| (x)    | ANNUAL      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|------------------------------------------------------------------------------------------|
|   | For      the fiscal year ended                                                           |    December 31,      2007 |

| (  ) | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|----------------|----------------------------------------------------------------------------------------------------|
|           | For      the transition period from                                                                | to |   |

| Commission      file number    0-1665 |
|-----------------------------------------------------------|

| Delaware                                                            | 36-2476480                                |
|---------------------------------------------------------------------|-------------------------------------------|
| (State      or other jurisdiction of incorporation or organization) | (I.R.S.      Employer Identification No.) |

| 1158 Broadway,      Hewlett, New York         | 11557           |
|-----------------------------------------------|-----------------|
| (Address      of principal executive offices) | (Zip      Code) |

| (516)      374-7600                                        |
|------------------------------------------------------------|
| (Issuer’s      telephone number, including areacode) |

| Title of each      class          | Name of each exchange      on which registered |
|-----------------------------------|------------------------------------------------|
| Common      Stock, $.01 par value | The      NASDAQ Stock Market LLC               |

|                            |                                                                                                                                            | Page No. |
|---------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|----------|
| Forward-Looking      Statements | 1                                                                                                                                               |
|  PART      I               |                                                                                                                                            |     |
|                            |                                                                                                                                            |     |
| Item      1.                    | Description      of Business                                                                                                                    | 2        |
|                            |                                                                                                                                            |     |
| Item      2                     | Description      of Property                                                                                                                    | 10       |
|                            |                                                                                                                                            |     |
| Item      3.                    | Legal      Proceedings                                                                                                                          | 10       |
|                            |                                                                                                                                            |     |
| Item      4.                    | Submission      of Matters to a Vote of Security Holders                                                                                        | 10       |
|                            |                                                                                                                                            |     |
| PART      II                    |                                                                                                                                            |     |
|                            |                                                                                                                                            |     |
| Item      5.                    | Market      for Common Equity, Related Stockholder Matters and Small Business Issuer      Purchases of Equity Securities                        | 11       |
|                            |                                                                                                                                            |     |
| Item      6.                    | Management’s      Discussion and Analysis or Plan of Operation                                                                            | 12       |
|                            |                                                                                                                                            |     |
| Item      7.                    | Financial      Statements                                                                                                                       | 25       |
|                            |                                                                                                                                            |     |
| Item      8.                    | Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosure                                                  | 25       |
|                            |                                                                                                                                            |     |
| Item      8A.                   | Controls      and Procedures                                                                                                                    | 26       |
|                            |                                                                                                                                            |     |
| Item      8B.                   | Other      Information                                                                                                                          | 28       |
|                            |                                                                                                                                            |     |
| PART      III                   |                                                                                                                                            |     |
|                            |                                                                                                                                            |     |
| Item      9.                    | Directors,      Executive Officers, Promoters, Control Persons and Corporate Governance;      Compliance with Section 16(a) of the Exchange Act | 29       |
|                            |                                                                                                                                            |     |
| Item      10.                   | Executive      Compensation                                                                                                                     | 32       |
|                            |                                                                                                                                            |     |
| Item      11.                   | Security      Ownership of Certain Beneficial Owners and Management andRelated      Stockholder Matters                                         | 34       |
|                            |                                                                                                                                            |     |
| Item      12.                   | Certain      Relationships and Related Transactions, and Director      Independence                                                             | 37       |
|                            |                                                                                                                                            |     |
| Item 13.                   | Exhibits                                                                                                                                        | 39       |
|                            |                                                                                                                                            |     |
| Item      14.                   | Principal      Accountant Fees and Services                                                                                                     | 42       |
|                            |                                                                                                                                            |     |
| Signatures                      |                                                                                                                                            |     |

| 1 |
|---|

|  | ·   | On      February 1, 2008, our wholly-owned subsidiary, Payments Inc., sold its      outstanding premium finance loan portfolio. The purchase price for the net      loan portfolio was approximately $11,845,000, of which approximately      $268,000 was paid to Payments.  The remainder of the purchase      price was satisfied by the assumption of liabilities, including the      satisfaction of Payments’ premium finance revolving credit line obligation      to Manufacturers and Traders Trust Company (“M&T”). As additional      consideration, Payments will be entitled to receive an amount based upon      the net earnings generated by the loan portfolio as it is collected. The      purchaser of the portfolio also agreed that, during the five year period      ending January 31, 2013 (subject to automatic renewal for successive two      year terms under certain circumstances), it will purchase, assume and      service all eligible premium finance contracts originated by Payments in      the states of New York, New Jersey and Pennsylvania.  In      connection with such purchases, Payments will be entitled to receive a fee      generally equal to a percentage of the amount  financed. |
|--|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      February 2, 2007, Robert Wallach resigned as a  director. |
|--------------------|-------------------------------------------------------------------|

| ·   | During      2007, the holders of $1,500,000 of the outstanding principal amount of our      subordinated debt agreed to extend the maturity date of the debt from      September 30, 2007 to September 30, 2008. In consideration for the      extension of the due date of the subordinated debt, we extended the      expiration date of warrants held by the debtholders for the purchase of      97,500 of our common shares from September 30, 2007 to September 30,      2008.  See Item 12 of this Annual  Report. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective      March 23, 2007, the holder of our Series A preferred shares exchanged such      shares for an equal number of Series B preferred shares. The terms of the      Series B preferred shares are identical to those of the Series A preferred      shares, except that they are mandatorily redeemable on April 30, 2008 (as      opposed to April 30, 2007 for the Series A preferred      shares).  See Item 12 of this Annual  Report. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      March 2007, Commercial Mutual Insurance Company’s Board of Directors      adopted a resolution to convert Commercial Mutual from an advance premium      insurance company to a stock property and casualty insurance      company.  We hold surplus notes of Commercial Mutual in the      aggregate principal amount of $3,750,000.  In the event the      conversion occurs, we may be able to convert such notes into a controlling      equity interest in Commercial Mutual.  See Items 1(b), 6 and 12      of this Annual Report. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      January 31, 2006, we purchased from Eagle Insurance Company two surplus      notes issued by Commercial Mutual Insurance Company in the aggregate      principal amount of $3,750,000 plus accrued interest of $1,794,688.      Commercial Mutual is a New York property and casualty insurer. Eagle is a      New Jersey property and casualty insurer that is subject to an Order of      Liquidation issued by the New Jersey Department of Banking and Insurance      (which order has been stayed pending appeal). Eagle owns approximately 10%      of our outstanding common shares.  See Items 1(b), 6 and 11 of      this Annual Report. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      July 28, 2006, we and our premium finance subsidiary, Payments Inc.,      entered into a new revolving line of credit with M&T which provided      for a decrease in the credit line to $20,000,000.  The new      revolver bore interest, at our option, at either M&T’s prime lending      rate (8.25% at December 31, 2006) or LIBOR (5.35% at December 31, 2006)      plus 2.25%, and was scheduled to mature on June 30, 2008.  The      line of credit also allowed for a $2,500,000 term loan (of the $20,000,000      credit line availability) to be used to provide liquidity for ongoing      working capital purposes.  Any draws against the term line bore      interest at LIBOR plus 2.75%.  Concurrently with the obtaining      of the new credit line, we borrowed $1,300,000 as a draw against the term      line.  See Items 6 and 7 of this Annual  Report. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | During      2005, we utilized our line of credit with M&T to repay an aggregate of      $2,000,000 of our $3,500,000 subordinateddebt. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective      May 25, 2005, the holders of the remaining $1,500,000 outstanding      principal amount of our subordinated debt agreed to extend the maturity      date of the debt from January 10, 2006 to September 30,      2007.  This extension was given to satisfy a requirement of      M&T that arose in connection with the increase in our revolving line      of credit to $25,000,000 and the extension of the line to June 30, 2007.      In consideration for the extension of the due date of the subordinated      debt, we extended the expiration date of warrants held by the debtholders      for the purchase of 97,500 of our common shares from January 10, 2006 to      September 30, 2007. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      November 15, 2005, we entered into an agreement for the acquisition of      substantially all of the assets of Accurate Agency, Inc., Louisons      Associates Limited and Accurate Agency of Western New York, Inc.,      insurance brokerage firms with a total of four offices located in and      around Rochester, New York that operate under the Accurate Agency brand.      The transaction was consummated effective as of January 1,      2006. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Business of      Issuer |
|-----|-------------------------|

| ·   | property      and casualty insurance for motorcycles, boats and    livery/taxis |
|--------------------|---------------------------------------------------------------------------------|

| ·   | life      insurance |
|--------------------|---------------------|

| ·   | business      insurance |
|--------------------|-------------------------|

| ·   | homeowner’s      insurance |
|--------------------|----------------------------------|

| ·   | excess      coverage |
|--------------------|----------------------|

| ·   | marketing,      sales and underwriting |
|--------------------|----------------------------------------|

| ·   | office      and logistics |
|--------------------|---------------------------|

| ·   | computer      information |
|--------------------|---------------------------|

| ·   | sales      training |
|--------------------|---------------------|

| ·   | bookkeeping      and accounting |
|--------------------|---------------------------------|

| ·   | processing      services |
|--------------------|--------------------------|

| ·   | assistance      with regard to the hiring ofemployees |
|--------------------|-------------------------------------------------------|

| ·   | assistance      with regard to the writing of localadvertising |
|--------------------|----------------------------------------------------------------|

| ·   | advice      regarding potential carriers for certain  customers |
|--------------------|-----------------------------------------------------------------|

| ·   | regulating      the interest rates, fees and service charges we may charge our      customers |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | imposing      minimum capital requirements for our premium finance subsidiary or      requiring surety bonds in addition to or as an alternative to such capital      requirements |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | governing      the form and content of our financingagreements |
|--------------------|----------------------------------------------------------------|

| ·   | prescribing      minimum notice and cure periods before we may cancel a customer’s policy      for non-payment under the terms of the financing  agreement |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | prescribing      timing and notice procedures for collecting unearned premium from the      insurance company, applying the unearned premium to our customer’s premium      finance account, and, if applicable, returning any refund due to our      customer |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | requiring      our premium finance company to qualify for and obtain a license and to      renew the license each year |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | conducting      periodic financial and market conduct examinations and investigations of      our premium finance company and itsoperations |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | requiring      prior notice to the regulating agency of any change of control of our      premium finance company |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

|                     | Number of Shares |
|--------------------------|------------------|
|                     | For              |  Withheld |
|                     |             |   |
| Barry      B. Goldstein  | 2,066,386        | 150,064 |
| Morton      L. Certilman | 2,043,954        | 172,496 |
| Jay      M. Haft         | 1,410,134        | 706,316 |
| David      A. Lyons      | 2,044,036        | 172,414 |
| Jack      D. Seibald     | 2,044,016        | 172,434 |

| ITEM      5. | MARKET FOR COMMON      EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF      EQUITY SECURITIES |
|--------------|--------------------------------------------------------------------------------------------------------------------------|

|                    |   | High   |   |   | Low    |   |
|-------------------------|--------|--------|--------|--------|--------|--------|
| 2007      Calendar Year |   |   |   |   |   |   |
| First      Quarter      |   | $      | 3.05   |   |   | $      | 2.33 |   |
| Second      Quarter     |   |   | 2.70   |   |   |   | 2.18 |   |
| Third      Quarter      |   |   | 2.75   |   |   |   | 1.95 |   |
| Fourth      Quarter     |   |   | 2.39   |   |   |   | 1.15 |   |
|                    |   |   |   |   |   |   |   |   |
|                    |   | High   |   |   | Low    |   |
| 2006      Calendar Year |   |   |   |   |   |   |   |   |
| First      Quarter      |   | $      | 3.35   |   |   | $      | 2.54 |   |
| Second      Quarter     |   |   | 3.00   |   |   |   | 1.95 |   |
| Third      Quarter      |   |   | 2.44   |   |   |   | 1.52 |   |
| Fourth      Quarter     |   |   | 3.18   |   |   |   | 1.42 |   |

| ITEM      6. | MANAGEMENT’S      DISCUSSION AND ANALYSIS OR PLAN OF  OPERATION |
|--------------|-----------------------------------------------------------------------|

|                                     |   |   |      |   |   |   |      | Change  |
|------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|---------|
|                                     |   | 2007   |      |   | 2006   |   |      |  $ |   |   |  | % |   |
| Commissions      and fee revenue         |   | $      | 5,745,000 |   |   | $      | 7,122,000 |    |   | $ | (1,377,000 | ) |   |   | (19 | )      % |
| General      and administrative expenses |   |   | 6,754,000 |   |   |   | 7,269,000 |    |   |   | (515,000 | ) |   |   | (7 | )      % |
| Impairment      of intangibles           |   |   | 95,000    |   |   |   | -         |    |   |   | 95,000 |   |   |   |   |   |
| Interest      income - notes receivable  |   |   | 1,288,000 |   |   |   | 1,183,000 |    |   |   | 105,000 |   |   |   | 9 | % |

|                                          |   | Year      ended   |
|-----------------------------------------------|--------|-------------------|
|                                          |   | December      31, |
|                                          |   |              |   |   |   |   |   | Change |
|                                          |   | 2007              |   |   | 2006 |   |   |  $ |   |   |  | % |
| Premium      Finance Revenue                  |   | $                 | 3,167,000 |   |   | $ | 3,960,000 |   |   |   | (793,000 | ) |   |   | (20 | )      % |
|                                          |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Expenses:                      |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      and administrative expenses      |   |              | 1,432,000 |   |   |   | 1,696,000 |   |   |   | (264,000 | ) |   |   | (16 | )      % |
| Provision      for finance receivable losses  |   |              | 472,000 |   |   |   | 650,000 |   |   |   | (178,000 | ) |   |   | (27 | )      % |
| Depreciation      and amortization            |   |              | 100,000 |   |   |   | 172,000 |   |   |   | (72,000 | ) |   |   | (42 | )      % |
| Interest      expense                         |   |              | 646,000 |   |   |   | 824,000 |   |   |   | (178,000 | ) |   |   | (22 | )      % |
| Total      Operating Expenses                 |   |              | 2,650,000 |   |   |   | 3,342,000 |   |   |   | (692,000 | ) |   |   | (21 | )      % |
|                                          |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      Before Provision for Income Taxes |   |              | 517,000 |   |   |   | 618,000 |   |   |   | (101,000 | ) |   |   | (16 | )      % |
| Provision      for Income Taxes               |   |              | 246,000 |   |   |   | 278,000 |   |   |   | (32,000 | ) |   |   | (12 | )      % |
| Net      Income from Discontinued Operations  |   | $                 | 271,000 |   |   | $ | 340,000 |   |   | $ | (69,000 | ) |   |   | (20 | )      % |

