Filing of Certain Prospectuses and Communications in Connection With Business Combination Transactions (425)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):

February 19, 2015 (February 19, 2015)

COVER-ALL TECHNOLOGIES INC.
(Exact name of Registrant as Specified in its Charter)

Delaware	1-09228	13-2698053
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification No.)

412 Mt. Kemble Avenue, Suite 110C, Morristown, New Jersey 07960
(Address of Principal Executive Offices)

Registrant's telephone number, including area code

(973) 461-5200

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[X]		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On February 19, 2015, Cover-All Technologies Inc. (the “Company”) issued a press release announcing its financial results for the quarter and year ended December 31, 2014. A copy of the press release is attached hereto as Exhibit 99.1, which is incorporated herein by reference.

The information furnished in this section of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 7.01. Regulation FD Disclosure.

The Company met with investors on February 19, 2015 and a copy of the presentation used at the meeting is attached hereto as Exhibit 99.4.

The information furnished in this section of this Current Report on Form 8-K and Exhibit 99.4 attached hereto shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 8.01. Other Events.

The Company is attaching hereto its audited financial statements for the year ended December 31, 2014 as Exhibit 99.2.

In addition, the Company is attaching hereto a copy of its Management Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2014 (the “MD&A”) as Exhibit 99.3. The financial statements and MD&A are included in a registration statement on Form S-4, in connection with an Agreement and Plan of Merger between the Company and Majesco dated December 14, 2014, that will be filed by Majesco.

Item 9.01. Financial Statements and Exhibits.

	(d)		Exhibits.

	99.1		Press Release, dated February 19, 2015.

	99.2		Audited Financial Statements (including footnotes) for the Year Ended December 31, 2014.

	99.3		Management Discussion and Analysis of Financial Condition and Results of Operations for the Year Ended December 31, 2014.

	99.4		Investor Presentation, dated February 19, 2015.

[signature on following page]

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

	COVER-ALL TECHNOLOGIES INC.

Date: February 19, 2015	By:	/s/ Ann F. Massey
		Ann F. Massey, Chief Financial Officer

Index to Exhibits

Exhibit No.		Description
Exhibit 99.1		Press Release, dated February 19, 2015.

Exhibit 99.2		Audited Financial Statements (including footnotes) for the Year Ended December 31, 2014.

Exhibit 99.3		Management Discussion and Analysis of Financial Condition and Results of Operations for the Year Ended December 31, 2014.

Exhibit 99.4		Investor Presentation, dated February 19, 2015.

Exhibit 99.1

Cover-All Technologies Inc.
412 Mt. Kemble Avenue, Suite 110C
Morristown, NJ 07960
Tel: 973.461.5200

FOR IMMEDIATE RELEASE

Cover-All Announces Fourth Quarter and Year End 2014 Results

●	Record Professional Services Revenue
●	Annual profitability improves significantly
●	Conference call and webcast will include merger update and presentation with the management of Cover-All and Majesco

MORRISTOWN, NEW JERSEY (February 19, 2015) – Cover-All Technologies Inc. (NYSE MKT: COVR) today announced financial results for the quarter and year ended December 31, 2014.

“While total revenues were flat compared to last year’s record revenues, profitability improved significantly to $0.4 million for 2014 from a net loss of $2.9 million last year,” said Manish Shah, CEO and President of Cover-All. “Profitability would have been even higher had it not been for $0.4 million of expenses we incurred during the 2014 fourth quarter as a result of the proposed merger with Majesco we announced on December 14, 2014. Improvements to profitability and prudent cash management meaningfully improved our liquidity and balance sheet, and at December 31, 2014 the Company’s cash position increased nearly 150% to $4.6 million.

“We reported record professional services revenue in 2014 driven by implementations of last year’s licensing sales. Throughout 2014, we successfully completed several implementation phases and helped five customers go live with their Cover-All products. Successful and rapid implementations are critically important as we work on achieving the next cycle of licensing sales. Strong demand for professional services continues to increase as a result of ongoing implementation projects, as well as the next rounds of recently completed implementations at existing customers. We expect demand for professional services to remain strong throughout 2015. Cover-All’s ability to implement our software quickly and cost effectively increases our value proposition to potential customers and enhances our credibility within the industry.

“The other significant milestone of 2014 was the December 14 merger announcement with Majesco. This is a transformative opportunity for Cover-All’s shareholders, employees and customers. The merger should improve our competitiveness as there are a limited amount of vendors in the marketplace today that will compare to the combined company’s proven and comprehensive solutions. We are excited about this opportunity, which accelerates the creation of shareholder value through what we expect to be faster and more consistent growth. Majesco is expected to file a registration statement on Form S-4 on February 19, 2015 and we look forward to providing more details on the proposed merger in our conference call and webcast today.”

FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2014

Revenue

●	Total revenues for the year ended December 31, 2014 were $20.5 million, compared to $20.5 million in 2013.

●	License revenue was $1.1 million in 2014, down 81% compared to $5.9 million in 2013.

●	Support Services revenue (which represents contracted continuing revenue) was $8.4 million in 2014, compared to $8.1 million in 2013, an increase of 3%.

●	Professional Services revenue was $11.0 million in 2014, up 71% compared to $6.4 million in 2013.

GAAP Profitability

●	Operating income for the year ended December 31, 2014 was $0.8 million compared to a loss of $2.4 million in 2013.

●	Net income for the year ended December 31, 2014 was $0.4 million, or $0.01 per basic and diluted share, compared to a net loss of $(2.9) million, or $(0.11) per basic and diluted share, in the same period of 2013.

Non-GAAP* Profitability

●	Earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP metric, for the year ended December 31, 2014 was $2.6 million, or $0.10 per basic and diluted share, compared to $2.6 million, or $0.10 per basic and diluted share, in the same period of 2013. Excluding merger costs in 2014 and restructuring costs in 2013, EBITDA for 2014 would have been $3.0 million or $0.11 per basic and diluted share, compared to $2.9 million, or $0.11 per diluted share in 2013.

●	Net income, excluding non-recurring acquisition and restructuring related costs, a non-GAAP metric, for the year ended December 31, 2014 was $0.8 million, or $0.03 per basic and diluted share, compared to a net loss of $(2.6) million, or $(0.10) per basic and diluted share, in the same period of 2013.

Balance Sheet

●	As of December 31, 2014, the Company had $4.6 million in cash and cash equivalents and $2.5 million in accounts receivable.

FINANCIAL HIGHLIGHTS FOR THE FOURTH QUARTER ENDED DECEMBER 31, 2014

Revenue

●	Total revenues for the three months ended December 31, 2014 were $5.3 million, compared to $4.5 million for the same period in 2013, an increase of 16%.

●	License revenue for the fourth quarter of 2014 was $34,000 compared to $599,000 for the same period in 2013.

●	Support Services revenue (which represents contracted continuing revenue) was $2.0 million for the fourth quarter of 2014, down 5% compared to $2.1 million for the same quarter last year.

●	Professional Services revenue for the fourth quarter of 2014 was $3.2 million, compared to $1.8 million for the same quarter in 2013, an increase of 78%.

GAAP Profitability

●	Operating loss for the three months ended December 31, 2014 was $(0.5) million, compared to an operating loss of $(1.3) million in the comparable period in 2013.

●	Net loss for the three months ended December 31, 2014 was $(0.6) million, or $(0.02) per basic and diluted share, compared to a net loss of $(1.5) million, or $(0.06) per basic and diluted share, in the same quarter of 2013.

Page 2 of 7

Non-GAAP* Profitability

●	EBITDA, a non-GAAP metric, was a loss of $(32,000), or $0.00 per basic and diluted share, for the fourth quarter of 2014, compared to a loss of $(65,720), or $0.00 per basic and diluted share, for the fourth quarter of 2013.

●	Net loss excluding non-recurring acquisition and restructuring related costs, a non-GAAP metric, for the three months ended December 31, 2014 was $(0.2) million, or $(0.01) per basic and diluted share, compared to a net loss of $(1.5) million, or $(0.06) per basic and diluted share, for the same period in 2013.

WEBCAST, CONFERENCE CALL AND PRESENTATION INFORMATION

Management of Cover-All and Majesco will conduct a live teleconference to discuss Cover-All’s 2014 financial results and provide investors an update on the proposed merger at 4:30 p.m. EST on Thursday, February 19, 2015. Anyone interested in participating should call 888-397-5352 if calling from the U.S., or 719-457-2645 if dialing internationally. A replay will be available until March 5, 2015, which can be accessed by dialing 877-870-5176 within the U.S. and 858-384-5517 if dialing internationally. Please use passcode 9018125 to access the replay.

In addition, the call will be webcast and will be available on the Company’s website at www.cover-all.com or by visiting http://public.viavid.com/index.php?id=113019. During the webcast, management will be using a presentation which is accessible using the webcast link above. The presentation will also be available on Cover-All’s website.

FORWARD-LOOKING STATEMENTS

Statements in this press release, other than statements of historical information, are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks which may cause the Company’s actual results in future periods to differ materially from expected results. Those risks include, among others, risks associated with increased competition, customer decisions, the successful completion of continuing development of new products, the successful negotiations, execution and implementation of anticipated new software contracts, the successful implementation of our acquisition strategies and our ability to complete or integrate acquisitions, the successful addition of personnel in the marketing and technical areas, our ability to complete development and sell and license our products at prices which result in sufficient revenues to realize profits and other business factors beyond the Company’s control. Those and other risks are described in the Company’s filings with the Securities and Exchange Commission (“SEC”) over the last 12 months, including but not limited to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on March 28, 2014, copies of which are available from the SEC or may be obtained upon request from the Company.

*ABOUT NON-GAAP FINANCIAL MEASURES

In evaluating its business, Cover-All considers and uses EBITDA as a supplemental measure of its operating performance. The Company defines EBITDA as earnings before interest, taxes, depreciation and amortization. The Company presents EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.

The term EBITDA is not defined under U.S. generally accepted accounting principles (“GAAP”) and is not a measure of operating income, operating performance or liquidity presented in accordance with GAAP. EBITDA has limitations as an analytical tool, and when assessing the Company’s operating performance, investors should not consider EBITDA in isolation or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with GAAP. Among other things, EBITDA does not reflect the Company’s actual cash expenditures. Other companies may calculate similar measures differently than Cover-All, limiting their usefulness as comparative tools. Cover-All compensates for these limitations by relying on its GAAP results and using EBITDA only supplementally.

Page 3 of 7

ABOUT COVER-ALL TECHNOLOGIES INC.

Cover-All provides property and casualty insurance professionals a robust state-of-the-art, browser-based family of Policy, Business Intelligence, and Claims solutions designed to deliver products to market faster, enhance quality, ensure compliance, and reduce costs. With offices in Morristown, NJ and Honolulu, HI, Cover-All continues its tradition of developing technology solutions designed to revolutionize the way property and casualty insurance business is conducted.

Additional information is available online at www.cover-all.com.

