----

----

----

----

| Delaware                        |   | 98-0438502          |
|---------------------------------|--------|---------------------|
| (State or Other Jurisdiction of |   | (I.R.S. Employer    |
| Incorporation or Organization)  |   | Identification No.) |

| Large Accelerated Filer             ̈           | Accelerated Filer                   ̈ |
|-----------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------|
| Non-Accelerated Filer               ̈ | Smaller Reporting Company             x                            |

----

----

----

| PART IFINANCIAL INFORMATION |
|-----------------------------|
| Item 1                      | Financial Statements | 3 |
|                        |   |   |
|                        | Consolidated Balance Sheets as of March 31, 2011 (UNAUDITED) and December 31, 2010 | 3 |
|                        | Consolidated Statements of Operations (UNAUDITED) for the three months ended March 31, 2011 and 2010 | 4 |
|                        | Consolidated Statements of Changes in Shareholders' Deficit (UNAUDITED) for the three months ended March 31, 2011 | 5 |
|                        | Consolidated Statements of Cash Flows (UNAUDITED) for the three months ended March 31, 2011 and 2010 | 6 |
|                        |   |   |
|                        | Notes to UNAUDITED Consolidated Financial Statements | 7 |
|                        |   |   |
| Item 2                      | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 |
|                        |   |   |
| Item 4                      | Controls and Procedures | 36 |
|                        |   |   |
| PART IIOTHER INFORMATION    |
|                        |   |   |
| Item 1                      | Legal Proceedings | 36 |
|                        |   |   |
| Item 6                      | Exhibits | 37 |
|                        |   |   |
|                        | Signatures | 38 |

----

|                                                                                                                                       |   | March 31, 2011 |        |   | December 31, 2010 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|-------------|--------|-----------------------------|--------|
|                                                                                                                                       |   | (Unaudited)              |        |   | (1)                         |   |
| ASSETS                                                                                                                                     |   |                     |        |   |                        |   |
| CURRENT ASSETS:                                                                                                                            |   |                     |        |   |                        |   |
| Cash                                                                                                                                       |   | $                        | 5,211,859   |   |                        | $      | 4,429,026 |   |
| Accounts receivable, net                                                                                                                   |   |                     | 1,570,026   |   |                        |   | 709,503 |   |
| Tax receivable                                                                                                                             |   |                     | 3,615       |   |                        |   | 6,455 |   |
| Prepaid expenses                                                                                                                           |   |                     | 153,718     |   |                        |   | 158,245 |   |
| Other current assets                                                                                                                       |   |                     | 2,072       |   |                        |   | 1,756 |   |
| Assets of discontinued operations                                                                                                          |   |                     | 278,313     |   |                        |   | 63,301 |   |
|                                                                                                                                       |   |                     |        |   |                        |   |   |   |
| Total current assets                                                                                                                       |   |                     | 7,219,603   |   |                        |   | 5,368,286 |   |
|                                                                                                                                       |   |                     |        |   |                        |   |   |   |
| Restricted cash                                                                                                                            |   |                     | -           |   |                        |   | 1,152,573 |   |
| Property and equipment, net                                                                                                                |   |                     | 548,401     |   |                        |   | 613,618 |   |
| Intangibles, net                                                                                                                           |   |                     | 520,102     |   |                        |   | 606,785 |   |
| Other assets                                                                                                                               |   |                     | 92,558      |   |                        |   | 92,558 |   |
|                                                                                                                                       |   |                     |        |   |                        |   |   |   |
| Total assets                                                                                                                               |   | $                        | 8,380,664   |   |                        | $      | 7,833,820 |   |
|                                                                                                                                       |   |                     |        |   |                        |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                       |   |                     |        |   |                        |   |   |   |
|                                                                                                                                       |   |                     |        |   |                        |   |   |   |
| CURRENT LIABILITIES:                                                                                                                       |   |                     |        |   |                        |   |   |   |
| Note payable                                                                                                                               |   | $                        | -           |   |                        | $      | 17,311 |   |
| Accounts payable                                                                                                                           |   |                     | 890,252     |   |                        |   | 918,972 |   |
| Accrued expenses                                                                                                                           |   |                     | 446,259     |   |                        |   | 346,808 |   |
| Current portion of capital lease obligations                                                                                               |   |                     | 143,379     |   |                        |   | 158,138 |   |
| Due to related parties                                                                                                                     |   |                     | -           |   |                        |   | 8,370 |   |
| Deferred revenue                                                                                                                           |   |                     | 1,187,113   |   |                        |   | 377,500 |   |
|                                                                                                                                       |   |                     |        |   |                        |   |   |   |
| Total current liabilities                                                                                                                  |   |                     | 2,667,003   |   |                        |   | 1,827,099 |   |
|                                                                                                                                       |   |                     |        |   |                        |   |   |   |
| LONG TERM LIABILITIES:                                                                                                                     |   |                     |        |   |                        |   |   |   |
| Warrant liability                                                                                                                          |   |                     | 3,721,046   |   |                        |   | 4,030,340 |   |
| Capital lease obligations                                                                                                                  |   |                     | 136,428     |   |                        |   | 165,612 |   |
|                                                                                                                                       |   |                     |        |   |                        |   |   |   |
| Total long term liabilities                                                                                                                |   |                     | 3,857,474   |   |                        |   | 4,195,952 |   |
|                                                                                                                                       |   |                     |        |   |                        |   |   |   |
| SHAREHOLDERS' EQUITY:                                                                                                                      |   |                     |        |   |                        |   |   |   |
| Preferred stock ($.001 par value; 20,000,000 shares authorized)                                                                            |   |                     |        |   |                        |   |   |   |
| Series A convertible preferred stock; 3,437,500 shares authorized, 1,276,750 shares issued and outstanding (liquidation value $12,767,500) |   |                     | 2,864,104   |   |                        |   | 2,864,104 |   |
| Series B convertible preferred stock; 5,000,000 shares authorized, 2,797,379 shares issued and outstanding (liquidation value $8,392,137)  |   |                     | 5,427,604   |   |                        |   | 5,427,604 |   |
| Common stock ($.001 par value; 300,000,000 shares authorized, 41,543,655 shares issued and outstanding)                                    |   |                     | 41,543      |   |                        |   | 41,543 |   |
| Additional paid-in capital                                                                                                                 |   |                     | 36,781,793  |   |                        |   | 36,764,016 |   |
| Accumulated deficit                                                                                                                        |   |                     | (43,258,857 | )      |                        |   | (43,286,498 | ) |
|                                                                                                                                       |   |                     |        |   |                        |   |   |   |
| Total shareholders' equity                                                                                                                 |   |                     | 1,856,187   |   |                        |   | 1,810,769 |   |
|                                                                                                                                       |   |                     |        |   |                        |   |   |   |
| Total liabilities and shareholders' equity                                                                                                 |   | $                        | 8,380,664   |   |                        | $      | 7,833,820 |   |