|                                                   |   | Year      ended   |
|--------------------------------------------------------|--------|-------------------|
|                                                   |   | December      31, |
|                                                   |   |              |   |   |   |   |   | Change |
|                                                   |   | 2007              |   |   | 2006 |   |   |  $ |   |   |  | % |   |
| (Loss)      income from continuing operations          |   | $                 | (318,000 | ) |   | $ | 168,000 |   |   | $ | (486,000 | ) |   |   | (289 | )      % |
| Income      from discontinued operations, net of taxes |   |              | 271,000 |   |   |   | 340,000 |   |   |   | (69,000 | ) |   |   | (20 | )      % |
| Net      (loss) income                                 |   | $                 | (47,000 | ) |   | $ | 508,000 |   |   | $ | (555,000 | ) |   |   | (109 | )      % |

|  | ·   | Net      cash used in operating activities during the year ended December 31, 2007      was $374,000 primarily due to the following:  (i) non-cash      charges of $572,000, which include depreciation and amortization, bad      debts, deferred income taxes, amortization of warrants, stock-based      payments, and the impairment of intangible assets, (ii) a decrease in      accounts receivable of $458,000, (iii) a decrease in the operating      activities from our discontinued operations of $91,000, which were offset      primarily by the accretion of discount on notes receivable of      $988,000.  The decrease in accounts receivable is primarily the      result of a January 2007 payment of a revenue accrual from an insurance      company, which did not continue in 2007, a reduction in the amount of      policies sold, and the conversion of certain amounts due from franchisees      into notes receivable. |
|--|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | Net      cash provided by investing activities during the year ended December 31,      2007 was $2,134,000 primarily due to the decrease in finance contracts      receivable from discontinued operations which is a result of the reduction      in the amount of policies financed in 2007 as compared to      2006.   Cash provided by investing activities was partially      offset by purchases of property and equipment of $213,000, consisting of      capitalized website development and enhancement costs, offset by the      proceeds received from the sale of one of our  stores. |
|--|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | Net      cash used in financing activities during the year ended December 31, 2007      was $1,925,000 primarily due to: (i) a $1,464,000 reduction in the      revolving credit line utilized in discontinued operations and (ii) the      scheduled principal reduction of $520,000 on our term loan with      Manufacturers and Traders Trust Company  (“M&T”). |
|--|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | We      did not maintain effective design of controls over access to financial      reporting applications and data. Controls do not limit access to programs      and data to only authorized users. In addition, controls lack the      requirement of periodic reviews and monitoring of such    access. |
|--|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | We      did not maintain effective controls to communicate policies and procedures      governing information technology security and access. Furthermore, we did      not maintain effective logging and monitoring of servers and databases to      ensure that access was both appropriate and  authorized. |
|--|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | We      did not maintain effective controls designed to ensure that information      technology program and data changes were authorized and properly managed.      In addition, our controls did not ensure that the information technology      program data changes were adequately tested for accuracy before      implementation. |
|--|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM      9. | DIRECTORS, EXECUTIVE      OFFICERS, PROMOTERS, CONTROL      PERSONS      AND CORPORATE GOVERNANCE; COMPLIANCE WITH      SECTION 16(A) OF THE EXCHANGEACT |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| Name                     | Age    | Positions and Offices  Held                                                                 |
|--------------------------|--------|---------------------------------------------------------------------------------------------|
|                     |   |                                                                                        |
| Barry      B. Goldstein  | 55     | President,      Chairman of the Board, Chief Executive Officer, Treasurer and      Director |
| Curt      M. Hapward     | 39     | President,      DCAP Management Corp.                                                       |
| Morton      L. Certilman | 76     | Secretary      and Director                                                                 |
| Jay      M. Haft         | 72     | Director                                                                                    |
| David      A. Lyons      | 58     | Director                                                                                    |
| Jack      D. Seibald     | 47     | Director                                                                                    |

|  Name      andPrincipal Position               |   Year |   | Salary  |    |   | OptionAwards |   |   | All      OtherCompensation |   |   | Total  |   |
|-----------------------------------------------------|------------------|--------|---------|---------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|
|                                                |             |   |    |    |   |         |   |   | Country      Club Dues (1) |   |   | Other  |   |   |   |   |
| Barry      B. GoldsteinChief      Executive Officer | 2007             |   | $       | 350,000 |   |         | $      | 41,224 |                       |   | $      | 21,085 |   |   | $ | 15,770 |   |   | $ | 428,079 |   |
| 2006                                                |             | $      | 350,000 |    |   |         | -      |   |                       | $      | 28,532 |   |   | $ | 26,410 |   |   | $ | 404,942 |   |

| (1) | Effective      with the execution of Mr. Goldstein’s employment agreement on October 16,      2007, he is no longer entitled to be reimbursed for country club      dues. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                    |   | Option      Awards                                      |
|-------------------------|--------|---------------------------------------------------------|
|    Name  |   | Number      of Securities UnderlyingUnexercised Options |   |   | Number      of Securities UnderlyingUnexercised Options |   |   | Option      ExercisePrice |   | Option      Expiration Date |
|                    |   | Exercisable                                             |   |   | Unexercisable |   |   |   |   |   |
|                    |   |                                                    |   |   |   |   |   |   |   |   |
| Barry      B. Goldstein |   |  32,500                                            |   |   |  97,500(1) |   |   | $2.06 |   | 10/16/12 |

| Name                     | Fees      Earned orPaid in Cash | Option Awards                | Total   |
|--------------------------|---------------------------------|------------------------------|---------|
|                     |                            |                         |    |
| Morton      L. Certilman | $22,250                         | -                            | $22,250 |
|                     |                            |                         |    |
| Jay      M. Haft         | $22,750                         | -                            | $22,750 |
|                     |                            |                         |    |
| David      A. Lyons      | $29,250                         |          -(1) | $29,250 |
|                     |                            |                         |    |
| Jack      D. Seibald     | $24,250                         | -                            | $24,250 |

| (1)   | As      of December 31, 2007, Mr. Lyons held options for the purchase of 20,000      common shares. |
|-----------------|-----------------------------------------------------------------------------------------------------|

| · | $10,000      per annum (1)                                     |
|--------|----------------------------------------------------------------|
| · | additional      $3,500 per annum for committee chair (1)       |
| · | $350      per Board meeting attended ($175 if telephonic)      |
| · | $200      per committee meeting attended ($100 if  telephonic) |

| ITEM      11. | SECURITY OWNERSHIP OF      CERTAIN BENEFICIAL OWNERS ANDMANAGEMENT AND RELATED      STOCKHOLDER MATTERS |
|---------------|---------------------------------------------------------------------------------------------------------|

| Name      and Addressof Beneficial      Owner                                                      |   | Number      of SharesBeneficially      Owned |   | ApproximatePercent of      Class |
|----------------------------------------------------------------------------------------------------|--------|----------------------------------------------|--------|----------------------------------|
|                                                                                               |   |                                         |   |                             |
| Infinity      Capital Partners, L.P.767      Third Avenue, 16th FloorNew      York, New York  |   | 458,458(1)(2)                      |   | 15.4%                            |

|  Name and Addressof      Beneficial Owner                                                                                  |   |  Number      of SharesBeneficially      Owned                                |   |  ApproximatePercent of      Class |
|---------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|----------------------------------------|
|                                                                                                                            |   |                                                                              |   |                                   |
| Barry      B. Goldstein1158      BroadwayHewlett,      New York                                                            |   | 425,900(1)(3)                                                           |   | 14.2%                                  |
| AIA      Acquisition Corp6787      Market StreetUpper      Darby, Pennsylvania                                             |   | 361,600(4)                                     |   | 11.0%                                  |
| Eagle      Insurance Companyc/o      The Robert Plan  Corporation999      Stewart AvenueBethpage,      New York  |   | 297,378(5)                                     |   | 10.0%                                  |
| Jack      D. Seibald1336      Boxwood Drive WestHewlett      Harbor, New York                                              |   | 274,750(1)(6)                                                      |   | 9.2%                                   |
| Morton      L. Certilman90      Merrick AvenueEast      Meadow, New York                                                   |   | 170,248(1)                                |   | 5.7%                                   |
| Jay      M. Haft69      Beaver Dam RoadSalisbury,      Connecticut                                                         |   | 157,278(1)(7)                                                 |   | 5.3%                                   |
| David      A. Lyons252      Brookdale RoadStamford,      Connecticut                                                       |   | 20,000(8)                  |   | *                                      |
| All      executive officersand      directors as a group(6      persons)                                                        |   | 1,063,057(1)(2)(5)(7)(8)(9)                                                  |   | 34.7%                                  |

| (1)    | Based      upon Schedule 13D filed under the Securities Exchange Act of 1934, as      amended, and other information that is publicly  available.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (2)    | Each      of (i) Infinity Capital, LLC (“Capital”), as the general partner of      Infinity Capital Partners, L.P. (“Partners”), (ii) Infinity Management,      LLC (“Management”), as the Investment Manager of Partners, and (iii)      Michael Feinsod, as the Managing Member of Capital and Management, the      General Partner and Investment Manager, respectively, of Partners, may be      deemed to be the beneficial owners of the shares held by      Partners.  Pursuant to the Schedule 13D filed under the      Securities Exchange Act of 1934, as amended, by Partners, Capital,      Management and Mr. Feinsod, each has sole voting and dispositive power      over the shares. |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3)    | Includes      (i) 8,500 shares held by Mr. Goldstein’s children, (ii) 11,900 shares held      in a retirement trust for the benefit of Mr. Goldstein and (iii) 32,500      shares issuable upon the exercise of currently exercisable      options.  Mr. Goldstein disclaims beneficial ownership of the      shares held by his children and retirement trust. Excludes shares owned by      AIA Acquisition Corp. of which members of Mr. Goldstein’s family are      principal stockholders.                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (4)    | Based      upon Schedule 13G filed under the Securities Exchange Act of 1934, as      amended, and other information that is publicly      available.  Includes 312,000 shares issuable upon the conversion      of preferred shares that are currently convertible.                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (5)    | Eagle      is a wholly-owned subsidiary of The Robert Plan Corporation.  We      have been advised that, pursuant to an Order of Rehabilitation filed with      the Superior Court of New Jersey, Mercer County on January 29, 2007, the      Commissioner of the Department of Banking and Insurance of the State of      New Jersey has been vested with title to the shares registered in Eagle’s      name.  We have been advised further that, on August 9, 2007, the      Court determined that Eagle was insolvent, and it terminated the      rehabilitation phase of the proceedings and issued an Order of      Liquidation.  Such order has been stayed pending      appeal. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

| (6)    | Represents      (i) 113,000 shares owned jointly by Mr. Seibald and his wife, Stephanie      Seibald; (ii) 100,000 shares owned by SDS Partners I, Ltd., a limited      partnership (“SDS”); (iii) 3,000 shares owned by Boxwood FLTD Partners, a      limited partnership (“Boxwood”); (iv) 33,000 shares owned by Stewart      Spector IRA (“S.  Spector”); (v) 3,000 shares owned by Barbara      Spector IRA Rollover (“B.  Spector”); (vi) 4,000 shares owned by      Karen Dubrowsky IRA (“Dubrowsky”); and (vii) 18,750 shares issuable upon      the exercise of currently exercisable warrants.  Mr. Seibald has      voting and dispositive power over the shares owned by SDS, Boxwood, S.      Spector, B. Spector and Dubrowsky. The amount reflected as owned by S.      Spector includes 30,000 shares issuable upon the exercise of currently      exercisable warrants. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (7)    | Includes      3,076 shares held in a retirement trust for the benefit of Mr.      Haft.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (8)    | Represents      shares issuable upon the exercise of currently exercisable      options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (9)    | Includes      14,881 shares issuable upon the exercise of currently exercisable      options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

|  | ·   | All      compensation plans previously approved by security holders;      and |
|--|--------------------|-------------------------------------------------------------------------------|

|  | ·   | All      compensation plans not previously approved by security      holders. |
|--|--------------------|-------------------------------------------------------------------------------|

|                                                            | Number      of securities to be issued upon exercise of outstanding options, warrants      and rights(a) | Weighted      average exercise price of outstanding options, warrants and      rights(b) | Number      of securities remaining available for future issuance under equity      compensation plans (excluding securities reflected in column      (a))(c) |
|-----------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Equity      compensation plans approved by security holders     | 268,624                                                                                                  | $2.55                                                                                    | 338,876                                                                                                                                                       |
|                                                            |                                                                                                     |                                                                                     |                                                                                                                                                          |
| Equity      compensation plans not approved by security holders |         -0-                                                      |    -0-                                                                    |        -0-                                                                                                                 |
|  Total                                                     |  268,624                                                                                            |  $2.55                                                                              |  338,876                                                                                                                                                 |

| ITEM      12. | CERTAIN RELATIONSHIPS      AND RELATED TRANSACTIONS, AND DIRECTOR      INDEPENDENCE |
|---------------|-------------------------------------------------------------------------------------|

| ExhibitNumber |  Description of Exhibit                                                                                                                                                            |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                    |
| 2             | Amended      and Restated Purchase and Sale Agreement, dated as of February 1, 2008, by      and among Premium Financing Specialists, Inc., Payments Inc. and DCAP      Group, Inc. (1) |
|          |                                                                                                                                                                                    |
| 3(a)          | Restated      Certificate of Incorporation (2)                                                                                                                                          |
|          |                                                                                                                                                                                    |
| 3(b)          | Certificate      of Designations of Series A Preferred Stock (3)                                                                                                                        |
|          |                                                                                                                                                                                    |
| 3(c)          | Certificate      of Designations of Series B Preferred Stock (4)                                                                                                                        |
|          |                                                                                                                                                                                    |
| 3(d)          | By-laws,      as amended (5)                                                                                                                                                            |
|          |                                                                                                                                                                                    |
| 10(a)         | 1998      Stock Option Plan, as amended (6)                                                                                                                                             |