Corporate Contact		Investor & Media Contact
Ann Massey		SM Berger & Co
Chief Financial Officer		Andrew Berger
(973) 461-5190		(216) 464-6400
amassey@cover-all.com		andrew@smberger.com

Page 4 of 7

Cover-All Technologies Inc. and Subsidiaries

CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)

	Three months ended						Year ended
	December 31,						December 31,
	2014			2013			2014		2013
Revenues:
Licenses	$	33,517		$	598,903		$	1,101,231	$	5,947,225
Support Services		2,033,963			2,140,902			8,427,649		8,147,108
Professional Services		3,198,415			1,794,486			10,949,550		6,388,403
Total Revenues		5,265,895			4,534,291			20,478,430		20,482,736
Cost of Revenues:
Licenses		––			80,363			––		147,670
Support Services		1,420,814			1,209,675			6,049,385		7,089,456
Professional Services		1,396,319			1,173,160			5,015,313		3,499,100
Total Cost of Revenues		2,817,133			2,463,198			11,064,698		10,736,226
Direct Margin		2,448,762			2,071,093			9,413,732		9,746,510
Operating Expenses:
Sales and Marketing		442,911			480,759			2,002,036		2,255,059
General and Administrative		1,376,891			1,060,218			3,603,553		2,618,543
Amortization of Capital Software		372,638			1,186,659			1,490,552		4,646,443
Acquisition Costs		406,298			––			406,298		––
Restructuring Cost		––			––			––		319,014
Research and Development		327,844			681,587			1,130,070		2,315,198
Total Operating Expenses		2,926,582			3,409,223			8,632,509		12,154,257
Operating (Loss) Income		(477,820	)		(1,338,130	)		781,223		(2,407,747	)
Other (Income) Expense:
Interest Expense		76,407			188,251			362,256		464,071
Interest Income		––			––			––		––
Other Income		––			––			––		(3,821	)
Total Other (Income) Expense		76,407			188,251			362,256		460,250
(Loss) Income Before Income Taxes		(554,227	)		(1,526,381	)		418,967		(2,867,997	)
Income Taxes		6,001			11,914			52,479		30,380
Net (Loss) Income	$	(560,228	)	$	(1,538,295	)	$	366,488	$	(2,898,377	)
Basic Earnings (Loss) Per Common Share	$	(0.02	)	$	(0.06	)	$	0.01	$	(0.11	)
Diluted Earnings (Loss) Per Common Share	$	(0.02	)	$	(0.06	)	$	0.01	$	(0.11	)
Weighted Average Number of Common
Shares Outstanding for Basic Earnings
(Loss) Per Common Share		26,628,000			26,348,000			26,628,000		26,173,000
Weighted Average Number of Common
Shares Outstanding for Diluted
Earnings (Loss) Per Common Share		26,628,000			26,348,000			26,628,000		26,173,000

Page 5 of 7

Cover-All Technologies Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

	December 31,			December 31,
	2014			2013
Assets:
Current Assets:
Cash and Cash Equivalents	$	4,564,595		$	1,848,571
Accounts Receivable (Less Allowance for Doubtful Accounts
of $25,000)		2,532,853			2,604,489
Prepaid Expenses		361,930			491,905
Deferred Tax Asset		864,037			850,500
Total Current Assets		8,323,415			5,795,465
Property and Equipment – Net		499,639			708,590
Goodwill		1,039,114			1,039,114
Capitalized Software (Less Accumulated Amortization of $23,795,743
and $22,305,191, Respectively)		6,474,031			7,964,583
Customer Lists/Relationships (Less Accumulated Amortization of
$402,000 and $341,333, Respectively)		––			60,667
Deferred Tax Asset		2,661,391			2,674,928
Deferred Financing Costs (Net of Amortization of $67,000 and
$36,082, Respectively)		24,483			56,201
Other Assets		148,290			424,522
Total Assets	$	19,170,363		$	18,724,070

Liabilities and Stockholders’ Equity:
Current Liabilities:
Accounts Payable	$	1,413,353		$	1,059,238
Accrued Expenses Payable		1,253,298			1,412,400
Deferred Charges		183,219			231,051
Short-Term Debt		1,842,780			––
Current Portion of Capital Lease		119,608			114,640
Deferred Revenue		2,454,435			2,997,455
Total Current Liabilities		7,266,693			5,814,784
Long-Term Liabilities:
Long-Term Debt		––			1,639,109
Long-Term Portion of Capital Lease		233,531			353,139
Total Long Term Liabilities		233,531			1,992,248
Total Liabilities		7,500,224			7,807,032
Commitments and Contingencies		—			—
Stockholders’ Equity:
Common Stock, $.01 Par Value, Authorized 75,000,000 Shares;
26,786,693 and 26,402,227 Shares Issued and Outstanding in
2014 and 2013, Respectively		267,867			264,022
Paid-In Capital		33,057,142			32,674,374
Accumulated Deficit		(21,654,870	)		(22,021,358	)
Total Stockholders’ Equity		11,670,139			10,917,038
Total Liabilities and Stockholders’ Equity	$	19,170,363		$	18,724,070

Page 6 of 7

Cover-All Technologies Inc. and Subsidiaries

RECONCILIATION OF U.S. GAAP NET (LOSS) INCOME TO EBITDA
(UNAUDITED)

	Three months ended						Year ended
	December 31,						December 31,
	2014			2013			2014		2013
Net (Loss) Income	$	(560,228	)	$	(1,538,295	)	$	366,488	$	(2,898,377	)

Interest Expense, Net		76,406			188,252			362,256		464,072
Income Tax Expense		6,001			11,913			52,479		30,379
Depreciation		49,317			63,218			229,540		251,853
Amortization		396,086			1,209,192			1,582,938		4,755,896

EBITDA	$	(32,418	)	$	(65,720	)	$	2,593,701	$	2,603,823

EBITDA per Common Share:
Basic	$	(0.00		$	(0.00	)	$	0.10	$	0.10
Diluted	$	(0.00		$	(0.00	)	$	0.10	$	0.10

RECONCILIATION OF SELECTED U.S. GAAP MEASURES TO NON U.S. GAAP MEASURES
(UNAUDITED)

	Three months ended						Year ended
	December 31,						December 31,
	2014			2013			2014		2013
Net Income (Loss) (U.S. GAAP)	$	(560,228	)	$	(1,538,295	)	$	366,488	$	(2,898,377	)
Acquisition Costs		406,298			—			406,298		—
Restructuring Costs		—			—			—		319,014

Net Income (Loss) (Excluding Acquisition
and Restructuring Costs) (Non U.S. GAAP)	$	(153,930	)	$	(1,538,295	)	$	772,786	$	(2,579,363	)

Earnings (Loss) per Common Share
(Excluding Acquisition and Restructuring
Costs):
Basic	$	(0.01	)	$	(0.06	)	$	0.03	$	(0.10	)
Diluted	$	(0.01	)	$	(0.06	)	$	0.03	$	(0.10	)

	Three months ended						Year ended
	December 31,						December 31,
	2014			2013			2014		2013
EBITDA	$	(32,418	)	$	(65,720	)	$	2,593,701	$	2,603,823
Acquisition Costs		406,298			—			406,298		—
Restructuring Costs		—			—			—		319,014

EBITDA (Excluding Acquisition and	$	373,880		$	(65,720	)	$	2,999,999	$	2,922,837
Restructuring Costs)

EBITDA per Common Share (Excluding
Acquisition and Restructuring Costs):
Basic	$	0.01		$	(0.00	)	$	0.11	$	0.11
Diluted	$	0.01		$	(0.00	)	$	0.11	$	0.11

Page 7 of 7

Exhibit 99.2

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets - December 31, 2014 and 2013	F-2
Consolidated Statements of Operations - Years Ended December 31, 2014,
2013 and 2012	F-4
Consolidated Statements of Changes in Stockholders' Equity -
Years Ended December 31, 2014, 2013 and 2012	F-6
Consolidated Statements of Cash Flows - Years Ended December 31,
2014, 2013 and 2012	F-7
Notes to Consolidated Financial Statements	F-9

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheets of Cover-All Technologies Inc. and Subsidiary as of December 31, 2014 and 2013, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2014. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Cover-All Technologies Inc. and Subsidiary as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

MSPC

Certified Public Accountants and Advisors,

A Professional Corporation

New York, New York

February 19, 2015

F-1

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Consolidated Balance Sheets

	December 31,
	2014		2013
*Assets:*
Current Assets:
Cash and Cash Equivalents	$	4,564,595	$	1,848,571
Accounts Receivable (Less Allowance for Doubtful Accounts
of $25,000 in 2014 and 2013)		2,532,853		2,604,489
Prepaid Expenses		361,930		491,905
Deferred Tax Asset		864,037		850,500

Total Current Assets		8,323,415		5,795,465

Property and Equipment - Net		499,639		708,590

Goodwill		1,039,114		1,039,114

Customer Lists/Relationships (Less Accumulated Amortization of
$402,000 and $341,333 in 2014 and 2013, Respectively)		--		60,667

Capitalized Software (Less Accumulated Amortization of
$23,795,743 and $22,305,191 in 2014 and 2013, Respectively)		6,474,031		7,964,583

Deferred Tax Asset		2,661,391		2,674,928

Deferred Financing Costs (Net Amortization of $67,800 and
$36,082, Respectively)		24,483		56,201

Other Assets		148,290		424,522

Total Assets	$	19,170,363	$	18,724,070

See Accompanying Notes to Consolidated Financial Statements.

F-2

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Consolidated Balance Sheets

	December 31,
	2014			2013
*Liabilities and Stockholders' Equity:*
Current Liabilities:
Accounts Payable	$	1,413,353		$	1,059,238
Accrued Expenses		1,253,298			1,412,400
Deferred Charges		183,219			231,051
Short-Term Debt		1,842,780			--
Current Portion of Capital Lease		119,608			114,640
Deferred Revenue		2,454,435			2,997,455

Total Current Liabilities		7,266,693			5,814,784

Long-Term Liabilities:
Long-Term Debt		--			1,639,109
Long-Term Portion of Capital Lease		233,531			353,139

Total Long-Term Liabilities		233,531			1,992,248

Total Liabilities		7,500,224			7,807,032

Commitments and Contingencies

Stockholders' Equity:
Common Stock, $.01 Par Value, Authorized 75,000,000 Shares;
26,786,693 and 26,402,227 Shares Issued and Outstanding in
2014 and 2013, Respectively		267,867			264,022

Additional Paid-in Capital		33,057,142			32,674,374

Accumulated Deficit		(21,654,870	)		(22,021,358	)

Total Stockholders' Equity		11,670,139			10,917,038

Total Liabilities and Stockholders' Equity	$	19,170,363		$	18,724,070

See Accompanying Notes to Consolidated Financial Statements.

F-3

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Consolidated Statements of Operations

	Years ended
	December 31,
	2014		2013			2012
Revenues:
Licenses	$	1,101,231	$	5,947,225		$	3,921,171
Support Services		8,427,649		8,147,108			8,296,263
Professional Services		10,949,550		6,388,403			4,007,405

Total Revenues		20,478,430		20,482,736			16,224,839

Costs of Revenues:
Licenses		--		147,670			820,113
Support Services		6,049,385		7,089,456			6,687,683
Professional Services		5,015,313		3,499,100			4,681,203

Total Costs of Revenues		11,064,698		10,736,226			12,188,999

Direct Margin		9,413,732		9,746,510			4,035,840

Operating Expenses:
Sales and Marketing		2,002,036		2,255,059			2,557,273
General and Administrative		3,603,553		2,618,543			2,026,180
Amortization of Capital Software		1,490,552		4,646,443			3,524,724
Acquisition Costs		406,298		--			136,957
Restructuring Costs		--		319,014			--
Research and Development		1,130,070		2,315,198			911,688

Total Operating Expenses		8,632,509		12,154,257			9,156,822

Operating Income (Loss)		781,223		(2,407,747	)		(5,120,982	)

Other Expense (Income):
Interest Expense		362,256		464,071			125,852
Interest Income		--		--			(37	)
Other Income		--		(3,821	)		(14,638	)

Total Other Expense (Income)		362,256		460,250			111,177

Income (Loss) Before Income Taxes		418,967		(2,867,997	)		(5,232,159	)

Income Tax Expense (Benefit)		52,479		30,380			(257,928	)

Net Income (Loss)	$	366,488	$	(2,898,377	)	$	(4,974,231	)

See Accompanying Notes to Consolidated Financial Statements.