----

|                                                           |   | For the Three Months Ended March 31, |       |
|----------------------------------------------------------------|--------|--------------------------------------------------------------------|------------|
|                                                           |   | 2011                                                               |       |   | 2010 |   |
|                                                           |   | (Unaudited)                                                        |       |   | (Unaudited) |   |
|                                                           |   |                                                               |       |   |   |   |
| Revenues                                                       |   | $                                                                  | 2,342,869  |   |   | $ | 1,249,635 |   |
|                                                           |   |                                                               |       |   |   |   |   |   |
| Cost of revenues                                               |   |                                                               | 1,658,861  |   |   |   | 1,758,408 |   |
|                                                           |   |                                                               |       |   |   |   |   |   |
| Gross profit (loss)                                            |   |                                                               | 684,008    |   |   |   | (508,773 | ) |
|                                                           |   |                                                               |       |   |   |   |   |   |
| Selling, general and administrative expenses:                  |   |                                                               |       |   |   |   |   |   |
| Salaries, employee benefits and related taxes                  |   |                                                               | 653,122    |   |   |   | 596,009 |   |
| Advertising and other marketing                                |   |                                                               | 23,477     |   |   |   | 57,343 |   |
| Depreciation and amortization                                  |   |                                                               | 181,718    |   |   |   | 231,811 |   |
| Rent, utilities, telephone and communications                  |   |                                                               | 97,448     |   |   |   | 75,243 |   |
| Professional fees                                              |   |                                                               | 104,537    |   |   |   | 347,997 |   |
| Other general and administrative                               |   |                                                               | 125,415    |   |   |   | 143,114 |   |
|                                                           |   |                                                               |       |   |   |   |   |   |
|                                                           |   |                                                               | 1,185,717  |   |   |   | 1,451,517 |   |
|                                                           |   |                                                               |       |   |   |   |   |   |
| Loss from operations                                           |   |                                                               | (501,709   | ) |   |   | (1,960,290 | ) |
|                                                           |   |                                                               |       |   |   |   |   |   |
| Gain from discontinued operations                              |   |                                                               | 219,020    |   |   |   | 1,031,155 |   |
|                                                           |   |                                                               |       |   |   |   |   |   |
| Other income (expense):                                        |   |                                                               |       |   |   |   |   |   |
| Gain on the change of the fair value of warrant liability      |   |                                                               | 309,294    |   |   |   | 974,468 |   |
| Interest income                                                |   |                                                               | 8,301      |   |   |   | 2,085 |   |
| Interest expense                                               |   |                                                               | (7,265     | ) |   |   | (50,372 | ) |
|                                                           |   |                                                               |       |   |   |   |   |   |
| Total other income (expense)                                   |   |                                                               | 310,330    |   |   |   | 926,181 |   |
|                                                           |   |                                                               |       |   |   |   |   |   |
| Net income (loss)                                              |   | $                                                                  | 27,641     |   |   | $ | (2,954 | ) |
|                                                           |   |                                                               |       |   |   |   |   |   |
| Net income (loss) per common share - basic and diluted:        |   |                                                               |       |   |   |   |   |   |
| Loss from operations                                           |   | $                                                                  | (0.01      | ) |   | $ | (0.03 | ) |
| Gain from discontinued operations                              |   |                                                               | 0.01       |   |   |   | 0.03 |   |
| Net income (loss) per common share - basic and diluted         |   | $                                                                  | -          |   |   | $ | - |   |
|                                                           |   |                                                               |       |   |   |   |   |   |
| Weighted average common shares outstanding - basic and diluted |   |                                                               | 41,543,655 |   |   |   | 41,543,655 |   |

----

|                             |   | Series A Preferred Stock,$.001 Par Value |      |   | Series B Preferred Stock,$.001 Par Value |   |      | Common Stock, $.001Par Value |   |   |      |   |   |                 |      |   | Total  |   |
|---------------------------------------|--------|-------------------------------------------------------------------|-----------|--------|-------------------------------------------------------------------|--------|-----------|---------------------------------------------|--------|--------|-----------|--------|--------|----------------------|-----------|--------|--------|--------|
|                                  |   | Number ofShares                                              |      |   | Amount                                                            |   |      | Number ofShares                        |   |   | Amount    |   |   | Number ofShares |      |   | Amount |   |   | Additional Paid-in            Capital             |   |   | AccumulatedDeficit |   |   | Shareholders'Equity |   |
|                                  |   |                                                              |      |   |                                                              |   |      |                                        |   |   |      |   |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance - December 31, 2010           |   |                                                              | 1,276,750 |   |                                                              | $      | 2,864,104 |                                        |   |   | 2,797,379 |   |   | $                    | 5,427,604 |   |   |   | 41,543,655 |   |   | $ | 41,543 |   |   | $ | 36,764,016 |   |   | $ | (43,286,498 | ) |   | $ | 1,810,769 |   |
|                                  |   |                                                              |      |   |                                                              |   |      |                                        |   |   |      |   |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization of deferred compensation |   |                                                              |      |   |                                                              |   |      |                                        |   |   |      |   |   |                 |      |   |   |   |   |   |   |   |   |   |   |   | 17,777 |   |   |   |   |   |   |   | 17,777 |   |
|                                  |   |                                                              |      |   |                                                              |   |      |                                        |   |   |      |   |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income for the period             |   |                                                              |      |   |                                                              |   |      |                                        |   |   |      |   |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 27,641 |   |   |   | 27,641 |   |
|                                  |   |                                                              |      |   |                                                              |   |      |                                        |   |   |      |   |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance - March 31, 2011              |   |                                                              | 1,276,750 |   |                                                              | $      | 2,864,104 |                                        |   |   | 2,797,379 |   |   | $                    | 5,427,604 |   |   |   | 41,543,655 |   |   | $ | 41,543 |   |   | $ | 36,781,793 |   |   | $ | (43,258,857 | ) |   | $ | 1,856,187 |   |