| 10(b)  | Amended      and Restated Financing and Security Agreement, dated as of July 28, 2006,      by and among Payments Inc., DCAP Group, Inc. and Manufacturers and Traders      Trust Company, in its capacity as both collateral and administrative      agent for each of the “Lenders” and sole arranger (4)                                                                                                                                                                                                |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10(c)  | Amended      and Restated Revolving Credit Note, dated July 28, 2006, in the principal      amount of $20,000,000 issued by Payments Inc. and DCAP Group, Inc. to      Manufacturers and Traders Trust Company (4)                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10(d)  | Term      Line Note, dated July 28, 2006, in the principal amount of $1,300,000      issued by Payments Inc. and DCAP Group, Inc. to Manufacturers and Traders      Trust Company (4)                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10(e)  | Security      Agreement, dated as of July 28, 2006, by DCAP Group, Inc, DCAP Management      Corp., DCAP Accurate, Inc., AIA-DCAP Corp., Barry Scott Agency, Inc.,      Barry Scott Companies, Inc., Barry Scott Acquisition Corp., Baron Cycle,      Inc., Blast Acquisition Corp., Dealers Choice Automotive Planning, Inc.,      IAH, Inc. and Intandem Corp. for the benefit of Manufacturers and Traders      Trust Company in its capacity as “Agent” for itself and other “Lenders”      (4) |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10(f)  | Reaffirmation      of and Amendment to Stock Pledge Agreements, dated as of July 28, 2006, by      DCAP Group, Inc., Barry Scott Agency, Inc., Barry Scott Companies, Inc.      and Blast Acquisition Corp. for the benefit of Manufacturers and Traders      Trust Company in its capacity as “Agent” for itself and other “Lenders”      (4)                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10(g)  | Unit      Purchase Agreement, dated as of July 2, 2003, by and among DCAP Group,      Inc. and the purchasers named therein (7)                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10(h)  | Form      of Secured Subordinated Promissory Note, dated July 10, 2003, issued by      DCAP Group, Inc. with respect to indebtedness in the original aggregate      principal amount of $3,500,000 (7)                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10(i)  | Letter      agreement, dated May 25, 2005, between DCAP Group, Inc. and Jack Seibald      as representative and attorney-in-fact with respect to the outstanding      subordinated debt (4)                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10(j)  | Letter      agreement, dated March 23, 2007, between DCAP Group, Inc. and Jack Seibald      as representative and attorney-in-fact with respect to the outstanding      subordinated debt (4)                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10(k)  | Letter      agreement, dated September 30, 2007, between DCAP Group, Inc. and Jack      Seibald as representative and attorney-in-fact with respect to the      outstanding subordinated debt                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10(l)  | Form      of Warrant, dated July 10, 2003, for the purchase of an aggregate of      525,000 common shares (105,000 shares after giving effect to 1-for-5      reverse split effectuated on August 26, 2004) of DCAP Group, Inc.      (7)                                                                                                                                                                                                                                                                                    |

|   |                                                                                                                                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10(m)  | Registration      Rights Agreement, dated July 10, 2003, by and among DCAP Group, Inc. and      the purchasers named therein (7)                                                             |
|   |                                                                                                                                                                                         |
| 10(n)  |  2005      Equity Participation Plan (8)                                                                                                                                                |
|   |                                                                                                                                                                                         |
| 10(o)  | Surplus      Note, dated April 1, 1998, in the principal amount of $3,000,000 issued by      Commercial Mutual Insurance Company to DCAP Group, Inc.  (8)                                    |
|   |                                                                                                                                                                                         |
| 10(p)  | Surplus      Note, dated March 12, 1999, in the principal amount of $750,000 issued by      Commercial Mutual Insurance Company to DCAP Group, Inc.  (8)                                     |
|   |                                                                                                                                                                                         |
| 10(q)  | Employment      Agreement, dated as of August 20, 2007, between DCAP Management Corp. and      Curt Hapward (9)                                                                              |
|   |                                                                                                                                                                                         |
| 10(r)  | Employment      Agreement, dated as of October 16, 2007, between DCAP Group, Inc.      and  Barry B. Goldstein (10)                                                                |
|   |                                                                                                                                                                                         |
| 10(s)  | Stock      Option Agreement, dated as of October 16, 2007, between DCAP Group, Inc.      and  Barry B. Goldstein (10)                                                              |
|   |                                                                                                                                                                                         |
| 14     | Code      of Ethics (11)                                                                                                                                                                     |
|   |                                                                                                                                                                                         |
| 21     | Subsidiaries                                                                                                                                                                                 |
|   |                                                                                                                                                                                         |
| 23     | Consent      of Holtz Rubenstein Reminick LLP                                                                                                                                                |
|   |                                                                                                                                                                                         |
| 31(a)  | Rule      13a-14(a)/15d-14(a) Certification of Principal Executive Officer as      Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of      2002                                    |
|   |                                                                                                                                                                                         |
| 31(b)  | Rule      13a-14(a)/15d-14(a) Certification of Principal Financial Officer as      Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of      2002                                    |
|   |                                                                                                                                                                                         |
| 32     | Certification      of Chief Executive Officer and Chief Financial Officer Pursuant to 18      U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002 |

| (1)    | Denotes      document filed as an exhibit to our Current Report on Form 8-K for an      event dated February 1, 2008 and incorporated herein by      reference.          |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                     |
| (2)    | Denotes      document filed as an exhibit to our Quarterly Report on Form 10-QSB for      the period ended September 30, 2004 and incorporated herein by      reference. |
|   |                                                                                                                                                                     |
| (3)    | Denotes      document filed as an exhibit to our Current Report on Form 8-K for an      event dated May 28, 2003 and incorporated herein by    reference.                |

| (4)    | Denotes      document filed as an exhibit to our Annual Report on Form 10-KSB for the      fiscal year ended December 31, 2006 and incorporated herein by      reference.      |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                           |
| (5)    | Denotes      document filed as an exhibit to our Current Report on Form 8-K for an      event dated December 26, 2007 and incorporated herein by      reference.               |
|   |                                                                                                                                                                           |
| (6)    | Denotes      document filed as an exhibit to our Annual Report on Form 10-KSB for the      fiscal year ended December 31, 2002 and incorporated herein by      reference.      |
|   |                                                                                                                                                                           |
| (7)    | Denotes      document filed as an exhibit to Amendment No. 1 to our Current Report on      Form 8-K for an event dated May 28, 2003 and incorporated herein by      reference. |
|   |                                                                                                                                                                           |
| (8)    | Denotes      document filed as an exhibit to our Annual Report on Form 10-KSB for the      fiscal year ended December 31, 2005 and incorporated herein by      reference.      |
|   |                                                                                                                                                                           |
| (9)    | Denotes      document filed as an exhibit to our Quarterly Report on Form 10-QSB for      the period ended September 30, 2007 and incorporated herein by      reference.       |
|   |                                                                                                                                                                           |
| (10)   | Denotes      document filed as an exhibit to our Current Report on Form 8-K for an      event dated October 16, 2007 and incorporated herein by      reference.                |
|   |                                                                                                                                                                           |
| (11)   | Denotes      document filed as an exhibit to our Annual Report on Form 10-KSB for the      fiscal year ended December 31, 2003 and incorporated herein by      reference.      |

| ITEM      14. | PRINCIPAL ACCOUNTANT      FEES AND SERVICES |
|---------------|---------------------------------------------|

| Fee      Category                |   | Fiscal      2007 Fees |    |   | Fiscal      2006 Fees |   |
|----------------------------------|--------|-----------------------|---------|--------|-----------------------|--------|
|  Audit      Fees(1)         |   | $                     | 116,000 |   |                  | $      | 87,425 |   |
|  Audit-Related      Fees(2) |   |                  | -       |   |                  |   | - |   |
|  Tax      Fees(3)           |   |                  | 28,000  |   |                  |   | 34,000 |   |
|  All      Other Fees(4)     |   |                  | 8,419   |   |                  |   | 15,485 |   |
|  Total      Fees            |   | $                     | 152,419 |   |                  | $      | 136,910 |   |

| (1) | Audit      Fees  consist      of  aggregate  fees  billed      for  professional  services rendered for the audit of      our annual financial statements and review of the interim financial      statements included in quarterly reports or services that      are  normally  provided  by      the  independent  auditors      in  connection  with statutory and      regulatory  filings or engagements for the fiscal years ended      December 31, 2007 and December 31, 2006,  respectively. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                                                                                                                                                                                                                                                                                                |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)    | Audit-Related      Fees consist of aggregate fees billed for assurance and related services      that are reasonably related to the performance of the audit or review of      our financial statements and are not reported under “Audit      Fees.”                                                   |
|   |                                                                                                                                                                                                                                                                                                                |
| (3)    | Tax      Fees consist of aggregate fees billed for preparation of our federal and      state income tax returns and other tax compliance    activities.                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                |
| (4)    | All      Other Fees consist of aggregate fees billed for products and services      provided by Holtz Rubenstein Reminick LLP, other than those disclosed      above. These fees related to the audits of our wholly-owned subsidiary,      DCAP Management Corp., and general accounting consulting      services. |

| DCAP      GROUP, INC. ANDSUBSIDIARIES                          |
|----------------------------------------------------------------|
| REPORT      ON AUDITS OF CONSOLIDATEDFINANCIAL      STATEMENTS |
|                                                           |
|  Years      Ended December 31, 2007 and 2006         |
|                                                           |

| DCAP      GROUP, INC. ANDSUBSIDIARIESContentsYears      Ended December 31, 2007 and 2006 |
|------------------------------------------------------------------------------------------|

| Consolidated      Financial Statements                                                                                                                                                                                                                                                                                       |                                                                                      |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|  Report      of Independent Registered Public Accounting Firm Consolidated      Balance Sheets Consolidated      Statements of Operations Consolidated      Statement of Stockholders' Equity Consolidated      Statements of Cash Flows Notes      to Consolidated Financial Statements  |  F-2 F-3 F-4 F-5 F-6      - F-7 F-8      - F-28   |

| DCAP      GROUP, INC. AND                                                        |   |
|----------------------------------------------------------------------------------|--------|
| SUBSIDIARIES                                                                     |   |
| Consolidated      Balance Sheets                                                 |   |
| December      31,                                                                |   | 2007 |   |   | 2006 |   |
|                                                                             |   |   |   |   |   |   |
| Assets                                                                           |   |   |   |   |   |   |
| Current      Assets:                                                             |   |   |   |   |   |   |
| Cash      and cash equivalents                                                   |   | $ | 1,030,822 |   |   | $ | 1,196,412 |   |
| Accounts      receivable, net of allowance for doubtful accounts of              |   |   |   |   |   |   |   |   |
| $50,000      at December 31, 2007 and $66,000 at December 31, 2006               |   |   | 801,718 |   |   |   | 1,436,463 |   |
| Prepaid      income taxes                                                        |   |   | 76,723 |   |   |   | 261,403 |   |
| Prepaid      expenses and other current assets                                   |   |   | 218,881 |   |   |   | 88,359 |   |
| Assets      from discontinued operations                                         |   |   | 12,651,223 |   |   |   | 15,026,925 |   |
| Total      current assets                                                        |   |   | 14,779,367 |   |   |   | 18,009,562 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Property      and equipment, net                                                 |   |   | 464,824 |   |   |   | 347,277 |   |
| Goodwill                                                                         |   |   | 2,601,257 |   |   |   | 2,601,257 |   |
| Other      intangibles, net                                                      |   |   | 150,910 |   |   |   | 348,786 |   |
| Notes      receivable                                                            |   |   | 5,170,804 |   |   |   | 4,007,986 |   |
| Deposits      and other assets                                                   |   |   | 78,164 |   |   |   | 94,019 |   |
| Total      assets                                                                |   | $ | 23,245,326 |   |   | $ | 25,408,887 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Liabilities      and Stockholders' Equity                                        |   |   |   |   |   |   |   |   |
| Current      Liabilities:                                                        |   |   |   |   |   |   |   |   |
| Accounts      payable and accrued expenses                                       |   | $ | 630,412 |   |   | $ | 855,183 |   |
| Current      portion of long-term debt                                           |   |   | 2,098,989 |   |   |   | 630,565 |   |
| Other      current liabilities                                                   |   |   | 154,200 |   |   |   | 166,146 |   |
| Liabilities      from discontinued operations                                    |   |   | 12,517,305 |   |   |   | 14,172,592 |   |
| Mandatorily      redeemable preferred stock                                      |   |   |  780,000 |   |   |   | - |   |
| Total      current liabilities                                                   |   |   | 16,180,906 |   |   |   | 15,824,486 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Long-term      debt                                                              |   |   | 499,065 |   |   |   | 2,408,139 |   |
| Deferred      income taxes                                                       |   |   | 408,000 |   |   |   | 402,000 |   |
| Mandatorily      redeemable preferred stock                                      |   |   | - |   |   |   | 780,000 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Commitments                                                                      |   |   |   |   |   |   |   |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Stockholders'      Equity:                                                       |   |   |   |   |   |   |   |   |
| Common      stock, $.01 par value; authorized 10,000,000 shares;issued           |   |   |   |   |   |   |   |   |
| 3,750,447      at December 31, 2007 and 3,672,947 shares at December 31,    2006 |   |   | 37,505 |   |   |   | 36,730 |   |
| Preferred      stock, $.01 par value; authorized                                 |   |   |   |   |   |   |   |   |
| 1,000,000      shares; 0 shares issued and outstanding                           |   |   | - |   |   |   | - |   |
| Capital      in excess of par                                                    |   |   | 11,850,872 |   |   |   | 11,633,884 |   |
| Deficit                                                                          |   |   | (4,545,242 | ) |   |   | (4,497,797 | ) |
|                                                                             |   |   | 7,343,135 |   |   |   | 7,172,817 |   |
| Treasury      stock, at cost, 781,423 shares at December 31, 2007 and            |   |   |   |   |   |   |   |   |
| 776,923      shares at December 31, 2006                                         |   |   | (1,185,780 | ) |   |   | (1,178,555 | ) |
| Total      stockholders' equity                                                  |   |   | 6,157,355 |   |   |   | 5,994,262 |   |
| Total      liabilities and stockholders' equity                                  |   | $ | 23,245,326 |   |   | $ | 25,408,887 |   |
|                                                                             |   |   |   |   |   |   |   |   |