F-4

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Consolidated Statements of Operations

	Years ended
	December 31,
	2014		2013			2012
Basic Earnings (Loss) Per Common Share	$	.01	$	(.11	)	$	(.19	)

Diluted Earnings (Loss) Per Common Share	$	.01	$	(.11	)	$	(.19	)

Weighted Average Number of Common Shares
Outstanding for Basic Earnings Per
Common Share		26,628,000		26,173,000			25,869,969

Weighted Average Number of Common Shares
Outstanding for Diluted Earnings
Per Common Share		26,628,000		26,173,000			25,869,969

See Accompanying Notes to Consolidated Financial Statements.

F-5

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders' Equity

			Additional								Total
			Paid-in			Accumulated			Treasury		Stockholders'
	Common Stock		Capital			Deficit			Stock		Equity
Balance at January 1, 2012	$	257,827	$	30,812,058		$	(14,148,750	)	$	--	$	16,921,135

Exercise of 25,000 Stock Options		250		21,000			--			--		21,250
Vesting of 75,000 Shares of
Restricted Stock to Several of
Our Employees		750		(750	)		--			--		--
Grant of 53,376 Shares of
Restricted Stock to Non-
Employee Directors		534		86,466			--			--		87,000
Non-Cash Stock-Based
Compensation		--		543,080			--			--		543,080
Warrants issued in connection
with Debt		--		542,055			--			--		542,055
Net Loss		--		--			(4,974,231	)		--		(4,974,231	)

Balance at December 31, 2012		259,361		32,003,909			(19,122,981	)		--		13,140,289

Exercise of 123,601 Stock Options
and Warrants		1,236		41,265			--			--		42,501
Vesting of 260,000 Shares of
Restricted Stock to Several of
Our Employees		2,600		(2,600	)		--			--		--
Grant of 82,520 Shares of
Restricted Stock to Non-
Employee Directors		825		100,675			--			--		101,500
Non-Cash Stock-Based
Compensation		--		531,125			--			--		531,125
Net Loss		--		--			(2,898,377	)		--		(2,898,377	)

Balance at December 31, 2013		264,022		32,674,374			(22,021,358	)		--		10,917,038

Vesting of 273,059 Shares of
Restricted Stock to Several of
Our Employees		2,731		(2,731	)		--			--		--
Grant of 123,218 Shares of
Restricted Stock to Non-
Employee Directors		1,114		155,582			--			--		156,696
Non-Cash Stock-Based
Compensation		--		229,917			--			--		229,917
Net Income		--		--			366,488			--		366,488

Balance at December 31, 2014	$	261,867	$	33,057,142		$	(21,654,870	)	$	--	$	11,670,139

See Accompanying Notes to Consolidated Financial Statements.

F-6

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

	Years ended
	December 31,
	2014			2013			2012
Cash Flows from Operating Activities:
Net (Loss) Income	$	366,488		$	(2,898,377	)	$	(4,974,231	)
Adjustments to Reconcile Net (Loss) Income to Net
Cash Provided by Operating Activities:
Depreciation		229,540			251,853			296,693
Amortization of Capitalized Software		1,490,553			4,646,443			3,524,724
Amortization of Customer Lists/Relationships		60,667			81,240			134,000
Amortization of Non-Competition Agreements		--			--			49,956
Amortization of Deferred Financing Costs		31,718			28,212			7,870
Amortization of Stock-Based Compensation		433,588			712,289			543,080
Stock-Based Compensation Provided for Services		156,696			101,500			87,000
Deferred Tax Benefit		--			--			(257,928	)

Changes in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable		71,636			(238,739	)		(547,957	)
Prepaid Expenses		129,975			36,493			61,287
Other Assets		276,232			(61,716	)		(145,835	)
Increase (Decrease) in:
Accounts Payable		354,115			(621,769	)		1,240,372
Accrued Liabilities		(159,102	)		21,867			636,645
Deferred Charges		(47,832	)		147,596			39,667
Unearned Revenue		(543,020	)		570,645			127,825

Net Cash Provided by Operating Activities		2,851,254			2,777,537			823,168

Cash Flows from Investing Activities:
Capital Expenditures		(20,590	)		(37,562	)		(278,106	)
Capitalized Software Expenditures		--			(2,169,034	)		(4,337,005	)

Net Cash Used for Investing Activities		(20,590	)		(2,206,596	)		(4,615,111	)

Cash Flows from Financing Activities:
Deferred Financing Costs		--			--			(92,283	)
Proceeds from Loan Agreement		--			--			2,000,000
Proceeds from Note Payable		--			--			400,000
Capital Lease - Principal Payments		(114,640	)		(118,763	)		(65,097	)
Payment of Debt		--			--			(400,000	)
Proceeds from Exercise of Stock Options, Restricted
Stock and Warrants		--			42,501			21,250

Net Cash (Used for) Provided by Financing
Activities		(114,640	)		(76,262	)		1,863,870

Net Increase (Decrease) in Cash and Cash
Equivalents		2,716,024			494,679			(1,928,073	)

Cash and Cash Equivalents - Beginning of Years		1,848,571			1,353,892			3,281,965

Cash and Cash Equivalents - End of Years	$	4,564,595		$	1,848,571		$	1,353,892

See Accompanying Notes to Consolidated Financial Statements.

F-7

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

	Years ended
	December 31,
	2014		2013		2012
Supplemental Disclosures of Cash Flow Information:
Cash paid during the years for:
Interest	$	226,708	$	282,908	$	70,517
Income Taxes	$	29,259	$	30,380	$	--

See Accompanying Notes to Consolidated Financial Statements.

F-8

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies

Description of Business - Cover-All Technologies Inc., through its wholly-owned subsidiary, Cover-All Systems, Inc. ("we", "our", or the "Company"), licenses and maintains its software products for the property/casualty insurance industry throughout the United States and Puerto Rico. The Company also provides professional consulting services to its customers interested in customizing their software.

On December 14, 2014, the Company and Majesco, a California corporation ("Majesco"), entered into an Agreement and Plan of Merger, pursuant to which, subject to shareholder approval and the satisfaction or waiver of certain conditions, the Company will merge with and into Majesco (the "Merger"), with Majesco continuing as the surviving corporation in the Merger. Upon the consummation of the Merger, each share of Company common stock issued and outstanding immediately prior to the effective time of the Merger (the "Effective Time") will be cancelled and automatically converted into the right to receive shares of Majesco common stock, such that, at the Effective Time, the shares of Majesco common stock issued in respect of the issued and outstanding Company common stock and such shares of Majesco common stock issued or issuable with respect to issued and outstanding options and other equity awards of the Company will in the aggregate represent approximately 16.5% of the total capitalization on a fully diluted basis of Majesco at closing.

Principles of Consolidation - The consolidated financial statements include the accounts of Cover-All Technologies Inc. and Cover-All Systems, Inc. its wholly-owned subsidiary. All material intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition - Our revenues are recognized in accordance with Accounting Standards Codification ("ASC") 986-605, Software Revenue Recognition. Revenue from the sale of software licenses is recognized when standardized software modules are delivered to and accepted by the customer, the license term has begun, the fee is fixed or determinable and collectibility is probable. Revenue from support services are recognized ratably over the lives of the contracts. Revenue from professional services is recognized when the service is provided.

We enter into revenue arrangements in which a customer may purchase a combination of software, support, and professional services (multiple-element arrangements). When vendor-specific objective evidence ("VSOE") of fair value exists for all elements, we allocate revenue to each element based on the relative fair value of each of the elements. VSOE of fair value is established by the price charged when that element is sold separately. For support, VSOE of fair value is established by renewal rates, when they are sold separately. For arrangements where VSOE of fair value exists only for the undelivered elements, we defer the full fair value of the undelivered elements and recognize the difference between the total arrangement fee and the amount deferred for the undelivered items as revenue, assuming all other criteria for revenue recognition have been met.

Cash and Cash Equivalents - We consider all highly liquid investments, with a maturity of three months or less when purchased, to be cash equivalents.

F-9

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies (Continued)

Risk Concentrations - Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. We place our cash and cash equivalents with high credit quality institutions to limit credit exposure. We believe no significant concentration of credit risk exists with respect to these deposits.

Concentrations of credit risk with respect to trade accounts receivable are limited due to the wide variety of customers principally major insurance companies, who are dispersed across many geographic regions. As of December 31, 2014, three customers accounted for approximately 64% of our trade accounts receivable portfolio. As of December 31, 2013, seven customers accounted for approximately 64% of our trade accounts receivable portfolio. We routinely assess the financial strength of customers and, based upon factors concerning credit risk, we establish an allowance for doubtful accounts. Management believes that accounts receivable credit risk exposure beyond such allowance is limited.

Impairment of Long-Lived Assets - We review our long-lived assets and identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future cash flows associated with the future use and disposal of the related asset or group of assets to their respective carrying amounts. Impairment, if any, is measured as the excess of the carrying amount over the fair value based on market value (when available) or discounted expected cash flows of those assets, and is recorded in the period in which the determination is made.

Stock-Based Compensation - We follow the guidance of ASC 718, Accounting for Stock Options and Other Stock-Based Compensation. ASC 718 requires companies to record compensation expense for share-based awards issued to employees and directors in exchange for services provided. The amount of the compensation expense is based on the estimated fair value of the awards on their grant dates and is recognized over the required service periods. Our share-based awards include stock options and restricted stock awards.

For the year ended December 31, 2014, 2013 and 2012, we recognized $590,284, $813,789 and $1,172,135, respectively, of stock-based compensation expense in our consolidated financial statements.

The estimated fair value underlying our calculation of compensation expense for stock options is based on the Black-Scholes pricing model. Forfeitures of share-based awards are estimated at the time of grant and revised, if necessary, in subsequent periods if our estimates change based on the actual amount of forfeitures we have experienced.

Property and Equipment - Property and equipment are carried at cost. Depreciation is recorded on the straight-line method over three to ten years, which approximates the estimated useful lives of the assets.

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

F-10

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies (Continued)

Intangible Assets - All of the Company's intangible assets are amortized using the straight-line method over their estimated useful lives, which ranges from 2.5 to 5 years. The Company evaluates its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Impairment is assessed by comparing the undiscounted cash flows expected to be generated by the intangible asset to its carrying value. If an impairment exists, the Company calculates the impairment by comparing the carrying value of the intangible asset to its fair value as determined by discounted expected cash flows. The Company has not recorded any impairments during the years ended December 31, 2014, 2013 and 2012.

