibit G of the      Company's Second Amended Disclosure Statement filed on Form 8-K dated      October 19, 1994 and approved by shareholders on November 14,      1994.                                                                                                                                                                                              |
| 4.9           | Form      of Warrant of the Company dated March 28, 1997 issued in connection      with the Waiver by and among the Company and the signatories thereto,      incorporated herein by reference to Exhibit 4.9 of the Company's 1996      Form 10-K (File No. 0-19301).                                                                                                                                                             |
| 4.10          | 1999      Stock Option Plan, incorporated herein by reference to Exhibit A of the      Company's Definitive Proxy Statement filed on May 4, 1999 and approved by      shareholders on June 7, 1999. .                                                                                                                                                                                                                                                  |
| 4.11          | Form      of Convertible Promissory Note issued by Communication Intelligence      Corporation, incorporated herein by reference to Exhibit 10.3 to the      Company's Form 8-K dated November 3, 2004.                                                                                                                                                                                                                                           |
| 4.12          | Form      of Warrant issued by Communication intelligence Corporation, incorporated      herein by reference to Exhibit 10.4 to the Company's Form 8-K dated      November 3, 2004.                                                                                                                                                                                                                                                               |
| 4.13          | Form      of Promissory Note issued by Communication Intelligence Corporation,      incorporated herein by reference to Exhibit 10.36 to the Company's Form      8-K dated August 12, 2006.                                                                                                                                                                                                                                                            |
| 4.14          | Form      of Warrant issued by Communication intelligence Corporation, incorporated      herein by reference to Exhibit 10.37 to the Company's Form 8-K dated      August 12, 2006.                                                                                                                                                                                                                                                                    |
| 4.15          | Form      of Promissory Note issued by the Company, incorporated herein by reference      to Exhibit 10.36 to the Company’s Form 8-K, filed February 9,      2007.                                                                                                                                                                                                                                                                               |
| 4.16          | Form      of Warrant issued by the Company, incorporated herein by reference to      Exhibit 10.37 to the Company’s Form 8-K, filed February 9,      2007.                                                                                                                                                                                                                                                                                       |
| 4.17          | Form      of Promissory Note issued by the Company, incorporated herein by reference      to Exhibit 10.36 to the Company’s Form 8-K, filed June 20,      2007.                                                                                                                                                                                                                                                                                  |
| 4.18          | Form      of Warrant issued the Company, incorporated herein by reference to Exhibit      10.37 to the Company’s Form 8-K, filed June 20, 2007.                                                                                                                                                                                                                                                                                                  |
| †10.1   | Licensing      and Development Agreement for Use and Marketing of Program Materials dated      September 25, 1992 between the Company and International Business      Machines Corporation, incorporated herein by reference to      Exhibit 10.13 of the Company's 1992 Form 10-K      (File No. 0-19301)                                                                                                                    |

----

| ExhibitNumber       | Document                                                                                                                                                                                                                                                                                       |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.2                | Standby      Stock Purchase Agreement between the Company and Philip Sassower dated      October 3, 1994, incorporated herein by reference to      Exhibit 10.13 of the Company's 1994 Form 10-K (File      No. 0-19301)                                                   |
| 10.3                | Form      of Subscription Agreement between the Company and the Purchasers, dated      November 28, 1995, incorporated herein by reference to Exhibit 1      of the Company's Form 8-K dated November 28,    1995.                                                         |
| 10.4                | Form      of Registration Rights Agreement between the Company and the Purchasers,      dated November 28, 1995, incorporated herein by reference to      Exhibit 1 of the Company's Form 8-K dated November 28,      1995.                                                |
| 10.5                | Form      of Warrant of the Company issued to Libra Investments, Inc. on      November 28, 1995, incorporated herein by reference to Exhibit 1      of the Company's Form 8-K dated November 28,    1995.                                                                  |
| 10.6                | Form      of Registration Rights Agreement between the Company and Libra      Investments, Inc., dated November 28, 1995, incorporated herein by      reference to Exhibit 1 of the Company's Form 8-K dated      November 28, 1995.                                       |
| 10.7                | Form      of Subscription Agreement between the Company and various investors, dated      June 13, 1996, incorporated herein by reference to Exhibit 1 of      the Company's Form 8-K dated June 27, 1996.                                                                 |
| 10.8                | Form      of Registration Rights Agreement between the Company and various      investors, dated June 13, 1996, incorporated herein by reference to      Exhibit 2 of the Company's Form 8-K dated June 27,      1996.                                                     |
| 10.9                | Form      of Preferred Stock Investment Agreement, dated as of December 31,      1996, between the Company and the investors listed on Schedule 1      thereto, incorporated herein by reference to Exhibit 1 of the      Company's Form 8-K dated December 31, 1996. |
| 10.10               | Form      of Registration Rights Agreement between the Company and the Investors      Listed on Schedule 1 thereto, incorporated herein by reference to      Exhibit 2 of the Company's Form 8-K dated December 31,      1996.                                             |
| 10.11               | Form      of Certificate of Designation of the Company with respect to the 5%      Cumulative Convertible Preferred Stock, incorporated herein by reference      to Exhibit 3 of the Company's Form 8-K dated December 31,      1996.                                           |
| 10.12               | Waiver,      dated March 26, 1997, effective December 31, 1996, by and among      the Company and the signatories thereto, incorporated herein by reference      to Exhibit 10.19 of the Company's 1996 Form 10-K (File      No. 0-19301).                            |
| 10.13               | Form      of Subscription Agreement between the Company and each subscriber, dated      as of November 25, 1997, incorporated herein by reference to Exhibit      10.1 of the Company's Form 8-K dated December 3,  1997.                                                            |
| 10.14               | Certificate      of Designations of the Company with respect to the Series B 5% Cumulative      Convertible Preferred Stock, incorporated herein by reference to Exhibit      10.2 of the Company's Form 8-K dated November 13,    1997.                                                  |
| 10.15               | Form      of Registration Rights Agreement, by and among the Company and the      signatories thereto, dated as of November 25, 1997, incorporated      herein by reference to Exhibit 10.3 to the Company's Form 8-K dated      November 13, 1997.                                  |
| 10.16               | Amendment      to the Company’s Certificate of Designation with respect to the 5%      Cumulative Convertible Preferred Stock dated June 12, 1998, incorporated      herein by reference to Exhibit 10.23 of the Company's 1998      Form 10-K (File No. 0-19301).        |
| 10.17               | Amendment      to the Company’s Amended and Restated Certificate of Incorporation dated      June 12, 1998 incorporated herein by reference to Exhibit 10.24 of      the Company's 1998 Form 10-K (File  No. 0-19301).                                                    |
| 10.18               | Employment      Agreement dated August 14, 1998 between James Dao and the Company      incorporated herein by reference to Exhibit 10.25 of the Company's      1998 Form 10-K (File No. 0-19301).                                                                               |
| ††10.19 | Software      Development and License Agreement dated December 4, 1998 between Ericsson      Mobile Communications AB and the Company incorporated herein by reference      to Exhibit 10.26 of the Company's 1998 Form 10-K (File      No. 0-19301).                           |