----

| DCAP      GROUP, INC. AND                                                            |   |
|--------------------------------------------------------------------------------------|--------|
| SUBSIDIARIES                                                                         |   |
|                                                                                 |   |   |   |   |   |   |
| Consolidated      Statements of Operations                                           |   |
| Years      Ended December 31,                                                        |   | 2007 |   |   | 2006 |   |
|                                                                                 |   |   |   |   |   |   |
| Commissions      and fee revenue                                                     |   | $ | 5,745,197 |   |   | $ | 7,121,724 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| Operating      expenses:                                                             |   |   |   |   |   |   |   |   |
| General      and administrative expenses                                             |   |   | 6,754,434 |   |   |   | 7,269,287 |   |
| Depreciation      and amortization                                                   |   |   | 288,543 |   |   |   | 285,184 |   |
| Impairment      of intangibles                                                       |   |   | 94,914 |   |   |   | - |   |
| Total      operating expenses                                                        |   |   | 7,137,891 |   |   |   | 7,554,471 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| Operating      loss                                                                  |   |   | (1,392,694 | ) |   |   | (432,747 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |
| Other      (expense) income:                                                         |   |   |   |   |   |   |   |   |
| Interest      income                                                                 |   |   | 10,638 |   |   |   | 4,454 |   |
| Interest      income - notes receivable                                              |   |   | 1,287,819 |   |   |   | 1,182,844 |   |
| Interest      expense                                                                |   |   | (477,644 | ) |   |   | (490,946 | ) |
| Interest      expense - mandatorily redeemable preferred stock                       |   |   | (39,000 | ) |   |   | (39,000 | ) |
|    Gain      on sale of store/book of business                        |   |   | 65,767 |   |   |   | 81,105 |   |
| Total      other income                                                              |   |   | 847,580 |   |   |   | 738,457 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| (Loss)      income from continuing operations before provision for income      taxes |   |   | (545,114 | ) |   |   | 305,710 |   |
| (Benefit      from) provision for income taxes                                       |   |   | (226,501 | ) |   |   | 137,570 |   |
| (Loss)      income from continuing operations                                        |   |   | (318,613 | ) |   |   | 168,140 |   |
| Income      from discontinued operations, net of taxes                               |   |   | 271,168 |   |   |   | 340,245 |   |
| Net      (loss) income                                                               |   | $ | (47,445 | ) |   | $ | 508,385 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| Net      Income (Loss) Per Common Share:                                             |   |   |   |   |   |   |   |   |
| Basic:                                                                               |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                        |   | $ | (0.11 | ) |   | $ | 0.06 |   |
| Income      from discontinued operations                                             |   |   | 0.09 |   |   |   | 0.12 |   |
| Income      (loss) per common share                                                  |   | $ | (0.02 | ) |   | $ | 0.18 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| Diluted:                                                                             |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                        |   | $ | (0.11 | ) |   | $ | 0.06 |   |
| Income      from discontinued operations                                             |   |   | 0.09 |   |   |   | 0.11 |   |
| Income      (loss) per common share                                                  |   | $ | (0.02 | ) |   | $ | 0.17 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| Weighted      Average Number of Shares Outstanding:                                  |   |   |   |   |   |   |   |   |
| Basic                                                                                |   |   | 2,963,036 |   |   |   | 2,888,805 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| Diluted                                                                              |   |   | 2,963,036 |   |   |   | 3,250,937 |   |

----

| DCAP      GROUP, INC. AND                           |
|-----------------------------------------------------|
|  SUBSIDIARIES                                  |
|                                                |   |   |   |   |   |   |   |   |   |
| Consolidated      Statement of Stockholders' Equity |
| Years      Ended December 31, 2007 and 2006         |
|                                                |   |   |   |   |   |   |   |   |   |
|                                                |   |   |   |   |  Capital |   |   |   |   |
|                                                |  Common      Stock |  Preferred      Stock |  in      Excess |   |  Treasury      Stock |   |
|                                                |  Shares |  Amount |  Shares |  Amount |  of      Par |  (Deficit) |  Shares |  Amount |  Total |
| Balance,      December 31, 2005                     |      3,545,447 |  $       35,455 | - | $        -      |  $11,371,880 |  $(5,006,182) |         776,923 |  $(1,178,555) |  $  5,222,598 |
| Exercise      of stock options                      |         127,500 |             1,275 | - | - |         189,974 |                    - |                    - |                    - |         191,249 |
| Tax      benefit from exercise of stock options     |                    - |                    - | - | - |           42,400 |                    - |                    - |                    - |           42,400 |
| Stock-based      payments                           |                    - |                    - | - | - |           29,630 |                    - |                    - |                    - |           29,630 |
| Net      income                                     |                    - |                    - | - | - | - |         508,385 |                    - |                    - |         508,385 |
| Balance,      December 31, 2006                     |      3,672,947 |           36,730 | - | - |    11,633,884 |    (4,497,797) |         776,923 |    (1,178,555) |      5,994,262 |
| Exercise      of stock options                      |           74,500 |                745 | - | - |         111,455 |                    - |                    - |                    - |         112,200 |
| Stock-based      payments                           |             3,000 |                  30 | - | - |         105,533 |                    - |                    - |                    - |         105,563 |
| Return      of stock as settlement of liability     |                    - |                    - | - | - |                     - |                    - |             4,500 |           (7,225) |           (7,225) |
| Net      loss                                       |                    - |                    - | - | - |                     - |         (47,445) |                    - |                    - |         (47,445) |
| Balance,      December 31, 2007                     |      3,750,447 |  $       37,505 | - | $        -     |  $11,850,872 |  $(4,545,242) |         781,423 |  $(1,185,780) |  $  6,157,355 |

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| DCAP      GROUP, INC. AND                                                              |   |
|----------------------------------------------------------------------------------------|--------|
| SUBSIDIARIES                                                                           |   |
|                                                                                   |   |   |   |   |   |   |
| Consolidated      Statements of Cash Flows                                             |   |
| Years      Ended December 31,                                                          |   | 2007 |   |   | 2006 |   |
|                                                                                   |   |   |   |   |   |   |
| Cash      Flows from Operating Activities:                                             |   |   |   |   |   |   |
| Net      (loss) income                                                                 |   | $ | (47,445 | ) |   | $ | 508,385 |   |
| Adjustments      to reconcile net (loss) income to net cash                            |   |   |   |   |   |   |   |   |
| used      in operating activities:                                                     |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                                     |   |   | 288,543 |   |   |   | 285,184 |   |
| Bad      debt expense                                                                  |   |   | 37,070 |   |   |   | 19,000 |   |
| Accretion      of discount on notes receivable                                         |   |   | (987,818 | ) |   |   | (905,500 | ) |
| Amortization      of warrants                                                          |   |   | 40,120 |   |   |   | 77,526 |   |
| Impairment      of intangible asset                                                    |   |   | 94,914 |   |   |   | - |   |
| Stock-based      payments                                                              |   |   | 105,563 |   |   |   | 29,630 |   |
| Tax      benefit from exercise of stock options                                        |   |   | - |   |   |   | 42,400 |   |
| Gain      on sale of store/book of business                                            |   |   | (65,767 | ) |   |   | (81,105 | ) |
| Deferred      income taxes                                                             |   |   | 6,000 |   |   |   | 336,000 |   |
| Changes      in operating assets and liabilities:                                      |   |   |   |   |   |   |   |   |
| Decrease      (increase) in assets:                                                    |   |   |   |   |   |   |   |   |
| Accounts      receivable                                                               |   |   | 458,310 |   |   |   | 51,101 |   |
| Prepaid      expenses and other current assets                                         |   |   | (196,442 | ) |   |   | 59,686 |   |
| Deposits      and other assets                                                         |   |   | 36,008 |   |   |   | (16,706 | ) |
| Increase      (decrease) in liabilities:                                               |   |   |   |   |   |   |   |   |
| Accounts      payable and accrued expenses                                             |   |   | (224,771 | ) |   |   | 341,633 |   |
| Income      taxes payable                                                              |   |   | 184,680 |   |   |   | (261,403 | ) |
| Other      current liabilities                                                         |   |   | (11,946 | ) |   |   | (32,798 | ) |
| Net      cash (used in) provided by operating activities of continuing      operations |   |   | (282,981 | ) |   |   | 453,033 |   |
| Operating      activities of discontinued operations                                   |   |   | (91,395 | ) |   |   | (768,640 | ) |
| Net      Cash Used In Operating Activities                                             |   |   | (374,376 | ) |   |   | (315,607 | ) |
|                                                                                   |   |   |   |   |   |   |   |   |
| Cash      Flows from Investing Activities:                                             |   |   |   |   |   |   |   |   |
| Decrease      in notes and other receivables - net                                     |   |   | 2,374 |   |   |   | 42,352 |   |
| Proceeds      from sale of store                                                       |   |   | 66,300 |   |   |   | 50,100 |   |
| Purchase      of property and equipment                                                |   |   | (213,309 | ) |   |   | (186,174 | ) |
| Purchase      of notes receivable                                                      |   |   | - |   |   |   | (3,075,141 | ) |
| Purchase      of business                                                              |   |   | - |   |   |   | (1,000,786 | ) |
| Net      cash used in investing activities of continuing operations                    |   |   | (144,635 | ) |   |   | (4,169,649 | ) |
| Investing      activities of discontinued operations                                   |   |   | 2,278,458 |   |   |   | 1,735,907 |   |
| Net      Cash Provided by (Used in) Investing Activities                               |   |   | 2,133,823 |   |   |   | (2,433,742 | ) |
|                                                                                   |   |   |   |   |   |   |   |   |
| Cash      Flows from Financing Activities:                                             |   |   |   |   |   |   |   |   |
| Proceeds      from term loan                                                           |   |   | - |   |   |   | 1,300,000 |   |
| Principal      payments on long-term debt                                              |   |   | (570,589 | ) |   |   | (593,846 | ) |
| Proceeds      from exercise of options and warrants                                    |   |   | 112,200 |   |   |   | 191,249 |   |
| Net      cash (used in) provided by financing activities of continuing      operations |   |   | (458,389 | ) |   |   | 897,403 |   |
| Financing      activities of discontinued operations                                   |   |   | (1,466,648 | ) |   |   | 1,086,869 |   |
| Net      Cash (Used in) Provided by Financing Activities                               |   |   | (1,925,037 | ) |   |   | 1,984,272 |   |

----

| DCAP      GROUP, INC. AND                              |   |
|--------------------------------------------------------|--------|
| SUBSIDIARIES                                           |   |
|                                                   |   |   |   |   |   |   |
| Consolidated      Statements of Cash Flows (continued) |   |
| Years      Ended December 31,                          |   | 2007 |   |   | 2006 |   |
|                                                   |   |   |   |   |   |   |
| Net      Decrease in Cash and Cash Equivalents         |   | $ | (165,590 | ) |   | $ | (765,077 | ) |
| Cash      and Cash Equivalents, beginning of year      |   |   | 1,196,412 |   |   |   | 1,961,489 |   |
| Cash      and Cash Equivalents, end of year            |   | $ | 1,030,822 |   |   | $ | 1,196,412 |   |
|                                                   |   |   |   |   |   |   |   |   |
| Supplemental      Schedule of Non-Cash Investing       |   |   |   |   |   |   |   |   |
| and      Financing Activities:                         |   |   |   |   |   |   |   |   |
| Note      payable issued for purchase of business      |   | $ | - |   |   | $ | 612,481 |   |
| Computer      equipment acquired under capital leases  |   | $ | 89,819 |   |   | $ | - |   |

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|  1. | Organization      and Nature of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|     | DCAP      Group, Inc. and Subsidiaries (referred to herein as "we" or "us") operate      a network of retail offices and franchise operations engaged in the sale      of retail auto, motorcycle, boat, business, and homeowner's insurance, and      until February 1, 2008 provided premium financing of insurance policies      for customers of our offices as well as customers of non-affiliated      entities. On February 1, 2008, we sold our outstanding premium finance      loan portfolio (see Notes 17 and 22). As a result of the sale, our premium      financing operations have been classified as discontinued operations and      prior periods have been restated. The purchaser of the premium finance      portfolio has agreed that, during the five year period ending January 31,      2013 (subject to automatic renewal for successive two year terms under      certain circumstances), it will purchase, assume and service premium      finance contracts originated by us in the states of New York, New Jersey      and Pennsylvania. In connection with such purchases, we will be      entitled to receive a fee generally equal to a percentage of the amount      financed.  Our continuing operations of the premium financing      business will consist of the revenue earned from placement fees and any      related expenses.  We also provide automobile club services for      roadside emergencies and tax preparation services. |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 2.       | Summary      of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|     | Principles      of consolidation - The accompanying consolidated financial      statements include the accounts of all subsidiaries and joint ventures in      which we have a majority voting interest or voting control. All      significant intercompany accounts and transactions have been      eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|     | Commission      and fee income - We recognize      commission revenue from insurance policies at the beginning of the      contract period. Refunds of commissions on the cancellation of insurance      policies are reflected at the time of cancellation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|     | Franchise      fee revenue on initial franchisee fees is recognized when substantially      all of our contractual requirements under the franchise agreement are      completed. Franchisees also pay a monthly franchise fee plus an applicable      percentage of advertising expense. We are obligated to provide marketing      and training support to each franchisee.  During the years ended      December 31, 2007 and 2006, approximately $110,000 and $50,000,      respectively, was recognized as initial franchise fee    income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|     | Fees      for income tax preparation are recognized when the services are completed.      Automobile club dues are recognized equally over the contract      period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|     | Allowance      for doubtful accounts - Management must make estimates of the      uncollectability of accounts receivable. Management specifically analyzed      accounts receivable and analyzes historical bad debts, customer      concentrations, customer credit-worthiness, current economic trends and      changes in customer payment terms when evaluating the adequacy of the      allowance for doubtful accounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

|   | Goodwill      and intangible assets - Goodwill represents      the excess of the purchase price over fair value of identifiable net      assets acquired from business acquisitions. In accordance with Statement      of Financial Accounting Standard (“SFAS”) No. 142, “Goodwill and Other Intangible      Assets,” goodwill is no longer amortized, but is reviewed for      impairment on an annual basis and between annual tests in certain      circumstances. We conduct our annual impairment test for goodwill at the      beginning of the first quarter. We performed the required impairment test      for fiscal years 2007 and 2006 and found no impairment of goodwill. There      can be no assurance that future goodwill impairment tests will not result      in a charge to earnings. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | Other      Intangibles -      SFAS No. 142 requires purchased intangible assets other than      goodwill to be amortized over their useful lives unless those lives are      determined to be indefinite. Purchased intangible assets are carried at      cost less accumulated amortization. Definite-lived intangible assets,      which include customer and phone, have been assigned an estimated finite      life and are amortized on a straight-line basis over periods ranging from      3 to 15 years. If the value of the intangible asset is determined to be      impaired, the asset is written down to the current fair    value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Property      and equipment      - Property and      equipment are stated at cost. Depreciation is provided using the      straight-line method over the estimated useful lives of the related      assets. Leasehold improvements are being amortized using the straight-line      method over the estimated useful lives of the related assets or the      remaining term of the lease.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Concentration      of credit risk - We invest our      excess cash in deposits and money market accounts with major financial      institutions and have not experienced losses related to these      investments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | We      perform ongoing credit evaluations and generally do not require      collateral.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Cash and      cash equivalents - We consider all highly liquid debt instruments      with a maturity of three months or less, as well as bank money market      accounts, to be cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Estimates      - The preparation of financial statements in conformity with      generally accepted accounting principles requires management to make      estimates and assumptions that affect the reported amounts of assets and      liabilities and disclosure of contingent assets and liabilities at the      date of the financial statements and the reported amounts of revenues and      expenses during the reporting period. Actual results could differ from      those estimates. The most significant estimates include the allowance for      finance receivable losses. It is reasonably possible that events could      occur during the upcoming year which could change such      estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Net income      per share - Basic net income per share is computed by dividing      income available to common shareholders by the weighted-average number of      common shares outstanding. Diluted earnings per share reflect, in periods      in which they have a dilutive effect, the impact of common shares issuable      upon exercise of stock options and conversion of mandatorily redeemable      preferred stock. The computation of diluted earnings per share excludes      those options and warrants with an exercise price in excess of the average      market price of our Common Stock during the periods presented. For the      year ended December 31, 2006, the inclusion of 361,124 of options and      warrants in the computation of diluted earnings per share would have been      anti-dilutive. During the year ended December 31, 2007, we recorded a loss      available to common shareholders and, as a result, the weighted average      number of shares of Common Stock used in the calculation of basic and      diluted loss per share is the same, and have not been adjusted for the      effects of 678,124 potential shares of Common Stock from unexercised stock      options and warrants, and the conversion of Convertible Preferred Stock,      which were anti-dilutive for such period. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      reconciliation for the years ended December 31, 2007 and 2006 is as      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

| Years      Ended December 31,                                                                                | 2007   |   |      | 2006   |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|
|                                                                                                         |   |   |      |   |   |   |
| Weighted      Average Number of Shares Outstanding                                                           |   |   | 2,963,036 |   |   |   | 2,888,805 |   |
| Effect      of Dilutive Securities, common stock equivalents                                                 |   |   | -         |   |   |   | 362,132 |   |
| Weighted      Average Number of Shares Outstanding, used forcomputing      diluted earnings (loss) per share |   |   | 2,963,036 |   |   |   |   3,250,937 |   |