Goodwill - Goodwill represents the excess of the purchase price of the acquired enterprise over the fair value of identifiable assets acquired and liabilities assumed. The Company applies ASC 350, "Intangibles—Goodwill and Other," and performs an annual goodwill impairment test during the fourth quarter of the Company's fiscal year and more frequently if an event or circumstance indicates that an impairment may have occurred. For the purposes of impairment testing, the Company has determined that it has one reporting unit. A two-step impairment test of goodwill is required pursuant to ASC 350-20-35. In the first step, the fair value of the reporting unit is compared to its carrying value. If the fair value exceeds the carrying value, goodwill is not impaired and further testing is not required. If the carrying value exceeds the fair value, then the second step of the impairment test is required to determine the implied fair value of the reporting unit's goodwill. The implied fair value of goodwill is calculated by deducting the fair value of all tangible and intangible net assets of the reporting unit, excluding goodwill, from the fair value of the reporting unit as determined in the first step. If the carrying value of the reporting unit's goodwill exceeds its implied fair value, then an impairment loss must be recorded that is equal to the difference. The identification and measurement of goodwill impairment involves the estimation of the fair value of the Company. The estimate of fair value of the Company, based on the best information available as of the date of the assessment, is subjective and requires judgment, including management assumptions about expected future revenue forecasts and discount rates. No impairment to the carrying value of goodwill was identified by the Company during the years ended December 31, 2014, 2013 and 2012.

The Company adopted FASB Accounting Standards Update ("ASU") 2012-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment, which permits an entity to take a qualitative approach to determining whether it is more likely than not that a reporting unit's fair value is less than its carrying amount before applying the two-step quantitative goodwill impairment test.

Capitalized Software Development Costs - Costs for the conceptual formulation and design of new software products are expensed as incurred until technological feasibility has been established. Once technological feasibility has been established, we capitalize costs to produce the finished software products. Capitalization ceases when the product is available for general release to customers. Costs associated with product enhancements that extend the original product's life or significantly improve the original product's marketability are also capitalized once technological feasibility has been established. Amortization is calculated on a product-by-product basis using the straight-line method over the remaining economic life of the product. At each balance sheet date, the unamortized capitalized costs of each computer software product is compared to the net realizable value of that product. If an amount of unamortized capitalized costs of a computer software product is found to exceed the net realizable value of that asset, such amount will be written off. The net realizable value is the estimated future gross revenues from that product reduced by the estimated future costs of completing and deploying that product, including the costs of performing maintenance and customer support required to satisfy our responsibility set forth at the time of sale. The Company capitalized software development costs of approximately $-0-, $2,169,000 and $4,337,000 for the years ended December 31, 2014, 2013 and 2012, respectively.

F-11

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies (Continued)

Capitalized Software Development Costs (Continued) - Amortization of capitalized software development costs in the amount of $4,646,443 and $3,524,724, as previously reflected in the Consolidated Statement of Operations for the year ended December 31, 2013 and 2012, respectively, have been reclassified from Cost of Revenues – Licenses to Operating Expenses – Amortization of Capitalized Software to conform to the current year presentation. This reclassification had no effect on the previously reported Net (Loss) for the years ended December 31, 2013 and 2012.

The Company’s policy is to periodically review the estimated useful lives and value of its capitalized software costs. During the quarter ended March 31, 2014, this review indicated that the revised estimated life (5 years) for capitalized software differed from the useful lives (3 years) that had been previously used for amortization purposes in the Company’s financial statements. This revision in the estimated life is based upon the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the Company. As a result, the Company revised the estimated useful lives of capitalized software, effective January 1, 2014. The effect of this change in estimate was to decrease amortization expense, increase operating income, and increase net income by $993,701 for the year ended December 31, 2014.

Advertising Expense - The Company expenses advertising costs as incurred. Advertising expense was $305,716, $253,500 and $372,134 for the years ended December 31, 2014, 2013 and 2012, respectively, and is reported as a component of sales and marketing expense.

Income Taxes - Income tax expense (or benefit) for the year is the sum of deferred tax expense (or benefit) and income taxes currently payable (or refundable). Deferred tax expense (or benefit) is the change during the year in a company's deferred tax liabilities and assets. Deferred tax liabilities and assets are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

The Company evaluates all significant tax positions as required by generally accepted accounting principles in the United States. As of December 31, 2014 and 2013, the Company does not believe that it has taken any tax positions that would require the recording of any additional tax liability nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next 12 months. The Company's income tax returns are subject to examination by the appropriate tax jurisdictions. As of December 31, 2014, the Company's federal and various state tax returns generally remain open for the last three years.

Earnings (Loss) Per Share - Basic earnings (loss) per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the amount of earnings for the period available to each share of common stock outstanding during the reporting period, while giving effect to all dilutive potential common shares that were outstanding during the period, such as common shares that could result from the potential exercise or conversion of securities into common stock.

F-12

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies (Continued)

Earnings (Loss) Per Share (Continued) - The computation of diluted earnings per share does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on per share amounts (i.e., increasing earnings per share or reducing loss per share). The dilutive effect of outstanding options and warrants and their equivalents are reflected in dilutive earnings per share by the application of the treasury stock method which recognizes the use of proceeds that could be obtained upon exercise of options and warrants in computing diluted earnings per share. It assumes that any proceeds would be used to purchase common stock at the average market price during the period. Options and warrants will have a dilutive effect only when the average market price of the common stock during the period exceeds the exercise price of the options or warrants.

Deferred Charges - The Company's lease on its premises provides for periodic increases over the lease term. The Company records rent expense on a straight-line basis. The effect of the difference between contractual cash payments and straight-line expense is recorded as a deferred charge.

Fair Value of Financial Instruments - Generally accepted accounting principles require disclosing the fair value of financial instruments to the extent practicable for financial instruments, which are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement. In assessing the fair value of these financial instruments, the Company used a variety of methods and assumptions, which were based on estimates of market conditions and risks existing at that time. For certain instruments, including the cash accounts receivable, accounts payable and accrued expenses, it was estimated that the carrying amount approximated fair value for the majority of these instruments because of their short maturity. The fair value of property and equipment is estimated to approximate their net book value.

(2) Recently Issued Accounting Standards

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or consolidated results of operations upon adoption.

In July 2013, the FASB issued an accounting standard update, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or Tax Credit Carryforward Exists." This standard requires netting of unrecognized tax benefits against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions. This standard is effective prospectively for annual and interim periods beginning December 16, 2013. The adoption of this guidance did not have a significant effect on the consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU is the result of a joint project by the FASB and the International Accounting Standards Board ("IASB") to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards ("IFRS") that would: remove inconsistencies and weaknesses; provide a more robust framework for addressing revenue issues; improve comparability of revenue recognition practices across entities, jurisdictions, industries, and capital markets; improve disclosure requirements and resulting financial statements; and simplify the presentation of financial statements. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU is effective for annual reporting periods beginning after December 15, 2016. Early adoption is not permitted. We are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.

F-13

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(2) Recently Issued Accounting Standards (Continued)

We believe there is no additional new accounting guidance adopted, but not yet effective, that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which may have a significant impact on the Company's financial reporting, if and when enacted.

(3) Acquisition

On December 30, 2011, the Company entered into an Asset Purchase Agreement with Ho'ike Services, Inc., dba BlueWave Technology, a Hawaii corporation. Under the terms of the Purchase Agreement, the Company purchased from Seller certain of the assets (excluding working capital) and assumed certain liabilities of Seller's business of developing and servicing enterprise claims management software for use in the property and casualty insurance industry, including for use by property and casualty insurance companies, third party administrators, managing general agents, self-insured employers and state funds and providing certain services related thereto, which Business Seller had marketed under the name "PipelineClaims."

The purchase price for the Assets, in addition to the assumption by the Company of the Assumed Liabilities, consists of the following: (i) $1,100,000 in cash (subject to adjustment) on the Closing Date, (x) $635,821 of which (net of adjustments for certain prepayments to Seller and other prorations) was paid in cash to Seller, and (y) $400,000 of which was deposited into an escrow account to be held and distributed by an escrow agent pursuant to the terms of an escrow agreement to secure possible future indemnification claims and certain other post-closing matters in favor of the Company; and (ii) up to an aggregate of $750,000 in an earnout, which earnout shall be based upon the performance of the Business in the five (5) years following the closing of the Acquisition. More particularly, for each of the five (5) years following the Acquisition, Seller will be entitled to receive an amount equal to ten percent (10%) of the PipelineClaims Free Cash Flow (as such term is defined in the Purchase Agreement) but in no event will the Company be required to pay to Seller in excess of $750,000 in the aggregate for the 5-year period. In December 2012, the Company received a disbursement from the escrow account of $250,000 as a result of a contractual provision entitling the Company to such amount if PipelineClaims was licensed by Island Insurance by December 31, 2012.

On December 30, 2011, the acquisition was valued at $1,035,821. As a result of this acquisition, the Company acquired the following assets:

Prepaid Expenses	$	13,163
Computer Equipment		10,658
Customer List		182,000
Software		830,000

*Total*	$	1,035,821

(4) Intangible Assets

The components of our amortizable intangible assets are as follows:

December 31, 2014

December 31, 2013

Weighted

Gross

Net

Useful

Gross

Net

Useful

Carrying

Accumulated

Carrying

Life

Carrying

Accumulated

Carrying

Life

Amount

Amortization

Amount

(In years)

Amount

Amortization

Amount

(In years)

Customer List

402,000

(402,000

)

3.00

402,000

(341,333

)

60,667

3.00

F-14

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(5) Property and Equipment

The following is a summary of property and equipment at cost, less accumulated depreciation and amortization:

	December 31,
	2014		2013
Computers and Equipment	$	295,650	$	390,220
Vehicles		72,914		72,914
Furniture and Fixtures		660,134		752,451
Leasehold Improvements		103,686		120,462

Totals - At Cost		1,132,384		1,336,047
Less: Accumulated Depreciation and Amortization		632,745		627,457

*Property and Equipment - Net*	$	499,639	$	708,590

Property and equipment includes assets under capital lease obligations with a capitalized cost of $644,047 and $644,047 and accumulated amortization of $279,087 and $150,278 at December 31, 2014 and 2013, respectively. Depreciation expense charged to the Statements of Operations was $229,540, $251,852 and $296,693 for the years ended December 31, 2014, 2013 and 2012, respectively.

(6) Commitments, Contingencies and Related Party Transactions

Operating Leases - The Company leases approximately 23,400 square feet of office space under a lease which expires in April 2020 and approximately 2,500 square feet of office space under a lease which expires in July 2015.

Rent expense was $632,699, $901,661 and $792,805 for the years ended December 31, 2014, 2013 and 2012, respectively.

Our future minimum lease commitments under the noncancellable operating leases for rental of our office space in effect at December 31, 2014 were as follows:

Year ending
December 31,
2015	$	587,451
2016		558,962
2017		570,668
2018		587,251
2019 and Thereafter		589,201

*Total*	$	2,893,533

F-15

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(6) Commitments, Contingencies and Related Party Transactions (Continued)

Employment Contracts - Effective March 1, 2012, we have an employment contract with an executive of the Company with an expiration date of February 28, 2015. The aggregate commitment for future salary at December 31, 2014 was approximately $54,167. The contract also includes a bonus based on the performance of the Company. The contract also granted 400,000 stock options and 125,000 shares of restricted stock on the effective date.

Sales and Use Tax Audit - The New York State Department of Taxation and Finance (the "Department") conducted an examination of the Company for state sales and use tax for audit periods March 1, 2009 through February 28, 2013. In February 2014, the Company received a Statement of Proposed Audit Change from the Department. The Change asserts proposed Sales and Use Tax due in the amount of approximately $191,600 together with interest of approximately $46,400. Interest will continue to accrue on the proposed outstanding balances until the date of payment. On March 11, 2014, the Company paid the Department an aggregate of approximately $238,000 in satisfaction in full of all amounts owed in connection with such examination.