----

|                                                                        |   | For the Three Months Ended March 31, |      |
|-----------------------------------------------------------------------------|--------|--------------------------------------------------------------------|-----------|
|                                                                        |   | 2011                                                               |      |   | 2010 |   |
|                                                                        |   | (Unaudited)                                                        |      |   | (Unaudited) |   |
| Cash Flows From Operating Activities:                                       |   |                                                               |      |   |   |   |
| Net income (loss)                                                           |   | $                                                                  | 27,641    |   |   | $ | (2,954 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                                                               |      |   |   |   |   |   |
| Depreciation and amortization                                               |   |                                                               | 181,718   |   |   |   | 231,811 |   |
| Stock-based compensation and consulting                                     |   |                                                               | 17,777    |   |   |   | 3,000 |   |
| Loss on change of fair value of warrant liability                           |   |                                                               | (309,294  | ) |   |   | (974,468 | ) |
| Gain (loss) on the disposal of equipment of discontinued operations         |   |                                                               | -         |   |   |   | 6,000 |   |
| Changes in assets and liabilities:                                          |   |                                                               |      |   |   |   |   |   |
| Accounts receivable                                                         |   |                                                               | (860,523  | ) |   |   | 392,563 |   |
| Tax receivable                                                              |   |                                                               | 2,840     |   |   |   | 7,486 |   |
| Prepaid expenses                                                            |   |                                                               | 4,527     |   |   |   | (70,785 | ) |
| Other current assets                                                        |   |                                                               | (316      | ) |   |   | (5,002 | ) |
| Other assets                                                                |   |                                                               | -         |   |   |   | (42,611 | ) |
| Accounts payable                                                            |   |                                                               | (28,720   | ) |   |   | 476,734 |   |
| Accrued interest on related secured note from related party                 |   |                                                               | -         |   |   |   | 35,329 |   |
| Accrued expenses                                                            |   |                                                               | 99,451    |   |   |   | (239,909 | ) |
| Due to related parties                                                      |   |                                                               | (8,370    | ) |   |   | - |   |
| Deferred revenue                                                            |   |                                                               | 809,613   |   |   |   | 259,000 |   |
| Assets of discontinued operations                                      |   |                                                               | (215,012  | ) |   |   | (930,035 | ) |
|                                                                        |   |                                                               |      |   |   |   |   |   |
| Net cash used in operating activities                                       |   |                                                               | (278,668  | ) |   |   | (853,841 | ) |
|                                                                        |   |                                                               |      |   |   |   |   |   |
| Cash Flows From Investing Activities:                                       |   |                                                               |      |   |   |   |   |   |
| Purchase of property and equipment                                          |   |                                                               | (29,816   | ) |   |   | (110,363 | ) |
|                                                                        |   |                                                               |      |   |   |   |   |   |
| Net cash used in investing activities                                       |   |                                                               | (29,816   | ) |   |   | (110,363 | ) |
|                                                                        |   |                                                               |      |   |   |   |   |   |
| Cash Flows From Financing Activities:                                       |   |                                                               |      |   |   |   |   |   |
| Payments on note payable                                                    |   |                                                               | (17,313   | ) |   |   | (7,595 | ) |
| Gross proceeds from capital leases                                          |   |                                                               | -         |   |   |   | 134,335 |   |
| Payments on capital leases                                                  |   |                                                               | (43,943   | ) |   |   | (33,113 | ) |
| Restricted cash in connection with letters of credit                        |   |                                                               | 1,152,573 |   |   |   | (587 | ) |
| Gross proceeds from sales of preferred stock and warrants                   |   |                                                               | -         |   |   |   | 1,107,000 |   |
|                                                                        |   |                                                               |      |   |   |   |   |   |
| Net cash provided by financing activities                                   |   |                                                               | 1,091,317 |   |   |   | 1,200,040 |   |
|                                                                        |   |                                                               |      |   |   |   |   |   |
| Net increase in cash                                                        |   |                                                               | 782,833   |   |   |   | 235,836 |   |
|                                                                        |   |                                                               |      |   |   |   |   |   |
| Cash - beginning of the period                                              |   |                                                               | 4,429,026 |   |   |   | 1,403,653 |   |
|                                                                        |   |                                                               |      |   |   |   |   |   |
| Cash - end of the period                                                    |   | $                                                                  | 5,211,859 |   |   | $ | 1,639,489 |   |
|                                                                        |   |                                                               |      |   |   |   |   |   |
| Supplemental Disclosures of Cash Flow Information                           |   |                                                               |      |   |   |   |   |   |
| Cash payments for interest                                                  |   | $                                                                  | 7,265     |   |   | $ | 15,043 |   |
| Non cash financing activities:                                              |   |                                                               |      |   |   |   |   |   |
| Accrued Interest on related party note                                      |   | $                                                                  | -         |   |   | $ | 35,329 |   |

----

----

----

| Warrant Issue Date |   | WarrantExercise Price |   |   | AggregateNumber ofWarrants |   |       | Expected Term(Years) ofWarrants |   |   | Volatility |   |   | Fair Value |   |
|------------------------------|--------|----------------------------|--------|--------|---------------------------------|--------|------------|-------------------------------------------|--------|--------|------------|--------|--------|-----------------|--------|
|                         |   |                       |   |   |                            |   |       |                                      |   |   |       |   |   |            |   |
| 1/15/2009                    |   | $                          | 0.15   |   |                            |   | 26,666,667 |                                      |   |   | 2.8        |   |   |            | 475    | % |   | $ | 1,599,820 |   |
| 3/26/2010                    |   |                       | 0.15   |   |                            |   | 7,380,000  |                                      |   |   | 4.0        |   |   |            | 483    | % |   |   | 442,799 |   |
| 9/30/2010                    |   |                       | 0.15   |   |                            |   | 18,000,010 |                                      |   |   | 4.5        |   |   |            | 484    | % |   |   | 1,080,000 |   |
| 11/29/2010                   |   |                       | 0.15   |   |                            |   | 2,000,000  |                                      |   |   | 4.7        |   |   |            | 485    | % |   |   | 120,000 |   |
| 12/22/2010                   |   | $                          | 0.15   |   |                            |   | 7,973,780  |                                      |   |   | 4.7        |   |   |            | 486    | % |   |   | 478,427 |   |
|                         |   |                       |   |   |                            |   |       |                                      |   |   |       |   |   |            |   |   |   | $ | 3,721,046 |   |

| Warrant liability balance as of December 31, 2010                                      |   | $      | 4,030,340 |   |
|----------------------------------------------------------------------------------------|--------|--------|-----------|--------|
| Decrease in the fair value of warrant liability during the period ended March 31, 2011 |   |   | (309,294  | )      |
| Warrant liability balance as of March 31, 2011                                         |   | $      | 3,721,046 |   |

----

| Series A convertible preferred stock issued and outstanding                                    |   |   | 25,535,000  |   |
|------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|
| Series B convertible preferred stock issued and outstanding                                    |   |   | 55,947,580  |   |
| Options, issued, outstanding and exercisable                                                   |   |   | 3,965,000   |   |
| Warrants to purchase common stock, issued, outstanding and exercisable                         |   |   | 91,987,344  |   |
| Warrants to purchase series A convertible preferred stock, issued, outstanding and exercisable |   |   | 3,000,000   |   |
|                                                                                           |   |   | 180,434,924 |   |

----

----

|                         |   | For the Three Months ended March 31, |   |
|------------------------------|--------|--------------------------------------|--------|
|                         |   | 2011                                 |   |   | 2010 |   |
|                         |   |                                 |   |   |   |   |
| Largest InsPro client        |   |                                 | 35     | % |   |   | 32 | % |
| Second largest InsPro client |   |                                 | 16     | % |   |   | 28 | % |