----

|   | Net      (loss) income from continuing operations available to common shareholders      for the computation of diluted earnings (loss) per share is computed as      follows: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Years      Ended December 31,                                                                                                 |   | 2007   |     |   | 2006   |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                                                                                                          |   |   |     |   |   |   |
| Net      (Loss) Income from Continuing Operations                                                                             |   | $      | (318,613 | )      |   | $      | 168,140 |   |
| Interest      Expense on Dilutive Convertible Preferred Stock                                                                 |   |   | -        |   |   |   | 39,000 |   |
| Net      (Loss) Income from Continuing Operations Available to Common Shareholders      for Diluted Earnings (Loss) Per Share |   | $      | (318,613 | )      |   | $      | 207,140 |   |

|   | There      are no dilutive effects in the calculation of diluted net income per share      from discontinued operations for the year ended December 31,      2007. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Net      (loss) income available to common shareholders for the computation of      diluted earnings (loss) per share is computed as  follows: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

| Years      Ended December 31,                                                                     |   | 2007   |    |   | 2006   |   |
|---------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                                              |   |   |    |   |   |   |
| Net      (Loss) Income                                                                            |   | $      | (47,445 | )      |   | $      | 508,385 |   |
| Interest      Expense on Dilutive Convertible Preferred Stock                                     |   |   | -       |   |   |   | 39,000 |   |
| Net      (Loss) Income Available to Common Shareholders forDiluted      Earnings (Loss) Per Share |   | $      | (47,445 | )      |   | $      | 547,385 |   |

|   | Advertising      costs - Advertising costs are charged to operations when the      advertising first takes place. Included in general and administrative      expenses are advertising costs approximating $596,000 and $479,000 for the      years ended December 31, 2007 and 2006, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Impairment      of long-lived assets - We review long-lived assets and certain      identifiable intangibles to be held and used for impairment on an annual      basis and whenever events or changes in circumstances indicate that the      carrying amount of an asset exceeds the fair value of the asset. If other      events or changes in circumstances indicate that the carrying amount of an      asset that we expect to hold and use may not be recoverable, we will      estimate the undiscounted future cash flows expected to result from the      use of the asset or its eventual disposition, and recognize an impairment      loss. The impairment loss, if determined to be necessary, would be      measured as the amount by which the carrying amount of the assets exceeds      the fair value of the assets. A similar evaluation is made in relation to      goodwill, with any impairment loss measured as the amount by which the      carrying value of such goodwill exceeds the expected undiscounted future      cash flows. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Income      taxes - Deferred tax assets and liabilities are determined based      upon the differences between financial reporting and tax bases of assets      and liabilities, and are measured using the enacted tax rates and laws      that will be in effect when the differences are expected to      reverse.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Share-based      compensation - Prior to January 1, 2006, we accounted for      share-based compensation under the recognition and measurement principles      of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to      Employees" ("APB 25"). Therefore, we measured compensation expense      for our share-based compensation using the intrinsic value method, that      is, as the excess, if any, of the fair market value of our stock at the      grant date over the amount required to be paid to acquire the stock, and      provided the disclosures required by SFAS 123, "Accounting for Stock-Based      Compensation" (“SFAS 123”) and SFAS 148, "Accounting for Stock-Based      Compensation-Transition and Disclosure"      (“SFAS 148”).                                                                                                                                                                                                              |

----

|   | Effective      January 1, 2006, we began recording compensation expense associated      with stock options and other equity-based compensation in accordance with      SFAS No. 123 (revised 2004), “Share-Based Payment”      (“SFAS 123(R)”) using the modified prospective transition method and      therefore we have not restated results for prior periods. Under the      modified prospective transition method, share-based compensation expense      includes (1) compensation expense for all share-based awards granted      on or after January 1, 2006 as determined based on the grant-date      fair value estimated in accordance with the provisions of SFAS 123(R)      and (2) compensation expense for share-based compensation awards      granted prior to, but not yet vested, as of January 1, 2006, based on      the grant date fair value estimated in accordance with the original      provisions of SFAS 123. We recognize compensation expense on a      straight-line basis over the requisite service period of the      award |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Website      development costs - Technology and content costs are generally      expensed as incurred, except for certain costs relating to the development      of internal-use software, including those relating to operating our      website, that are capitalized and depreciated over two years. A total of      approximately $53,000 and $43,000 in such costs were incurred during the      years ended December 31, 2007 and 2006, respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Comprehensive      income (loss) - Comprehensive income (loss) refers to revenue,      expenses, gains and losses that under generally accepted accounting      principles are included in comprehensive income but are excluded from net      income as these amounts are recorded directly as an adjustment to      stockholders' equity. At December 31, 2007 and 2006, there were no such      adjustments required.                                    |

|   | New      accounting pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | In      July 2006, the Financial Accounting Standards Board ("FASB") issued      Financial Interpretation No. 48, “Accounting for Uncertainty in      Income Taxes — an interpretation of FASB Statement No. 109” (“FIN      48”), which clarifies the accounting for uncertainty in tax positions. FIN      48 requires that we recognize the impact of a tax position in our      financial statements if that position is more likely than not to be      sustained on audit, based on the technical merits of the position. The      provisions of FIN 48 are effective in the first quarter      of  2007, with the cumulative effect of the change in accounting      principle, if any, recorded as an adjustment to opening retained earnings.      The adoption of FIN 48 did not have a material impact on our financial      position or results of operations. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | In      September 2006, the Securities and Exchange Commission ("SEC") released      Staff Accounting Bulletin (“SAB”) No. 108, “Considering the Effects of      Prior Year Misstatements When Quantifying Misstatements in Current Year      Financial Statements” (“SAB 108”). SAB 108 provides interpretive      guidance on the SEC’s views regarding the process of quantifying the      materiality of misstatements in the financial statements. SAB 108 is      effective for fiscal years ending after November 15, 2006, and early      application for the first interim period of the same fiscal year is      encouraged. The application of SAB 108 did not have a material effect on      our financial position or results of operations.                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | In      September 2006, the FASB issued SFAS No. 157, “Fair Value      Measurements” (“SFAS 157”). SFAS 157 defines fair value,      establishes a framework and gives guidance regarding the methods used in      measuring fair value, and expands disclosures about fair value      measurements. SFAS 157 is effective for financial statements issued for      fiscal years beginning after November 15, 2007, and interim periods within      those fiscal years. We are currently evaluating the impact of adopting      SFAS 157 on our consolidated financial  statements.                                                                                                                                                                                                                                                                                                        |

----

|   | In January      2007, the FASB issued SFAS No. 159, “The Fair Value Option for      Financial Assets and Financial Liabilities — Including an amendment of      FASB Statement No. 115” (“SFAS No. 159”). SFAS      No. 159 is intended to improve financial reporting by providing      entities with the opportunity to mitigate volatility in reported earnings      caused by measuring related assets and liabilities differently without      having to apply complex hedge accounting provisions. It also establishes      presentation and disclosure requirements designed to facilitate      comparisons between entities that choose different measurement attributes      for similar types of assets and liabilities. The statement does not affect      any existing accounting literature that requires certain assets and      liabilities to be carried at fair value, and it does not establish      requirements for recognizing dividend income, interest income or interest      expense. It also does not eliminate disclosure requirements included in      other accounting standards. The provisions of SFAS 159 are effective for      the fiscal year beginning after November 15, 2007. We are currently      evaluating the impact of the provisions of SFAS    No. 159. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | In      December 2007, the FASB issued SFAS No. 141(R), “Business      Combinations”.  Effective for fiscal years beginning      after December 15, 2008, this statement revises and converges      internationally the accounting for business combinations.  The      adoption of this statement is not expected to have a material impact on      our financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | In      December 2007, the FASB also issued SFAS No. 160, “Noncontrolling Interests in      Consolidated Financial Statements.” Effective for fiscal years      beginning after December 15, 2008, this statement revises and converges      internationally the reporting of noncontrolling interests in consolidated      financial statements. The adoption of this statement is not expected to      have a material impact on our financial  statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

| 3.     | Business      Acquisitions                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Effective      January 1, 2006, we acquired substantially all of the assets of Accurate      Agency of Western New York, Inc., Louisons Associates Limited and Accurate      Agency, Inc. (collectively, “Accurate”), insurance brokerage firms with a      total of four offices located in and around Rochester, New      York.                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The      aggregate purchase price was $1,600,000, including $800,000 of cash with      the balance paid through the issuance of an $800,000 non-interest bearing      note payable over 72 months commencing on January 10, 2007.  The      note has been recorded at its estimated present value of      $612,481.  The purchase price of $1,447,022, including      transaction costs of $34,541, was allocated as  follows: |

| Goodwill                    |   | $      | 1,157,286 |   |
|-----------------------------|--------|--------|-----------|--------|
| Intangible      Assets      |   |   | 280,686   |   |
| Property      and Equipment |   |   | 9,050     |   |
| Net      Assets Acquired    |   | $      | 1,447,022 |   |

|   | In      January 2006, we purchased the book of business, customer list and certain      other assets of  Mid–Hudson Valley Brokerage, LLC (“Mid-Hudson”)      located in Poughkeepsie, New York, for $94,505 in cash. The net purchase      price of $98,709, including transactions costs of $4,740, was allocated as      follows: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Goodwill                 |   | $      | 78,420 |   |
|--------------------------|--------|--------|--------|--------|
| Intangible      Assets   |   |   | 20,289 |   |
| Net      Assets Acquired |   | $      | 98,709 |   |

|   | The      aggregate intangible assets acquired have been assigned to customer lists,      which is subject to periodic amortization over a weighted average      estimated useful life of four years. Our consolidated statement of      operations includes the revenue and expenses of Accurate and Mid-Hudson      from January 2006. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | The      goodwill acquired in the acquisitions is expected to be deductible for      income tax purposes over a period of 15 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.     | Notes      Receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Purchase of Notes      Receivable On      January 31, 2006, we purchased from Eagle Insurance Company (“Eagle”) two      surplus notes issued by Commercial Mutual Insurance Company (“CMIC”) in      the aggregate principal amount of $3,750,000 (the “Surplus Notes”), plus      accrued interest of $1,794,688. The aggregate purchase price for the      Surplus Notes was $3,075,141, of which $1,303,434 was paid to Eagle by      delivery of a six month promissory note which provided for interest at the      rate of 7.5% per annum.  The promissory note was paid in full on      July 28, 2006.  CMIC is a New York property and casualty      insurer. Eagle is a New Jersey property and casualty insurer that is      subject to an Order of Liquidation issued by the New Jersey Department of      Banking and Insurance (which order has been stayed pending      appeal).  Eagle owns approximately 10% of our outstanding common      stock.  The Surplus Notes acquired by us are past due and      provide for interest at the prime rate or 8.5% per annum, whichever is      less.  Payments of principal and interest on the Surplus Notes      may only be made out of the surplus of CMIC and require the approval of      the New York State Department of Insurance.  During the years      ended December 31, 2007 and 2006, interest payments totaling $125,000 and      $250,000, respectively, were received.  The discount on the      Surplus Notes and the accrued interest at the time of acquisition are      being accreted over a 30 month period, the estimated period to collect      such amounts.  Such accretion amount, together with interest on      the Surplus Notes for the periods ended December 31, 2007 and 2006, are      included in our consolidated statement of operations as “Interest      income-notes receivable.” Possible Future      Conversion of Notes Receivable In March 2007, CMIC's Board of Directors      adopted a resolution to convert CMIC from an advance premium cooperative      insurance company to a stock property and casualty  insurance      company.  CMIC has advised us that it has obtained permission from      the Superintendent of Insurance of the State of New York to proceed with      the conversion process (subject to certain conditions as discussed      below). The      conversion by CMIC to a stock property and casualty insurance company is      subject to a number of conditions, including the approval of the plan of      conversion by the Superintendent of Insurance and CMIC’s      policyholders.  As part of the approval process, the      Superintendent of Insurance had an appraisal performed with respect to the      fair market value of CMIC as of December 31, 2006.  In addition,      the Insurance Department conducted a five year examination of CMIC as of      December 31, 2006. We, as a holder of the CMIC surplus notes, at our      option, would be able to exchange the surplus notes for an equitable share      of the securities or other consideration, or both, of the corporation into      which CMIC would be converted.  Based upon the amount payable on      the surplus notes and the statutory surplus of CMIC, we believe that,      following any conversion by CMIC into a stock corporation, we could hold a      controlling equity interest in CMIC.  It is anticipated that the      conversion will be completed within the next twelve months.  No      assurances can be given that the conversion will occur. Our      Chairman is also Chairman of CMIC and one of our other directors and our      Chief Accounting Officer are also directors of CMIC.  |