(7) Income Taxes

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

	Years ended
	December 31,
	2014		2013		2012
Current:
Federal	$	33,640	$	--	$	(2,018,410	)

State		18,839		30,380		(534,285	)

Totals		52,479		30,380		(2,552,695	)

Deferred		--		--		2,294,767

*Income Tax Expense (Benefit)*	$	52,479	$	30,380	$	(257,928	)

The income tax expense (benefit) differs from the amount computed by applying the statutory federal income tax rate to (loss) income before income taxes as follows:

	Years ended
	December 31,
	2014			2013			2012
Computed Federal Statutory Tax Expense (Benefit)	$	142,449		$	(975,119	)	$	(1,778,934	)

State Income Tax Expense (Benefit) - Net of Federal
(Expenses) Benefit		33,517			(215,100	)		(313,930	)

Expired Net Operating Losses					--			1,098,781

Tax Benefit of Net Operating Loss Carryforward		(123,487	)		1,220,599			736,155

*Income Tax Expense (Benefit)*	$	52,479		$	30,380		$	(257,928	)

F-16

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(7) Income Taxes (Continued)

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

	Years ended
	December 31,
	2014			2013
Deferred Tax Assets - Current:
Accounts Receivable Allowance	$	10,000		$	10,000
Vacation Accrual		9,200			9,200
Net Operating Loss Carryforwards		844,837			831,300

*Current Deferred Tax Asset*	$	864,037		$	850,500

Deferred Tax Asset (Liability) - Long-Term:
Net Operating Loss Carryforward	$	3,075,163		$	3,840,896
Property, Equipment and Intangibles		2,104,271			3,265,889
Valuation Allowance		(2,518,043	)		(4,431,857	)

*Long-Term Deferred Tax Asset*	$	2,661,391		$	2,674,928

The deferred tax asset at December 31, 2014 and 2013 included net operating loss carryforwards of approximately $3,920,000 and $4,673,000, respectively. This represents approximately $9,900,000 and $11,800,000 of federal net operating loss carryforwards that are subject to expiration beginning in fiscal 2019 through 2032. During the year ended December 31, 2014 and 2013, the deferred tax asset valuation allowance (decreased) increased by approximately $(1,913,000) and $1,391,100, respectively. In assessing the realizability of deferred tax assets, management considers, within each taxing jurisdiction, whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Factors that may affect the Company's ability to achieve sufficient forecasted taxable income in future periods may include, but are not limited to, the following: increased competition, a decline in sales or margins, a loss of market share, and a decrease in demand for professional services. Based upon the levels of historical taxable income and projections for future taxable income over the years in which the deferred tax assets are deductible, at December 31, 2014, management believes that it is more likely than not that the Company will realize the benefits, net of the established valuation allowance, of these deferred tax assets in the future.

The Tax Reform Act of 1986 enacted a complex set of rules which limits a company's ability to utilize net operating loss carryforwards and tax credit carryforwards in periods following an ownership change. These rules define an ownership change as a greater than 50 percent point change in stock ownership within a defined testing period which is generally a three-year period. As a result of stock which may be issued by us from time to time, and the conversion of outstanding warrants, or the result of other changes in ownership of our outstanding stock, the Company may experience an ownership change and consequently our utilization of net operating loss carryforwards could be significantly limited.

F-17

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(8) Short-Term Debt

On September 11, 2012, the Company entered into a Loan and Security Agreement ("Loan Agreement") between and among Imperium Commercial Finance Master Fund, LP, a Delaware limited partnership ("Imperium"), as lender, Cover-All Systems, Inc., a wholly-owned subsidiary of the Company (the "Subsidiary"), as borrower, and the Company, as a guarantor. The Loan Agreement provides for a three-year term loan to the Subsidiary of $2,000,000, evidenced by a Term Note in favor of Imperium, and a three-year revolving credit line to the Subsidiary of up to $250,000, evidenced by a Revolving Credit Note in favor of Imperium (together with the Term Note, the "Imperium Note"). The amount available to be borrowed under the revolving credit line may not exceed 80% of Eligible Accounts (as defined in the Loan Agreement). All amounts borrowed under the term loan and the revolving credit line are secured by a security interest in all of the assets of the Subsidiary and guaranteed by the Company, which guarantee is secured by a pledge by the Company of all of the outstanding shares of capital stock of the Subsidiary. As of December 31, 2014, the Company had an outstanding balance of $2,000,000 under the term loan and no balance outstanding under the revolving credit facility.

Interest on the outstanding principal balance under the Imperium Notes accrues at a fixed rate equal to eight percent (8%) per annum and is payable monthly. The outstanding principal and any remaining interest under the Imperium Notes will be immediately due and payable on the earliest of (1) September 10, 2015, and (2) the date Imperium's obligation to advance funds under the revolving credit line is terminated following an event of default pursuant to the terms and conditions of the Loan Agreement. Payments and prepayments received by Imperium will be applied against principal and interest as provided for in the Loan Agreement.

The Loan Agreement contains customary representations, warranties, affirmative and negative covenants, and events of default. If an event of default occurs and is continuing, Imperium has certain rights and remedies under the Loan Agreement. Additionally, the Loan Agreement requires the Company to maintain minimum revenues and EBITDA, tested annually, commencing with the twelve months ending September 30, 2013.

In connection with the Loan Agreement, the Company issued to Imperium a five-year warrant (the "Stock Purchase Warrant") to purchase 1,400,000 shares of the Company's common stock at an exercise price of $1.48 per share. The Stock Purchase Warrant is not exercisable until the earliest of (i) the date when Current Market Value (as defined therein) exceeds the exercise price multiplied by two, (ii) the date of a Change of Control transaction (as defined therein), and (iii) the third anniversary of the date of issuance of the Stock Purchase Warrant. The Stock Purchase Warrant provides for adjustments to the exercise price and the number of shares issuable upon exercise in certain events to protect against dilution and for cashless exercise. The Stock Purchase Warrant also required the Company to file a registration statement with the Securities and Exchange Commission with respect to the shares issuable upon exercise of the Stock Purchase Warrant within 45 days of the date of issuance of the Stock Purchase Warrant, and that the Company use its best efforts to obtain the effectiveness of such registration statement within 90 days (subject to extension to 120 days) of the date of issuance of the Stock Purchase Warrant. The Company filed the Registration Statement and it was effective in the required timeframe. If the Company failed to comply with its obligations to file the registration statement and obtain its effectiveness within the specified periods, and in certain other events, the Company would have been required to pay Imperium, for each month such failure continues, the amount of $22,500. The Stock Purchase Warrant also provides for piggyback registration rights.

F-18

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(8) Short-Term Debt (Continued)

The proceeds from the $2,00,000 Imperium note were allocated using the relative fair value method to both the note payable balance and fair value of the warrants as follows:

Allocation of proceeds:

Note Payable	$	1,457,945
Warrants		542,055

*Total*	$	2,000,000

The portion of the proceeds allocated to the warrants is recognized as additional paid-in capital and a debt discount. The debt discount related to the warrants is accreted into interest expense through maturity of the note payable. The note payable principal balance outstanding and remaining debt discount is as follows:

	December 31,
	2014		2013
Principal Balance	$	2,000,000	$	2,000,000
Less: Debt Discount		157,220		360,891

*Short-Term Debt*	$	1,842,780	$	1,639,109

The Company also issued five-year warrants (the "Monarch Warrants") to purchase 42,000 shares, in the aggregate, of the Company's common stock at an exercise price of $1.48 per share, to Monarch Capital Group, LLC ("Monarch"), which acted as the Company's financial adviser in connection with the loan transaction, and an officer of Monarch. The Monarch Warrants are not exercisable until the earliest of (i) the date when the Current Exercise Price (as defined therein) exceeds the exercise price multiplied by two, (ii) the date of a Change of Control transaction (as defined therein), and (iii) the third anniversary of the date of issuance. The Monarch Warrants provide for adjustment to the exercise price and the number of shares issuable upon exercise in certain events to protect against dilution and for cashless exercise. The Monarch Warrants also provide for piggyback registration rights.

On April 10, 2013, we amended and restated the terms of the Imperium Stock Purchase Warrant and each of the Monarch Warrants to provide that the aggregate number of shares issuable on exercise of the Stock Purchase Warrant and the Monarch Warrants shall not exceed 19.9% of the Company's issued and outstanding shares of common stock at the date of original issuance (i.e., 5,171,145 shares of common stock based on 25,857,730 shares of common stock issued and outstanding at September 11, 2012) without first obtaining the approval of the Company's stockholders. This change, and certain other minor, technical changes, were contained in amended and restated warrants that we issued to the holders.

In connection with the Imperium Loan Agreement financing, the Company incurred deferred financing costs of approximately $92,000, which will be amortized over the life of the loan (or earlier if the loan becomes due or is repaid before its fixed maturity).

On July 17, 2013, the Company issued a promissory note, in the aggregate principal amount of $400,000, to John W. Roblin, our former Chairman and Chief Executive Officer (the "Roblin Note"). The Roblin Note bore interest at a rate equal to 9% per annum and was repayable by us upon our receipt of a payment from a certain customer in the amount of $896,000, which was due October 31, 2012 or sooner if the customer payment was received. The Company received the customer payment and, on November 13, 2012, the Roblin Note was fully repaid.

F-19

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(9) Capital Lease Obligation

In September, the Company acquired office furniture under a capital lease agreement with Lakeland Bank. The interest rate implicit in the lease is 4.25%. The following is a schedule by years of future minimum lease payments under capital lease with the present value of the net minimum lease payment as of December 31, 2014.

Years Ended
2015	$	130,195
2016		130,195
2017		123,649
Thereafter		--

Total Minimum Lease Payments		384,039
Less: Amounts Representing Interest		(30,900	)

Present Value of Minimum Lease Payment		353,139
Less: Current Portion of Obligation Under Capital Lease		(119,608	)

*Total Capital Lease Obligations - Net of Current Portion*	$	233,531

(10) Stock-Based Compensation

Stock Options

In June 2005, the Company adopted the 2005 Stock Incentive Plan (which was amended in 2006 and in 2008). Options and stock awards for the purchase of up to 5,000,000 shares may be granted by the Board of Directors to our employees and consultants at an exercise or grant price determined by the Board of Directors on the date of grant. Options may be granted as incentive or nonqualified stock options with a term of not more than ten years. The 2005 Plan allows the Board of Directors to grant restricted or unrestricted stock awards or awards denominated in stock equivalent units, securities or debentures convertible into common stock, or any combination of the foregoing and may be paid in common stock or other securities, in cash, or in a combination of common stock or other securities and cash. At December 31, 2014 and 2013, an aggregate of 1,593,684 and 1,716,902 shares, respectively, were available for grant under the 2005 Stock Incentive Plan.

The Company uses the Black-Scholes-Merton option-pricing model ("Black-Scholes") to measure fair value of the share-based awards. The Black-Scholes model requires us to make significant judgments regarding the assumptions used within the model, the most significant of which are the expected stock price volatility, the expected life of the option award, the risk-free interest rate of return and dividends during the expected term.

- Expected volatilities are based on historical volatility of the Company's stock during the preceding periods. The Company uses "Level 1" inputs, which are our trading market values in active markets.