----

| ExhibitNumber | Document                                                                                                                                                                                                                                                                            |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.20         | Loan      and Warrant Agreement dated October 20, 1999 between the Company and the      Philip S. Sassower 1996 Charitable Remainder Annuity  Trust.                                                                                                                                |
| 10.21         | Asset      Purchase Agreement between the Company and PenOp Ltd and PenOp Inc.      incorporated herein by reference to the Company’s Form 8-K dated October      6, 2000.                                                                                                    |
| 10.22         | Loan      Agreement dated June 19, 2001 between the Company and the Philip S.      Sassower 1996 Charitable Remainder Annuity Trust.                                                                                                                                                |
| 10.23         | Equity      Line of Credit Agreement between the Company and Cornell Capital Partners,      LP, incorporated by reference to the Company’s Registration Statement on      Form S-1 dated February 13, 2003 (File No. 333-103157)                                              |
| 10.24         | Form      of Note and Warrant Purchase Agreement dated October 28, 2004, among      Communication Intelligence Corporation and the Purchasers identified      therein, incorporated herein by reference to Exhibit 10.1 to the Company's      Form 8-K dated November 3, 2004. |
| 10.25         | Form      of Registration Rights Agreement dated October 28, 2004, among      Communication Intelligence Corporation and the parties identified there      in, incorporated herein by reference to Exhibit 10.2 to the Company's Form      8-K dated November 3, 2004.         |
| 10.26         | Form      of Note and Warrant Purchase Agreement dated August 10, 2006, among      Communication Intelligence Corporation and the Purchasers identified      therein, incorporated herein by reference to Exhibit 10.34 to the      Company's Form 8-K dated August 12, 2006.       |
| 10.27         | Form      of Registration Rights Agreement dated August 10, 2006, among      Communication Intelligence Corporation and the parties identified there      in, incorporated herein by reference to Exhibit 10.35 to the Company's      Form 8-K dated August 12, 2006.               |
| Xx      10.28 | Amendment      dated May 31, 2005 to the License agreement dated December 22, 2000      between the Company and eCom Asia Pacific, Ltd. filed as Exhibit 10.26 of      the Company’s Form 10-K/A (file no. 0-19301) filed with the Commission on      September 15, 2005.     |
| Xx      10.29 | License      agreement dated June 2, 2005 between the Company and SnapOn Credit LLC.      filed as Exhibit 10.27 of the Company’s Form 10-K/A (file no. 0-19301)      filed with the Commission on September 15, 2005.                                                        |
| 10.30         | Amendment      to employment agreement with Guido DiGregorio, incorporated herein by      reference to the Company's Form 8-K dated September 21,    2005.                                                                                                                          |
| 10.31         | Amendment      to employment agreement with Frank V. Dane, incorporated herein by      reference to the Company's Form 8-K dated September 21,    2005.                                                                                                                             |
| 10.32         | Form      of stock option agreement dated August 31, 2005 with Russel L. Davis -      incorporated by reference to Exhibit 10.30 of the Company’s Form 10-K/A      (file no. 0-19301) filed with the Commission on September 15,      2006.                                   |
| 10.33         | Form      of stock option agreement dated December 19, 2005 with Guido DiGregorio -      incorporated by reference to Exhibit 10.30 of the Company’s Form 10-K/A      (file no. 0-19301) filed with the Commission on September 15,      2006.                                |
| 10.34         | Form      of stock option agreement dated August 31, 2005 with Francis V. Dane -      incorporated by reference to Exhibit 10.30 of the Company’s Form 10-K/A      (file no. 0-19301) filed with the Commission on September 15,      2006.                                   |
| 10.35         | Form      of stock option agreement dated August 31, 2005 with C. B. Sung -      incorporated by reference to Exhibit 10.30 of the Company’s Form 10-K/A      (file no. 0-19301) filed with the Commission on September 15,      2006.                                        |
| 10.36         | Form      of Note and Warrant Purchase Agreement dated February 5, 2007, among      Communication Intelligence Corporation and the Purchasers identified      therein, incorporated herein by reference to Exhibit 10.34 to the      Company's Form 8-K dated February 5, 2007.     |
| 10.37         | Form      of Registration Rights Agreement dated February 5, 2007, among      Communication Intelligence Corporation and the parties identified there      in, incorporated herein by reference to Exhibit 10.35 to the Company's      Form 8-K dated February 5, 2007.             |
| 10.38         | Amendment      to the Note and Warrant Purchase Agreement dated February 5, 2007, among      Communication Intelligence Corporation and the parties identified there      in, incorporated herein by reference to Exhibit 99.1 to the Company's Form      8-K dated March 15, 2007. |

----

| ExhibitNumber               | Document                                                                                                                                                                                                                                                                               |
|-----------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.39                       | Form      of Note and Warrant Purchase Agreement dated June 15, 2007, among      Communication Intelligence Corporation and the Purchasers identified      therein, incorporated herein by reference to Exhibit 10.34 to the      Company's Form 8-K dated June 15, 2007.              |
| 10.40                       | Form      of Registration Rights Agreement dated June 15, 2007, among Communication      Intelligence Corporation and the parties identified there in, incorporated      herein by reference to Exhibit 10.35 to the Company's Form 8-K dated June      15, 2007.                      |
| 10.41                       | Form      of Securities Purchase and Registration Rights Agreement dated August 24,      2007, among Communication Intelligence Corporation and Phoenix Venture      Fund LLC, incorporated herein by reference to Exhibit 10.36 to the      Company's Form 8-K dated August 27, 2007. |
| †††*10.42 | Consulting      Agreement dated January 9, 2008 between the Company and GS Meyer &      Associates LLC                                                                                                                                                                             |
| 14.00                       | Code      of Ethics –Incorporated by reference to the registrant’s Annual Report on      Form 10-K (File No. 0-19301) filed with the Commission on March 30,      2004.                                                                                                    |
| *21.1                       | Schedule      of Subsidiaries.                                                                                                                                                                                                                                                         |
| *23.1                       | Consent      of GHP Horwath, P.C., Independent Registered Public Accounting      Firm.                                                                                                                                                                                                 |
|                        |                                                                                                                                                                                                                                                                                   |
| *23.2                       | Consent      of Stonefield Josephson, Inc, Independent Registered Public Accounting      Firm.                                                                                                                                                                                         |
| *31.1                       | Certification      of Company’s Chief Executive Officer pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002                                                                                                                                                           |
| *31.2                       | Certificate      of Company’s Chief Financial Officer pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002                                                                                                                                                             |
| *32.1                       | Certification      of Chief Executive Officer pursuant to 18 USC Section 1750, as adopted      pursuant to Section 906 of the Sarbanes-Oxley Act of  2002                                                                                                                              |
| *32.2                       | Certification      of Chief Financial Officer pursuant to 18 USC Section 1750, as adopted      pursuant to Section 906 of the Sarbanes-Oxley Act of  2002                                                                                                                              |