----

----

----

----

|                                                         |   | March 31, 2011 |    |   | December 31, 2010 |   |
|--------------------------------------------------------------|--------|--------------------------|---------|--------|-----------------------------|--------|
|                                                         |   |                     |    |   |                        |   |
| Accounts receivable, less allowance for doubtful accounts $0 |   | $                        | 114,175 |   |                        | $      | 149,913 |   |
| Deferred compensation advances                               |   |                     | -       |   |                        |   | 200 |   |
| Prepaid expenses                                             |   |                     | 3,916   |   |                        |   | 4,332 |   |
| Other current assets                                         |   |                     | 151,228 |   |                        |   | 174,103 |   |
| Other assets                                                 |   |                     | 12,935  |   |                        |   | 51,227 |   |
| Accounts payable                                             |   |                     | (3,402  | )      |                        |   | (82,431 | ) |
| Accrued expenses                                             |   |                     | (539    | )      |                        |   | (134,203 | ) |
| Sub-tenant security deposit                                  |   |                     | -       |   |                        |   | (99,840 | ) |
| Net current assets of discontinued operations                |   | $                        | 278,313 |   |                        | $      | 63,301 |   |

|                                                   |   | For the Three Months Ended March 31, |    |
|--------------------------------------------------------|--------|--------------------------------------------------------------------|---------|
|                                                   |   | 2011                                                               |    |   | 2010 |   |
| Revenues:                                              |   |                                                               |    |   |   |   |
| Commission and other revenue from carriers             |   | $                                                                  | 63,189  |   |   | $ | 149,646 |   |
| Transition policy commission pursuant to the Agreement |   |                                                               | 194,661 |   |   |   | 350,332 |   |
| Gain on the sale of Insurint                           |   |                                                               | -       |   |   |   | 578,569 |   |
| Gain on disposal of property and equipment             |   |                                                               | -       |   |   |   | 6,000 |   |
| Lead sale revenue                                      |   |                                                               | -       |   |   |   | 103 |   |
| Insurint revenue                                       |   |                                                               | -       |   |   |   | 53,130 |   |
| Sub-lease revenue                                      |   |                                                               | 150,142 |   |   |   | 257,951 |   |
|                                                   |   |                                                               |    |   |   |   |   |   |
|                                                   |   |                                                               | 407,992 |   |   |   | 1,395,731 |   |
|                                                   |   |                                                               |    |   |   |   |   |   |
| Operating expenses:                                    |   |                                                               |    |   |   |   |   |   |
| Salaries, employee benefits and related taxes          |   |                                                               | 11,133  |   |   |   | 167,388 |   |
| Rent, utilities, telephone and communications          |   |                                                               | 161,704 |   |   |   | (11,387 | ) |
| Professional fees                                      |   |                                                               | (1,961  | ) |   |   | 86,211 |   |
| Other general and administrative                       |   |                                                               | 18,096  |   |   |   | 122,364 |   |
|                                                   |   |                                                               |    |   |   |   |   |   |
|                                                   |   |                                                               | 188,972 |   |   |   | 364,576 |   |
|                                                   |   |                                                               |    |   |   |   |   |   |
| Gain (loss) from discontinued operations               |   | $                                                                  | 219,020 |   |   | $ | 1,031,155 |   |

----

|                            |   | UsefulLife(Years) |   | At March 31,2011 |       |   | At December 31,2010 |   |
|---------------------------------|--------|-------------------|--------|----------------------------|------------|--------|-------------------------------|--------|
| Computer equipment and software |   | 3                 |   | $                          | 1,169,538  |   |                          | $      | 1,139,721 |   |
| Office equipment                |   | 4.6               |   |                       | 194,360    |   |                          |   | 194,360 |   |
| Office furniture and fixtures   |   | 6.7               |   |                       | 191,363    |   |                          |   | 191,363 |   |
| Leasehold improvements          |   | 9.8               |   |                       | 34,034     |   |                          |   | 34,034 |   |
|                            |   |              |   |                       | 1,589,295  |   |                          |   | 1,559,478 |   |
|                            |   |              |   |                       |       |   |                          |   |   |   |
| Less accumulated depreciation   |   |              |   |                       | (1,040,894 | )      |                          |   | (945,860 | ) |
|                            |   |              |   |                       |       |   |                          |   |   |   |
|                            |   |              |   | $                          | 548,401    |   |                          | $      | 613,618 |   |

|                                              |   | UsefulLife(Years) |   | At March 31,2011 |       |   | At December 31,2010 |   |
|---------------------------------------------------|--------|-------------------|--------|----------------------------|------------|--------|-------------------------------|--------|
| InsPro Technologies intangible assets acquired    |   | 4.7               |   | $                          | 2,097,672  |   |                          | $      | 2,097,672 |   |
| Software development costs for external marketing |   | 2                 |   |                       | 174,296    |   |                          |   | 174,296 |   |
|                                              |   |              |   |                       | 2,271,968  |   |                          |   | 2,271,968 |   |
|                                              |   |              |   |                       |       |   |                          |   |   |   |
| Less:  accumulated amortization         |   |              |   |                       | (1,751,866 | )      |                          |   | (1,665,183 | ) |
|                                              |   |              |   |                       |       |   |                          |   |   |   |
|                                              |   |              |   | $                          | 520,102    |   |                          | $      | 606,785 |   |

| 2011   |   | $      | 260,051 |   |
|--------|--------|--------|---------|--------|
| 2012   |   |   | 260,051 |   |
|   |   |   |    |   |
|   |   | $      | 520,102 |   |

----

|                                   |   | For the period ended March 31, |   |
|----------------------------------------|--------|---------------------------------------------------------|--------|
|                                   |   | 2011                                                    |   |   | 2010 |   |
|                                   |   |                                                    |   |   |   |   |
| Salaries, commission and related taxes |   | $                                                       | 17,777 |   |   | $ | 3,000 |   |

|                                          |   | Number         |      |   | Weighted |   |   |            |   |
|-----------------------------------------------|--------|----------------|-----------|--------|----------|--------|--------|-----------------|--------|
|                                          |   | Of Shares |      |   | Average  |   |   | Weighted        |   |
|                                          |   | Underlying     |      |   | Exercise |   |   | Average         |   |
|                                          |   | Options        |      |   | Price    |   |   | Fair Value |   |
|                                          |   |           |      |   |     |   |   |            |   |
| Outstanding at December 31, 2010              |   |           | 6,590,000 |   |     | $      | 0.24   |            |   | $ | 0.30 |   |
|                                          |   |           |      |   |     |   |   |            |   |   |   |   |
| For the period ended March 31, 2011           |   |           |      |   |     |   |   |            |   |   |   |   |
| Granted                                       |   |           | -         |   |     |   | -      |            |   |   | - |   |
| Exercised                                     |   |           | -         |   |     |   | -      |            |   |   | - |   |
| Expired                                       |   |           | (425,000  | )      |     |   | 2.70   |            |   |   | 0.77 |   |
|                                          |   |           |      |   |     |   |   |            |   |   |   |   |
| Outstanding at March 31, 2011                 |   |           | 6,165,000 |   |     | $      | 0.07   |            |   | $ | 0.27 |   |
|                                          |   |           |      |   |     |   |   |            |   |   |   |   |
| Outstanding and exercisable at March 31, 2011 |   |           | 3,965,000 |   |     | $      | 0.79   |            |   | $ | 0.46 |   |