- The Company uses historical data to estimate expected life of the option award. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding.

F-20

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(10) Stock-Based Compensation (Continued)

- The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

- The Company does not anticipate issuance of dividends during the expected term.

	2014		2013
Expected volatility	41%–50	%	41%–50	%
Weighted-average volatility	41	%	41	%
Expected dividends	0	%	0	%
Expected term (in years)	3-5		3-5
Risk-free interest rate	.46	%	.46	%

As of December 31, 2014, there was approximately $49,292 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted by the Company. That cost is expected to be recognized over a weighted-average period of 6.2 years.

A summary of the changes in outstanding common stock options for all outstanding plans is as follows:

			Exercise		Weighted-Average
			Price		Remaining	Weighted-Average
	Shares		Per Share		Contractual Life	Exercise Price
Balance, December 31, 2011	1,524,963		$	0.85-1.55	2.0 Years	$	1.21

Granted	1,055,000			1.63-1.67	4.2 Years		1.65
Exercised	(25,000	)		.85			.85
Canceled	(75,000	)		1.05-1.63			1.24
Expired	(375,000	)		1.40			1.40

Balance, December 31, 2012	2,104,963		$	.85-1.67	2.8 Years	$	1.40

Granted	10,000			1.50			1.50
Exercised	(250,000	)		.85			.85
Canceled	(5,000	)		1.55			1.55
Expired	(72,463	)		1.38			1.38

Balance, December 31, 2013	1,787,500		$	1.00-1.67	2.2 Years	$	1.48

Granted	--			--			--
Exercised	(450,000	)		1.04			1.04
Canceled	(345,000	)		1.61			1.61
Expired	--			--			--

Balance, December 31, 2014	992,500		$	1.50-1.63	1.76 Years	$	1.63

F-21

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(10) Stock-Based Compensation (Continued)

The options granted during 2014 are distributed as follows, relative to the difference between the exercise price and the stock price at grant date:

	Number	Weighted-Average		Weighted-Average
	Granted	Exercise Price		Fair Value
Exercise Price at Stock Price	--	$	--	$	--

The options granted during 2013 are distributed as follows:

	Number	Weighted-Average		Weighted-Average
	Granted	Exercise Price		Fair Value
Exercise Price at Stock Price	10,000	$	1.50	$	.63

The options granted during 2012 are distributed as follows:

	Number	Weighted-Average		Weighted-Average
	Granted	Exercise Price		Fair Value
Exercise Price at Stock Price	1,055,000	$	1.65	$	.61

Exercisable options at December 31, 2014, 2013 and 2012 were as follows:

	Number of	Weighted-Average
December 31,	Exercisable Options	Exercise Price
2014	237,500	$	1.55
2013	1,225,500	$	1.40
2012	876,110	$	1.20

The following table summarizes information about stock options at December 31, 2014:

Exercisable

Outstanding Stock Options

Stock Options

Weighted-Average

Range of

Remaining

Weighted-Average

Exercise Prices

Contractual Life

Exercise Price

$1.50-$1.67

992,500

1.8 Years

1.63

237,500

1.55

F-22

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(10) Stock-Based Compensation (Continued)

Warrants - There were 1,442,000 warrants outstanding at December 31, 2014.

A summary of the changes in outstanding warrants is as follows:

	Outstanding	Exercise	Weighted-Average
	and Exercisable	Price	Remaining	Weighted-Average
	Warrants	Per Warrant	Contractual Life	Exercise Price
Balance, December 31, 2011	--				--
Granted	1,442,000	1.48	4.70		1.48
Balance, December 31, 2012	1,442,000				1.48
Granted	--				--
Balance, December 31, 2013	1,442,000			$	1.48
Granted	--				--
*Balance, December 31, 2014*	1,442,000			$	1.48

Exercisable Warrants at December 31, 2014, 2013 and 2012 were as follows:

	Number of	Weighted-Average
December 31,	Exercisable Warrants	Exercise Price
2014	1,442,000	$	1.48
2013	1,442,000	$	1.48
2012	1,442,000	$	1.48

Time-Based Restricted Stock Units - During the years ended December 31, 2014, 2013 and 2012, we granted 123,218, 119,329 and 278,376, respectively, time-based RSUs vesting through June 4, 2017.

F-23

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(10) Stock-Based Compensation (Continued)

A summary of our time-based RSUs for the years ended December 31, 2014, 2013 and 2012 are as follows:

			Weighted-Average Grant Date
	Shares		Fair Value
Balance, January 1, 2012	252,500		$	1.42

Granted	278,376		$	1.65
Vested	(128,376	)		--
Forfeited or Expired	--			--

Balance, December 31, 2012	402,500		$	1.61

Granted	119,329		$	1.35
Vested	(342,520	)		--
Forfeited or Expired	(10,000	)		--

Balance, December 31, 2013	169,309		$	1.65

Granted	123,218		$	1.39
Vested	(239,466	)		--
Forfeited or Expired	--			--

*Balance, December 31, 2014*	53,061		$	1.58

(11) Basic Earnings (Loss) Per Share Disclosures

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

	2014		2013			2012
Numerator:
Net (Loss) Income	$	366,488	$	(2,898,377	)	$	(4,974,231	)

*Numerator for Diluted (Loss) Earnings Per*
*Common Share*	$	366,488	$	(2,898,377	)	$	(4,974,231	)

Denominator:
Weighted Average Number of Common Shares
Outstanding for Basic (Loss) Earnings Per
Common Share		26,628,000		26,173,000			25,869,969

Effect of Dilutive Securities:
Exercise of Options and Restricted Stock		--		--			--

Exercise of Warrants		--		--			--

*Denominator for Diluted (Loss) Earnings Per*
*Common Share*		26,628,000		26,173,000			25,869,969


*Basic (Loss) Earnings Per Common Share*	$	.01	$	(.11	)	$	(.19	)

*Diluted (Loss) Earnings Per Common Share*	$	.01	$	(.11	)	$	(.19	)

F-24

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(11) Basic Earnings Per Share Disclosures (Continued)

We use the treasury stock method to compute diluted earnings per share, whereby the proceeds from the exercise of dilutive instruments are hypothetically used to repurchase outstanding shares at market prices. The Company's options and warrants were not included in the computation of EPS at December 31, 2013 and 2012 because to do so would be antidilutive.

(12) Accrued Expenses

Accrued expense consist of the following:

	Years ended
	December 31,
	2014		2013
Accrued Bonuses, Payroll, Commissions, Benefits, Temporary
Help and Consulting	$	907,894	$	962,937
Accrued Professional Fees		222,377		246,733
Other		123,027		202,730

*Totals*	$	1,253,298	$	1,412,400

(13) 401(k) Plan

Upon date of hire, employees are eligible to participate in the Cover-All Technologies, Inc. 401(k) Plan (the "Plan"). Employees can contribute a portion of their salary on a pre-tax basis subject to annual IRS limitations for the year ended December 31, 2014. The Company provides for a matching contribution of $.50 for each $1.00 of the first 5% of pay employees elect to defer. The Company contribution to the Plan in 2014, 2013 and 2012 was approximately $102,116, $122,380 and $134,598, respectively.

(14) Stockholders' Equity

In December 2011, the Board of Directors authorized a share buyback plan of up to 1,000,000 shares of the Company's common stock.

In February 2009, we announced that our Board of Directors declared a special cash dividend in the amount of $0.03 per share on our common stock. This dividend was paid on April 7, 2009 to common stockholders of record as of the close of business on March 27, 2009. The Company also announced that, in light of their decision to declare a special cash dividend, the Board of Directors had determined that the Company would suspend its common stock buyback plan until further notice.

In June 2008, the Board of Directors authorized a share buyback plan of up to 1,000,000 shares of the Company's Common Stock.

In 2008, we purchased an aggregate of 201,870 shares of treasury stock on the open market at an average purchase price of $0.82 per share for a total purchase price of approximately $164,894, which were subsequently retired.

F-25

COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(15) Customer Concentration

For the year ended December 31, 2014, sales to two customers amounted to approximately 24% and 18% of revenues, respectively.

For the year ended December 31, 2013, sales to two customers amounted to approximately 24% and 11% of revenues, respectively.

For the year ended December 31, 2012, sales to four customers amounted to approximately 12%, 12%, 11% and 11% of revenues, respectively.

All of the major customers referred to above, other than the one customers in 2014 with 24%, one customers in 2013 with 11% of revenues and one customer in 2012 with 12% of revenues and are units of CHARTIS, Inc., formerly associated with American International Group, Inc.

· · · · · · · · · ·

F-26

Exhibit 99.3

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2014

This discussion of Cover-All’s financial condition and results of operations should be read together with the consolidated financial statements and notes attached as an exhibit to this Form 8-K to which this MD&A is also an exhibit. Certain statements in this exhibit, other than statements of historical information, are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks which may cause the Company’s actual results in future periods to differ materially from expected results. Those risks include, among others, risks associated with increased competition, customer decisions, the successful completion of continuing development of new products, the successful negotiations, execution and implementation of anticipated new software contracts, the successful implementation of our acquisition strategies and our ability to complete or integrate acquisitions, the successful addition of personnel in the marketing and technical areas, our ability to complete development and sell and license our products at prices which result in sufficient revenues to realize profits and other business factors beyond the Company’s control. Those and other risks are described in the Company’s filings with the Securities and Exchange Commission (“SEC”) over the last 12 months, including but not limited to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on March 28, 2014, copies of which are available from the SEC or may be obtained upon request from the Company.

OVERVIEW

We are a supplier of software products for the property and casualty insurance industry, supplying a wide range of professional services that support product customization, conversion from existing systems and data integration with other software or reporting agencies. We also offer on-going support services including incorporating recent insurance rate and rule changes in our solutions. These support services also include analyzing the changes, developments, quality assurance, documentation and distribution of insurance rate and rule changes.

We earn revenue from software contract licenses, fees for servicing the product, which we call support services, and professional services. Total revenue in 2014 was $20,478,000 compared to $20,483,000 in 2013, due to an increase in support and professional services offset by a decrease in license revenue.

The following is an overview of the key components of our revenue and other important financial data in 2014:

Software Licenses. License revenue was $1,101,000 in 2014 compared to $5,947,000 in 2013 as a result of fewer new customer sales and sales to existing customers in 2014. Our new software license revenue is affected by the strength of general economic and business conditions and the competitive position of our software products. New software license sales are characterized by long sales cycles and intense competition. Timing of new software license sales can substantially affect our quarterly results.

Support Services. Support services revenue was $8,428,000 in 2014 compared to $8,147,000 in 2013. The increase in maintenance revenue in 2014 was mainly due to maintenance from new customer contracts signed 2013. Support services revenue is influenced primarily by the following factors: the renewal rate from our existing customer base, the amount of new support services associated with new license sales and annual price increases.

Professional Services. The increase in professional services revenue to $10,950,000 in 2014 from $6,388,000 in 2013 was a result of increased demand for new software capabilities and customizations from new customers and our current customer base and implementations of Cover-All Policy for new customers and our current customer base.

Income (Loss) before Provision for Income Taxes. Income (loss) before provision for income taxes was $366,000 in 2014 compared to $(2,868,000) in 2013, primarily due to an increase in support and professional services revenue offset by a decrease in license revenue, and a decrease in amortization of capitalized software, support and research and development costs.

Income Taxes. We recorded income taxes of $52,000 and $30,000 in 2014 and 2013, respectively.