| † | Confidential      treatment of certain portions of this exhibit have been previously granted      pursuant to a request for confidentiality dated March 29, 1993, filed      pursuant to the Securities Exchange Act of 1934. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| * | Filed      herewith. |
|---|----------------------|

| †† | Confidential      treatment of certain portions of this exhibit have been requested from the      SEC pursuant to a request for confidentiality dated March 30, 1999, filed      pursuant to the Securities and Exchange Act of 1934. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ††† | Confidential      treatment of certain portions of this exhibit have been requested from the      SEC pursuant to a request for confidentiality dated March 10,2008, filed      pursuant to the Securities and Exchange Act of 1934. |
|-----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Xx | Confidential      treatment of certain portions of this exhibit have been requested from the      SEC pursuant to a request for confidentiality dated March 30, 2006 filed      pursuant to the Securities and Exchange Act of 1934. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Communication      Intelligence Corp. |
|--------|---------------------------------------|
|   | By:                                   | /s/ Francis V. DaneFrancis      V. Dane(Principal      Financial Officer and Officer Duly Authorized to Sign on Behalf of the      Registrant) |

| Signature                                             | Title                                                                                                             |
|-------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|
|                                                  |                                                                                                              |
|   /s/ Guido DiGregorioGuido      DiGregorio |   Chairman,      President and Chief Executive Officer(Principal      Executive Officer)                |
|   /s/ Francis V. DaneFrancis      V. Dane   |   Chief      Legal Officer and Chief Financial Officer(Principal      Financial and Accounting Officer) |
|   /s/ Garry MeyerGarry      Meyer           |    Director                                                                                        |
|   /s/ Louis P. PanettaLouis      P. Panetta |    Director                                                                                        |
|   /s/ Chien Bor SungChien      Bor Sung     |    Director                                                                                        |
|   /s/ David WelchDavid      Welch           |    Director                                                                                        |

----

----

----

|                                                                                                                                                                                                         |   | December      31, |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                                                                                                                                         |   | 2007              |    |   | 2006 |   |
| Assets                                                                                                                                                                                                       |   |              |    |   |   |   |
| Current      assets:                                                                                                                                                                                         |   |              |    |   |   |   |
| Cash and cash      equivalents                                                                                                                                                                               |   | $                 | 1,144   |   |   | $ | 727 |   |
| Accounts receivable, net of      allowances of $117 and $397 at December 31, 2007 and 2006,      respectively                                                                                                |   |              | 452     |   |   |   | 487 |   |
| Prepaid expenses and other      current assets                                                                                                                                                               |   |              | 135     |   |   |   | 105 |   |
|                                                                                                                                                                                                         |   |              |    |   |   |   |   |   |
| Total current      assets                                                                                                                                                                                    |   |              | 1,731   |   |   |   | 1,319 |   |
| Property      and equipment, net                                                                                                                                                                             |   |              | 77      |   |   |   | 140 |   |
| Patents                                                                                                                                                                                                      |   |              | 3,528   |   |   |   | 3,906 |   |
| Capitalized      software development costs                                                                                                                                                                  |   |              | 1,109   |   |   |   | 656 |   |
| Deferred      financing costs (Note 3)                                                                                                                                                                       |   |              | − |   |   |   | 75 |   |
| Other      assets                                                                                                                                                                                            |   |              | 30      |   |   |   | 30 |   |
|                                                                                                                                                                                                         |   |              |    |   |   |   |   |   |
| Total assets                                                                                                                                                                                                 |   | $                 | 6,475   |   |   | $ | 6,126 |   |
|                                                                                                                                                                                                         |   |              |    |   |   |   |   |   |
| Liabilities      and Stockholders' Equity                                                                                                                                                                    |   |              |    |   |   |   |   |   |
| Current      liabilities:                                                                                                                                                                                    |   |              |    |   |   |   |   |   |
| Convertible notes, net of      unamortized fair value assigned to beneficial conversion feature and      warrants of $228 at December 31, 2006 (Note 3)                                                      |   | $                 | − |   |   | $ | 1,154 |   |
| Short-term debt –net of      unamortized fair value assigned to warrants of $350 including related      party debt of $1,170, net of $247 of unamortized fair value assigned to      warrants (Note 4) |   |              | 1,370   |   |   |   | – |   |
| Accounts payable                                                                                                                                                                                             |   |              | 135     |   |   |   | 72 |   |
| Accrued    compensation                                                                                                                                                                                      |   |              | 364     |   |   |   | 236 |   |
| Other accrued      liabilities                                                                                                                                                                               |   |              | 298     |   |   |   | 269 |   |
| Deferred revenue                                                                                                                                                                                             |   |              | 431     |   |   |   | 404 |   |
|                                                                                                                                                                                                         |   |              |    |   |   |   |   |   |
| Total current      liabilities                                                                                                                                                                               |   |              | 2,598   |   |   |   | 2,135 |   |
| Long-term      debt –net of unamortized fair value assigned to warrants of $266,      including related party debt of $450, net of $199 of unamortized fair      value assigned to warrants (Note 4)   |   |              | − |   |   |   | 334 |   |
| Long-      term debt – other, net of unamortized fair value assigned to warrants of      $21 at December 31, 2007 (Note 3)                                                                             |   |              | 96      |   |   |   |   |   |
| Minority      interest                                                                                                                                                                                       |   |              | – |   |   |   | 73 |   |
| Commitments      and contingencies (Note 7)                                                                                                                                                                  |   |              |    |   |   |   |   |   |
| Stockholders'      equity:                                                                                                                                                                                   |   |              |    |   |   |   |   |   |
| Preferred stock, $.01 par value;      10,000 shares authorized; 0 outstanding at December 31, 2007 and 2006,      respectively                                                                               |   |              | – |   |   |   | – |   |
| Common stock, $.01 par value;      155,000 shares authorized; 129,057 and 107,557 shares issued and      outstanding at December 31, 2007 and 2006, respectively                                             |   |              | 1,291   |   |   |   | 1,076 |   |
| Additional paid-in      capital                                                                                                                                                                              |   |              | 93,785  |   |   |   | 90,497 |   |
| Accumulated    deficit                                                                                                                                                                                       |   |              | (91,260 | ) |   |   | (87,861 | ) |
| Accumulated other comprehensive      loss                                                                                                                                                                    |   |              | (35     | ) |   |   | (128 | ) |
|                                                                                                                                                                                                         |   |              |    |   |   |   |   |   |
| Total      stockholders' equity                                                                                                                                                                              |   |              | 3,781   |   |   |   | 3,584 |   |
|                                                                                                                                                                                                         |   |              |    |   |   |   |   |   |
| Total      liabilities and stockholders' equity                                                                                                                                                              |   | $                 | 6,475   |   |   | $ | 6,126 |   |
|                                                                                                                                                                                                         |   |              |    |   |   |   |   |   |