----

| 5.     | Sale      of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | Sale of Book of      Business In      March 2007, we sold the book of business of one of our stores for $63,000      in cash.  The sale resulted in a gain of      $62,467.     Sale of      Store During      the year ended December 31, 2006, we sold one of our retail stores for      $125,000 in cash and notes.  The sale of the store resulted in a      gain of $81,105.  In addition, concurrently with the sale, the      purchaser entered into a franchise agreement with  us. |

| 6.     | Goodwill                                                                                        |
|--------|-------------------------------------------------------------------------------------------------|
|   |                                                                                            |
|   | The      changes in the carrying value of goodwill for the years presented are as      follows: |

| December      31,                                          |   | 2007   |      |   | 2006   |   |
|------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                       |   |   |      |   |   |   |
| Balance,      beginning of year                            |   | $      | 2,601,257 |   |   | $      | 1,305,551 |   |
| Addition,      as a result of acquisitions                 |   |   | -         |   |   |   | 1,235,706 |   |
| Addition,      as a result of contingent acquisition costs |   |   | -         |   |   |   | 67,000 |   |
| Reduction      from sale of store                          |   |   | -         |   |   |   | (7,000 | ) |
| Balance,      end of year                                  |   | $      | 2,601,257 |   |   | $      | 2,601,257 |   |

| 7.     | Other      Intangibles                                |
|--------|-------------------------------------------------------|
|   |                                                  |
|   | Other      intangible assets consist of thefollowing: |

----

| December      31,                    |   | 2007   |    |   | 2006   |   |
|--------------------------------------|--------|--------|---------|--------|--------|--------|
|                                 |   |   |    |   |   |   |
|  Gross      carrying amount:    |   |   |    |   |   |   |
|  Customer      lists            |   | $      | 554,425 |   |   | $      | 554,525 |   |
|  Vanity      phone numbers      |   |   | -       |   |   |   | 204,416 |   |
|                                 |   |   | 554,425 |   |   |   | 758,941 |   |
|                                 |   |   |    |   |   |   |   |   |
|  Accumulated      amortization: |   |   |    |   |   |   |   |   |
|  Customer      lists            |   |   | 403,515 |   |   |   | 314,281 |   |
|  Vanity      phone numbers      |   |   | -       |   |   |   | 95,874 |   |
|                                 |   |   | 403,515 |   |   |   | 410,155 |   |
|                                 |   |   |    |   |   |   |   |   |
| Balance,      end of year            |   | $      | 150,910 |   |   | $      | 348,786 |   |

|   | The      aggregate amortization expense for the years ended December 31, 2007 and      2006 was approximately $103,000 and $141,000, respectively. As of December      31, 2007, we no longer utilized the vanity telephone numbers included in      intangible assets. The balance of $94,914 was written off and is included      in impairment of intangible assets in the Consolidated Statements of      Operations for the year ended December 31,2007. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Estimated      amortization expense for the five years subsequent to December 31, 2007 is      as follows: |
|--------|------------------------------------------------------------------------------------------------------------|

|   | Years      Ending December 31, |   |   |
|--------|--------------------------------|--------|--------|
|   |                           |   |   |
|   | 2008                           |   | 75,000 |
|   | 2009                           |   | 75,000 |

|   | The      remaining weighted-average amortization period as of December 31, 2007 is      2.0 years |
|--------|---------------------------------------------------------------------------------------------------|

|   | Other      intangible assets are being amortized using the straight-line method over      a period of four to fifteen years. |
|--------|------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                         |
| 8.     | Property      and Equipment                                                                                                  |
|   |                                                                                                                         |
|   | Property      and equipment consists of thefollowing:                                                                        |

| December      31,                                           |  Useful      Lives                                 |   | 2007   |      |   | 2006   |   |
|-------------------------------------------------------------|---------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                        |                                                    |   |   |      |   |   |   |
|  Furniture,      fixtures & equipment              |              5 years |   | $      | 379,812   |   |   | $      | 358,085 |   |
|  Leasehold      improvements                           |    3      - 5 years                      |   |   | 310,817   |   |   |   | 266,872 |   |
|  Computer      hardware, software and office equipment |         2 - 5 years                           |   |   | 1,535,301 |   |   |   | 1,338,311 |   |
|  Entertainment      facility                           |            20 years            |   |   | 200,538   |   |   |   | 200,538 |   |
|                                                        |                                                    |   |   | 2,426,468 |   |   |   | 2,163,806 |   |
|  Less      accumulated depreciation                    |                                                    |   |   | 1,961,644 |   |   |   | 1,816,529 |   |
|                                                        |                                                    |   | $      | 464,824   |   |   | $      | 347,277 |   |

----

|   | Depreciation      expense for the years ended December 31, 2007 and 2006 was approximately      $186,000 and $117,000,respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

| 9.     | Accounts      Payable and Accrued Expenses                             |
|--------|------------------------------------------------------------------------|
|   |                                                                   |
|   | Accounts      payable and accrued expenses consists of the  following: |

| December      31,                    | 2007                                                                                                          | 2006                                                   |   |
|--------------------------------------|---------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|--------|
|                                 |                                                                                                          |                                                   |   |
|  Accounts      payable          |  $    259,229                                                                        |  $   374,834                       |   |
|  Interest                       |          85,902                                                  |         85,902 |   |
|  Payroll      and related costs |          75,422                                                  |         57,566 |   |
|  Professional      fees         |        209,859                                                             |       106,420            |   |
|  Acquisition      costs         |                   - |         67,000 |   |
|  Other                          |                   - |       163,461            |   |
|                                 |  $    630,412                                                                        |  $   855,183                       |   |

|  10. | Debentures      Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|      | In      1971, pursuant to a plan of arrangement, we issued a series of debentures,      which matured in 1977. As of December 31, 2007 and 2006, $154,200 of these      debentures has not been presented for payment. Accordingly, this balance      has been included in other current liabilities in the accompanying      consolidated balance sheet. Interest has not been accrued on the remaining      debentures payable. In addition, no interest, penalties or other charges      have been accrued with regard to any escheatobligation. |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 11.       | Long-Term      Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|      | Long-term      debt and capital lease obligations consistof:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

| December      31,                                                                                                                                                                                                                                                              |             2007   |            2006                                                          |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|---------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                           |                                             |                                                                                              |
| Note      payable issued in connection with the purchase of Accurate, payable in      monthly installments of $9,255, including imputed interest at 7% per      annum. Payments on the note commenced in January 2007 and the note matures      in December 2012. (a)          |  $  517,113                       |  $   556,555                                                                  |
|                                                                                                                                                                                                                                                                           |                                             |                                                                                              |
| Term      loan from Manufacturers and Traders Trust Company, which bears interest at      LIBOR plus 2.75%, payable in quarterly principal installments of $130,000      each, commencing September 1, 2006. The remaining principal balance is      payable on June 30, 2008. |      520,000            |    1,040,000                                                                       |
|                                                                                                                                                                                                                                                                           |                                             |                                                                                              |
| Capitalized      lease for computer equipment, payable in monthly installments of $2,241      per month, including interest at 9.1% per annum. The term of the      capitalized lease is through June 30, 2011.                                                                |        78,672 |                 - |

----

|  Subordinated      loan, which bears interest at 12.625% per annum, payable semi-annually.      The principal balance is due and payable on September 30, 2008. The loan      was subordinate to the revolving credit facility included in discontinued      operations, and was secured by a security interest in the assets of our      premium finance subsidiary and a pledge of our subsidiary's stock.      Effective February 1, 2008, upon the sale of the premium finance      portfolio, the loan is no longer subordinated to the revolving credit      facility and there is no longer a security interest in the assets of our      premium financing subsidiary; however, the loan is still subordinated to      the above term loan from Manufacturers and Traders Trust      Company. |   1,500,000                  |    1,500,000                  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------|----------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                   |                                         |
| Unamortized      value of stock purchase warrants issued in connection with subordinated      loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |      (17,731) |       (57,851) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   2,598,054                  |    3,038,704                  |
| Less      current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   2,098,989                  |       630,565  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  $        499,065       |  $      2,408,139                       |

|   | The      capital lease is collateralized by computer equipment with a carrying cost      and accumulated depreciation approximating $90,000 and $12,000,      respectively, at December 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Effective      March 23, 2007 and September 30, 2007, the holders of approximately      $1,385,000 and $115,000, respectively, outstanding principal amount of our      subordinated debt agreed to extend the maturity date of the debt from      September 30, 2007 to September 30, 2008. In consideration for the      extension of the due date of the subordinated debt, we extended the      expiration date of warrants held by the debtholders for the purchase of      97,500 of our shares of Common Stock from September 30, 2007 to September      30, 2008. The holder of the $115,000 of subordinated debt is a limited      liability company in which our President, Chairman of the Board and Chief      Executive Officer owns a minority interest. (a)      At December 31, 2006, we reduced the amount due to Accurate by      approximately $98,000 as a result of pre-acquisition liabilities satisfied      by us. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Long-term      debt matures as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

| Years      ended December 31, |   |                                        |
|-------------------------------|--------|---------------------------------------------|
| 2008                          |   |  $      2,098,989                      |
| 2009                          |   |       104,343 |
| 2010                          |   |       135,596 |
| 2011                          |   |       130,868 |
| 2012                          |   |       128,258 |
|                          |   |  $      2,598,054                      |

| 12.    | Related      Party Transaction                                                                                                                                                                            |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                      |
|   | Professional      fees - A law firm affiliated with one of our directors was paid      legal fees of $123,000 and $139,000 for the years ended December 31, 2007      and 2006, respectively.             |
|   |                                                                                                                                                                                                      |
|   | A      director was paid a fee of $49,900 during the year ended December 31, 2006      for consulting services in accordance with a consulting agreement. This      agreement expired on October 31,2006. |

----

|   | Guaranty –      Under our revolving line of credit entered into in July 2006, our      Chairman and CEO was obligated on an unlimited wind-down guaranty as long      as the loan was in effect.  In consideration of this guaranty,      he was paid $50,000 in 2006. Upon the sale of the premium finance      portfolio on February 1, 2008, the wind-down guaranty was      terminated. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Note      receivable – Included in other current assets is a $161,000 note      receivable from a franchisee who is affiliated with one of our directors.      Interest income from this note was approximately $5,000 for the year ended      December 31, 2007. In February 2008, the note was paid in      full.                                                                                   |

| 13.    | Income      Taxes                                                                                                                                                                                                                                                                                                  |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                               |
|   | We      file a consolidated U.S. Federal Income Tax return that includes all      wholly-owned subsidiaries. State tax returns are filed on a consolidated      or separate basis depending on applicable laws. The provision for income      taxes from continuing operations is comprised of the      following: |

| Years      ended December 31, |   | 2007   |     |   | 2006   |   |
|-------------------------------|--------|--------|----------|--------|--------|--------|
|                          |   |   |     |   |   |   |
|  Current:                |   |   |     |   |   |   |
|  Federal                 |   | $      | (185,000 | )      |   | $      | (158,000 | ) |
|  State                   |   |   | (47,501  | )      |   |   | (40,430 | ) |
|                          |   |   | (232,501 | )      |   |   | (198,430 | ) |
|                          |   |   |     |   |   |   |   |   |
|  Deferred:               |   |   |     |   |   |   |   |   |
|  Federal                 |   |   | 4,800    |   |   |   | 267,000 |   |
|  State                   |   |   | 1,200    |   |   |   | 69,000 |   |
|                          |   |   | 6,000    |   |   |   | 336,000 |   |
|                          |   |   |     |   |   |   |   |   |
|                          |   | $      | (226,501 | )      |   | $      | 137,570 |   |

|   | A      reconciliation of the federal statutory rate to our effective tax rate      from continuing operations is asfollows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------|

| Years      Ended December 31,                |   | 2007   |   |   | 2006   |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                         |   |   |   |   |   |   |
| Computed      Expected Tax (Benefit) Expense |   |   | (34.00 | )%     |   |   | 34.00 | % |
| State      Taxes, net of federal benefit     |   |   | -0-    |   |   |   | 5.79 |   |
| Permanent      Differences                   |   |   | (7.55  | )      |   |   | 5.21 |   |
| Total      Tax (Benefit) Expense             |   |   | (41.55 | )%     |   |   | 45.00 | % |

|   | At      December 31, 2007, we had net operating loss carryforwards for tax      purposes, which expire at various dates through 2019, of approximately      $1,589,000. These net operating loss carryforwards are subject to Internal      Revenue Code Section 382, which places a limitation on the utilization of      the federal net operating loss to approximately $10,000 per year, as a      result of a greater than 50% ownership change of DCAP Group, Inc. in 1999.      We did not utilize any net operating loss carryforwards during the years      ended December 31, 2007 and 2006 to offset current taxable income. Our      taxable loss for the year ended December 31, 2007 is approximately      $1,132,000. This loss will either be carried back or will be available for      future years, expiring through December 31,  2027. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | The      tax effects of temporary differences which give rise to deferred tax      assets and liabilities from continuing operations consist of the      following: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| December      31,                                             |   | 2007   |      |   | 2006   |   |
|---------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                          |   |   |      |   |   |   |
|  Deferred tax      assets:                               |   |   |      |   |   |   |
|  Net      operating loss carryovers                      |   | $      | 996,000   |   |   | $      | 550,000 |   |
|  Provision      for doubtful accounts                    |   |   | 20,000    |   |   |   | 26,000 |   |
|  Amortization      of intangible assets                  |   |   | 117,000   |   |   |   | 91,000 |   |
|  Stock      compensation expense                         |   |   | 39,000    |   |   |   | 12,000 |   |
|  Gross      deferred tax assets                          |   |   | 1,172,000 |   |   |   | 679,000 |   |
|                                                          |   |   |      |   |   |   |   |   |
|  Deferred      tax liabilities:                          |   |   |      |   |   |   |   |   |
|  Interest      on note                                   |   |   | 838,000   |   |   |   | 373,000 |   |
|  Depreciation                                            |   |   | 8,000     |   |   |   | 23,000 |   |
|  Prepaid      expenses                                   |   |   | 16,000    |   |   |   | 33,000 |   |
|  Amortization      of goodwill                           |   |   | 222,000   |   |   |   | 156,000 |   |
|  Gross      deferred tax liabilities                     |   |   | 1,084,000 |   |   |   | 585,000 |   |
|                                                          |   |   |      |   |   |   |   |   |
|  Net      deferred tax assets before valuation allowance |   |   | 88,000    |   |   |   | 94,000 |   |
|  Less      valuation allowance                           |   |   | (496,000  | )      |   |   | (496,000 | ) |
|  Net      deferred tax liability                         |   | $      | (408,000  | )      |   | $      | (402,000 | ) |

| 14.    | Commitments                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Leases      - We, and each of our affiliates, lease office space under      noncancellable operating leases expiring at various dates through August      31, 2011. Many of the leases are renewable and include additional rent for      real estate taxes and other operating expenses. The minimum future rentals      under these lease commitments for leased facilities and office equipment      are as follows: |

| Years      ended December 31, |   |                                                   |
|-------------------------------|--------|--------------------------------------------------------|
| 2008                          |   |  $   407,673                       |
| 2009                          |   |       248,595            |
| 2010                          |   |       172,792            |
| 2011                          |   |         56,778 |
|                          |   |  $   885,838                       |

|   | Rental      expense approximated $497,000 and $503,000 for the years ended December      31, 2007 and 2006, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Employment agreement -      On October 16, 2007, we entered into an Employment Agreement with Barry B.      Goldstein, our President, Chief Executive Officer and Chairman of the      Board.  The initial term of the Employment Agreement expires      June 30, 2009.  Pursuant to the Employment Agreement, Mr.      Goldstein is entitled to receive an annual salary of $350,000, and annual      bonuses based on our net income. In addition, pursuant to the Employment      Agreement Mr. Goldstein would be entitled, under certain circumstances, to      a payment equal to one and one-half times his then annual salary in the      event of the termination of his employment following a change of control.      Concurrently with the execution of the Employment Agreement, we granted to      Mr. Goldstein options for the purchase of 130,000 shares of Common Stock      at an exercise price of $2.06 pershare. |