Net Income (Loss). Net income (loss) for 2014 was $366,000 compared to $(2,898,000) in 2013, mainly as a result of an increase in support and professional services revenue offset by a decrease in license revenue and a decrease in amortization of capitalized software, support and research and development costs.

EBITDA. Earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP metric, was $2,594,000 for 2014 compared to $2,604,000 for 2013.

The following is an unaudited reconciliation of U.S. GAAP net income to EBITDA for the years ended December 31, 2014 and 2013:

	2014		2013
Net Income (loss)	$	366,488	$	(2,898,377	)

Interest income, net		362,256		464,072
Income tax expense		52,479		30,379
Depreciation		229,540		251,853
Amortization		1,582,938		4,755,896

EBITDA	$	2,593,701	$	2,603,823

EBITDA per common share:

Basic	$	0.10	$	0.10

Diluted	$	0.10	$	0.10

Cash Flow. We generated $2,851,000 in positive cash flow from operations in 2014 and ended the year with $4,565,000 in cash and cash equivalents and $2,533,000 in accounts receivable.

We continue to face competition for growth in 2014 mainly in the marketing and selling of our products and services to new customers caused by a number of factors, including long sales cycles and general economic and business conditions. In addition, there are risks related to customers’ acceptance and implementation delays which could affect the timing and amount of license revenue we are able to recognize. However, given the positive response to our new software from existing customers, the significant expansion of our relationship with a very large customer and the introduction of additional software capabilities, we are expanding our sales and marketing efforts to both new and existing customers. Consequently, we continue to incur additional sales and marketing expense in advance of generating the corresponding revenue.

As we shift over time from software development to deployment, from a financial perspective, the non-cash charges for amortization of developed software will increasingly impact our bottom line. Therefore, in order to provide more visibility to investors, we have decided to also report EBITDA to show what we believe is the Company’s earnings power without the impact of, among other items, amortization. In 2014, the non-cash charge for amortization of capitalized software decreased to $1,491,000 from $4,646,000 in the same period in 2013. Therefore, we believe that EBITDA will be a useful measure of the true earnings power of the Company while we complete the development and deployment cycle. As such, we expect to increasingly focus on EBITDA to evaluate our progress.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The SEC has issued cautionary advice to elicit more precise disclosure in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” about accounting policies that management believes are most critical in portraying our financial results and in requiring management’s most difficult subjective or complex judgments.

The preparation of financial documents in conformity with accounting principles generally accepted in the United States of America requires management to make judgments and estimates. On an on-going basis, we evaluate our estimates, the most significant of which include establishing allowances for doubtful accounts, a valuation allowance for our deferred tax assets and determining the recoverability of our long-lived assets. The basis for our estimates are historical experience and various assumptions that are believed to be reasonable under the circumstances, given the available information at the time of the estimate, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from the amounts estimated and recorded in our financial statements.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

●Revenue Recognition

●Valuation of Capitalized Software

●Valuation of Allowance for Doubtful Accounts Receivable

●Deferred Tax Asset

Revenue Recognition

Revenue recognition rules are very complex, and certain judgments affect the application of our revenue policy. The amount and timing of our revenues is difficult to predict, and any shortfall in revenue or delay in recognizing revenue could cause our operating results to vary significantly from quarter to quarter. In addition to determining our results of operations for a given period, our revenue recognition determines the timing of certain expenses, such as commissions, royalties and other variable expenses.

Our revenues are recognized in accordance with FASB ASC 986-605, “Software Revenue Recognition,” as amended. Revenue from the sale of software licenses is predominately related to the sale of standardized software and is recognized when these software modules are delivered and accepted by the customer, the license term has begun, the fee is fixed or determinable, and collectability is probable. Revenue from support services is recognized ratably over the life of the contract. Revenue from professional consulting services is recognized when the service is provided.

Amounts invoiced to our customers in excess of recognizable revenues are recorded as deferred revenues. The timing and amounts invoiced to customers can vary significantly depending on specific contract terms and can therefore have a significant impact on deferred revenues in any given period.

Our revenues are derived from the licensing of our software products, professional services, and support services. We recognize revenue when persuasive evidence of an arrangement exists, we have delivered the product or performed the service, the fee is fixed or determinable, and collection is probable.

License Revenue. We recognize our license revenue upon delivery, provided that collection is determined to be probable and no significant obligations remain.

Services and Support Revenue. Our services and support revenue is composed of professional services (such as consulting services and training) and support services (maintenance, support and ASP services). Our professional services revenue is recognized when the services are performed. Our support services are recognized ratably over the term of the arrangement.

Valuation Of Capitalized Software

Costs for the conceptual formulation and design of new software products are expensed as incurred until technological feasibility has been established. Once technological feasibility is established, we capitalize costs to produce the finished software products. Capitalization ceases when the product is available for general release to customers. Costs associated with product enhancements that extend the original product’s life or significantly improve the original product’s marketability are also capitalized once technological feasibility for that particular enhancement has been established. Amortization is calculated on a product-by-product basis as the greater of the amount computed using (a) the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product or (b) the straight-line method over the remaining economic life of the product. At each balance sheet date, the unamortized capitalized costs of each computer software product is compared to the net realizable value of that product. If an amount of unamortized capitalized costs of a computer software product is found to exceed the net realizable value of that asset, such amount will be written off. The net realizable value is the estimated future gross revenues from that product reduced by the estimated future costs of completing and deploying of that product, including the costs of performing maintenance and customer support required to satisfy our responsibility set forth at the time of sale.

Valuation Of Allowance For Doubtful Accounts Receivable

Management’s estimate of the allowance for doubtful accounts is based on historical information, historical loss levels, and an analysis of the collectability of individual accounts. We routinely assess the financial strength of our customers and, based upon factors concerning credit risk, establish an allowance for uncollectible accounts. Management believes that accounts receivable credit risk exposure beyond such allowance is limited.

Deferred Income Taxes

Deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income and available tax planning strategies. If tax regulations, operating results or the ability to implement tax planning and strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. We estimate our income tax valuation allowance by assessing which deferred tax assets are more-likely-than-not to be recovered in the future. The valuation allowance is based on our estimates of taxable income in each jurisdiction in which we operate and the period over which the deferred tax assets will be recoverable. If it appears that we will not generate such taxable income, we may need to increase the valuation allowance against the related deferred tax asset in a future period.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain items from the consolidated statements of operations expressed as a percentage of total revenues:

	Year Ended December 31,
	2014		2013		2012
Revenues:
License	5.4	%	29.0	%	24.2	%
Support Services	41.2		39.8		51.1
Professional Services	53.4		31.2		24.7
Total Revenues	100.0		100.0		100.0

Cost of Revenues:
License	—		23.4		26.8
Support Services	29.5		34.6		41.2
Professional Services	24.5		17.1		28.8
Total Cost of Revenues	54.0		75.1		96.8
Direct Margin	46.0		24.9		3.2

Operating Expenses:
Sales and Marketing	9.8		11.0		15.8
General and Administrative	17.6		12.8		12.5
Amortization of Capitalized Software	7.3
Acquisition Costs	2.0		—		0.8
Restructuring Cost	—		1.6		—
Research and Development	5.5		11.3		5.6
Total Operating Expenses	42.2		36.7		34.7

Operating Income (Loss)	3.8		(11.8	)	(31.5	)

Other (Income) Expense:
Interest Expense	1.8		2.3		0.8
Interest Income	—		—		—
Other Expense	—		—		—
Other Income	—		(0.1	)	(0.1	)
Total Other (Income) Expense	1.8		2.2		0.7

Income (Loss) Before Income Taxes	2.0		(14.0	)	(32.2	)

Income Tax Expense (Benefit):	0.2		0.2		(1.6	)

Net (Loss) Income	1.8	%	(14.2	)%	(30.6	)%

YEAR ENDED DECEMBER 31, 2014 COMPARED WITH YEAR ENDED DECEMBER 31, 2013

Revenues

Total revenues were $20,478,000 for the year ended December 31, 2014 compared to $20,483,000 for the year ended December 31, 2013. License fees were $1,101,000 for the year ended December 31, 2014 compared to $5,947,000 in 2013 as a result of fewer new customer license sales and sales to existing customers. For the year ended December 31, 2014, support services revenues were $8,428,000 compared to $8,147,000 of the prior year due to new license sales signed later in 2013 resulting in recognition of new maintenance in 2014. Professional services revenue contributed $10,950,000 for the year ended December 31, 2014 compared to $6,388,000 for the year ended December 31, 2013 as a result of increased demand for new software capabilities and customizations from our current customer base and implementation of Cover-All Policy for our new customers.

Cost of sales was approximately $11,065,000 for the year ended December 31, 2014 compared to $10,736,000 in 2013 due to an increase in personnel-related costs in the year ended December 31, 2014. We are expanding our delivery bandwidth while maintaining our costs in line with our revenues through improved productivity and new technology in order to meet our increasing demand. Non-cash capitalized software amortization was approximately $1,491,000 for the year ended December 31, 2014 as compared to approximately $ 4,646,000 in the year ended December 31, 2013. We capitalized approximately $0 of software development costs in the year ended December 31, 2014 as compared to approximately $2,169,000 in the same period in 2013.

The direct margin in the year ended December 31, 2014 was 46%, compared to 48% in 2013 due to a decrease in higher gross margin license revenue in 2014. Support services margin increased in the year ended December 31, 2014 compared to 2013 primarily due to several cost saving initiatives. Professional services direct margin increased in the year ended December 31, 2014, compared to 2013, primarily due to use of offshore resources to provide customizations to new and existing customers.’

We expect our annual gross margin to vary in percentage terms in future years as we experience changes in the mix between higher gross margin license revenues and lower gross margin services revenues.

Amortization of capitalized software was approximately $1,491,000 in the year ended December 31, 2014, as compared to approximately $4,646,000 in 2013. The Company revised the estimated useful life of its capitalized software, effective January 1, 2014, from three years to five years.

Expenses

Research and development expenses decreased to approximately $1,130,000, in the year ended December 31, 2014 as compared to approximately $2,315,000 in 2013, primarily as a result of work on fewer new products and capabilities. We are continuing our ongoing efforts to enhance the functionality of our products and solutions and believe that investments in research and development are critical to our remaining competitive in the marketplace.

Sales and marketing expenses were approximately $2,002,000 in the year ended December 31, 2014 compared to approximately $2,255,000 in 2013. This decrease in 2014 was primarily due to a decrease in our marketing and sales staff, resulting in a decrease in personnel-related costs.

General and administrative expenses increased to approximately $3,604,000 in the year ended December 31, 2014 as compared to approximately $2,619,000 in 2013. This increase in 2014 was mainly due to reclassing of all facilities costs to general and administrative expenses in 2014.

Acquisition expenses were approximately $406,000 for the year ended December 31, 2014 as compared to $0 in 2013. These expenses were in connection with the potential merger with Majesco.

Restructuring costs were approximately $0 for the year ended December 31, 2014 as compared to $319,000 in 2013. These expenses consisted of severance payments to former employees of the Company, including our former Chief Executive Officer.

We had $0 of other income for the year ended December 31, 2014 compared to $4,000 of other income for the year ended December 31, 2013.

In 2014, we recorded income tax of $52,000. We recorded an income tax of $30,000 in 2013.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

We have funded our operations primarily from cash flow from operations and from debt facilities. Cash from operations results primarily from net income from the income statement plus non-cash expenses (depreciation and amortization) and adjusted for changes in working capital from the balance sheet.