----

|                                                            |   | Years      ended December 31, |    |
|-----------------------------------------------------------------|--------|-------------------------------|---------|
|                                                            |   | 2007                          |    |   | 2006 |   |   | 2005 |   |
|                                                            |   |                          |    |   |   |   |   |   |   |
| Revenues:                                                       |   |                          |    |   |   |   |   |   |   |
| Product                                                         |   | $                             | 1,448   |   |   | $ | 1,427 |   |   | $ | 2,256 |   |
| Maintenance                                                     |   |                          | 697     |   |   |   | 915 |   |   |   | 865 |   |
|                                                            |   |                          | 2,145   |   |   |   | 2,342 |   |   |   | 3,121 |   |
| Operating      costs and expenses:                              |   |                          |    |   |   |   |   |   |   |   |   |   |
| Cost of sales:                                                  |   |                          |    |   |   |   |   |   |   |   |   |   |
| Product                                                         |   |                          | 367     |   |   |   | 101 |   |   |   | 109 |   |
| Maintenance                                                     |   |                          | 158     |   |   |   | 149 |   |   |   | 39 |   |
| Research and      development                                   |   |                          | 476     |   |   |   | 817 |   |   |   | 1,144 |   |
| Sales and      marketing                                        |   |                          | 1,276   |   |   |   | 1,658 |   |   |   | 1,240 |   |
| General and      administrative                                 |   |                          | 2,061   |   |   |   | 2,174 |   |   |   | 2,173 |   |
|                                                            |   |                          |    |   |   |   |   |   |   |   |   |   |
|                                                            |   |                          | 4,338   |   |   |   | 4,899 |   |   |   | 4,705 |   |
|                                                            |   |                          |    |   |   |   |   |   |   |   |   |   |
| Loss      from operations                                       |   |                          | (2,193  | ) |   |   | (2,557 | ) |   |   | (1,584 | ) |
|                                                            |   |                          |    |   |   |   |   |   |   |   |   |   |
| Interest      income and other income (expense), net            |   |                          | (26     | ) |   |   | 43 |   |   |   | 17 |   |
| Interest      expense:                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| Related      party (Note 4)                                     |   |                          | (135    | ) |   |   | (11 | ) |   |   | – |   |
| Other      (Note 3)                                             |   |                          | (149    | ) |   |   | (105 | ) |   |   | (208 | ) |
| Amortization      of loan discount and deferred financing cost: |   |                          |    |   |   |   |   |   |   |   |   |   |
| Related      party (Note 4)                                     |   |                          | (305    | ) |   |   | (70 | ) |   |   | – |   |
| Other      (Note 3)                                             |   |                          | (664    | ) |   |   | (591 | ) |   |   | (2,275 | ) |
| Minority      interest                                          |   |                          | 73      |   |   |   | 5 |   |   |   | 19 |   |
|                                                            |   |                          |    |   |   |   |   |   |   |   |   |   |
|                                                            |   |                          |    |   |   |   |   |   |   |   |   |   |
| Net      loss                                                   |   | $                             | (3,399  | ) |   | $ | (3,286 | ) |   | $ | (4,031 | ) |
|                                                            |   |                          |    |   |   |   |   |   |   |   |   |   |
| Basic      and diluted loss per share                           |   | $                             | (0.03   | ) |   | $ | (0.03 | ) |   | $ | (0.04 | ) |
|                                                            |   |                          |    |   |   |   |   |   |   |   |   |   |
| Basic      and diluted weighted average shares                  |   |                          | 113,960 |   |   |   | 107,374 |   |   |   | 104,189 |   |
|                                                            |   |                          |    |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                                                                                                                                      |   | Common      Shares |    |   | CommonStock |   |   | AdditionalPaid-InCapital |   |   | AccumulatedDeficit |   |   | AccumulatedOtherComprehensiveLoss |    |   | Total  |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|--------|-------------|--------|--------|--------------------------|--------|--------|--------------------|--------|--------|-----------------------------------|---------|--------|--------|--------|
| Balances      as of December 31, 2004                                                                                                                                                                                                                     |   |               | 101,412 |   |        | $      | 1,014  |                     |   | $      | 87,231             |   |   | $                                 | (80,544 | )      |   | $      | (170 | ) |   | $ | 7,531 |   |
| Shares      of Common Stock issued on conversion of long-term notes                                                                                                                                                                                       |   |               | 5,092   |   |        |   | 51     |                     |   |   | 2,271              |   |   |                              |    |   |   |   |   |   |   |   | 2,322 |   |
| Shares      issued for services                                                                                                                                                                                                                           |   |               | 24      |   |        |   |   |                     |   |   | 10                 |   |   |                              |    |   |   |   |   |   |   |   | 10 |   |
| Shares      issued on exercise of stock options                                                                                                                                                                                                           |   |               | 14      |   |        |   |   |                     |   |   | 5                  |   |   |                              |    |   |   |   |   |   |   |   | 5 |   |
| Comprehensive      (loss):Net      loss                                    |   |               |    |   |        |   |   |                     |   |   |               |   |   |                              | (4,031  | )      |   |   |   |   |   |   | (4,031 | ) |
| Foreign      currency translation adjustment                                                                                                                                                                                                              |   |               |    |   |        |   |   |                     |   |   |               |   |   |                              |    |   |   |   | 19 |   |   |   | 19 |   |
| Total      comprehensive loss                                                                                                                                                                                                                             |   |               |    |   |        |   |   |                     |   |   |               |   |   |                              |    |   |   |   |   |   |   |   | (4,012 | ) |
| Balances      as of December 31, 2005                                                                                                                                                                                                                     |   |               | 106,542 |   |        |   | 1,065  |                     |   |   | 89,517             |   |   |                              | (84,575 | )      |   |   | (151 | ) |   |   | 5,856 |   |
| Shares      of Common Stock issued on conversion of long-term notes                                                                                                                                                                                       |   |               | 996     |   |        |   | 11     |                     |   |   | 449                |   |   |                              |    |   |   |   |   |   |   |   | 460 |   |
| Shares      issued for services                                                                                                                                                                                                                           |   |               | 19      |   |        |   |   |                     |   |   | 6                  |   |   |                              |    |   |   |   |   |   |   |   | 6 |   |
| Stock      based employee compensation                                                                                                                                                                                                                    |   |               |    |   |        |   |   |                     |   |   | 189                |   |   |                              |    |   |   |   |   |   |   |   | 189 |   |
| Fair      value of warrants issued to the investors in connection with long –term      debt, related party                                                                                                                                          |   |               |    |   |        |   |   |                     |   |   | 336                |   |   |                              |    |   |   |   |   |   |   |   | 336 |   |
| Comprehensive      (loss):Net      loss                                    |   |               |    |   |        |   |   |                     |   |   |               |   |   |                              | (3,286  | )      |   |   |   |   |   |   | (3,286 | ) |
| Foreign      currency translation adjustment                                                                                                                                                                                                              |   |               |    |   |        |   |   |                     |   |   |               |   |   |                              |    |   |   |   | 23 |   |   |   | 23 |   |
| Total      comprehensive loss                                                                                                                                                                                                                             |   |               |    |   |        |   |   |                     |   |   |               |   |   |                              |    |   |   |   |   |   |   |   | (3,263 | ) |
| Balances      as of December 31, 2006                                                                                                                                                                                                                     |   |               | 107,557 |   |        |   | 1,076  |                     |   |   | 90,497             |   |   |                              | (87,861 | )      |   |   | (128 | ) |   |   | 3,584 |   |
| Fair      value of warrants issued  in connection with      short-term   debt                                                                                                                                                    |   |               |    |   |        |   |   |                     |   |   | 546                |   |   |                              |    |   |   |   |   |   |   |   | 546 |   |
| Fair      value of warrants issued in connection with long-term   debt                                                                                                                                                                     |   |               |    |   |        |   |   |                     |   |   | 23                 |   |   |                              |    |   |   |   |   |   |   |   | 23 |   |
| Stock      based employee compensation                                                                                                                                                                                                                    |   |               |    |   |        |   |   |                     |   |   | 130                |   |   |                              |    |   |   |   |   |   |   |   | 130 |   |
| Adjustment      to the fair value of beneficial conversion feature associated with the      convertible notes (Note 5)                                                                                                                                    |   |               |    |   |        |   |   |                     |   |   | 202                |   |   |                              |    |   |   |   |   |   |   |   | 202 |   |
| Sale      of common stock at approximately $0.14 per share net of related costs of      $398                                                                                                                                                              |   |               | 21,500  |   |        |   | 215    |                     |   |   | 2,387              |   |   |                              |    |   |   |   |   |   |   |   | 2,602 |   |
| Comprehensive      loss:                                                                                                                                                                                                                                  |   |               |    |   |        |   |   |                     |   |   |               |   |   |                              |    |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                                                                                                                                                                                             |   |               |    |   |        |   |   |                     |   |   |               |   |   |                              | (3,399  | )      |   |   |   |   |   |   | (3,399 | ) |
| Foreign      currency translation adjustment                                                                                                                                                                                                              |   |               |    |   |        |   |   |                     |   |   |               |   |   |                              |    |   |   |   | 93 |   |   |   | 93 |   |
| Total      comprehensive loss                                                                                                                                                                                                                             |   |               |    |   |        |   |   |                     |   |   |               |   |   |                              |    |   |   |   |   |   |   |   | (3,306 | ) |
| Balances      as of December 31, 2007                                                                                                                                                                                                                     |   |               | 129,057 |   |        | $      | 1,291  |                     |   | $      | 93,785             |   |   | $                                 | (91,260 | )      |   | $      | (35 | ) |   | $ | 3,781 |   |