----

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Acquisition- In connection      with the 2003 acquisition of AIA Acquisition Corp. ("AIA"), additional      contingent cash consideration based upon the EBITDA of the combined      operations of AIA and our wholly-owned subsidiary, Barry Scott Companies,      Inc., during each 12 month period ending April 30, 2008 may be payable.      The additional cash consideration cannot exceed $67,000 per      annum.                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Litigation      - From      time to time, we are involved in various lawsuits and claims incidental to      our business. In the opinion of management, the ultimate liabilities, if      any, resulting from such lawsuits and claims will not materially affect      our financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | IRS tax      audit - Our Federal income tax return for the year ended December      31, 2005 is currently under audit by the Internal Revenue Service. The      final results of this audit cannot be estimated by management. It is      anticipated that the audit will be concluded by  mid-2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 15.    | Mandatorily      Redeemable Preferred Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | On      May 8, 2003, we issued 904 shares of $.01 par value 5.0% Series A      Preferred Stock in connection with the acquisition of substantially all of      the assets of AIA.  The Series A Preferred Stock has a      liquidation preference of $1,000 per share. Dividends on the Series A      Preferred Stock are cumulative and are payable in cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Each      share of the Series A Preferred Stock is convertible at the option of the      holder at any time into shares of our Common Stock at a conversion rate of      $2.50 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | On      January 15, 2005, the preferred stockholder converted 124 shares of Series      A Preferred Stock into 49,600 shares of our Common  Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Subject      to legal availability of funds, the Series A Preferred Stock was      mandatorily redeemable by us for cash at its liquidation preference on      April 30, 2007 (unless previously converted into our Common Stock).      Effective March 23, 2007, the holder of the Series A Preferred Stock      agreed to exchange the Series A Preferred Stock for a new Series B      Preferred Stock that is mandatorily redeemable by us for cash at its      liquidation preference on April 30, 2008 (unless previously converted into      our Common Stock).  Redemption of the Series B Preferred Stock      can occur prior to April 30, 2008 upon a substantial sale by us, as      defined.  The terms of the Series B Preferred Stock are the same      as the Series A Preferred Stock with the exception of the redemption      date. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | In      accordance with SFAS No. 150, "Accounting for Certain      Financial Instruments with Characteristics of both Liabilities and      Equity", the Series A Preferred Stock and the Series B Preferred      Stock have been reported as a liability, and the preferred dividends have      been classified as interest expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 16.    | Stockholders'      Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Preferred      Stock - During 2001, we amended our Certificate of Incorporation to      provide for the authority to issue 1,000,000 shares of Preferred Stock,      with a par value of $.01 per share. Our Board of Directors has the      authority to issue shares of Preferred Stock from time to time in a series      and to fix, before the issuance of each series, the number of shares in      each series and the designation, liquidation preferences, conversion      privileges, rights and limitations of each  series.                                                                                                                                                                                                                                                                                                                                    |

----

|   | Treasury      Stock - In June 2007, a      shareholder tendered 4,500 shares of Common Stock to us to settle an      obligation due us of approximately $7,200. The tendered shares were      recorded as an increase in treasury stock, valued at the balance of the      obligation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Warrants      - On      July 10, 2003, in connection with the issuance of the subordinated debt,      we issued warrants to purchase 105,000 shares of our Common Stock at an      exercise price of $6.25 per share (the "Warrants"). The Warrants were      valued at $147,000 and were being amortized as additional interest expense      over the term of the associated debt. The Warrants were scheduled to      expire on January 10, 2006. Effective May 25, 2005, the holders of      $1,500,000 outstanding principal amount of our subordinated debt agreed to      extend the maturity date of the debt from January 10, 2006 to September      30, 2007. This extension was given to satisfy a requirement of our premium      finance lender that arose in connection with the increase in our revolving      line of credit to $25,000,000 and the extension of the line to June 30,      2007. In consideration for the extension of the due date of our      subordinated debt, we extended the expiration date of Warrants held by the      debt holders for the purchase of 97,500 shares of our Common Stock from      January 10, 2006 to September 30, 2007. The extension of the Warrants was      valued at approximately $148,000 and is being amortized as additional      interest expense over the extension period.  In March 2007 and      September 2007, holders of approximately $1,385,000 and $115,000,      respectively, of the principal amount of the subordinated loan agreed to      extend the maturity date of this loan from September 30, 2007 to September      30, 2008.  In consideration for the extension of the due date of      our subordinated debt, we extended the expiration date of Warrants held by      the debt holders for the purchase of 97,500 shares of our Common Stock      from September 30, 2007 to September 30, 2008. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Stock      Options - In November 1998, we adopted the 1998 Stock Option Plan      (the “1998 Plan”), which provides for the issuance of incentive stock      options and non-statutory stock options. Under this plan, options to      purchase not more than 400,000 shares of our Common Stock were permitted      to be granted, at a price to be determined by our Board of Directors or      the Stock Option Committee at the time of grant. During 2002, we increased      the number of shares of Common Stock authorized to be issued pursuant to      the 1998 Plan to 750,000. Incentive stock options granted under this plan      expire no later than ten years from date of grant (except no later than      five years for a grant to a 10% stockholder). Our Board of Directors or      the Stock Option Committee will determine the expiration date with respect      to non-statutory options granted under this plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | In      December 2005, our shareholders ratified the adoption of the 2005 Equity      Participation Plan (together with the 1998 Plan, the “Plans”), which      provides for the issuance of incentive stock options, non-statutory stock      options and restricted stock. Under this plan, a maximum of 300,000 shares      of Common Stock may be issued pursuant to options granted and restricted      stock issued. Incentive stock options granted under this plan expire no      later than ten years from date of grant (except no later than five years      for a grant to a 10% stockholder). Our Board of Directors or the Stock      Option Committee will determine the expiration date with respect to      non-statutory options, and the vesting provisions for restricted stock,      granted under this plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Effective      January 1, 2006, our plans are accounted for in accordance with the      recognition and measurement provisions of SFAS No. 123(R), which replace      SFAS No. 123 and supersede APB 25, and related interpretations. FAS      123(R) requires compensation costs related to share-based payment      transactions, including employee stock options, to be recognized in the      financial statements. In addition, we adhere to the guidance set forth      within SEC SAB No. 107, which provides the Staff's views regarding the      interaction between SFAS 123(R) and certain SEC rules and regulations and      provides interpretations with respect to the valuation of share-based      payments for public companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Prior      to January 1, 2006, we accounted for similar transactions in accordance      with APB 25 which employed the intrinsic value method of measuring      compensation cost. Accordingly, compensation expense was not recognized      for fixed stock options if the exercise price of the option equaled or      exceeded the fair value of the underlying stock at the grant      date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

----

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | While SFAS 123 encouraged      recognition of the fair value of all stock-based awards on the date of      grant as an expense over the vesting period, companies were permitted to      continue to apply the intrinsic value-based method of accounting      prescribed by APB 25 and disclose certain pro forma amounts as if the fair      value approach of SFAS 123 had been applied.  In December 2002,      SFAS No. 148, “Accounting      for Stock-Based Compensation-Transition and Disclosure,” an amendment of SFAS 123, was      issued, which, in addition to providing alternative methods of transition      for a voluntary change to the fair value method of accounting for      stock-based employee compensation, required more prominent pro forma      disclosures in both the annual and interim financial statements. We      complied with these disclosure requirements for all applicable periods      prior to January 1, 2006. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | In      adopting SFAS 123(R), we applied the modified prospective approach to      transition. Under the modified prospective approach, the provisions of      SFAS 123(R) are to be applied to new awards and to awards modified,      repurchased, or cancelled after the required effective date. Additionally,      compensation cost for the portion of awards for which the requisite      service has not been rendered that are outstanding as of the required      effective date shall be recognized as the requisite service is rendered on      or after the required effective date. The compensation cost for that      portion of awards shall be based on the grant-date fair value of those      awards as calculated for either recognition or pro-forma disclosures under      SFAS 123.                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | As      a result of the adoption of SFAS 123(R), our results for the years ended      December 31, 2007 and 2006 include share-based compensation expense      totaling approximately $97,000 and $30,000, respectively, and a tax      benefit of approximately $43,000 and $13,500,      respectively.  Such amounts have been included in the      Consolidated Statement of Income within general and administrative      expenses. Stock      option compensation expense in 2007 and 2006 is the estimated fair value      of options granted amortized on a straight-line basis over the requisite      service period for entire portion of the award less an estimate for      anticipated forfeitures.                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The      weighted average estimated fair value of stock options granted in the      years ended December 31, 2007 and 2006 was $1.22 and $1.46, respectively,      per share.  The fair value of options at the date of grant was      estimated using the Black-Scholes option pricing model. During 2007 and      2006, we took into consideration the guidance under SFAS 123(R) and SAB      No. 107 when reviewing and updating assumptions. The expected volatility      is based upon historical volatility of our stock and other contributing      factors. The expected term is based upon observation of actual time      elapsed between date of grant and exercise of options for all employees.      Previously such assumptions were determined based on historical      data.                                                                                                                                                                             |

|   | The      fair value of each option grant is estimated on the date of grant using      the Black-Scholes option-pricing model. The following weighted average      assumptions were used for grants during the years ended December 31,      2007 and 2006: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                            |
|   | Years      Ended December 31,                                                                                                                                                                                                                                   | 2007 | 2006 |
|   |                                                                                                                                                                                                                                                            |   |   |
|   | Dividend      Yield                                                                                                                                                                                                                                             |        0.00% | 0.00% |
|   | Volatility                                                                                                                                                                                                                                                      | 60.79% |       123.23% |
|   | Risk-Free      Interest Rate                                                                                                                                                                                                                                    |        5.00% | 5.00% |
|   | Expected      Life                                                                                                                                                                                                                                              |        5 years | 5      years |

----

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

|   | A      summary of option activity under the Plans as of December 31, 2007, and      changes during the year then ended is as  follows: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   |     Fixed      Stock Options |     Shares |  WeightedAverageExercisePrice        | WeightedAverageRemainingContractualTerm      (years) |   AggregateIntrinsicValue |
|--------|--------------------------------------------------|--------------------------------|-------------------------------------------|------------------------------------------------------|-------------------------------------|
|   |                                             |                           |                                      |                                                 |                                |
|   | Outstanding,      beginning of year              | 193,300                        | $      2.34 |                                                 |                                |
|   | Granted                                          | 197,024                        | 2.20                                      |                                                 |                                |
|   | Exercised                                        | (74,500)                       | 1.51                                      |                                                 |                                |
|   | Expired                                          | (32,000)                       | 1.50                                      |                                                 |                                |
|   | Forfeited                                        | (15,200)                       | 2.72                                      |                                                 |                                |
|   | Outstanding,      end of year                    | 268,624                        | $     2.55       | 4.03                                                 | $850                                |
|   |                                             |                           |                                      |                                                 |                                |
|   | Exercisable,      end of year                    | 125,868                        | $     2.95       | 3.27                                                 | $850                                |

|   | The      aggregate intrinsic value of options outstanding and options exercisable      at December 31, 2007 is calculated as the difference between the exercise      price of the underlying options and the market price of our Common Stock      for the shares that had exercise prices, that were lower than the $1.67      closing price of our Common Stock on December 31, 2007. The total      intrinsic value of options exercised in the years ended December 31, 2007      and 2006 was $96,750 and $135,150, respectively, determined as of the date      of exercise. We received cash proceeds from options exercised in the years      ended December 31, 2007 and 2006 of approximately $112,000 and $191,000,      respectively. A      summary of the status of our non-vested options as of December 31, 2007      and the changes during the year ended December 31, 2007, is as      follows: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                      |   | Options |    |   | Weighted      Average Grant Date Fair Value |   |
|-------------------------------------------|--------|---------|---------|--------|---------------------------------------------|--------|
|  Nonvested      at December 31, 2006 |   |    | 19,692  |   |                                        | $      | 1.86 |   |
|  Granted                             |   |    | 197,024 |   |                                        |   | 1.22 |   |
|  Vested                              |   |    | (66,877 | )      |                                        |   | 1.35 |   |
|  Forfeited                           |   |    | (7,083  | )      |                                        |   | 2.00 |   |
|  Nonvested      at December 31, 2007 |   |    | 142,756 |   |                                        | $      | 1.21 |   |

|   | As      of December 31, 2007 and 2006, the fair value of unamortized compensation      cost related to unvested stock option awards was approximately $141,000      and $39,000, respectively. Unamortized compensation cost as of December      31, 2007 is expected to be recognized over a remaining weighted-average      vesting period of 2.3 years. For the year ended December 31, 2007, the      weighted average fair value of options exercised was $1.10. The      total fair value of shares vested during the year ended December 31, 2007      was approximately $77,000. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Common      shares reserved                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