Our largest source of operating cash flows is cash collections from our customers following the purchase or renewal of software licenses, product support agreements and other related services. Payments from customers for software licenses are generally received at the beginning of the contract term. Payments from customers for product support and ASP services are generally received in advance on a quarterly basis. Payments for professional services are generally received 30 days after the services are performed.

On September 11, 2012, we entered into a $2.25 million credit facility with Imperium Commercial Finance Master Fund, LP, an affiliate of Imperium Partners. The $2.25 million credit facility, which will support our product/services expansion and growth initiatives, consists of a $2 million three-year term loan, bearing interest at a fixed rate of 8% per annum, and a $250,000 revolving credit facility, also bearing interest at a fixed rate of 8% per annum. Imperium also received five-year warrants to purchase 1.4 million shares of our common stock, with an exercise price of $1.48 per share.

In connection with the Imperium Loan Agreement financing, we incurred deferred financing costs of $92,283, which will be amortized over the life of the loan (or earlier if the loan becomes due or is repaid before its fixed maturity).

At December 31, 2014, we had cash and cash equivalents of $4,565,000 compared to cash and cash equivalents of $1,849,000 at December 31, 2013. The increase in cash and cash equivalents is primarily attributable to an increase in support and professional services revenue in 2014.

Cash Flows

Our ability to generate cash has depended on a number of different factors, primarily our ability to continue to secure and retain customers and generate new license sales and related product support agreements. In order to attract new customers and maintain or grow existing revenue streams, we utilize our existing sources of capital to invest in sales and marketing, technology infrastructure and research and development.

Our ability to continue to control expenses, maintain existing revenue streams and anticipate new revenue will impact the amounts and certainty of cash flows. We intend to maintain our expenses in line with existing revenue streams from maintenance support, ASP services and professional services.

Balance sheet items that should be considered in assessing our liquidity include cash and cash equivalents, accounts receivable, prepaid expenses, accounts payable and accrued liabilities. Income statement items that should be considered in assessing our liquidity include revenue, cost of revenue (net of depreciation and amortization), operating expenses (net of depreciation and amortization) and other expenses. Statement of cash flows items that should be considered in assessing our liquidity include net cash flows from operating activities, net cash flows from investing activities and net cash flows from financing activities.

At December 31, 2014, we had a working capital of $1,057,000 compared to a working capital deficit of $(19,000) at December 31, 2013. This increase in our working capital resulted primarily from an increase in support and professional services revenue in 2014. Net cash provided from operating activities totaled approximately $2,851,000 in 2014 compared to approximately $2,778,000 in 2013. In 2014, cash flow from operating activities represented our principal source of cash and results primarily from net income (loss), less non-cash expense and changes in working capital.

In 2014, net cash used for investing activities was approximately $21,000 compared to approximately $2,207,000 in 2013. The decrease in net cash used for investing activities was mainly due to a significant decrease in capitalized software. We expect capital expenditures and capital software expenditures to continue to be funded by cash generated from operations. We use cash to invest in capital and other assets to support our growth.

In 2014, net cash provided from financing activities was approximately $(115,000) compared to approximately $(76,000) in 2013. The cash used by financing activities in 2014 consisted of the payment of debt related to the purchase of furniture in 2013.

Funding Requirements

Our primary uses of cash are for operating expenses, including personnel-related expenditures, facilities and technology costs, and for interest only payments under our Loan Agreement.

We may need additional funding for any large capital expenditures and for continued product development. We lease computer equipment for terms of three years in order to have the latest available technology to serve our customers and develop new products.

Interest on the outstanding principal balance under the Imperium Notes accrues at a fixed rate equal to 8% per annum and is payable monthly, in arrears. The outstanding principal and any remaining interest under the Imperium Notes will be immediately due and payable to Imperium on the earlier of (1) September 10, 2015 and (2) the date Imperium’s obligation to advance funds under the revolving credit line is terminated following an event of default pursuant to the terms and conditions of the Loan Agreement. Payments and prepayments received by Imperium will be applied against principal and interest as provided for in the Loan Agreement.

On December 16, 2011, we announced that our board of directors authorized a share buyback plan of up to 1,000,000 shares of the Company’s common stock, in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Imperium Loan Agreement prohibits buybacks of our common stock.

On December 30, 2011, we completed the acquisition of the PipelineClaims assets (excluding working capital) of Ho’ike Services, Inc. dba BlueWave Technology (“BlueWave”), a provider of enterprise claims management software to the property and casualty insurance industry based in Honolulu, Hawaii. The aggregate purchase price for the acquisition, in addition to the assumption by us of certain assumed liabilities, consisted of the following: (i) $1,100,000 in cash on the closing date, (x) $635,821 of which (net of adjustments for certain prepayments to BlueWave and other prorations) was paid in cash to BlueWave, and (y) $400,000 of which was deposited into an escrow account to be held and distributed by an escrow agent pursuant to the terms of an escrow agreement to secure possible future indemnification claims and certain other post-closing matters in our favor; and (ii) up to an aggregate of $750,000 in an earnout, which earnout will be based upon the performance of the acquired business in the five years following the closing. More particularly, for each of the five years following the closing, BlueWave will be entitled to receive an amount equal to ten percent (10%) of the PipelineClaims Free Cash Flow (as such term is defined in the purchase agreement) but in no event will we be required to pay to BlueWave in excess of $750,000 in the aggregate for the 5-year period. For each of the first two years following the closing of the BlueWave transaction, BlueWave was not entitled to receive any earnout payment. In December 2012, we received a disbursement from the escrow account of $250,000 as a result of a contractual provision entitling us to such amount if PipelineClaims was not licensed by Island Insurance by December 31, 2012.

We prepare monthly cash flow projections on a rolling twelve-month basis based on a detailed review of anticipated receipts and revenue from licenses, support services and professional services. We also perform a detailed review of our disbursements, including fixed costs, variable costs, legal costs, payroll costs and other specific payments, on a rolling twelve-month basis.

We believe that our current cash balances and anticipated cash flows from operations will be sufficient to meet our normal operating needs for at least the next twelve months. These projections include anticipated sales of new licenses, the exact timing of which cannot be predicted with absolute certainty and can be influenced by factors outside the Company’s control. Our ability to fund our working capital needs and address planned capital expenditures will depend on our ability to generate cash in the future. We anticipate generating future working capital through sales to new customers and continued sales and services to our existing customers.

Our future liquidity and capital resource requirements will depend on many factors, including, but not limited to, the following trends and uncertainties we face:

●Our ability to generate cash is subject to general economic, financial, competitive and other factors beyond our control.

●Our need to invest resources in product development in order to continue to enhance our current product, develop new products, attract and retain customers and keep pace with competitive product introductions and technological developments.

●We experience competition in our industry and continuing technological changes.

●Insurance companies typically are slow in making decisions and have numerous bureaucratic and institutional obstacles, which can make our efforts to attain new customers difficult.

●We compete with a number of larger companies who have greater resources than those of ours; and

●We compete on the basis of insurance knowledge, products, services, price, technological advances and system functionality and performance.

We do not expect for there to be a need for a change in the mix or relative cost of our sources of capital.

The New York State Department of Taxation and Finance (the “Department”) conducted an examination of the Company for state sales and use tax for audit periods March 1, 2009 through February 28, 2013. In February 2014, the Company received a Statement of Proposed Audit Change from the Department. The Change asserts proposed Sales and Use Tax due in the amount of approximately $191,600 together with interest of approximately $46,400. On March 11, 2014, the Company paid the Department an aggregate of approximately $238,000 in satisfaction in full of all amounts owed in connection with such examination.

Net Operating Loss Carryforwards

The deferred tax asset from tax net operating loss carryforwards of approximately $3,920,000 represents approximately $9,900,000 of net operating loss carryforwards which are subject to expiration beginning in 2023. During 2014, the deferred tax asset valuation allowance was decreased for the assumed utilization of prior period net operating loss carryforwards utilized to offset taxable income for the current period, subject to federal alternative minimum tax limitations. In assessing the realizability of deferred tax assets, management considers, within each taxing jurisdiction, whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Factors that may affect the Company’s ability to achieve sufficient forecasted taxable income in future periods may include, but are not limited to, the following: increased competition, a decline in sales or margins, a loss of market share, and a decrease in demand for professional services. Based upon the levels of historical taxable income and projections for future taxable income over the years in which the deferred tax assets are deductible, at December 31, 2014, management believes that it is more likely than not that the Company will realize the benefits, net of the established valuation allowance, of these deferred tax assets in the future.

The Tax Reform Act of 1986 enacted a complex set of rules which limits a company’s ability to utilize net operating loss carryforwards and tax credit carryforwards in periods following an ownership change. These rules define an ownership change as a greater than 50 percent point change in stock ownership within a defined testing period which is generally a three-year period. As a result of stock which may be issued by us from time to time, and the conversion of outstanding warrants, or the result of other changes in ownership of our outstanding stock, the Company may experience an ownership change and consequently our utilization of net operating loss carryforwards could be significantly limited.

CONTRACTUAL OBLIGATIONS

The following table summarizes our significant contractual obligations at December 31, 2014:

Payments due by period
(in thousands)

									More
			Less						than
Contractual			than		1-3		3-5		5
Obligations	Total		1 Year		Years		Years		Years
Capital Leases	$	384	$	130	$	254	$	—	$	—
Operating Leases		2,893		587		1,717		589		—
Long-Term Debt		2,000		2,000		—		—		—
Total	$	5,277	$	2,717	$	1,971	$	589	$	—

We lease one facility in Morristown, New Jersey, which lease expires April 1, 2020 and one facility in Honolulu, Hawaii, which lease expires July 1, 2015. We also lease various furniture and telephone and computer equipment.

OFF-BALANCE SHEET TRANSACTIONS

We do not maintain any off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that are reasonably likely to have a material current or future effect on our condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Recent Accounting And Auditing Developments

In February 2013, the FASB issued ASU 2013-02, which supersedes and replaces the presentation requirements for reclassifications out of accumulated other comprehensive income in ASUs 2011-05 and 2011-12. The amendment requires that an entity must report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. ASU 2013-02 was effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. We adopted the amended standards beginning January 1, 2013. As there was no other comprehensive income during the years ended December 31, 2013, 2012 or 2011, or any amounts reclassified out of accumulated other comprehensive income, there was no impact on our financial position, results of operations, or cash flows.

In March 2013, the FASB issued ASU 2013-04, which provides guidance on the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date. The update requires an entity to measure obligations resulting from joint and several liability obligations for which the total amount of the obligation within the scope of the update is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangements among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in ASU 2013-04 are effective for fiscal years and interim periods within those years, beginning on or after December 15, 2013 and must be applied retrospectively. We do not expect the adoption of ASU 2013-04 in the first quarter of 2014 to have an impact on our financial position, results of operations, or cash flows.

In July 2013, the FASB issued authoritative guidance that requires an entity to present an unrecognized tax benefit (“UTB”), or a portion of a UTB, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent that a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the UTB should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The guidance is effective prospectively for fiscal years and interim reporting periods within those years, beginning after December 15, 2013. The Company does not expect this guidance to have a material impact on its condensed consolidated financial statements.

We believe there is no additional new accounting guidance adopted, but not yet effective, that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which may have a significance impact on the Company’s financial reporting, if and when enacted.

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