----

|                                                                                  |   |   |    |   |                                                                   |   |    |
|---------------------------------------------------------------------------------------|--------|--------|---------|--------|------------------------------------------------------------------------|--------|---------|
|                                                                                  |   | 2007   |    |   |                 2006 |   |    |       2005 |   |  |
|                                                                                  |   |   |    |   |                                                                   |   |    |   |   |   |
| Cash      flows from operating activities:                                            |   |   |    |   |                                                                   |   |    |   |   |   |
| Net      loss                                                                         |   | $      | (3,399  | )      |                                                                   | $      | (3,286  | )  |   | $ | (4,031 | ) |   |
| Adjustments      to reconcile net loss to net cash used in operating      activities: |   |   |    |   |                                                                   |   |    |   |   |   |   |   |   |
| Depreciation and      amortization                                                    |   |   | 857     |   |                                                                   |   | 623     |   |   |   | 466 |   |   |
| Amortization of convertible note      discount                                        |   |   | 589     |   |                                                                   |   | 445     |   |   |   | 1,706 |   |   |
| Amortization of warrant costs on      long-term debt -  related party       |   |   | 305     |   |                                                                   |   | 70      |   |   |   | – |   |   |
| Deferred financing      costs                                                         |   |   | 75      |   |                                                                   |   | 146     |   |   |   | 553 |   |   |
| Loss on disposal of property and      equipment                                       |   |   | 3       |   |                                                                   |   | – |   |   |   | 43 |   |   |
| Provision for doubtful      accounts                                                  |   |   | – |   |                                                                   |   | – |   |   |   | 4 |   |   |
| Stock issued for      services                                                        |   |   | – |   |                                                                   |   | 6       |   |   |   | 10 |   |   |
| Stock based employee      compensation                                                |   |   | 130     |   |                                                                   |   | 189     |   |   |   | – |   |   |
| Minorityinterest                                                                      |   |   | (73     | )      |                                                                   |   | (5      | )  |   |   | – |   |   |
| Changes in operating assets and      liabilities:                                     |   |   |    |   |                                                                   |   |    |   |   |   |   |   |   |
| Accounts      receivable                                                              |   |   | 35      |   |                                                                   |   | (4      | ) |   |   | (131 | ) |   |
| Prepaid expenses and other      current assets                                        |   |   | (30     | )      |                                                                   |   | 63      |   |   |   | (63 | ) |   |
| Accounts    payable                                                                   |   |   | 63      |   |                                                                   |   | (218    | )  |   |   | 47 |   |   |
| Accrued      compensation                                                             |   |   | 128     |   |                                                                   |   | 1       |   |   |   | (23 | ) |   |
| Other accrued      liabilities                                                        |   |   | 29      |   |                                                                   |   | (18     | ) |   |   | (108 | ) |   |
| Deferred    revenue                                                                   |   |   | 27      |   |                                                                   |   | (153    | ) |   |   | 99 |   |   |
|                                                                                  |   |   |    |   |                                                                   |   |    |   |   |   |   |   |   |
| Net      cash used in operating activities                                            |   |   | (1,261  | )      |                                                                   |   | (2,141  | )  |   |   | (1,428 | ) |   |
|                                                                                  |   |   |    |   |                                                                   |   |    |   |   |   |   |   |   |
| Cash      flows from investing activities:                                            |   |   |    |   |                                                                   |   |    |   |   |   |   |   |   |
| Acquisition      of property and equipment                                            |   |   | (26     | )      |                                                                   |   | (93     | )  |   |   | (107 | ) |   |
| Capitalization      of software development costs                                     |   |   | (788    | )      |                                                                   |   | (510    | )  |   |   | (299 | ) |   |
|                                                                                  |   |   |    |   |                                                                   |   |    |   |   |   |   |   |   |
| Net      cash used in investing activities                                            |   |   | (814    | )      |                                                                   |   | (603    | ) |   |   | (406 | ) |   |
|                                                                                  |   |   |    |   |                                                                   |   |    |   |   |   |   |   |   |
| Cash      flows from financing activities:                                            |   |   |    |   |                                                                   |   |    |   |   |   |   |   |   |
| Proceeds      from issuance of long-term debt – related party                   |   |   | 1,120   |   |                                                                   |   | 600     |   |   |   | – |   |   |
| Proceeds      from issuance of common stock net of related expenses                   |   |   | 2,602   |   |                                                                   |   | – |   |   |   | – |   |   |
| Principal      payments on short-term debt                                            |   |   | (1,265  | )      |                                                                   |   | – |   |   |   | (36 | ) |   |
| Principal      payments on long-term debt – related party                       |   |   | – |   |                                                                   |   | – |   |   |   | (13 | ) |   |
| Principal      payments on capital lease obligations                                  |   |   | (5      | )      |                                                                   |   | (8      | )  |   |   | (9 | ) |   |
| Proceeds      from exercise of stock options                                          |   |   | – |   |                                                                   |   | – |   |   |   | 5 |   |   |
| Net      cash provided by (used in) financing activities                              |   |   | 2,452   |   |                                                                   |   | 592     |   |   |   | (53 | ) |   |
| Effect      of exchange rate changes on cash                                          |   |   | 40      |   |                                                                   |   | 30      |   |   |   | – |   |   |
| Net      increase (decrease) in cash and cash equivalents                             |   |   | 417     |   |                                                                   |   | (2,122  | )  |   |   | (1,887 | ) |   |
| Cash      and cash equivalents at beginning of year                                   |   |   | 727     |   |                                                                   |   | 2,849   |   |   |   | 4,736 |   |   |
|                                                                                  |   |   |    |   |                                                                   |   |    |   |   |   |   |   |   |
| Cash      and cash equivalents at end of year                                         |   | $      | 1,144   |   |                                                                   | $      | 727     |   |   | $ | 2,849 |   |   |
|                                                                                  |   |   |    |   |                                                                   |   |    |   |   |   |   |   |   |
|                                                                                  |   |   |    |   |                                                                   |   |    |   |   |   |   |   |   |