----

| Options Outstanding |   |                                  | Options Exercisable |    |
|--------------------------|--------|---------------------------------------|--------------------------|---------|
| ExercisePrice            |   | Number ofSharesUnderlyingOptions |                     |    | WeightedAverageRemainingContractualLife |   |   | ExercisePrice |   |   | NumberExercisable |   |   | ExercisePrice |   |
|                     |   |                                  |                     |    |   |   |   |   |   |   |   |   |   |   |   |
| $                        | 0.060  |                                  |                     | 405,000 |   |   |   | 3.6 |   |   | $ | 0.060 |   |   |   | 255,000 |   |   | $ | 0.060 |   |
| 0.07                     |   |                                  | 500,000                  |    |   |   | 4.3 |   |   |   | 0.065 |   |   |   | 100,000 |   |   |   | 0.065 |   |
| 0.10                     |   |                                  | 2,220,000                |    |   |   | 2.9 |   |   |   | 0.100 |   |   |   | 2,070,000 |   |   |   | 0.100 |   |
| 0.11                     |   |                                  | 1,500,000                |    |   |   | 4.4 |   |   |   | 0.111 |   |   |   | - |   |   |   | 0.111 |   |
| 1.00                     |   |                                  | 1,000,000                |    |   |   | 4.7 |   |   |   | 1.000 |   |   |   | 1,000,000 |   |   |   | 1.000 |   |
| 2.62                     |   |                                  | 20,000                   |    |   |   | 0.7 |   |   |   | 2.620 |   |   |   | 20,000 |   |   |   | 2.620 |   |
| 2.95                     |   |                                  | 45,000                   |    |   |   | 0.2 |   |   |   | 2.950 |   |   |   | 45,000 |   |   |   | 2.950 |   |
| 3.50                     |   |                                  | 75,000                   |    |   |   | 5.0 |   |   |   | 3.500 |   |   |   | 75,000 |   |   |   | 3.500 |   |
| $                        | 3.600  |                                  |                     | 400,000 |   |   |   | 5.1 |   |   | $ | 3.600 |   |   |   | 400,000 |   |   | $ | 3.600 |   |
|                     |   |                                  | 6,165,000                |    |   |   |   |   |   |   |   |   |   |   | 3,965,000 |   |   |   |   |   |

----

|                                |   |     |       |   | Weighted |   |
|-------------------------------------|--------|----------|------------|--------|----------|--------|
|                                |   | Common   |       |   | Average  |   |
|                                |   | Stock    |       |   | Exercise |   |
|                                |   | Warrants |       |   | Price    |   |
|                                |   |     |       |   |     |   |
| Outstanding at December 31, 2010    |   |     | 93,162,344 |   |     |   | 0.24 |   |
|                                |   |     |       |   |     |   |   |   |
| For the period ended March 31, 2011 |   |     |       |   |     |   |   |   |
| Granted                             |   |     | -          |   |     |   | - |   |
| Exercised                           |   |     | -          |   |     |   | - |   |
| Expired                             |   |     | (1,175,000 | )      |     |   | 1.50 |   |
| Outstanding at March 31, 2011       |   |     | 91,987,344 |   |     |   | 0.24 |   |
|                                |   |     |       |   |     |   |   |   |
| Exercisable at March 31, 2011       |   |     | 91,987,344 |   |     | $      | 0.24 |   |

| ExercisePrice |   | ExpirationDate |      | WeightedAverageRemaining Life |   |   | Common StockWarrants |   |
|---------------|--------|----------------|-----------|------------------------------------|--------|--------|---------------------------|--------|
|          |   |           |      |                               |   |   |                      |   |
| $             | 1.51   |           | 3/30/2012 |                               |   | 1.0    |                      |   |   | 4,966,887 |   |
| 0.20          |   | 3/31/2013      |      |                               | 2.0    |   |                      |   | 25,000,000 |   |
| 0.15          |   | 1/14/2014      |      |                               | 2.8    |   |                      |   | 26,666,667 |   |
| 0.15          |   | 3/26/2015      |      |                               | 4.0    |   |                      |   | 7,380,000 |   |
| 0.15          |   | 9/30/2015      |      |                               | 4.5    |   |                      |   | 18,000,010 |   |
| 0.15          |   | 11/29/2015     |      |                               | 4.7    |   |                      |   | 2,000,000 |   |
| 0.15          |   | 12/22/2015     |      |                               | 4.7    |   |                      |   | 7,973,780 |   |
| $             | 0.24   |           |      |                               |   | 3.1    |                      |   |   | 91,987,344 |   |

----

|                                |   |      |    |   | Weighted |   |
|-------------------------------------|--------|-----------|---------|--------|----------|--------|
|                                |   | Preferred |    |   | Average  |   |
|                                |   | Stock     |    |   | Exercise |   |
|                                |   | Warrants  |    |   | Price    |   |
|                                |   |      |    |   |     |   |
| Outstanding at December 31, 2010    |   |      | 150,000 |   |     |   | 4.00 |   |
|                                |   |      |    |   |     |   |   |   |
| For the period ended March 31, 2011 |   |      |    |   |     |   |   |   |
| Granted                             |   |      | -       |   |     |   | - |   |
| Exercised                           |   |      | -       |   |     |   | - |   |
| Expired                             |   |      | -       |   |     |   | - |   |
| Outstanding at March 31, 2011       |   |      | 150,000 |   |     |   | 0.00 |   |
|                                |   |      |    |   |     |   |   |   |
| Exercisable at March 31, 2011       |   |      | 150,000 |   |     | $      | 4.00 |   |

|                            |   | Useful Life (Years) |   | March 31, 2011 |     |   | December 31, 2010 |   |
|---------------------------------|--------|-------------------------------|--------|--------------------------|----------|--------|-----------------------------|--------|
| Computer equipment and software |   | 3                             |   | $                        | 595,899  |   |                        | $      | 595,899 |   |
| Phone System                    |   | 3                             |   |                     | 15,011   |   |                        |   | 15,011 |   |
|                            |   |                          |   |                     | 610,910  |   |                        |   | 610,910 |   |
| Less accumulated depreciation   |   |                          |   |                     | (458,017 | )      |                        |   | (413,837 | ) |
|                            |   |                          |   | $                        | 152,893  |   |                        | $      | 197,073 |   |