|   | Warrants                                         |   | 97,500  |
|--------|--------------------------------------------------|--------|---------|
|   |                                             |   |    |
|   | Stock      Option Plan/Equity Participation Plan |   | 607,500 |

| 17. | Discontinued      Operations On      February 1, 2008, we sold our outstanding premium finance loan portfolio.      Under the terms of the sale, the purchaser of the premium finance      portfolio has agreed that, during the five year period ending January 31,      2013 (subject to automatic renewal for successive two year terms under      certain circumstances), it will purchase, assume and service all eligible      premium finance contracts originated by us in the states of New York, New      Jersey and Pennsylvania.  In connection with such purchases, we      will be entitled to receive a fee generally equal to a percentage of the      amount financed. As a result of the sale of the premium finance portfolio      on February 1, 2008, the operating results of the premium financing      operations for the years ended December 31, 2007 and 2006 have been      presented as discontinued operations.  Net assets and      liabilities to be disposed of or liquidated, at their book value, have      been separately classified in the accompanying balance sheets at December      31, 2007 and 2006. Continuing operations of our premium financing      operations will only consist of placement fee revenue and any related      expenses. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Summarized      financial information of the premium financing segment as discontinued      operations for the years ended December 31, 2007 and 2006      follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Years      Ended December 31,                 |   | 2007   |      |   | 2006   |   |
|-----------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                          |   |   |      |   |   |   |
| Premium      Finance Revenue                  |   | $      | 3,166,554 |   |   | $      | 3,960,223 |   |
|                                          |   |   |      |   |   |   |   |   |
| Operating      Expenses:                      |   |   |      |   |   |   |   |   |
| General      and administrative expenses      |   |   | 1,432,299 |   |   |   | 1,695,779 |   |
| Provision      for finance receivable losses  |   |   | 472,266   |   |   |   | 650,005 |   |
| Depreciation      and amortization            |   |   | 99,550    |   |   |   | 171,430 |   |
| Interest      expense                         |   |   | 645,770   |   |   |   | 824,382 |   |
| Total      Operating Expenses                 |   |   | 2,649,885 |   |   |   | 3,341,596 |   |
|                                          |   |   |      |   |   |   |   |   |
| Income      Before Provision for Income Taxes |   |   | 516,669   |   |   |   | 618,627 |   |
| Provision      for Income Taxes               |   |   | 245,501   |   |   |   | 278,382 |   |
| Net      Income from Discontinued Operations  |   | $      | 271,168   |   |   | $      | 340,245 |   |

|   | The      components of assets and liabilities of discontinued operations as of      December 31, 2007 and 2006 are asfollows: |
|--------|-------------------------------------------------------------------------------------------------------------------------------|

| December      31,                          |   | 2007   |       |   | 2006   |   |
|--------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                       |   |   |       |   |   |   |
| Finance      contracts receivable, net     |   | $      | 12,498,809 |   |   | $      | 14,777,855 |   |
| Other      current assets                  |   |   | 31,680     |   |   |   | 19,114 |   |
| Deferred      income taxes                 |   |   | 69,000     |   |   |   | 82,000 |   |
| Property      and equipment, net           |   |   | 3,324      |   |   |   | 8,829 |   |
| Other      assets                          |   |   | 48,410     |   |   |   | 139,127 |   |
| Total      Assets                          |   | $      | 12,651,223 |   |   | $      | 15,026,925 |   |
|                                       |   |   |       |   |   |   |   |   |
| Revolving      credit line                 |   | $      | 9,488,437  |   |   | $      | 10,952,345 |   |
| Accounts      payable and accrued expenses |   |   | 139,480    |   |   |   | 157,998 |   |
| Premiums      payable                      |   |   | 2,889,388  |   |   |   | 3,062,249 |   |
| Total      Liabilities                     |   | $      | 12,517,305 |   |   | $      | 14,172,592 |   |

|   | Finance      income, fees and receivables - For our premium      finance operations, we are using the interest method to recognize interest      income over the life of each loan in accordance with SFAS No. 91, "Accounting for Nonrefundable      Fees and Costs Associated with Originating or Acquiring Loans and Initial      Direct Costs of Leases."                                                                                                                                              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Upon      the establishment of a premium finance contract, we record the gross loan      payments as a receivable with a corresponding reduction for deferred      interest. The deferred interest is amortized to interest income using the      interest method over the life of each loan. The weighted average interest      rate charged with respect to financed insurance policies was approximately      26.37% and 26.49% per annum for the years ended December 31, 2007 and      2006, respectively. |

|   | Upon      completion of collection efforts, after cancellation of the underlying      insurance policies, any uncollected earned interest or fees are charged      off. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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|   | Allowance      for finance receivable losses - Customers who      purchase insurance policies are often unable to pay the premium in a lump      sum and, therefore, require extended payment terms. Premium finance      involves making a loan to the customer that is backed by the unearned      portion of the insurance premiums being financed. No credit checks are      made prior to the decision to extend credit to a customer. Losses on      finance receivables include an estimate of future credit losses on premium      finance accounts. Credit losses on premium finance accounts occur when the      unearned premiums received from the insurer upon cancellation of a      financed policy are inadequate to pay the balance of the premium finance      account. After collection attempts are exhausted, the remaining account      balance, including unrealized interest, is written off. We review      historical trends of such losses relative to finance receivable balances      to develop estimates of future losses. However, actual write-offs may      differ materially from the write-off estimates that we used. For the years      ended December 31, 2007 and 2006, the provision for finance receivable      losses was approximately $472,000 and $650,000, respectively, and actual      principal write-offs for such years, net of actual and anticipated      recoveries of previous write-offs, were approximately $522,000 and      $679,000, respectively. If our provision for finance receivable losses was      understated by 10% because our actual write-offs were greater than      anticipated, the effect would have been a reduction in our basic earnings      per share by approximately $0.01 and $0.01 for the years ended December      31, 2007 and 2006, respectively. |

|   | Deferred      loan costs -      Deferred loan costs are amortized on a straight-line basis over the      related term of the loan. |
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|   | Concentration      of credit risk –All finance contracts receivable are repayable in      less than one year. In the event of a default by the borrower, we are      entitled to cancel the underlying insurance policy financed and receive a      refund for the unused term of such policy from the insurance carrier. We      structure the repayment terms in an attempt to minimize principal losses      on finance contract receivables. |
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|   | Finance      Contract Receivables  - A summary of the changes of the      allowance for finance receivable losses is as  follows: |
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| December      31,                                  |   | 2007   |     |   | 2006   |   |
|----------------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                               |   |   |     |   |   |   |
|  Balance,      beginning of year              |   | $      | 205,269  |   |   | $      | 234,029 |   |
|  Provision      for finance receivable losses |   |   | 472,266  |   |   |   | 650,005 |   |
|  Charge-offs                                  |   |   | (503,923 | )      |   |   | (678,765 | ) |
|  Balance,      end of year                    |   | $      | 173,612  |   |   | $      | 205,269 |   |

|   | Finance      receivables are collateralized by the unearned premiums of the related      insurance policies. These finance receivables have an average remaining      contractual maturity of approximately four months, with the longest      contractual maturity being approximately ten  months. |
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|   | Revolving      Credit Facility - On December 27, 2004, we entered into a revolving      line of credit (the “Old Revolver”) with Manufacturers and Traders Trust      Company (the “Bank”), which provided for an increase in the credit line to      $25,000,000. Subject to certain conditions, the Bank had agreed to arrange      an additional $10,000,000 credit facility with other lenders on a "best      efforts" basis. The Old Revolver bore interest, at our option, at either      (i) the Bank's prime lending rate (7.25% at December 31, 2005) or (ii)      LIBOR (4.34% at December 31, 2005) plus 2.5%, and was scheduled to mature      on June 30, 2007. We could borrow against the line to the extent of 85% of      eligible premium financereceivables. |
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|   | On      July 28, 2006, we and our premium finance subsidiary, Payments, Inc.,      entered into a new revolving line of credit (the “New Revolver”) with the      Bank, which provided for a decrease in the credit line to $20,000,000 and      the elimination of the Bank’s agreement to arrange an additional      $10,000,000 credit facility with other lenders on a “best efforts”      basis.  The New Revolver bore interest, at our option, at either      the Bank’s prime lending rate (7.25% at December 31, 2007) or LIBOR (5.24%      at December 31, 2007) plus 2.25%, and was scheduled to mature on June 30,      2008.  The line of credit also allows for a $2,500,000 term loan      (of the $20,000,000 credit line availability) to be used to provide      liquidity for ongoing working capital purposes.  Any draws      against the term line bear interest at LIBOR plus 2.75%.  As of      July 28, 2006, we made our first draw against the term line of      $1,300,000.  The draw is repayable in quarterly principal      installments of $130,000 each, commencing September 1,      2006.  The remaining principal balance is payable on June 30,      2008.  Interest is payable monthly.  The New Revolver      eliminated the personal guaranty required of our CEO of $1,250,000 but      continued his obligation on an unlimited wind-down guaranty and his      personal guaranty as to misrepresentations that relate to dishonest or      fraudulent acts committed by him or known but not timely reported by      him.  The New Revolver also allowed for a reduction of life      insurance coverage on the life of our CEO from $4,000,000 to      $1,500,000. |
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | The      New Revolver was secured by substantially all of the assets of our premium      finance subsidiary, Payments, Inc., and was guaranteed by DCAP Group, Inc.      and its subsidiaries. The New Revolver was paid in full and terminated on      February 1, 2008 upon the closing of the sale of our premium finance loan      portfolio (see Note 22).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

| 18. | Major      Insurance Carriers |
|-----|-------------------------------|

|   | For      the year ended December 31, 2007, revenue from major insurance carriers in      excess of 10% of net revenues from continuing operations consisted of the      following: |
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|   | Carrier | %      of Total Revenue | Segment   |
|--------|---------|-------------------------|-----------|
|   |    |                    |      |
|   | A       | 36%                     | Insurance |
|   | B       | 12%                     | Insurance |

|   | For      the year ended December 31, 2006, revenue from major insurance carriers in      excess of 10% of net revenues from continuing operations consisted of the      following: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Carrier | %      of Total Revenue | Segment   |
|--------|---------|-------------------------|-----------|
|   |    |                    |      |
|   | A       | 34%                     | Insurance |

| 19.    | Fair      Value of Financial Instruments                                                                                                                                                                                                                                                                                                                                     |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                         |
|   | The      methods and assumptions used to estimate the fair value of the following      classes of financial instruments were:                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                         |
|   | Current      Assets and Current Liabilities: The carrying values of cash,      accounts receivables, finance contract receivables and payables and      certain other short-term financial instruments approximate their fair      value.                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                         |
|   | Long-Term      Debt: The fair value of our long-term debt, including the current      portion, was estimated using a discounted cash flow analysis, based on our      assumed incremental borrowing rates for similar types of borrowing      arrangements. The carrying amount of variable and fixed rate debt at      December 31, 2007 and 2006 approximates fair  value. |

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| 20.    | Retirement      Plan                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Qualified      employees are eligible to participate in a salary reduction plan under      Section 401(k) of the Internal Revenue Code. Participation in the plan is      voluntary, and any participant may elect to contribute up to a maximum of      $15,000 per year. We will match 25% of the employee's contribution up to      6%. Contributions for the years ended December 31, 2007 and 2006      approximated $25,000 and $17,000,respectively. |

| 21.    | Supplementary      Information - Statement of Cash Flows |
|--------|----------------------------------------------------------|
|   |                                                     |
|   | Cash      paid during the years for:                     |

| Years      Ended December 31, |   | 2007   |    |   | 2006   |   |
|-------------------------------|--------|--------|---------|--------|--------|--------|
|                          |   |   |    |   |   |   |
| Interest                      |   | $      | 463,305 |   |   | $      | 487,026 |   |
|                          |   |   |    |   |   |   |   |   |
| Income      Taxes             |   | $      | 3,033   |   |   | $      | 332,038 |   |

| 22.    | Subsequent      Event                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | On      February 1, 2008, our wholly-owned subsidiary, Payments Inc. (“Payments”),      sold its outstanding premium finance loan portfolio to Premium Financing      Specialists, Inc. (“PFS”). The purchase price for the acquired net loan      portfolio was approximately $11,845,000, of which approximately $268,000      was paid to Payments, and the remainder of the purchase price was      satisfied by the assumption of liabilities, including the satisfaction of      our premium finance revolving credit line obligation to Manufacturers and      Traders Trust Company. As additional consideration, Payments will be      entitled to receive an amount based upon the net earnings generated by the      acquired loan portfolio as it is collected. PFS      has agreed that, during the five year period ending January 31, 2013      (subject to automatic renewal for successive two year terms under certain      circumstances), it will purchase, assume and service all eligible premium      finance contracts originated by Payments in the states of New York, New      Jersey and Pennsylvania.  In connection with such purchases, PFS      shall be obligated to pay to Payments a fee generally equal to a      percentage of the amount financed. As      a result of the sale of the premium finance portfolio on February 1, 2008,      our premium financing operations have been presented as discontinued      operations. After February 1, 2008, premium financing operations will only      consist of placement fee revenue and any related expenses. Simultaneously      with the closing, our revolving line of credit with Manufacturers and      Traders Trust Company was terminated. See      Note 17. |

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|                             | DCAP GROUP,    INC. |                         |
|----------------------------------|---------------------|------------------------------|
|                             |                |                         |   |
| Dated:       March 28, 2008 | By:                 | /s/      Barry B. Goldstein  |   |
|                             |                | Barry      B. Goldstein      |   |
|                             |                | Chief      Executive Officer |   |
|                             |                |                         |   |

| Signature                                                         | Capacity                                                                                                                  | Date                            |
|-------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|---------------------------------|
|                                                              |                                                                                                                      |                            |
|  /s/      Barry B. GoldsteinBarry      B. Goldstein          | President,      Chairman of the Board, Chief Executive Officer, Treasurer and Director      (Principal Executive Officer) |  March      28, 2008       |
|   /s/      Victor BrodskyVictor Brodsky            |  Chief      Accounting Officer(Principal      Financial and Accounting Officer)                                 |   March      28, 2008 |
|  /s/ Morton L.      Certilman Morton L. Certilman  |  Secretary      and Director                                                                                    |  March      28, 2008       |
| /s/      Jay M. HaftJay      M. Haft                              | Director                                                                                                                  | March      28, 2008             |
|  /s/      David A. LyonsDavid      A. Lyons                  |  Director                                                                                                            |  March      28, 2008       |
|  /s/      Jack D. SeibaldJack      D. Seibald                |  Director                                                                                                            |  March      28, 2008       |