----

|                                                                                                              |   | December      31, |    |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                                              |   | 2007              |    |   | 2006 |   |   | 2005 |   |
| Interest paid                                                                                                     |   | $                 | 244     |   |   | $ | 109 |   |   | $ | 237 |   |
| Schedule      of non-cash transactions:                                                                           |   |              |    |   |   |   |   |   |   |   |   |   |
| Fair      value of warrants issued to the investors in connection with long –term      debt                 |   | $                 | 23      |   |   | $ | – |   |   | $ | – |   |
| Fair      value of warrants issued to the investors in connection with long –term      debt                 |   | $                 | 546     |   |   | $ | 336 |   |   |   | – |   |
| Fair      value of the adjustment to the beneficial conversion feature associated      with the convertible notes |   | $                 | 202     |   |   | $ | – |   |   | $ | – |   |
| Common      stock issued upon the conversion of long-term debt, net                                               |   | $                 | – |   |   | $ | 460 |   |   | $ | 2,322 |   |
| Issuance      of common stock for services                                                                        |   | $                 | – |   |   | $ | 6 |   |   | $ | 10 |   |

----

----

|                           |   | 2007   |   |   | 2006   |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|
| Cash      in bank              |   | $      | 89     |   |   | $      | 533 |   |
| Money      market funds        |   |   | 1,055  |   |   |   | 194 |   |
|                           |   |   |   |   |   |   |   |   |
| Cash and cash      equivalents |   | $      | 1,144  |   |   | $      | 727 |   |

----

|                                                |   | 2007   |   |   | 2006   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Machinery      and equipment                        |   | $      | 1,179  |   |   | $      | 1,216 |   |
| Office      furniture and fixtures                  |   |   | 435    |   |   |   | 483 |   |
| Leasehold      improvements                         |   |   | 90     |   |   |   | 90 |   |
| Purchased      software                             |   |   | 319    |   |   |   | 315 |   |
|                                                |   |   |   |   |   |   |   |   |
|                                                |   |   | 2,023  |   |   |   | 2,104 |   |
| Less      accumulated depreciation and amortization |   |   | (1,946 | )      |   |   | (1,964 | ) |
|                                                |   |   |   |   |   |   |   |   |
|                                                |   | $      | 77     |   |   | $      | 140 |   |

| ·   | Patent      numbers 5544255, 5647017, 5818955 and 6064751 involve (a) the electronic      capture of a handwritten signature utilizing an electronic tablet device      on a standard computer system within an electronic document, (b) the      verification of the identity of the person providing the electronic      signature through comparison of stored signature measurements, and (c) a      system to determine whether an electronic document has been modified after      signature. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Patent      number 6091835 involves all of the foregoing and the recording of the      electronic execution of a document regardless of whether execution occurs      through a handwritten signature, voice pattern, fingerprint or other      identifiable means. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Patent      numbers 5933514, 6212295, 6381344, and 6487310 involve methods and      processes related to handwriting recognition developed by the Company over      the years.  Legal fees associated with these patents were      immaterial and expensed as the fees were  incurred. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |    | Expiration |   | Estimated OriginalLife |   |   | 2007   |   |   | 2006   |   |
|------------------------------------|---------|------------|--------|------------------------|--------|--------|--------|--------|--------|--------|--------|
| Patent      (Various)              |    | Various    |   |                   | 5      |   |   | $      | 9      |   |   | $ | 9 |   |
| Patent      (Various)              |    | Various    |   |                   | 7      |   |   |   | 476    |   |   |   | 476 |   |
|                               | 5544255 |       | 2013   |                   |   | 13     |   |   |   | 93     |   |   |   | 93 |   |
|                               | 5647017 |       | 2014   |                   |   | 14     |   |   |   | 187    |   |   |   | 187 |   |
|                               | 5818955 |       | 2015   |                   |   | 15     |   |   |   | 373    |   |   |   | 373 |   |
|                               | 6064751 |       | 2017   |                   |   | 17     |   |   |   | 1,213  |   |   |   | 1,213 |   |
|                               | 6091835 |       | 2017   |                   |   | 17     |   |   |   | 4,394  |   |   |   | 4,394 |   |
|                               |    |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|                               |    |       |   |                   |   |   |   |   |   | 6,745  |   |   |   | 6,745 |   |
| Less      accumulated amortization |    |       |   |                   |   |   |   |   | (3,217 | )      |   |   | (2,839 | ) |
|                               |    |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|                               |    |       |   |                   |   |   |   |   | $      | 3,528  |   |   | $ | 3,906 |   |
|                               |    |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |

| ·   | The      estimated cash flow from products based upon each patent are expected to      exceed the value assigned to eachpatent; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | There      are no legal, regulatory or contractual provisions known to the Company      that limit the useful life of each patent to less than the assigned useful      life; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | No      additional material costs need to be incurred or modifications made in      order for the Company to continue to be able to realize the protection      afforded by the patents; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Company, does not foresee any effects of obsolescence or significant      competitive pressure on its current or future products, anticipates      increasing demand for products utilizing the patented technology, and      believes that the current markets for its products based on the patented      technology will remain constant or will grow over the useful lives      assigned to the patents because of a legal, regulatory and business      environment encouraging the use of electronic  signatures. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                          |   | 2007   |    |   | 2006   |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Accrued      professional services                                                                                            |   | $      | 134     |   |   | $      | 125 |   |
| Refundable      deposits                                                                                                      |   |   | − |   |   |   | 48 |   |
| Rents                                                                                                                         |   |   | 43      |   |   |   | − |   |
| Interest                                                                                                                      |   |   | 66      |   |   |   | 27 |   |
| Other                                                                                                                         |   |   | 55      |   |   |   | 69 |   |
|                     Total |   | $      | 298     |   |   | $      | 269 |   |