----

| 2011                                     |   | $      | 126,413 |   |
|------------------------------------------|--------|--------|---------|--------|
| 2012                                     |   |   | 99,209  |   |
| 2013                                     |   |   | 37,420  |   |
| 2014                                     |   |   | 30,757  |   |
| 2015                                     |   |   | 12,815  |   |
|                                     |   |   |    |   |
| Total future payments                    |   |   | 306,614 |   |
| Less amount representing interest        |   |   | 26,807  |   |
|                                     |   |   |    |   |
| Present value of future minimum payments |   |   | 279,807 |   |
| Less current portion                     |   |   | 143,379 |   |
|                                     |   |   |    |   |
| Long-term portion                        |   | $      | 136,428 |   |

----

----

----

----

----

|                       |   | For the Three Months Ended March 31, |      |
|----------------------------|--------|--------------------------------------------------------------------|-----------|
|                       |   | 2011                                                               |      |   | 2010 |   |
|                       |   |                                                               |      |   |   |   |
| Professional services      |   | $                                                                  | 1,350,973 |   |   | $ | 555,890 |   |
| ASP revenue                |   |                                                               | 454,418   |   |   |   | 359,745 |   |
| Sales of software licenses |   |                                                               | 335,000   |   |   |   | 125,000 |   |
| Maintenance revenue        |   |                                                               | 197,538   |   |   |   | 200,000 |   |
| Sub-leasing revenue        |   |                                                               | 4,940     |   |   |   | 9,000 |   |
|                       |   |                                                               |      |   |   |   |   |   |
| Total                      |   | $                                                                  | 2,342,869 |   |   | $ | 1,249,635 |   |

|   | · | In First Quarter 2011 our professional services revenue increased $795,083 or 143% as a result of higher post implementation services, which were provided by InsPro Technologies in First Quarter 2011 to two of our clients. Implementation services included assisting clients in setting up their insurance products in InsPro, providing modifications to InsPro’s functionality to support the client’s business, interfacing InsPro with the client’s other systems, automation of client correspondence to their customers and data conversion from the client’s existing systems to InsPro. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In First Quarter 2011 our ASP revenue increased $94,673 or 26% as a result of a $45,000 one time set-up fee for a new client and increased fees from several existing clients.  In First Quarter 2011 we earned ASP revenue from nine InsPro clients.  ASP hosting service enables a client to either lease the InsPro software, paying only for that capacity required to support their business, or for a client to outsource the operation of their licensed InsPro installation to the Company.  InsPro’s ASP hosting clients access InsPro installed on InsPro Technologies’ owned servers located at InsPro Technologies’ offices or at a third party’s site. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In First Quarter 2011 we earned $335,000 of license fee revenue, which include a license fee recognized upon the completion of the implementation of InsPro for a client. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In First Quarter 2011 our maintenance revenue decreased $2,462 or 1% as a result of the consolidation of a client’s two InsPro installations into one InsPro installation and the elimination of one of the two maintenance agreements for this client.  In First Quarter 2011 we earned maintenance revenues from nine clients. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | In First Quarter 2011 and First Quarter of 2010 we earned sub-leasing revenue from the sub leasing of space in our Radnor office. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|                                          |   | For the Three Months Ended March 31, |      |
|-----------------------------------------------|--------|--------------------------------------------------------------------|-----------|
|                                          |   | 2011                                                               |      |   | 2010 |   |
|                                          |   |                                                               |      |   |   |   |
| Salaries, employee benefits and related taxes |   | $                                                                  | 1,057,248 |   |   | $ | 987,402 |   |
| Professional fees                             |   |                                                               | 390,371   |   |   |   | 504,518 |   |
| Rent, utilities, telephone and communications |   |                                                               | 81,305    |   |   |   | 75,516 |   |
| Other cost of revenues                        |   |                                                               | 129,937   |   |   |   | 190,972 |   |
|                                          |   | $                                                                  | 1,658,861 |   |   | $ | 1,758,408 |   |

|   | · | Our salaries, employee benefits and related taxes component of cost of revenues in First Quarter 2011 was $1,057,248 as compared to $987,402 for First Quarter 2010 for an increase of $69,846 or 7% as compared to First Quarter 2010.  Salaries, employee benefits and related taxes increased as a result of increased employee staffing. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our professional fees component of cost of revenues in First Quarter 2011 was $390,371 as compared to $504,518 for First Quarter 2010 for an decrease of $114,147 or 23% as compared to First Quarter 2010.  Professional fees decreased as a result of $167,571 of training and set up expense incurred in First Quarter 2010, which pertained to a new vendor that provides InsPro Technologies with offshore outsourcing capabilities. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our rent, utilities, telephone and communications component of cost of revenues in First Quarter 2011 was $81,305 as compared to $75,516 for First Quarter 2010 for an increase of $5,789 or 8% as compared to First Quarter 2010.  Rent, utilities, telephone and communications increased as a result of scheduled increases in rental costs and increases in telephone and communications costs. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our other cost of revenues component of cost of revenues in First Quarter 2011 was $129,937 as compared to $190,972 in First Quarter 2010, a decrease of $61,035 or 32%.  The decrease was the result of costs reduction initiatives pertaining to computer processing. Other cost of revenues consisted of computer processing incurred primarily to provide ASP hosting services, hardware and software, travel and entertainment, and office expenses. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                          |   | For the Three Months Ended March 31, |      |
|-----------------------------------------------|--------|--------------------------------------------------------------------|-----------|
|                                          |   | 2011                                                               |      |   | 2010 |   |
|                                          |   |                                                               |      |   |   |   |
| Salaries, employee benefits and related taxes |   | $                                                                  | 653,122   |   |   | $ | 596,009 |   |
| Advertising and other marketing               |   |                                                               | 23,477    |   |   |   | 57,343 |   |
| Depreciation and amortization                 |   |                                                               | 181,718   |   |   |   | 231,811 |   |
| Rent, utilities, telephone and communications |   |                                                               | 97,448    |   |   |   | 75,243 |   |
| Professional fees                             |   |                                                               | 104,537   |   |   |   | 347,997 |   |
| Other general and administrative              |   |                                                               | 125,415   |   |   |   | 143,114 |   |
|                                          |   | $                                                                  | 1,185,717 |   |   | $ | 1,451,517 |   |

|                                           |   | For the Three Months Ended March 31, |    |
|------------------------------------------------|--------|--------------------------------------------------------------------|---------|
|                                           |   | 2011                                                               |    |   | 2010 |   |
|                                           |   |                                                               |    |   |   |   |
| Salaries, wages and bonuses                    |   | $                                                                  | 495,542 |   |   | $ | 476,049 |   |
| Share based employee and director compensation |   |                                                               | 17,777  |   |   |   | 3,000 |   |
| Commissions to employees                       |   |                                                               | 44,889  |   |   |   | 25,056 |   |
| Employee benefits                              |   |                                                               | 29,443  |   |   |   | 29,812 |   |
| Payroll taxes                                  |   |                                                               | 50,721  |   |   |   | 38,205 |   |
| Severance and other compensation               |   |                                                               | 3,750   |   |   |   | 4,106 |   |
| Directors’ compensation                  |   |                                                               | 11,000  |   |   |   | 19,781 |   |
|                                           |   |                                                               |    |   |   |   |   |   |
| Total                                          |   | $                                                                  | 653,122 |   |   | $ | 596,009 |   |