----

|                                    |   | Payments      due by period |   |
|-----------------------------------------|--------|-----------------------------|--------|
| Contractual      obligations            |   | Total                       |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |   | 2011 |   |   | 2012 |   |   | Thereafter |   |
| Short-term      debt related party (1)  |   | $                           | 1,720  |   |   | $ | 1,720 |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |
| Long-term      debt (2)                 |   |                        | 117    |   |   |   | – |   |   |   | 117 |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |
| Operating      lease commitments (3)    |   |                        | 1,056  |   |   |   | 264 |   |   |   | 272 |   |   |   | 280 |   |   |   | 240 |   |   |   | – |   |   |   | – |   |
| Total      contractual cash obligations |   | $                           | 2,893  |   |   | $ | 1,984 |   |   | $ | 389 |   |   | $ | 280 |   |   | $ | 240 |   |   | $ | – |   |   | $ | – |   |

| 1.   | Short-term      debt reported on the balance sheet is net of approximately $350 in      discounts representing the fair value of warrants issued in connection      with the Company’s debt financings. Short-term debt includes $1,170 due to      a related party. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Long-term      debt reported on the balance sheet is net of approximately $21 in      discounts representing the fair value of warrants issued to the      investors. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | The      operating lease commenced on November 1, 2002. The lease was renegotiated      in December 2005 and extended for an additional 60 months. The base rent      will increase approximately 3% per annum over the term of the lease, which      expires on October 31, 2011. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                           |   | 2005   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| Net      income (loss) as reported                                                                                                                             |   | $      | (4,031 | ) |
| Add:      Stock-based employee compensation expense included in reported results of      operations, net of related tax effects                                |   |   | -      |   |
|  Deduct:      Total stock-based employee compensation expense determined under fair      value-based method for all awards, net of related tax    effects |   |   | (1,298 | ) |
| Pro forma net    loss                                                                                                                                          |   | $      | (5,329 | ) |
|  Basic      and diluted net loss per share available to stockholders:                                                                                     |   |   |   |   |
| As reported                                                                                                                                                    |   | $      | (0.04  | ) |
| Pro forma                                                                                                                                                      |   | $      | (0.05  | ) |

----

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|                         |   | Year      EndedDecember      31, 2007 | Year      EndedDecember      31, 2006 |
|------------------------------|--------|---------------------------------------|---------------------------------------|
| Risk      free interest rate |   | 3.32%      - 5.11%                    | 4.60%      - 5.11%                    |
| Expected      life (years)   |   | 3.21      – 6.83                | 3.46      -5.02                       |
| Expected      volatility     |   | 80.96%      - 104.57%                 | 80.92%      - 104.57%                 |
| Expected      dividends      |   | None                                  | None                                  |

|   |                                                                 |   | Year      EndedDecember      31, 2007                                                         | Year      EndedDecember      31, 2006                                                         |
|--------|----------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|
|   | Research      and development                                        |   | $                    18 | $                    54 |
|   | Sales      and marketing                                             |   |               66                                      |               92                                      |
|   | General      and administrative                                      |   |               13                                      |               22                                      |
|   | Director      options                                                |   |               33                                      |               21                                      |
|   | Stock-based      compensation expense included in operating expenses |   | $                  130            | $                  189            |

----

|                                                                                  | December      31, 2007                                | December      31, 2006             |
|---------------------------------------------------------------------------------------|-------------------------------------------------------|------------------------------------|
|                                                                                  | Shares                                                | WeightedAverageExercise      Price | Aggregate      Intrinsic Value | Weighted      Average Remaining Contractual Life | Shares | WeightedAverageExercise      Price | Aggregate      Intrinsic Value | Weighted      Average Remaining Contractual Life |
|                                                                                  |                                                  |                               |   |   |   |   |   |   |
| Outstanding      at beginning of period                                               |              5,893 | $0.69                              |   |   |               8,591 | $0.75 |   |   |
| Granted                                                                               |              870   | $0.21                              |   |   |               1,764 | $0.44 |   |   |
| Exercised                                                                             |            −           | $0.00                              |   |   |                  (19) | $0.42 |   |   |
| Forfeited                                                                             |              (727) | $0.98                              |   |   |         (4,443) | $0.72 |   |   |
|                                                                                  |                                                  |                               |   |   |   |   |   |   |
| Outstanding      at period end                                                        |             6,036       | $0.59                              |   |             4.7 |                5,893 | $0.69 |   | 5.4 |
|                                                                                  |                                                  |                               |   |   |   |   |   |   |
| Options      vested and exercisable at period end                                     |             5,364       | $0.62                              |   |             4.5 |               5,066 | $0.74 |   | 5.2 |
|                                                                                  |                                                  |                               |   |   |   |   |   |   |
| Weighted      average grant-date fair value of options granted during the      period | $0.14                                                 |                               |   |   | $0.24 |   |   |   |

|                          |                    |   | Options      Outstanding |   |    | Options      Exercisable                                   |   |
|-------------------------------|-------------------------|--------|--------------------------|--------|---------|------------------------------------------------------------|--------|
| Range      of Exercise Prices |                    |   | OptionsOutstanding       |   |    | Weighted      Average Remaining Contractual Life(in years) |   |   | Weighted      Average Exercise Price |   |   | Number      Outstanding |   |   | Weighted      Average Exercise Price |   |
| $                             | 0.00      – $0.50 |   |                     |   | 2,504   |                                                       |   |   | 5.3 |   |   | $ | 0.32 |   |   |   | 1,832 |   |   | $ | 0.34 |   |
| $                             | 0.51      – $1.00 |   |                     |   | 3,341   |                                                       |   |   | 4.3 |   |   | $ | 0.73 |   |   |   | 3,341 |   |   | $ | 0.73 |   |
| $                             | 1.01      – $2.00 |   |                     |   | 176     |                                                       |   |   | 2.0 |   |   | $ | 1.31 |   |   |   | 176 |   |   | $ | 1.31 |   |
| $                             | 2.01      – $2.99 |   |                     |   | − |                                                       |   |   | 0.0 |   |   | $ | 0.00 |   |   |   | − |   |   | $ | 0.00 |   |
| $                             | 3.00      – $7.50 |   |                     |   | 15      |                                                       |   |   | 2.5 |   |   | $ | 3.56 |   |   |   | 15 |   |   | $ | 3.56 |   |
|                          |                    |   |                     |   | 6,036   |                                                       |   |   |   |   |   |   |   |   |   |   | 5,364 |   |   |   |   |   |

----

| Nonvested      Shares             |   | Shares |   |   | Weighted      AverageGrant-DateFair      Value |   |
|-----------------------------------|--------|--------|--------|--------|------------------------------------------------|--------|
| Nonvested      at January 1, 2007 |   |   | 827    |   |                                           | $      | 0.36 |   |
| Granted                           |   |   | 870    |   |                                           | $      | 0.14 |   |
| Forfeited                         |   |   | (727   | )      |                                           | $      | 0.29 |   |
| Vested                            |   |   | (298   | )      |                                           | $      | 0.26 |   |
| Nonvested                         |   |   | 672    |   |                                           | $      | 0.22 |   |

----

----

|                                  |   | 2007   |    |   | 2006   |   |
|---------------------------------------|--------|--------|---------|--------|--------|--------|
| Deferred      tax assets:             |   |   |    |   |   |   |
| Net      operating loss carryforwards |   | $      | 28,987  |   |   | $      | 28,182 |   |
| Credit      carryforwards             |   |   | 315     |   |   |   | 315 |   |
| Deferred      income                  |   |   | 172     |   |   |   | 162 |   |
| Other,      net                       |   |   | 317     |   |   |   | 213 |   |
|                                  |   |   |    |   |   |   |   |   |
| Total      deferred tax assets        |   |   | 29,791  |   |   |   | 28,872 |   |
|                                  |   |   |    |   |   |   |   |   |
| Valuation      allowance              |   |   | (29,791 | )      |   |   | (28,872 | ) |
|                                  |   |   |    |   |   |   |   |   |
| Net      deferred tax assets          |   | $      | -       |   |   | $      | - |   |

|                                                            |   | 2007   |    |    | 2006   |   |    | 2005   |   |
|-----------------------------------------------------------------|--------|--------|---------|---------|--------|--------|---------|--------|--------|
| Expected      income tax benefit                                |   | $      | (1,157  | )       |   | $      | (1,085  | )      |   | $ | (1,327 | ) |
| State      income tax benefit                                   |   |   | (204    | )  |   |   | (291    | )      |   |   | 234 |   |
| Expired      net operating loss                                 |   |   | 1,512   |    |   |   | 1,471   |   |   |   | 2,268 |   |
| Change      in valuation allowance and other                    |   |   | (151    | )       |   |   | (95     | )      |   |   | (1,175 | ) |
|      Income      tax expense (benefit) |   | $      | – |    |   | $      | – |   |   | $ | – |   |

----

|                                                 |   | First Quarter |   |   | SecondQuarter |   |   | ThirdQuarter |   |   | FourthQuarter |   |   | Total  |   |
|------------------------------------------------------|--------|--------------------|--------|--------|---------------|--------|--------|--------------|--------|--------|---------------|--------|--------|--------|--------|
| 2007      Unaudited                                  |   |               |   |   |          |   |   |         |   |   |          |   |   |   |   |
| Net      sales                                       |   | $                  | 334    |   |          | $      | 555    |         |   | $      | 456           |   |   | $      | 800    |   |   | $ | 2,145 |   |
| Gross      profit                                    |   | $                  | 276    |   |          | $      | 393    |         |   | $      | 356           |   |   | $      | 595    |   |   | $ | 1,620 |   |
| Loss      before income taxes, and minority interest |   | $                  | (810   | )      |          | $      | (845   | )            |   | $      | (1,107        | )      |   | $      | (710   | ) |   | $ | (3,472 | ) |
| Net      loss                                        |   | $                  | (807   | )      |          | $      | (843   | )            |   | $      | (1,105        | )      |   | $      | (644   | ) |   | $ | (3,399 | ) |
| Basic      and diluted loss per share                |   | $                  | (0.01  | )      |          | $      | (0.01  | )            |   | $      | (0.01         | )      |   | $      | (0.01  | ) |   | $ | (0.03 | ) |
|                                                 |   |               |   |   |          |   |   |         |   |   |          |   |   |   |   |   |   |   |   |   |
|                                                 |   |               |   |   |          |   |   |         |   |   |          |   |   |   |   |   |   |   |   |   |
| 2006      Unaudited                                  |   |               |   |   |          |   |   |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Net      sales                                       |   | $                  | 701    |   |          | $      | 448    |         |   | $      | 701           |   |   | $      | 492    |   |   | $ | 2,342 |   |
| Gross      profit                                    |   | $                  | 634    |   |          | $      | 419    |         |   | $      | 645           |   |   | $      | 394    |   |   | $ | 2,092 |   |
| Loss      before income taxes, and minority interest |   | $                  | (813   | )      |          | $      | (928   | )            |   | $      | (672          | )      |   | $      | (878   | ) |   | $ | (3,291 | ) |
| Net      loss                                        |   | $                  | (811   | )      |          | $      | (925   | )            |   | $      | (669          | )      |   | $      | (881   | ) |   | $ | (3,286 | ) |
| Basic      and diluted loss per share                |   | $                  | (0.01  | )      |          | $      | (0.01  | )            |   | $      | (0.01         | )      |   | $      | (0.01  | ) |   | $ | (0.03 | ) |
|                                                 |   |               |   |   |          |   |   |         |   |   |          |   |   |   |   |   |   |   |   |   |
|                                                 |   |               |   |   |          |   |   |         |   |   |          |   |   |   |   |   |   |   |   |   |

----

|                               |   | BalanceAt      BeginningOf Period |   |   | Charged      toCosts      andExpense |   |   | Deductions |   |   | BalanceAt      EndOf Period |   |
|------------------------------------|--------|-----------------------------------|--------|--------|--------------------------------------|--------|--------|------------|--------|--------|-----------------------------|--------|
|                               |   |                              |   |   |                                 |   |   |       |   |   |                        |   |
| Year      ended December 31, 2005: |   |                              |   |   |                                 |   |   |       |   |   |                        |   |
| Accounts      receivable reserves  |   | $                                 | 404    |   |                                 | $      | 4      |       |   | $      | (21                         | )      |   | $ | 387 |   |
|                               |   |                              |   |   |                                 |   |   |       |   |   |                        |   |   |   |   |   |
| Year      ended December 31, 2006: |   |                              |   |   |                                 |   |   |       |   |   |                        |   |   |   |   |   |
| Accounts      receivable reserves  |   | $                                 | 387    |   |                                 | $      | 10     |       |   | $      | -                           |   |   | $ | 397 |   |
|                               |   |                              |   |   |                                 |   |   |       |   |   |                        |   |   |   |   |   |
| Year      ended December 31, 2007: |   |                              |   |   |                                 |   |   |       |   |   |                        |   |   |   |   |   |
| Accounts      receivable reserves  |   | $                                 | 397    |   |                                 | $      | 123    |       |   | $      | (403                        | )      |   | $ | 117 |   |
|                               |   |                              |   |   |                                 |   |   |       |   |   |                        |   |   |   |   |   |
|                               |   |                              |   |   |                                 |   |   |       |   |   |                        |   |   |   |   |   |