|   | · | Salaries, wages and bonuses were $495,542 in First Quarter 2011 as compared to $476,049 in First Quarter 2010, an increase of $19,493 or 4%.  The increase is primarily the result of an increase in Mr. Oakes’ salary and to a lesser extent increased staffing. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Share based employee and director compensation expense was $17,777 in First Quarter 2011 as compared to $3,000 in First Quarter 2010.  The increase is attributable to vesting and expensing of all outstanding options issued subsequent to the First Quarter 2010.  Share based employee and director compensation consist of stock option and restricted stock grants, which are valued at fair-value at the date of the grant and expensed over the stock option’s vesting period or the duration of employment, whichever is shorter. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Commissions to employees were $44,889 in First Quarter 2011 as compared to $25,056 in First Quarter 2010.  Commissions to employees increased as a result of increased commissionable revenue activity, which was paid to InsPro Technologies’ sales personnel. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Payroll taxes expense was $50,721 in First Quarter 2011 as compared to $38,205 in First Quarter 2010, an increase of $12,516 or 32%.  The increase is the result of increased payroll expense. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                       |   | For the Three Months Ended March 31, |    |
|----------------------------------------------------------------------------|--------|--------------------------------------------------------------------|---------|
|                                                                       |   | 2011                                                               |    |   | 2010 |   |
|                                                                       |   |                                                               |    |   |   |   |
| Amortization of intangibles acquired as a result of the InsPro acquisition |   | $                                                                  | 86,684  |   |   | $ | 117,020 |   |
| Amortization of software and website development for external marketing    |   |                                                               | -       |   |   |   | 21,787 |   |
| Depreciation expense                                                       |   |                                                               | 95,034  |   |   |   | 93,004 |   |
|                                                                       |   |                                                               |    |   |   |   |   |   |
| Total                                                                      |   | $                                                                  | 181,718 |   |   | $ | 231,811 |   |

|   | · | In First Quarter 2011 we incurred amortization expense of $86,684 as compared to $117,020 in the First Quarter 2010 for the intangible assets acquired from InsPro Technologies (formerly Atiam Technologies, L.P.) on October 1, 2007.  The decrease is the result of no amortization for the employment and non-compete agreements acquired as this asset was fully amortized as of October 1, 2010. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In First Quarter 2010 we incurred amortization expense of $21,787 for software development cost for external marketing pertaining to InsPro Technologies’ InsPro system, which were fully amortized as of June 30, 2010. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In First Quarter 2011 we incurred depreciation expense of $95,034 as compared to $93,004 in First Quarter 2010. The increase was due to assets acquired by InsPro Technologies subsequent to March 31, 2010. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                   |   | For the Three Months Ended March 31, |    |
|--------------------------------------------------------|--------|--------------------------------------------------------------------|---------|
|                                                   |   | 2011                                                               |    |   | 2010 |   |
| Revenues:                                              |   |                                                               |    |   |   |   |
| Commission and other revenue from carriers             |   | $                                                                  | 63,189  |   |   | $ | 149,646 |   |
| Gain recognized upon the execution of the Agreement    |   |                                                               | -       |   |   |   | - |   |
| Transition policy commission pursuant to the Agreement |   |                                                               | 194,661 |   |   |   | 350,332 |   |
| Gain on the sale of Insurint                           |   |                                                               | -       |   |   |   | 578,569 |   |
| Gain on disposal of property and equipment             |   |                                                               | -       |   |   |   | 6,000 |   |
| Lead sale revenue                                      |   |                                                               | -       |   |   |   | 103 |   |
| Insurint revenue                                       |   |                                                               | -       |   |   |   | 53,130 |   |
| Sub-lease revenue                                      |   |                                                               | 150,142 |   |   |   | 257,951 |   |
|                                                   |   |                                                               |    |   |   |   |   |   |
|                                                   |   |                                                               | 407,992 |   |   |   | 1,395,731 |   |
|                                                   |   |                                                               |    |   |   |   |   |   |
| Operating expenses:                                    |   |                                                               |    |   |   |   |   |   |
| Salaries, employee benefits and related taxes          |   |                                                               | 11,133  |   |   |   | 167,388 |   |
| Lead, advertising and other marketing                  |   |                                                               | -       |   |   |   | - |   |
| Depreciation and amortization                          |   |                                                               | -       |   |   |   | - |   |
| Rent, utilities, telephone and communications          |   |                                                               | 161,704 |   |   |   | (11,387 | ) |
| Professional fees                                      |   |                                                               | (1,961  | ) |   |   | 86,211 |   |
| Loss on impairment of property and equipment           |   |                                                               | -       |   |   |   | - |   |
| Loss on impairment of intangible assets                |   |                                                               | -       |   |   |   | - |   |
| Other general and administrative                       |   |                                                               | 18,096  |   |   |   | 122,364 |   |
| (Gain) on disposal of property and equipment           |   |                                                               | -       |   |   |   | - |   |
|                                                   |   |                                                               |    |   |   |   |   |   |
|                                                   |   |                                                               | 188,972 |   |   |   | 364,576 |   |
|                                                   |   |                                                               |    |   |   |   |   |   |
| Gain from discontinued operations                      |   | $                                                                  | 219,020 |   |   | $ | 1,031,155 |   |

----

|   | · | Commission and other revenue from carriers of $63,189 in First Quarter 2011 as compared to $149,646 in First Quarter 2010.  The decrease is due to the declines in our telesales call center produced agency business.   We continue to receive commissions from carriers other than certain carriers and commissions on policies other than Transferred Policies, which were transferred to the acquirer. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Transition policy commission pursuant to the Agreement of $194,661 in First Quarter 2011 as compared to $350,332 in the First Quarter 2010.  The decrease is due to the declines in our telesales call center produced agency business. On February 20, 2009, the Company entered into and completed the sale of the Agency Business to eHealth Insurance Services, Inc., an unaffiliated third party, pursuant to the terms of a Client Transition Agreement (the “Agreement”). |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | During the first quarter of 2010 we recognized a $578,569 gain on the sale of Insurint effective open the execution of an asset purchase agreement (the “Insurint Sale Agreement”) with an unaffiliated third party. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Pursuant to the terms of the Insurint Sale Agreement we sold substantially all of Insurint’s assets used in Insurint’s business including the Insurint software, www.insurint.com web site, other intellectual property specific to Insurint including but not limited to the customer base and all future revenue pertaining to Insurint.  The buyer agreed to assume future Insurint commitments and expenses subsequent to March 31, 2010. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Pursuant to the Insurint Sale Agreement we will receive in aggregate $625,000 in cash from the buyer of Insurint, of which $312,500 was received on April 1, 2010 and the $312,500 balance will be received over twenty-three equal monthly installments in the amount of $13,020.83, with the first monthly payment due on May 1, 2010, and the last monthly payment in the amount of $13,020.91 due on April 1, 2012. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | We incurred $21,829 of legal costs pertaining to the Insurint Sale Agreement. |
|--------|---|-------------------------------------------------------------------------------|

|   | · | Insurint revenue of $53,130 in First Quarter 2010 ceased effective March 31, 2010 as a result of the Insurint Sale Agreement. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|

|   | · | In First Quarter 2011 we earned sub-lease revenue of $150,142 as compared to $257,951 in First Quarter 2010 relating to the sub-lease of a portion of our Florida office and our former New York sales office. The decline in Sub-lease revenue is the result of the elimination of sub-lease revenue from our former New York sales office and lower sub-lease revenue from our former Deerfield Beach office.  Our leases for our former New York sales office and our former Deerfield Beach office expired on December 31, 2010 and February 28, 2011, respectively.  Sub-lease revenue on both offices included base rent, additional rent pertaining to utilities and occupancy costs and certain telephony, technology and facility services provided by us to certain of our sub-tenants. |
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|   | · | Increases in accounts receivable of $860,523 in 2011, which is primarily the result of increases in InsPro billings especially for professional services and delays in payments from certain of InsPro’s clients. |
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|   | · | Increases in accounts payable and accrued expenses of $70,731 in First Quarter 2011, which is primarily the result of an increase in accrued payroll expense, which will be paid in the second quarter of 2011. |
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|   | · | Increases in net assets of discontinued operations of $215,012, which is primarily the result of the payment of lease payments pertaining to abandoned leases and the return of security deposits to the Company’s landlords and sub-tenants all pertaining to our former New York and Florida offices. |
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|   | · | Recorded depreciation and amortization expense of $181,718 and $231,811 in 2011 and 2010, respectively. |
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|   | · | Recorded stock-based compensation and consulting expense of $17,777 and $3,000 in 2011 and 2010, respectively. |
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|   | · | Recognized a gain on change in fair value of warrants liabilities of $309,294 and $974,468 in 2011 and 2010, respectively. |
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|   | · | We recorded a gain of $6,000 on the disposal of property and equipment of discontinued operations in First Quarter 2010. |
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|   | · | During the first quarter of 2011 the letters of credit pertaining to the former leases for our Florida and New York offices, which were collateralized with assets in the form of a money market account and certificate of deposit and classified as restricted cash as of December 31, 2010, were terminated as a result of the expiration of these leases.  As a result of the termination of these letters of credit the restrictions on the money market account and certificate of deposit were lifted, and $1,152,573 was reclassified from restricted cash to cash during the first quarter of 2011. |
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|   | · | During the first quarter of 2010 we received $1,107,000 in gross proceeds as a result of the exercise of subscription units pertaining to our rights offering, which was completed on March 26, 2010. |
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|   | o | On January 14, 2010 we filed a prospectus for a rights offering on form S-1/A, which the Commission declared effective on January 22, 2010, to distribute to shareholders at no charge, one non-transferable subscription right for each 12,256 shares of our common stock and 613 shares of our preferred stock owned as of January 1, 2010, the record date, either as a holder of record or, in the case of shares held of record by brokers, dealers, custodian banks or other nominees on shareholders’ behalf, as a beneficial owner of such shares.  This rights offering was designed to give all of the holders of the Company’s common stock the opportunity to participate in an equity investment in the Company on the same economic terms as our 2009 private placement. |
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|   | o | The basic subscription right entitled the holder to purchase one unit (“Subscription Unit”) at a subscription price of $1,000. A Subscription Unit consisted of 250 shares of Series A preferred stock and a five-year warrant to purchase 5,000 shares of common stock at an exercise price of $0.20 per share.  In the event that a holder of a Subscription Unit purchased all of the basic Subscription Units available to the holder then pursuant to their basic subscription right, the holder had the option to choose to subscribe for a portion of any Subscription Units that were not purchased by all other holders of Subscription Units through the exercise of their basic subscription rights. |
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|   | o | Effective with the expiration of the subscription rights, which occurred on March 26, 2010, holders of subscription rights exercised in aggregate 1,061 basic subscription rights and 46 over subscription rights for a total 1,107 Subscription Units.  As a result of the exercise of 1,107 Subscription Units we issued effective on March 26, 2010 in aggregate 276,750 shares of Series A preferred stock and five-year warrants to purchase in aggregate 5,535,000 shares of common stock at an exercise price of $0.20 per share. The Series A preferred stock issued in 2010 have the same terms as the Series A Preferred stock issued in 2009. |
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|   | o | Of the 1,107 Subscription Units exercised Co-Investment exercised 1,000 basic subscription rights for $1,000,000 and on March 26, 2010, the Company issued to Co-Investment 250,000 shares of Series A preferred stock and five-year warrants to purchase in aggregate 5,000,000 shares of common stock at an exercise price of $0.20 per share. |
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|   | o | Effective with the expiration of the subscription rights all unexercised subscription rights expired. |
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|   | · | InsPro Technologies has entered into various capital lease obligations to purchase equipment used for operations. |
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| ExhibitNo. |   | Description                                                                        |
|------------|--------|------------------------------------------------------------------------------------|
|       |   |                                                                               |
| 31.1       |   | Chief Executive Officer’s Rule 13a-14(a)/15d-14(a) Certification * |
| 31.2       |   | Chief Financial Officer’s Rule 13a-14(a)/15d-14(a) Certification * |
| 32.1       |   | Chief Executive Officer’s Section 1350 Certification †            |
| 32.2       |   | Chief Financial Officer’s Section 1350 Certification †            |

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| Date: May 16, 2011 | INSPRO TECHNOLOGIES CORPORATION |
|--------------------|---------------------------------|
|               |                            |   |
|               | By:                             | /s/ ANTHONY R. VERDI |
|               |                            | Anthony R. Verdi |
|               |                            | Chief Financial Officer and Chief Operating Officer |
|               |                            | (Principal Executive and Financial Officer) |

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| Exhibit No. |   | Description                                                                            |
|------------------|--------|----------------------------------------------------------------------------------------|
|             |   |                                                                                   |
| 31.1             |   | Principal Executive Officer’s Rule 13a-14(a)/15d-14(a) Certification * |
| 31.2             |   | Chief Financial Officer’s Rule 13a-14(a)/15d-14(a) Certification *     |
| 32.1             |   | Principal Executive Officer’s Section 1350 Certification †            |
| 32.2             |   | Chief Financial Officer’s Section 1350 Certification †                |

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